While restaurant subscription programs have in the past been far from a guaranteed success, Los Angeles-based Sweetgreen, a health-focused fast-casual chain, has seen positive results from its Sweetpass pilot, offering daily credits for meal purchases for a set monthly rate.
“We are at the start of our journey to create tailored promotions and loyalty to drive incremental customer frequency and improve customer spend,” Jonathan Neman, co-founder and CEO of Sweetgreen, told analysts on a call Thursday (March 3) discussing the company’s fourth quarter and full year 2021 results. “In January, we piloted Sweetpass, a limited-time offer subscription. “We exceeded our pilot expectations across all customer cohorts, particularly with new and last customers.”
Research from the March/February edition of PYMNTS’ Digital Divide series, Digital Divide: Restaurant Subscribers And Loyalty Programs, created in collaboration with Paytronix, found that restaurant subscribers are significantly more loyal than their non-subscriber counterparts. The research drew from a census-balanced survey of more than 2,000 United States adults conducted in late December.
Specifically, the study found that restaurant subscribers are nearly twice as likely to use restaurant loyalty programs as non-subscribers are, and 78% of subscribers consider themselves very or extremely loyal to their preferred quick-service restaurants, compared to 55% of the population overall. Similarly, 79% of subscribers say the same of their preferred table-service restaurants, compared to 59% of the overall population.
Neman noted that the program provided the restaurant with “a lot of interesting data,” which will help inform the brand as it “test[s] and iterate[s its] way to what a future loyalty [program] could be.” Going forward, the company wants to drive engagement with initiatives “including digital challenges, personalized offers and membership options.”
Overall, digital sales accounted for two-thirds of the company’s revenue in 2021, with the bulk of those transactions occurring through the chain’s direct ordering platforms rather than through third-party marketplaces.
Friendly’s Opens First Location of Its Fast-Casual Brand
As the fast-casual segment continues to grow, some full-service chains are making entries into the category in an effort to draw in consumers who favor digital ordering over in-restaurant dining.
Full-service restaurant chain Friendly’s, which has 130 locations in the Mid-Atlantic and Northeastern U.S., announced Tuesday (March 1) that it had opened the first location of its first Friendly’s Cafe location, a fast-casual concept, in Westfield, Massachusetts, in late February.
“We envision Friendly’s Cafe as an opportunity for further menu and technology innovation to meet our customer’s changing desires, while also still adhering to our mission of bringing family and friends around the table to make new memories,” Craig Erlich, CEO of Friendly’s Restaurants, said in a statement.
Dine Brands Trials Virtual Restaurants in Dozens of IHOP Restaurants
IHOP’s upcoming loyalty launch is not the only major digital initiative that the pancake chain has coming.
On a call with analysts Wednesday (March 2) discussing Dine Brands’ fourth-quarter and full-year 2021 earnings results, CEO John Peyton shared that the company is now testing new virtual brands at some of the pancake chain’s restaurants. The brands, Thrilled Cheese and Super Mega Dilla, a grilled cheese chain and a quesadilla chain respectively, are now live in seven test markets.
“The early results are encouraging, and we recently launched a beta test in approximately 50 restaurants,” IHOP president Jay Johns said. “These virtual brands, which intentionally do not compete with our breakfast day part business, require minimal new SKUs and some require new equipment to execute. We’re enthusiastic about this flexible lower cost options to meet the convenience needs of our guests and look forward to providing updates on our progress.”
Digital orders account for a large share of all restaurant purchases, according to data from PYMNTS’ new Restaurant Friction Index, created collaboration with Paytronix, which features the results of a survey of more than 500 managers of full-service and quick-service restaurants.
According to the survey, 41% of restaurant sales were being generated through digital channels as of September 2021. This finding reveals that digital channels are significantly more popular than in-restaurant sales, which account for 32%, and phone sales, which account for 26%.
McDonald’s Faces $900 Million Ice Cream Machine Lawsuit
In the ongoing saga of McDonald’s ice cream machine troubles, the quick-service giant is now the subject of a $900 million lawsuit filed Tuesday by Kytch, a small company that had worked on a device to help the restaurant brand fix the machines, Wired reported Wednesday.
The device creator alleges that McDonald’s defamed it with false claims about its technology — which aimed to provide store owners with up-to-date information about problem areas — and collaborated with a competitor to scare away would-be Kytch customers.
McDonald’s told the publication in response: “Kytch’s claims are meritless, and we’ll respond to the complaint accordingly.”