Restaurant Loyalty Programs Drive Customer Spending

In the first in-depth loyalty study of its members, the National Restaurant Association (www.restaurant.org), partnered with Loyalty 360: The Loyalty Marketer's Association (www.loyalty360.org) and rDialogue (www.rdialogue.com) to identify the level of penetration of loyalty programs in the restaurant industry, the types of practices being used, and the level of dedicated resources supporting strategy, implementation, and management of the programs.

The results reveal that customer loyalty is a key restaurant business driver; 77 percent of respondents indicate that loyalty programs helped them drive business during the economic downturn, while 90 percent reveal that loyalty programs helped to give them a competitive advantage.

"Repeat customers are a very important demographic for restaurant operators to grow their business, and loyalty programs can provide strong incentive to increase visits from those individuals," says Hudson Riehle, senior vice president of the research & knowledge group with the National Restaurant Association. "This new research clearly shows the value of operating guest loyalty programs, and offers great insight into loyalty strategies."

McLoone Management (www.mcloones.com), owner and operator of six table service restaurants in New Jersey and Maryland, told Hospitality Technology in a September article that building customer loyalty has been a crucial component in helping the organization to grow its operations. The company is currently on track to grow its number of locations to 10.

McLoone developed its Premier Club program in 2007 with Radiant Systems' (www.radiantsystems.com) Aloha Loyalty and Aloha Stored Value; the club has more than 5,000 members and averages 1,000 new members annually. Guests pay $25 to join, but membership comes with $20 pre-loaded on the card.

McLoone's management identified that one of the things that makes the Premier Club successful is all of the perks that are offered to members. For example, McLoone offers half-priced bottles of wine, preferred seating, discounts off of retail purchases and $40 rewards loaded back onto cards for every $500 spent at their restaurants.

McLoone's net revenue of purchases from Premiere Club members has increased 8.8 percent annually for the past three years, and they are on track to have more than $1 million in revenue from loyalty club purchases in 2010. They have learned that customers see value in their programs, and in some cases, they will load up to $1,000 on their cards in order to receive a 20 percent rebate during select periods.