In the restaurant industry, businesses strive for repeat customers. Why? Because loyal customers usually means higher revenue. A recent study found that 80% of businesses with a loyalty scheme received an average of 4.9x more revenue than their expenses.
But how exactly does a loyalty scheme work for a virtual brand? And how can you launch your own loyalty scheme?
Don’t worry - we’ve got the answers you need! In this article, we’ll explain how reward programmes for restaurants work, the benefits of using them, and how to introduce a loyalty scheme to your virtual kitchen.
Virtual restaurant brands and how the food delivery industry is changing
Before we get into the thick of it, let’s take a look at the current state of food delivery and how the market is changing.
After the COVID-19 pandemic hit in 2020, the hospitality industry took a turn for the worst. Food operators were forced to close their doors and stop their in-house dining operations. Our report on the future of franchising in post-pandemic Britain found that the industry reported losses of £80.8 billion during the first 12 months of the pandemic.
To keep their businesses afloat, a lot of these restaurants, cafes, and other food venues had to pivot their offerings. They turned to food delivery and host kitchens, which allowed them to continue generating income while delivering food to local customers.
The restrictions of the pandemic have loosened, but the food delivery industry is still growing. Globally, the food delivery market is expected to reach $0.91tn in 2023. Revenue in the platform-to-consumer delivery market is predicted to reach $222.50 billion in 2023.
So what does this mean for the industry?
It means that existing food operators should continue to maximise their kitchen capacity, reduce food waste, and increase their income by launching virtual brands. And with a loyalty scheme in place, food operators have a higher chance of repeat purchases and more income.
Find out more about hospitality trends in the industry.
Benefits of launching a restaurant loyalty scheme
Effective restaurant loyalty schemes are a great way to improve customer engagement, increase sales, and boost your profit-margins.
Let’s take a look at these benefits (and a few others) in more detail.
1. Increase customer engagement
Customers that take part in your loyalty scheme are more likely to engage with your business. One study found that 62.1% of businesses said their loyalty programmes kept customers engaged throughout the pandemic.
Whether they like and comment on your social media posts, recommend your food to a friend, leave an online review, or simply order from you again - a loyalty-scheme customer is more inclined to do these things (especially if they get a reward for doing so).
2. Increase customer retention
A fast food loyalty scheme is a great way to encourage your existing customers to stick around and make repeat purchases. It goes without saying that this is good for business! It means you spend less time and money trying to acquire new customers and more time preparing food for repeat customers.
3. Identify your most-engaged customers
With a loyalty scheme, you have insight into who your most-engaged customers are. You can see what sort of demographics they fit into, what items they like to buy, and other key insights about their buying behaviour.
As a result, you can tailor your food options and online buying process to best suit their needs. It gives them a better experience and helps you increase your income - it’s a win-win!
4. Encourage reviews and recommendations
Food loyalty programmes provide existing customers with a better experience. They get good deals and rewards when they order your food, as well as a tasty and delicious meal. This means that they’re more likely to share positive feedback online.
In a world where customers don’t trust companies with less than a 4-star rating, it’s clear that good reviews are helpful for business!
They’re also more likely to recommend your food to friends and family. This word-of-mouth advertising helps you reach a wider audience without having to spend time and money on advertising.
5. Boost sales
Customer loyalty schemes encourage diners to choose your food over your competitors. It keeps your brand at the forefront of their mind as the “go-to” location whenever they fancy a spur-of-the-moment takeaway. This means you have a higher chance of getting more orders, selling more food, and making more money!
6. Improve your reputation
If you’re consistently delivering excellent value for money with tasty food, your brand will start to make a name for itself. You’ll be seen as a quality food operator that provides delicious food at a fair price.
With the latest POS (point-of-sale) and restaurant CRM systems, you can also offer personalised content and rewards based on diners’ unique buying patterns (more on this later). This shows that you genuinely care about their experience and positions your virtual brand as a thoughtful and top-quality takeaway.
7. Gain a competitive advantage
Offering a loyalty program can help you stand out from your competitors. It gives customers a reason to choose your restaurant over other options.
Think about it - if your competitors are serving similar food to you, but your loyalty programme means that customers get a free milkshake with their next order, who are they going to pick? Chances are, they’re ordering from you.
8. Predictable revenue
A loyalty program can help create predictable revenue streams for the restaurant. Although it’s not set-in-stone, customers are more likely to return and spend money on a regular basis. As a result, you can more accurately predict your income and make informed business decisions.
