Roughly 100,000 restaurants have closed since the start of the pandemic, leaving plenty of market share and customer trial for those still standing.
A major post-COVID question, though, is how brands maintain those guest relationships, particularly in an accelerating digital age. Most have responded with sophisticated loyalty programs, which typically appreciate higher average checks and better frequency as compared to non-rewards members. McDonald's, Burger King, Popeyes, Jack in the Box, and more jumped on this opportunity last year.
CKE Restaurants, the parent of Hardee's and Carl's Jr., is following a similar path after spending the past two years building its digital presence and mobile apps. In March, the brand debuted My Rewards, a program in which customers receive 10 stars for every dollar spent. Consumers can unlock rewards at the 150, 300, and 500-star thresholds. Redeemable items include made-from-scratch biscuits, the Charbroiled Burger and Angus Burger lines, and Hand-Breaded Chicken. To drive early growth, CKE is offering double stars through May 17.
It's where the industry is headed. Digital orders placed through an app or website increased by 13 percent last year compared to 100 percent growth in 2020, according to The NPD Group.
QSR recently caught up with CKE Chief Brand Officer Chad Crawford to learn more about the company's digital journey, the rollout of My Rewards, and what opportunities lie ahead.
The company has stated this rewards program is part of a larger overhaul. Could share more about what changes were implemented and what progress has been made?
There absolutely has been a great cross-functional effort as we've worked to rebuild really our technology infrastructure. So that transformation began about two years ago, and really accelerated over the last 12 months or so and has brought forth a number of enhancements and really redos in our technology platform. Effectively, we've integrated and brought to life POS, our great partners at Olo and Punchh who are enabling the consumer side of it, the app development, effectively the whole technology stack—that has brought us to where we are today.
How would you describe CKE’s digital presence prior to the pandemic?
We had certainly made progress on identifying those opportunities, planning, and even beginning to make those improvements to our digital infrastructure. And then over the course of the last two years—really accelerating through the last year to get to where we are—really put those to task and got us to where we are and really ready to roll.
At what point did you guys recognize the loyalty program needs to be part of your digital platform? When did those discussions surface?
As we were building the technology infrastructure, loyalty was always part of that strategy and plan, and it always was intended to be part of that milestone. We've really spent the last 12 months or so focusing on the infrastructure and then really bringing forward our connectivity and point of sale and then the digital acceleration and ultimately now where we are. The official introduction of loyalty has come to fruition basically in the last probably eight to 10 months.
How do you formulate the points system and integrate that with your menu selections?
As we went out and talked to a number of consumers to understand their needs, delivering high value was a top priority to guests. As we thought through how best to do that, we wanted to make sure that there were achievable rewards. You earn 10 stars for every dollar spent, and there are rewards with few as 150 stars. So the exciting thing about that is, you have an initial threshold of great products, entry products, where people can earn and enjoy those rewards near-term, but we also knew that there is an excitement long-term that both our loyal users—and those that we're inviting to come visit us more often—can get to relatively expediently, as well.
So as you go up to those other two tiers, they also are approachable in the 300 and 500-star threshold, but with each of those, we made sure that we were optioning across dayparts, and we thought a lot about that. We thought about those dayparts so that people could have the best possible entrees. And then ultimately at the highest threshold, what I would call our really iconic products, we have things like the Western Bacon Cheeseburger, Hand-Breaded Chicken Sandwich, Angus Burger.
We really thought it was just a great formula, and we put it into test markets and got great feedback. Because as we built it, it was nice to have achievable tiers. Ones where people could earn and enjoy in near-term or they can sort of see the next goal, but it's not so far out that they feel overwhelmed or put off by it. Something that encourages them to engage more with the brand.
What are some things that you guys are able to leverage with customers that you weren't really able to access without the loyalty program? What are the incremental opportunities?
I think the most important thing is to be able to have a more direct communication and relationship with the guests, to have them access and appeal and interact with and build the relationship that they've already started, but deeper with both the Carl's Jr. and Hardee's brands. I think that's a really important piece of it. It's a platform where we can communicate with guests and they can also provide feedback to our brands, as well. And part of the excitement and part of the learnings that will come is that as we move forward and learn through the system, we’ll be able to even further refine and tailor offers.
This loyalty program offers a lot of opportunity for customer personalization, and some brands have taken it to the point where customers pull up to the drive-thru and restaurants identify loyalty members. Do you envision a future where you go that route?
I think potentially. As we build the future enhancements in the program and we think about how it grows, whether it's testing elements in the drive-thru or thinking about trends or how consumers interact with the physical space of a restaurant, our technology infrastructure that our team and our Chief Technology Officer Phil Crawford has built is really platforms that enable those expansions. But what I would say is that in a test and learn environment, what's going to be most important is listening to the voice of the guests and deciding and understanding how they want to best interact effectively with the brand, whether that's through drive-thru enhancements, in-restaurant enhancement, pickup, however those channels come to be.
With rollout of new apps and a loyalty program, do you anticipate a time where CKE will move away from paper couponing and completely shift to digital offers?
We've certainly seen brands make some bolder decisions to reduce or to even discontinue those. As we stand right now, for both Hardee's and Carl's Jr., those traditional paper coupons certainly play an important role in certain regions and certain markets more than others. But we also have to be mindful of the guests. What is driving their interest and their usage and connectivity with the brand. I think there's a balance of items. What we'll continue to do is evaluate the most effective way to deploy those resources.
Certainly as loyalty continues to grow and we introduce it here, we'll continue to evaluate and look, but certainly for now, we're still using and extending our reach with some of those traditional FSIs [free standing inserts]. We're also using some of those to garner some learnings to promote digital offers and programming to entice and learn as some of those guests start utilizing the digital platforms.