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Loyalty Programs Are Powering Growth

Our Most Compelling Data:

83%

of restaurant leaders with a loyalty program said it’s successful in driving increased order size.

69%

of consumers found personalized loyalty programs valuable.

44%

of restaurant leaders said they need to improve customer relationships through faster and easier communication channels.

Loyalty programs fuel order size, repeat visits, and ROI — and there’s room for more.

Loyalty programs are a potent way to turn walk-ins into regulars and unlock even more revenue potential.

A whopping 83% of restaurant leaders said their loyalty program is successful in driving up order size and repeat visits at their restaurants, creating return on investment. The vast majority of restaurant leaders (71%) planned to increase their investments in loyalty or rewards programs over the next 12 months, which means we’ll likely see the popularity and value of these programs rise. That said, investment in a loyalty program should be driven by what will actually keep your customers loyal.

When given the ability to choose multiple options, consumers told us they care most about exclusive discounts, earning rewards, and personalization.

Personalization is central to consumer experiences, and that stands true for loyalty programs. Think about aligning rewards against customers’ past purchases. Say a customer orders the same menu item each week. Receiving a discount on that menu item may feel more meaningful to them compared to something else.

Key takeaway:

To design or revamp a loyalty program that truly resonates with customers, look at your sales data and consider how you could bring the areas of your business customers care about most to the forefront. Whether that’s members-only pricing, limited-time menu offers, or a tiered reward system, designing a loyalty program that makes an impact with customers can drive new revenue and boost business.

Pro tip:

Setting up a loyalty program doesn’t have to be hard. In fact, your POS provider may already have the capabilities embedded and ready for you to flip the switch. With Square Loyalty, users can customize whether customers earn points by visits, by amount spent, or by categories purchased. And with instant access to data, including top loyalty customers and loyalty-attributed sales, users can fine-tune promotions.

TokyoTaco is located in Sydney’s Newtown suburb, an area where residents are eager to try new experiences. It has cultivated a strong customer base with its unique take on fast-casual Mexican and Japanese cuisine. “We’ve been very lucky to create a very strong local following,” Co-Founder Jordan Hajek said.

Unlike some startup restaurants, Hajek and fellow Co-Founder Andrew Collis said they’ve relied on organic growth without a substantial marketing budget. With Square Loyalty, TokyoTaco entices local workers and diners to become repeat customers by encouraging them to accumulate points that can be used for discounts or free items. This strategy not only fosters customer loyalty but also contributes to overall business growth. As a testament to its success, Hajek said TokyoTaco ranks in the top 20% of Uber Eats food delivery sales in Australia and New Zealand.

It’s not just excellent food that brings Australian diners back to this restaurant. It’s the business’s investment in delivering an experience their community craves.

Our brand has always been heavily reliant on word of mouth and positive experiences. You really need to concentrate on building that local customer base and honing down and understanding who they are, what they want, where they come from, and how we get to meet those people and build connections with them.”

– Jordan Hajek, co-founder of TokyoTaco, Sydney, Australia

Yes, customers want emails and texts from restaurants

While loyalty programs are widely effective in driving ROI, the largest hurdle may be telling the world about them.

That leads us to what restaurant leaders see as their top priority over the next year: finding faster and easier ways to communicate with customers to improve relationships.

When asked to select all the ways they encourage people to return to their businesses, 48% of restaurant leaders cited social media, while 44% used a loyalty or rewards program, 35% sent marketing emails, and 27% used automated reminder messages. While that may seem like a good mix of tactics, consumer data showed restaurants may be missing a huge opportunity to boost foot traffic by doubling down further on a 54-year-old technology: email.

Email communication was easily the number one way consumers told us they wanted to be reached by businesses in this year’s survey, with text messaging as the clear number-two tactic year over year. While no one should read this and think it’s time to shut down their restaurant’s Instagram account — we crave those food pics! — the data shows one-to-one messaging between customers and restaurants is likely the most effective way to share news of new dishes, big events, and limited-time offers.

How consumers prefer that businesses communicate with them:

Communication Method	2024	2023
Email	63%	63%
Text messages	44%	32%
Facebook	22%	36%
Social media direct messages	16%	23%
Instagram	15%	20%
Chat on website	13%	14%
TikTok	10%	14%
Other social media channels	4%	1%
Some other way	3%	3%

Key takeaway:

The data shows consumers really don’t see emails or texts as an intrusion if they already gave you permission to reach out by opting into a loyalty program or by checking a box when placing an order. Consider ramping up direct email and text marketing programs while staying active on social media channels for more general awareness and marketing efforts.