Virtually all states have ended restrictions on public and indoor dining, and ravenous consumers have been responding. Restaurants sales reached $66 billion in April, a 30 percent increase from February and a 120 percent vault over April 2020.
But how those dollars are spent, from the time of day to the method of payment, are different from before the pandemic. And every single change can be better understood, and optimized, through a more effective rewards program platform. A well-assembled loyalty initiative is like a perfectly layered cake: the data is the cake, and the loyalty is the icing. However, it can go stale if the program does not immediately prove relevancy among dining members.
Restaurants are Good at Prepping, So Prep for Change
Here are five ways restaurant dining behaviors are changing, post pandemic, and how rewards can respond to these changes for better business.
Keep calm and carry out. Or not.
A lot of people grew comfortable with ordering carryout from their favorite restaurants during the pandemic—five-star dining in sweats! But the single biggest advantage of delivery, which is convenience, may not hold up with consumers thirsting to socialize. This presents a multi-channel dining opportunity.
Rewards can serve you! Restaurant operators can promote rewards geared toward different kinds of transactions, with special temptations for customers more likely to dine in. Members of family burger chain Red Robin’s Royalty program earn $20 toward their sixth trip when they visit the restaurant five times in the first five weeks of membership.
Carryout technology is standard fare.
The innovations rapidly created to cater to carry-out during the pandemic—QR-code menus, contactless payments—are not likely to go away. But they can be incorporated into the dining experience to reduce errors and expedite service.
Rewards can serve you! Tech features incorporated into a rewards app would enable customers to seamlessly reserve tables, order and pay digitally, even when dining in. The specific customer insights, such as the average length of a dining stay, could help personalize future visits. Restaurants also can use their apps to deliver limited-time rewards (Chipotle offered free delivery on app and online orders every Sunday of one slow month in the pandemic). And they can use apps for push notifications, like sending members within 100 yards of a location a “free drink with entrée purchase” offer. I received one of those from a local restaurant when I was driving by. The timing was off—it was midafternoon and I wasn’t thinking “entrée”—but the idea was good. Just think if Starbucks sent out such messages on 90-degree days: “Order a cold drink and we’ll upgrade you to the next size for free.” I’d bite (and slurp a drink down).
Snack attackers are peaking, off peak.
Back in 2006, Taco Bell launched the sales-boosting “Fourth Meal” campaign to encourage customers to stop by and eat late—between dinner and breakfast. It may have been ahead of its time, because post-lunch and -dinner visits to restaurants are rising, up 3 percent in February, year over year, according to NPD research. Specifically, more customers were popping in from 3 to 5 p.m. and from 9 p.m. to 5 a.m. seeking smaller bites, creating a drive-thru, and dine-in, window of opportunity.
Rewards can serve you! Member data will reveal the characteristics of visitors during off hours and how much they spend. These insights can help build special snack menus that entice members to order more and visit more. For example, if a lot of off-hour customers are families with young kids – who get hungry a lot but don’t eat much—the menu can feature child-friendly snacks that differ from the kids’ menu. Parents, meanwhile, can treat themselves to little something-somethings they don’t often get.
Working from home means eating at home.
More than half of U.S. workers (51 percent) were working remotely as of April, according to a Gallup poll, but the number rockets to 72 percent among white-collar workers. If even half of those kitchen lunchbreaks shakes out to one fewer restaurant table each, it adds up to a sharp sales decline and cost-of-service issues.
Rewards can serve you! Restaurants can send messages directly to reward enrollees to promote member-only lunch, breakfast or dinner specials at specific locations. The chef-driven burger chain Bad Daddy’s Burger Bar relies just on email to engage members of its E-Club program. Members enroll for a specific location and receive exclusive “bad ass” offers redeemable at that venue. If they follow Bad Daddy’s on Facebook, they automatically are directed to that specific location’s page, featuring local specials and events.
Employees have called off—for good.
A lot of former restaurant workers, laid off during the pandemic, are not returning, and the industry is struggling to staff up. Part of the reason is servers make sub-minimum wage and rely on tips for the difference. The post-pandemic environment may change this as restaurants consider higher pay—eight states actually require it, having eliminated the tipped minimum wage and enforcing a regular, minimum wage. But higher wages could mean higher prices.
Rewards can serve you! Employee reward programs are not unusual, but they can do more work of attracting and retaining workers in certain industries. The key is being collaborative, with clear goals and attainable incentives (just like a customer reward program). Weekly contests can be designed to sell more appetizers, increase gift card sales or even to recruit more hires. As for rewards, a restaurant can ask team members directly what they would work hardest for.
An Unlimited Menu of Insights, Prix Fixe
More than 110,000 restaurants closed in 2020, temporarily or permanently, according to The National Restaurant Association. As the industry rebuilds, it should use every affordable resource to minimize missteps and accurately anticipate and meet its customers’ new preferences.
A reward program alone won’t teach an organization about how its customers behave—the company has to invest in the data analytics to earn those insights. Such efforts do not have to be expensive, especially considering the app technologies that enable close engagement (opted in, of course).
But getting it wrong can be costly. Invest in good technology, or hire a good supplier, and watch customers eat it up.
Jenn McMillen is founder and Chief Accelerant of Incendio, a firm specializing in customer-facing initiatives, whether it’s marketing or technology. Incendio builds and fixes marketing, consumer engagement, loyalty and CRM programs, providing a big-agency approach to marketing needs without the big-agency cost structure, and is a trusted partner of some of the biggest U.S. brands.