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How to Increase Customer Loyalty in Restaurants

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Justin GuinnAuthor

Restaurants have two types of customers — first-time customers and repeat customers who have dined with you before.

If you’re wondering how to increase customer loyalty in restaurants, you’ll want to tap into both these types of customers.

Operators need tactics to increase restaurant sales for new guests. Then restaurants need to deliver quality customer experiences and delicious menu items that can help get these guests back for more dining experiences across dine-in and online ordering. 

A prescriptive, intentional restaurant customer loyalty program can help with bringing guests back again and often.

In this article, you will learn how to increase customer loyalty in restaurants. You’ll discover loyalty program tactics and technologies that can help successful restaurants develop and sustain profitability.

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Key insights on how to increase customer loyalty in restaurants

The importance of increasing customer loyalty in the restaurant industry cannot be overstated.

Generally, the cost to acquire a new customer for your business can cost five times more than retaining an existing customer. Relatively expensive restaurant customer acquisition costs (CAC) make it critical to capitalize on every customer you earn by bringing them back regularly and maximizing returns on CAC.

According to research from Deloitte, bringing guests back to your business is precisely what restaurant loyalty programs do.

Deloitte’s survey of restaurant guests shows that almost half of restaurant loyalty members (47%) use their memberships several times a month, and almost a third (32%) do so several times a week. That’s a lot of repeat visits to help maximize CAC returns and boost your restaurant’s average customer lifetime value (LTV).

Research from Toast adds to the importance of customer loyalty and rewards programs. 

Toast is the point of sale system built for restaurants. We conducted research in order to help restaurants understand the evolving preferences, behaviors, and dining habits of their guests across different demographics.

Our research found that 37% of guests expect restaurants to offer a loyalty rewards program — more than any other technology or service we asked about.

When filtering by restaurant type, guests say that fast food, cafe, pizzeria, breweries, and fine dining restaurants are the restaurants where guests most expect businesses to offer loyalty and rewards programs.

The same Toast research also explored the frequency that guests try new restaurants based on their age.

Perhaps not surprisingly, millennials try new restaurants more often than other age groups. This could prove to make it more challenging to pin them down as loyal customers — but just because they’re spreading their dining spend around town doesn’t mean millennials are loyal diners as well.

According to PYMNTS research, 64% of Gen Z diners and 61% of millennials participate in customer loyalty programs at at least one or two of the table-service restaurants they frequent. That’s compared to just 37% of Gen X and 27% of baby boomer patrons.

Delivering delicious food and consistently great guest experiences is no easy feat, but it may just table stakes these days when there are so many great restaurants around. Providing an engaging, worthwhile loyalty program with personalized touches may be a key factor for increasing customer loyalty in your restaurant.

What is a restaurant customer loyalty program?

A restaurant customer loyalty program is a guest engagement strategy that encourages repeat business from customers.

Loyalty programs can involve incentives and rewards that help gamify customers to return again and often to your restaurant. These programs can be as simple as a punch card — though they’re most often digitally driven these days.

By offering excellent customer service, great food, and implementing a loyalty program, restaurant owners can build a loyal customer base that contributes to the long-term success of their business.

Different types of restaurant customer loyalty programs

There are various types of loyalty programs that restaurants can implement to cultivate customer loyalty and drive repeat business.

  1. Punch card programs: This classic loyalty card approach rewards customers with a free meal or menu item — such as an appetizer — after a certain number of visits or purchases. It is a simple and effective customer engagement tactic that helps to motivate them to return.

  2. Online apps and platforms: Many restaurants now rely on building customer loyalty programs through their own mobile apps or established platforms. These programs often utilize a point-based system, where customers accumulate points for each transaction or dollar spent. These points can then be redeemed for discounts, free items, or other rewards.

  3. POS-integrated programs: Restaurants can leverage their point-of-sale (POS) systems to track customer behavior and offer targeted rewards. By collecting customer data, such as order history and preferences, restaurants offer more personalized guest experiences, making customers feel valued and appreciated.

  4. General data collection: Some restaurants opt for loyalty programs that primarily focus on collecting customer data without offering immediate rewards. This data can then be used to inform marketing efforts and tailor promotions to specific customer segments, helping build trust and loyalty over time.