9. Cost-effective marketing
Compared to traditional marketing methods (such as paid advertising or online promotions), a loyalty program can be a cost-effective way to promote your restaurant. If your existing loyalty program customers are telling their friends and family about you, you’re reaching a wider audience and attracting new customers without having to pay for advertising.
10. Improve the customer experience
A loyalty program can help you personalise the customer experience. For example, you can offer rewards and incentives that are tailored to each individual customer's preferences and buying habits. As a result, your customers get a better experience and you get a higher chance of increasing your revenue.
What do successful restaurant loyalty programmes have in common?
Let’s take a look at some of the traits that successful food and beverage loyalty programmes tend to have.
Customers have higher expectations today than they did pre-pandemic. One of these expectations includes receiving a personalised experience. Studies have also found that customers that redeem personalised offers also have a 4.5x higher average annual spend than those who don’t.
So what does personalisation look like in a loyalty scheme for a virtual food brand?
Ultimately, it involves using customer data to inform your discounts and rewards.
For example, you can use a customer’s purchase history to provide them with unique and personalised discounts. If a customer has ordered a side of chilli fries with their past five orders, you could send them a discount to get a free side of chilli fries with their next order.
Customers don’t join loyalty schemes for nothing. They want rewards for signing up - especially if they’re paying for a membership.
But what type of rewards should you offer?
According to a study from YouGov and Mando-Connect, the most popular reward for Brits is offering discounts. A whopping 60% of respondents say they’ll join a loyalty programme for this reason.
The remaining rewards include the following:
- Partner rewards (28%)
- Free products, services, experiences and privileges (23%)
- Being the first to know (12%)
- A good and easy membership experience (6%)
- Demonstrating you share your customers values (3%)
- Data privacy and security (2%)
Card linking involves customers connecting their credit or debit card to your loyalty programme. Essentially, it means that the customer receives the discount or benefit automatically when they make a purchase.
A study from Avanto found that linking payment cards to loyalty programmes is an up-and-coming trend. Why? Because it enhances the experience for customers, which can increase your programme’s overall performance.
Think about it. Instead of having to manually add or apply discounts at checkouts, customers can simply use the relevant bank card. The discount applies automatically, creating a seamless and efficient way for customers to reap the benefits of your loyalty scheme.
The process of setting up card links varies depending on the payment platform you use, so get in touch with them to see how to set it up!
How to introduce a reward programmes for your virtual restaurant brand
Here are some best practices for launching a loyalty rewards programme for your restaurant.
Understand your target audience
Start by knowing who you’re trying to target. This will help you create a loyalty scheme that resonates with the customers you want to reach.
For example, if your customer base is primarily students between the ages of 18–24, you might consider launching a loyalty scheme that offers free items or discounts when they spend a certain amount.
On the other hand, if you’re targeting an older age group of professionals with more disposable income, you might consider a loyalty scheme that provides early access to new and exciting menu items.
Figure out which type of loyalty scheme to use
After figuring out the audience that your virtual food brand is targeting, you can now think about the type of loyalty scheme you want to offer.
Here are some of the options to consider:
- A points-based system. Whenever a customer makes an order, they receive points. After collecting a certain amount of points, they can use them to buy items from your menu.
- Item-based rewards. After ordering a certain number of specific items on your menu, the customer receives one for free. For example, after buying nine burgers, they get the 10th for free.
- Promotional rewards. These rewards aren’t tied to specific behaviour, but instead provide time-based offers and discounts which encourage customers to place an order. An example might be ‘Get 25% off pizzas if you order within the next 48 hours”.
When deciding which loyalty scheme to use, make sure you’re thinking about the best way to increase restaurant revenue. The same loyalty programme won’t work for everyone, so it’s up to you to find the scheme that works best for your kitchen and that’ll help you boost your income!
Continually update and add new offers
Customers that join your loyalty scheme will be quite engaged with your restaurant. However, studies have shown that you still need to work to keep that engagement flowing. If you don’t, you risk losing their attention - which means they could take their business elsewhere.
Regularly updating your offers is one of the ways you can keep existing customers engaged. This means adding new and innovative rewards or discounts on a weekly or monthly basis. For example, you could launch a meal-combo deal in January, while the February deal features a free side with any main course, and so on.
As mentioned previously, you can also personalise your offers based on the customer’s buying history. That way, they get new rewards and discounts that are unique to them and suited to their preferences.
Contact Peckwater Brands to launch your virtual food brand
With a loyalty scheme, customers get value for money while you get the chance to build relationships with your diners. It’s a win-win for customers and virtual food brands alike!
If you’re thinking about opening a virtual food brand and setting up a loyalty scheme, get in touch with the team at Peckwater to get the ball rolling.