4 Strategies to Overcome QSR’s Biggest Reward Challenges

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The following is a guest post from Jenn McMillen, founder of Incendio.

Several monster-sized restaurant chains have introduced loyalty programs in 2021, tempting millions of high-frequency diners across demographics with the benefits of spending their dining dollars at one chain over another.

For these restaurants, the perks add up to more than a free bag of fries. Rewards initiatives provide additional insights into a clientele that is both local and transient, wealthy and less wealthy, and from all cultures. A rewards program can help make sense of customer characteristics that vary widely. But one characteristic is constant: these customers are hungry for loyalty programs.

Consider these fast facts:

If customers are spending more money at restaurants that offer some sort of rewards program, then what’s the lag? It may be that the QSR industry has historically benefited from steady business activity. But now, with so many QSRs clustered in one geographic area, the customer’s choice of Channel A or Channel B is often a last-minute decision based on parking, drive-thru line, cravings, or draw. A rewards program provides a good reason to choose one over another.

QSRs looking to introduce, modify or expand their reward options face three challenges:

Challenge 1: There is less room at the table. With 40% of QSR customers saying their favorite restaurants don’t offer a rewards program, more and more chains are joining the fray. In 2021, McDonald’s, Burger King, Del Taco and Popeye’s launched or piloted their first programs. This can lead to customer fragmentation that could threaten retention rates among existing programs.

Challenge 2: The number of people searching “quickly” rrewards climb. Papa John’s announced that it gained nearly one million members in its Papa Rewards program between the third and fourth quarters of 2021. Chipotle reported approximately 2 million new members during the same period. If satisfied, these members will become more entrenched, making it harder for new programs to gain enrollees.

Challenge 3: App-based programs (which are must-haves) are bland. While some restaurants have been quick to launch loyalty programs during the pandemic, many of those programs offer generic rewards, according to QSR Magazine. Many existing programs have not innovated their applications with engaging events, promotions and interactive communications.

How to overcome these challenges

These are obstacles that the restaurant industry has the means to overcome. However, before launching (or re-launching) a rewards program, QSR managers should consider the following:

Do your preparation – find out what works for other QSR programs. Starting with the programs that work within your target customer group, identify the things that show the most promise. Then do something similar, but better, faster, and with more personally relevant communications via in-app communications, text, and email. Your customer data is your guide. For example, 32% of men eat fast food every week, as do 28% of women. Thirty-six percent of people who eat fast food every week are between the ages of 25 and 38. Yet only 18% of baby boomers and 27% of Gen Xers eat QSR weekly. Is there an opportunity here?

Look for chocolate and peanut butter partners. Consider the activities of your target members and determine if a brand partnership can enrich your reward proposition. Your target may travel frequently (hotel partnerships), spend a lot of time in the car (fuel rewards), or be a big sports fan (sports teams or ticket partnerships). Checkers partnered with the Tampa Bay Buccaneers in 2021 in a promotion that sent users coupons for free burgers every time they texted a game earn code to their phone. Or a QSR can work with a competitor: Red Robin’s partnership with Donatos allows Red Robin customers to order a Donatos pizza, for example, which attracts members of both programs.

Recommend secret menus to members. Members love exclusivity, and in the restaurant business, that means “me” menus. These can be permanent or limited-time offers. The key is to attract new members and encourage existing members to visit more. What if Chipotle, for example, added a hot sauce condiment cabinet just for members of its Chipotle Rewards program? Members could access the cabinet with a code and entice non-members to sign up so they too could get their hands on a bottle of Cholula.

Make sure you’re equipped to be “biggie-er”. Businesses entering the rewards fray or looking to gain membership would do well to regularly assess their capabilities and ensure they can develop and maintain their digital platforms as they expand. Include important features for your customers, such as nutritional information or free coffee upgrades. Del Taco’s Del Yeah Rewards app encourages members to climb four levels (Queso, Scorcho, Inferno and Epic) with special challenges, badges, exclusive experiences and surprises (such as quarterly free food bonuses at certain levels ). And all members receive free coffee with any purchase before 11 a.m., every day.

A rewards program can positively disrupt the value of a quick service restaurant if a QSR first invests the time to ensure the program offers the right menu of features, such as unexpected rewards, earning and redemptions immediate and a visually appealing digital element. and instructive.

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