Restaurant Operators Face New Loyalty Demands

Restaurant Loyalty & Rewards

Lettuce-wrap your mind around this: “There are 31.6 million consumers in the United States — 15.7 percent of the total — who are dining in restaurants less and ordering food online more often now than they did before the pandemic began. An astounding 82 percent of them plan to keep at least some of their newfound ordering habits even after the health crisis has subsided.”

So says PYMNTS’ November 2020 Delivering on Restaurant Rewards study, a Paytronix collaboration, where we examined the trends around digital dining and loyalty. Surveying nearly 2,100 U.S. consumers about restaurant types, use of restaurants’ loyalty and rewards programs, the types of rewards they prefer and more, this study is an education on COVID-era digital trends that have, it would seem, permanently altered how consumers dine – and how they pay for it.

This much we do know, and it’s kind of shocking: “There are 44.2 million U.S. consumers who do not use rewards programs simply because the restaurants from which they make purchases are not providing them,” per the new study.

The market potential this suggests is massive and, as the study notes, “it is critical that restaurants provide their customers not just with the rewards programs they want to earn and retain their business, but also with the chance to access those programs in as many ways as possible, whether it be via mobile app, phone number or registered credit and debit cards.”

Retention On The Side

For some time, the industry has known of the zombie loyalty program problem, where points are accrued but unused, consumers have little awareness, redemption is friction-filled and the rewards may or not be worth the bother. That’s a luxury problem, however. It’s fixable.

But restaurants without loyalty programs at all? We still have those? Apparently so.

“Loyalty and rewards programs have become popular, but many consumers today do not use them simply because the restaurants from which they place orders do not offer them. This is the case for 38.7 percent of restaurant customers who do not have access to rewards programs, or roughly 44.2 million people, making it the single biggest factor preventing rewards programs’ broader usage,” according to Delivering on Restaurant Rewards.

Meanwhile, “43 percent of all restaurant customers in the U.S., or 86.2 million people, currently participate in such programs. Our research shows that 48.1 percent of consumers who only dine at chain restaurants with table service and 44.9 percent of consumers who only order from chain QSRs are participating in loyalty and rewards programs.”

Clearly, there’s room for innovation, improvement and more loyalty programs, not fewer.

Income A Stronger Indicator Than Age Group

As seen in study after study of evolution in the mobile order-ahead (MOA) and order-to-eat (OTE) space, younger generational cohorts dominate with their digital-first mindset.

What’s less obvious — and equally important — is how income bracket affects the use of mobile ordering and the loyalty to specific chains and restaurants when doing so.

Stating that “income also plays a part,” Delivering on Restaurant Rewards notes that 49.5 percent of consumers earning more than $100,000 per year use restaurant rewards programs. “This compares to 46 percent of consumers earning between $50,000 and $100,000 per year and 31.4 percent of those earning less than $50,000 per year. Thus, the more consumers earn in annual income, the more likely they are to use restaurant rewards programs.”

Another important finding is that demand for restaurant rewards programs “is highest among those ordering exclusively from QSRs: 86.7 percent of these consumers want to engage with their restaurants’ rewards programs via mobile app, 69 percent want to access rewards via their phone numbers and 56.2 percent would like to earn rewards through physical cards. Tapping into this universal interest in rewards programs thus stands to benefit restaurants of all types, but none more so than QSRs,” according to the new study.

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