Strategies for Building a Successful Customer Loyalty Program for Restaurants

By: Melissa Canellis


Due to the pandemic, restaurants are in competition to earn customers’ trust — and a quality restaurant loyalty program is the perfect solution to building consumer confidence. Brands need to begin the process by providing quality food and value to their guests that they feel they can’t get elsewhere.

Moving forward, growing guests’ confidence is also about ensuring safety and not just procedures for store cleanliness, staff wearing masks and social distancing, but also ensuring a contactless experience for ordering, payments, delivery and curbside pickup. Furthermore, it’s important to assure guests and make them aware of these safety enhancements through customer communication and messaging.  

Customer confidence grows, as restaurants are able to repeat these behaviors and deliver a consistent experience across every channel and customer interaction. Restaurants can do this by understanding their customers’ needs and preferences and subsequently making their lives easier and more rewarding.

That’s why restaurant loyalty programs are a key aspect of customer experience. They provide brands with the means to reward customers for their good habits and also provide offers and incentives to encourage them to adopt new behaviors.

Anne Fischer, Papa John’s SVP of Customer Experience explains the approach they took when developing their customized Papa Rewards program powered by Punchh. Here are the main strategy takeaways Fischer described during a highly-attended, customer loyalty webinar

Three Key Strategies for a Successful Restaurant Loyalty Program

When it comes to flexibility, our program is really unique. The entire menu is open and available to our members. There’s not this nuance of, “You can get only this size pizza or this many toppings, no desserts.” Instead we said, “Take it all.” Even the high-cost wings, we’re going to open up the entire menu that if you’ve earned rewards you can get whatever it is that you want, not just some preset category of options.

The second piece is that we took a really strong view on what is that customer experience and how we can have a truly simple and very user-friendly program. Not a lot of math, not a lot of point conversions. There are no tricks to going in and trying to get those rewards. Instead, we made it super simple. It truly is just one tap and you’re able to apply those rewards that you’ve earned as a member again, towards anything on our menu, including being able to stack those with other discounts.

Then finally, we wanted this to be personalized because we think about what the modern customer is looking for. They want experiences that are curated to them. We’ve got a phenomenal business model in that we’re a major digital player. Being able to use all that customer data to then inform a truly personalized experience was really important.


Top Restaurant Loyalty Program Benefits for a Brand

Drive Sales Growth & Customer Lifetime Value
The restaurant loyalty program and the all-new Papa Rewards is one of those machines that’s working in the background really driving growth. We’ve got some 16 million members, our sales from our members is up, some 30%, and then very importantly, we’re in a position right now where it’s driving incredible brand advocacy and also incredible lifetime value that we’re seeing from these customers.

Encourage New Customer Behaviors
With everything changing so quickly and needs changing so fast, it’s more critical than ever to have a restaurant loyalty program. Our day-to-day offers are about stretching membership to try new things and add onto their ticket. This may be going against new occasions especially as lifestyles are adjusting so much, and being able to go after some of the new dayparts that are opening up.


Best Metrics to Measure Restaurant Loyalty Program Success

Provide Value Without Discounting
That’s been part of the success is that we think about the contribution and the CLV that we’re getting from some of these members. You could offer value to a customer beyond just discounting. What we’ve seen is that if you do it the right way, and you do it in a way that really meets their needs, we’ve actually been able to even pull back on some of the discounting and be able to drive even better results. For example during the pandemic, Papa John’s partnered with their board member, Shaquille O’Neal. According to Fischer, one of the things that he made available was for one of their loyalty members to participate in a live event with him. That was an experience that someone couldn’t get anywhere else. That’s an example of something that goes beyond just discounting that provides a lot of value because the person is a Papa Rewards member.

Deliver on Customer-Centric KPIs
Looking at the business from a customer view can be challenging for a lot of companies — especially those that are accustomed to looking at it from a very transactional view. One of the big things that we did at Papa John’s is we invested in mastering our data, really getting in there and understanding those customer segments and being able to calculate things like CLV. From a KPI standpoint, it definitely is about those higher-orders, brand affinity, driving brand awareness and advocacy.

Prioritizing Customer Preferences Through 1:1 Experiences 

Papa John’s utilizes restaurant loyalty program data to gain customer insights around transaction history, daypart, basket size, and preferences to understand and deliver on their customers’ changing needs and provide a world-class customer experience. “We’ve got millions and millions of folks in this membership program, and the idea that we would offer a one-size-fits-all experience or offering for those members, that’s not the way to do it. These are individuals with individualized needs, and we owe it to them to deliver some personalization. I think Punchh has been a great partner for us to enable that,” said Fischer.

Learn more about the implementation and success of the Papa John’s restaurant loyalty program by watching the recorded webinar.

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