By choosing the right loyalty program setup for your restaurant, you can incentivize repeat business and foster a strong connection with your regular customers.

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Taking advantage of a POS-enabled, credit card-linked loyalty program

While restaurant operators should consider all their unique business factors before choosing which loyalty program option works best, card-linked loyalty programs are becoming an increasingly popular option.

Credit card-linked loyalty is just what it sounds like — a loyalty program that tracks past orders, rewards, and points based on a customer’s credit card use. Guests are asked to opt-in to the loyalty program once, then points and rewards accumulate automatically while their order history is also recorded.

This single opt-in and automation helps take any burden or guesswork off of guests and restaurant staff. No need to look up loyalty accounts or dig through wallets to find a tattered punch card.

The points and rewards provide the gamification and incentive, but operators shouldn’t overlook the importance of guests’ past order history.

According to MasterCard, restaurants are using loyalty programs to better understand their customers and provide more personalized, impactful experiences.

Perks and rewards aren’t going anywhere, but savvy restaurant operators may consider how to best implement past order history into their engagement with their most loyal guests.

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How restaurant technology beyond loyalty programs can help boost customer loyalty

Restaurant technology plays a crucial role in delivering consistently positive experiences that can help boost customer loyalty and streamline operations. 

Modern POS systems, such as Toast POS, often include built-in loyalty program features, making it easier to track customer behavior, offer rewards, and streamline operations. By integrating your loyalty program into your POS system, you can seamlessly track customer interactions and provide a personalized, memorable experience.

Restaurants can combine loyalty program data with gift card salesemail marketing, and other marketing forms to engage with specific, high-value guests. 

Offering online ordering and delivery services can provide convenience to customers and increase their engagement with your restaurant. Implementing a user-friendly online ordering system and ensuring timely delivery builds customer satisfaction and encourages repeat orders.

Operators can utilize their restaurant reservation tool to engage with guests and get them coming back for more — such as including links in email marketing for guest to reserve a table for their next visit.

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Importance of social media, email marketing, and ongoing engagement for loyalty

Restaurant management teams can help generate loyalty by running marketing campaigns to engage new and existing customers.

Toast’s research found that word-of-mouth recommendations and social media are the top ways that diners find out about restaurants — making these critical discovery, rediscovery, and general engagement channels.

This breakdown gets interesting when examined by the guest’s family demographic. For guests with kids, social media actually trumps recommendations. Recommendations is top for guests with no kids while social media comes in second.

Social media, email marketing, and ongoing engagement are powerful campaign channels that can help enhance customer loyalty. 

  1. Social media: Maintaining an active presence on social media platforms allows you to engage with your existing customers and reach new ones. Sharing visually appealing content, promoting special offers, and responding to customer feedback in a timely manner helps strengthen brand loyalty and keep your restaurant top of mind.

  2. Email marketing: Building an email list of your existing customers and sending targeted campaigns can be highly effective in encouraging repeat business. Personalizing offers based on customer preferences, announcing new dishes or events, and offering exclusive discounts or promotions can make your customers feel valued and keep them engaged with your restaurant.

  3. Word-of-mouth and referrals: Encouraging satisfied customers to refer their friends and colleagues to your restaurant can be a powerful way to boost customer loyalty. Offering incentives for referrals, such as a free meal or a discount, can motivate customers to spread the word and attract new customers.

By implementing a comprehensive marketing strategy that leverages social media, email marketing, and ongoing engagement, operators can reinforce customer loyalty and drive high-quality repeat business that boosts bottom line growth.

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Sustaining restaurant customer loyalty with Toast

With a fully integrated loyalty program, such as Toast Loyalty, your restaurant can reward customers and keep them coming back for more. 

Ongoing labor shortages and increasing menu prices have many restaurant owners looking for ways to keep guests coming back. 

On average, restaurants see additional sales and more repeat visits from guests in a loyalty rewards program. We took real sales data from Toast restaurants and created a simple ROI calculator. Use it to figure out your sales boost. If you don't know these numbers exactly, just use an estimate for how many times on average guests visit your restaurant each year and how many new loyalty members you think you could sign up each month.

Learn more about Toast Loyalty and request a demo to get started.

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DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.