The pandemic continues to hit the restaurant sector hard.
The National Restaurant Association recently reported that the industry lost $120 billion during the pandemic’s first three months and that these losses could total $240 billion by the end of the year. Sales rose somewhat in May, but the trade group said many restaurants are still losing money and considering shutting down. Quick-service restaurant (QSR) owners are working to weather the pandemic’s severe economic effects and keep customers engaged, and many are turning to loyalty programs.
The current health crisis has prompted restaurants to prioritize contactless digital ordering, outreach and payment options that ease customers’ concerns about physical interactions. These shifts have pushed drive-thru restaurant chain Checkers and Rally’s to work toward leveraging a mobile app-enabled loyalty program, said Josh Buchmann, senior director of eCommerce and guest engagement for the company.
“While people were already shifting over to eCommerce transactions, the first wave of COVID-19 really spurred things into faster motion,” Buchmann explained.
Checkers and Rally’s operated as independent chains — both serving menu items such as hamburgers, hot dogs, chicken sandwiches and seasoned fries — until the former acquired the latter in 1999. The Tampa, Florida-based chain was publicly held until 2017, when it was purchased by Oak Hill Capital Partners for $525 million. The QSR and others in the space are aligning their fall strategies with consumers’ current preferences in mind, including meeting the demand for contactless ordering and payments and providing appropriately priced menu offerings.
“Our guests are value-driven,” Buchmann said. “They want a lot — not necessarily for cheap — but they want a lot of food for the price.”
Loyalty Programs For Engagement
Most restaurants consider an appealing rewards app essential to competing in today’s market. A recent study showed that 17 percent of Americans in 2019 used their smartphones to access the internet and lacked broadband services at home. Many use their mobile devices to look up recipes, play games, send emails, shop and order meals.
Checkers and Rally’s knew it needed to develop an app after focus group studies revealed that guests were using other QSRs’ mobile offerings to access coupons and loyalty incentives, Buchmann said. The chain wanted to enable guests to make transactions without much friction as well as ensure that customers receive offers on items that appeal to them.
“Simplicity is actually the key,” Buchmann said. “[Customers] are not going to download a Checkers and Rally’s app to play a game or to surf the web. … They want to get on the app for relevant content, typically during mealtime.”
Tracking customers’ menu preferences is one way that QSRs can keep their messaging relevant. Checkers and Rally’s recently entered a partnership with a restaurant customer data platform provider to achieve this, which Buchmann said allows the chain to better tailor its offerings. A loyalty member who has never ordered a burger, for example, would receive a message about a chicken sandwich deal instead. Guests who primarily order late at night would receive their own personalized “sweet treat” offerings, he explained.
“That platform becomes our aggregator for loyalty profiles for point-of-sale transactions, for email, and a hub on which we can build a profile we can use to better serve the guest with relevant messaging,” he said.
QSRs also look to encourage repeat purchases and develop long-lasting relationships with customers, and both actions are central to loyalty programs. Checkers and Rally’s is working to create a dual-branded loyalty and rewards offering that links with its app to deliver incentives such as “surprise and delight discounts” or free-delivery promotions for members who have not made recent purchases. Customers can join by texting or signing up online or at the restaurant, Buchmann explained, and they can redeem their rewards at physical locations or online for pickup or delivery.
The chain is currently meeting with potential app vendors to flesh out the most important details for the first iteration of its app and loyalty program, Buchmann said. The chain’s model makes it well-suited to a mobile loyalty offering, he noted, as almost 85 percent of its restaurants do not have dine-in or in-store settings. He said he envisions that customers using the app would be able to place and pay for orders remotely before picking up their meals.
“We need to move quickly, so we are looking for a major vendor that offers a white-label app solution, something we can do out of the box and customize later,” he said. “That makes it more affordable and quicker to market. Once we get the foundation established, we’ll seek out partners who can do extra customer development to make it uniquely Checkers and Rally’s.”
Checkers and Rally’s, as well as other QSRs with robust drive-thru operations, are evaluating how best to appeal to their customers. Those that build innovative digital programs to satisfy consumers and encourage repeat purchases are poised to stand out from the competition now and in the future.