Despite worsening pandemic conditions, 55 percent of loyalty customers grew their average check size more than the inflation of menu items. 

A growing number of casual-dining players recognize the importance of loyalty, no matter the size of their footprint. 

IHOP, one of the largest full-service chains in the world, debuted International Bank of Pancakes in March, allowing customers to redeem digital coins for exclusive rewards. Dine Brands, the parent of Applebee’s and IHOP, reported during its Q2 earnings call that after just four months, there were more than 2 million members, 30 percent of which were new to the chain. In April, the 52-unit Snooze, an A.M. Eatery rolled out a loyalty program of its own, entitled MySnooze Bennyfits. Customers have access to free meals, priority waitlist seating, special parties, and swag. 

The “why” behind this trend is obvious. According to Paytronix’s 2022 Loyalty Report (data gathered from in-store and online transactions between January 2019 and December 2021), loyalty spending hit its highest level on record last year. Casual dining, fast casual, ice cream/snack/coffee, and Mexican/sandwich concepts each saw their best spend per guest of any year Paytronix has data. The programs lead to an 18-30 percent lift in visits and spend, and loyalty customers pay on average 6 percent more than nonloyalty guests. 

The top 2-3 percent of a total customer base makes up about 10 percent of loyalty consumers. These high-level guests spend two to three times more and account for 8 percent of total spend on average. 

“The Paytronix Annual Loyalty Report shows that the potential of loyalty to build relationships between customers and their favorite brands has never been greater,” Lee Barnes, Paytronix’s chief data officer, said in a statement. “Between the ongoing generational shift and the critical importance of the top tier of 2-3 percent of guests, it has become increasingly clear that growing cadres of loyal customers are vital for the health of brands. And the loyalty members of convenience stores who visit daily show the potential of loyalty customers to visit more often.” 

For full service specifically, restaurants saw an average of $328.88 spent per loyalty guest in 2021, which is a large jump from the $270.28 seen in 2020, and only a slight decrease from the $332.18 mark in 2019. Average visits per loyalty customer was 7.3 last year, compared to 6.7 and 8.2 in 2020 and 2019, respectively. Additionally, the average full-service loyalty member has become younger since pre-COVID. Baby boomers still account for the biggest segment, but their share sank by nearly 30 percent between 2019 and 2021. Gen X, older millennials (36-45), and younger millennials (26-35), saw drops between 2019 and 2020, but each saw recovery in 2021. Gen Z (15-25) didn’t see any decline in membership across that timeframe.

Record-high inflation doesn’t seem to be having an impact either. Fifty-five percent of restaurant loyalty customers grew their average check size more than the price of the average item increase. Paytronix believes price jumps of more than 10 percent is the point that loyalty guests will no longer tolerate. For frame of reference, restaurant menu prices jumped 8 percent in August year-over-year, the largest in 2022 thus far. Full-service meals rose 9 percent while quick-service menu prices soared 7.2 percent. 

“The data collected through these programs—from member demographics to visit frequency to most popular menu items—is invaluable to any brand seeking to understand its guests better,” Paytronix said in its report. “This information can be leveraged to make strategic business decisions and market more effectively. It can also be interpreted with artificial intelligence to uncover hidden patterns and trends.”

Feature, Marketing & Promotions, Technology