How to Create a Loyalty Program for Your Restaurant?

Do you want a piece of the benefits a loyalty program can offer to your restaurant but don’t know how to apply one?

Loyalty programs are now a staple in big chain restaurants, which are racking up the benefits of a well-built community. The thing is, loyalty programs are not that hard to apply – your restaurant doesn’t have to be a gigantic fast food chain to apply them. In this article, I’ll tell you about:

• Restaurant customer loyalty programs.
• Their benefits.
• And how to apply them easily in your restaurant.

I’ll share with you the process you can use to create effective restaurant loyalty programs in a few steps. If you apply them correctly, your restaurant can benefit immensely from improved business performance, customer retention, and much more. Let’s find out how it works!

What Are Restaurant Loyalty Programs?

Restaurant loyalty programs are special marketing tactics that can boost your restaurant’s customer retention rate and repeat business.

How?

They aim at rewarding customers for certain behaviors and spending practices, while making your customers prefer your restaurant because it becomes more convenient to them. Before you can apply loyalty programs in your business, you must perfect the experience your restaurant offers. Loyalty programs reward customers and make them feel special for meeting certain criteria, for example:

• Subscribing to your newsletter.
• Earning points by spending money in your restaurant.
• Having punch cards.
• Or even wearing specific clothes.

The thing is, only regular customers are going to take advantage of these things because they love your restaurant. The loyalty program makes it easier for them to love your restaurant because it offers advantages they can benefit from. Other customers who are not taking advantage of these rewards might want to join in on the fun because it seems viable to them, which again, starts the cycle of loyalty and customer retention.

It has 2 great advantages:

1. Rewarding regular customers
2. Encouraging non-regular customers to become your regulars

These strategies weren’t originally applied in restaurants, but have been introduced successfully in later years. Nowadays, there are entire websites dedicated to helping you exploit the best restaurant loyalty programs available in your vicinity. That’s exactly why you can’t afford to miss the opportunity of using loyalty programs in your food business, whether it’s fast food, family, or fine dining.

Benefits Of Loyalty Programs In Restaurants

Customer loyalty programs help restaurants in numerous ways. As I mentioned, they can boost customer retention, repeat business, and even improve the profitability of your restaurant. Also, they help your restaurant:

• Maintain your customers engaged with your brand.
• Keep them satisfied with the service.
• Stand out from other restaurants in the area by offering something different and appealing.
• And also help you build a community around your business.

A tailored loyalty program is also helpful to gain new customers if you’re in a highly competitive area of the city. And the best part is that you can create them to satisfy the different needs that your restaurant might have. Still, restaurant loyalty programs can be a double-edged sword if they’re not created properly. For example, those same websites I mentioned are also famous for exploiting caveats in poorly defined strategies. That can leave your restaurant in the dust in terms of profitability.

How To Create An Effective Loyalty Program For Your Restaurant?

Now, let’s talk business. Creating effective restaurant loyalty programs is a not-so-easy task, especially if you want to play it safe. Below I talk about the steps that you can follow to create a strategy that’s applicable to your restaurant. Make sure to pay special attention to every step to avoid falling into the traps that make your restaurant lose money.

1. Study Your Business

The first step is to study your business extensively. This step is essential to help you understand which areas of your business need more attention. Your restaurant should be as smooth as marbles for your customers! It should:

• Have outstanding customer service.
• Delicious food.
• Sanitary conditions for service.
• A good menu that always leaves them wanting to try more.
• Good prices when compared to your competitors, or prices that seem fair for the experience you offer.

Of course, if you run your restaurant every day, you’re probably already acquainted with the information you need to gather. Which information? Well, that depends on the objectives you want to achieve, which takes us to the next step.

2. Set Objectives For Your Loyalty Program

Setting objectives for your loyalty program is necessary – you need to aim at something with your strategy so it’s finite. I’ll give you a couple of examples.

• Let’s say your restaurant is new in town, and the area of your business you’d like to improve is customer acquisition. Gaining new clients is vital for new businesses! That would be your objective.
• Let’s say your business is not profiting as much as you’d like. Your customers seem to be satisfied, but repeat business percentages are low. You need to make your customers come back more often and spend more in your restaurant!

For both, there’s specific information you need to know, but only you know what objectives you want to set. Now comes the how.

3. Study The Logistics

Now is the time to ask what would it take to offer a loyalty program in your restaurant. You need to ask yourself these questions:

• Does your POS system support loyalty programs? For example, Waiterio’s POS supports vouchers and discounts.
• Do you have to complement the loyalty program with other marketing strategies or services, e.g. email marketing, subscription services, free wi-fi, or others?
• How does the loyalty program impact your restaurant’s profitability?
• How does the strategy impact your restaurant and staff?

Some restaurants offer free wi-fi, which is only available to customers who share their email, which is also used to track their customer’s data. Other restaurants use third-party loyalty software to create point-based promotions. Some restaurants add wi-fi routers and hire internet providers to start offering free wi-fi. All those costs are definitively impacting your restaurant. Sometimes, promotions can also change the way your business works, which inevitably will affect your restaurant’s staff.

You can add more questions to the process – I mention this because you might have specific concerns, like how would your strategy impact your inventory management. That’s a question that you must ask yourself once you figure out what you’re going to do specifically, which is the next step.

4. Figure Out Effective Strategies For Your Restaurant

This might seem like generic advice but hear me out. Effective strategies are not easy to come by, which is why I cannot share with you a specific template to follow – not all restaurants are the same! That’s why you must study:

• Your customers.
• What drives them to your restaurant?
• And add some more flavor to the offer that brought them.

