The prevalence of loyalty in hospitality isn’t catching anybody off guard. According to recent Paytronix data, there’s been a 9 percent rise in loyalty membership for online orders among full-service restaurants.
What that suggests is straightforward—digital orders continue to gobble share of sales mix. Per Paytronix, digital orders now consistently comprise 25–30 percent of all orders. In late 2019, the figure was less than 10 percent. But to the earlier point, those placing digital orders are increasingly proving to be members of a brand’s loyalty program.
That 9 percent jumps to 26 percent in quick service (where loyalty tends to be more of a frequency play. Think beverage chains). Loyalty guests deliver a consistent 18–30 percent lift in visits and spend across industries, brands, segments, and business models, Paytronix said.
Another stat restaurants want to chase: first-party ordering results in a loyalty attachment rate of 41 percent; for third-party ordering, it’s just 3 percent.
All said, it’s no grand mystery why loyalty programs have sprung up through every crevice in the sector. Eichten says TGI Fridays needed to differentiate and did so by shedding the barrier to redemption. “That everyday reward was important,” she says. “You don’t need any points. You immediately have more value by being a member. That’s day one: Nice to meet you, you deserve to have free chips and salsa. You deserve to take $3 off when you enjoy one of our other appetizers.”
The simplified categories were a segment outlier, too. Many of TGI Fridays’ peers, Eichten says, take the surprise-and-delight approach. Basically, a user spends money to get a reward, although it’s one chosen by the brand. TGI Fridays flexed options into its tiers to make the program more valuable to users, and to also keep from getting stale. “The kind of secrecy behinds the point and the reward machine where you get an offer in your inbox, we think guests want transparency and they want quick value that they get to decide how to spend,” Eichten says.
One of the reasons loyalty metrics are so sticky owes to the evolution of marketing. Offering everyday value in return for data gives TGI Fridays ammo it can load up going forward. It makes marketing more relevant and unlocks the ability to anticipate what a guest actually wants as far as offers go, Eichten says. The brand begins to understand guest preferences, from what they order to what they avoid, like gluten. Perhaps these insights dictate future menu evolution. “That’s the kind of thing that feeds the entire business cycle,” she says.
“It’s not just about better marketing,” Eichten adds. “Higher personalization for the sake of driving business. It’s about informing everything we do to be guest-forward as a brand.”
TGI Fridays has more news ahead, she teases. That’s simply the nature of digital engagement—you’re never done updating, even when you launch. Eichten says the chain has tested some experiential benefits in smaller-scale markets. For instance, the ability to skip the line. “I always joke, ‘I’m not food insecure except when I got to a restaurant and there’s a line,” she says.
A skip-the-line feature would give loyalty members first access and “that special feeling” of being a TGI Fridays VIP. The brand has also evaluated ideas like being able to expand to-go orders. Say, there’s a way to tack on a salad or fries to round out a platter purchase. “Those are the kinds of things we were testing at the end of last year and kind of mixed results,” Eichten says. “But something I think you’ll see more of on the horizon where you just get inherent value that makes the dining experience easier and better as you go.”
In general, Eichten is fascinated by where the category heads next. “The blend of tech and experience and all those things has to keep, honestly, the guest center, but the team member standing right next to her holding hands,” she says. “Because it’s a hard environment for our labor force and we want them to be successful, and we want them to feel like they’re contributing to driving growth, which they can do. It’s absolutely in their power now. So where this shakes out, I can’t wait to see two years from now.”