Knowing your customers will help you address them correctly and package the offer. It will also help you know what drives them to your restaurant – the food, the service, the location, the prices, and more. It could be anything, but you need to figure out what’s the driving force behind your specific customers. Once you know that, you must double down on that by improving it with a loyalty program so your restaurant appears more convenient than others. You can learn what that is in your restaurant by applying customer satisfaction surveys. For good measure, I’ll give you 3 examples.

Example 1

Let’s say your customers are people under 40 who are interested in the new food your restaurant offers. If what brings them to your restaurant is the numerous offers, the innovation, and so on, come up with ideas to double down on that. It could be something like “customers who spend X in the restaurant in X period of time gain access to a private experimental session where chefs serve new dishes that we’ll add to the menu in the future”. This hits the spot for those foodies who love new experiences. Particularly if you can add the “private” element, which always makes people feel special. Since most of your customers are part of this segment, it will likely improve your profits – given there aren’t any errors in your price-setting practices.

Example 2

Let’s say a big part of your customer base is families and groups of friends who go to your restaurant for delicious food and affordable prices. So you have delicious food and affordable prices – double down on that! It could be something like “groups of 3 people or more can register. Groups that spend X amount gain points, which are redeemable at X amount for X group food offers”. This will help your restaurant gain new clients, and improve repeat business, and the average ticket by promoting group choices.

Example 3

Let’s say half of your customers are corporate employees who work close to your restaurant – they go to it just because it’s very convenient and the food is pretty good. Here you can take advantage of a specific condition, which is that your customers are office workers. The loyalty program could be something like “customers who are wearing ties have a 5% discount on their meals”. Something small like this can bring a smile to your hard-working office customers, which will definitely promote your business and improve repeat business. The good thing about strategies like this is that they don’t really require a lot of fancy equipment or software!

5. Set The Rules

Another important thing is to write down the rules that apply to the loyalty program. Without rules, things can roll out of proportion. For example, with system points, you can’t let your customers gain infinite points – they can find ways of exploiting this until things go south. Another example would be limiting the days they can redeem their points for free food. And you can always limit the reward. Don’t offer redeemable points for all items on the menu. Instead, pick specific items that are in the middle point between desirable for your customers and that giving too many away cause your restaurant to lose money. Yes, you will take a few losses sometimes if you offer things like that, but remember it’s all in the name of repeat business and customer loyalty, which can improve your restaurant’s profits in the long run.

6. Apply The Strategy, Learn From Your Mistakes, And Repeat

Now, remember when I mentioned that setting objectives made the strategy finite? Well, in this stage, you must apply the strategy you created for a specific period, and wait. Once the period ends, you must study the results to see if you achieved the objectives you set to accomplish. This really is a neverending process, because you can learn from your mistakes, gather more information, and come up with new strategies.

The process should be something like this:

• Learn how many customers joined your loyalty program.
• Study how this has impacted your restaurant again. Before it was theoretical, now it’s practical because you have real information to play with. Key factors to study are profits, customer satisfaction, repeat business percentage, and more alike.
• Study ways of improving your loyalty program. You should also consider adding new things, creating new promotions, and keeping the offer fresh. That way you can keep attracting new customers to join your loyalty program.

What is important is that you recognize that this is a cyclical process, and even if something goes wrong, you can try again next time. Of course, it would be ideal to nail it the first time – but that’s not always the case. Something people seem to forget is that big brands like Wendy’s, Burger King, and McDonald’s have existed for many years. They’ve had a lot of time to think about their strategies, learn from their mistakes, and start over a few times.

#1 Tip For Small Restaurants – Make Your Loyalty Program Smaller!

If you’re interested in applying a loyalty program in your restaurant, but don’t want to mess it up, you can always start small. There are many things you can do to simplify your loyalty program. Here are a few tips:

• Use the power of surveys! Customer satisfaction surveys are amazing to catch vital information about your restaurant. It can help you iron the bad out of it, like common mistakes your waiters make, or also learn what your customers prefer from your menu.
• Apply the strategy just for one month to see how it goes. That can help you modify it so it’s more tailored to your customers, which can save you a lot of money, time, and effort.
• Segment your customers and offer the program to specific segments. This will make it cheaper for you because the target sample will be smaller. You can also do this by creating a subscription service, which can be in the form of an email subscription, using your POS to track customer data, or using third-party services like punchh or loyalty gator.
• Avoid offering something too big, pricey, or hard to apply in your restaurant. You don’t need to rebuild your kitchen to accommodate your customer loyalty program. The best thing is that you can tailor it to start offering what you already have.

Another thing to consider is that you shouldn’t have any problems in your restaurant that can cause consequences in the long term. For example, if you don’t have good relationships with your suppliers, you have poor customer service, or poor inventory management, you can create bigger problems in your restaurant. And you won’t have to wait too long to see them! That’s why big restaurant chains have the advantage of millions and billions of dollars to make up for their mistakes, but you don’t have to make mistakes that big in your restaurant in the first place.

Is Your Restaurant Ready For A Loyalty Program?

All restaurants older than a year should have a loyalty program. In fact, even new restaurants can have one. That way you can start building your customer base from the get-go, which will have a massive impact on repeat business, profitability, and, customer satisfaction. Finally, I wanted to mention that there’s no better loyalty program than top-notch friendly service. If you have a poorly-trained or unhappy front-of-house staff, there’s no way a loyalty program can fix your restaurant. So, will a loyalty program help or break your restaurant?