What Is a Loyalty Program for Restaurants and C-Stores?

Loyalty programs are the new ladder to success in today's hospitality and retail marketplace. These programs are more than business promotional tools; they foster deep connections, encourage repeat visits, and build loyalty. 

Do you operate a restaurant, café, or convenience store? Building your data-driven loyalty program is essential to boost customer lifetime value. Each type of program design brings specific advantages to different business models, but there are clear, universal advantages to having one in place. 

This article will explore a variety of loyalty program structures. You'll learn how each can accelerate the success of your restaurant or c-store business.

What Is a Customer Loyalty Program?  

A customer loyalty program is a means by which to reward customers who make purchases from and patronize a brand. By participating in these programs, customers earn rewards and often the opportunity to exchange their tracked achievements for financial or experiential benefit. 

Such rewards and experiences include discounts, free merchandise, special events, tasting sessions, take-home meal kit, mobile-only offers, and monthly freebies. Each of these offerings encourages repeat business, fostering a loyal customer base. 

Loyalty programs track customer purchases and interactions through a digital or physical card that records points. Points accrue based on the amount spent, the number of items purchased, or the frequency of visits—and sometimes all three. A guest’s points can then be redeemed for rewards like those mentioned above. 

Customer loyalty programs take various forms, depending on the company’s strategy and the behavior it wishes to encourage. Five common types include: 

1. Points-Based Systems: The most common structure for a points program where customers earn one point for every dollar spent, which they can later exchange for rewards once they have enough points to redeem. For instance, Pizza Hut’s Hut Rewards is a successful loyalty program where a customer spends $1 and earns two points. Like other points programs, customers use points for their favorite menu items. 
2. Tiered Programs: Each tier is based on customer spending or engagement, encouraging customers to “level up” and reach more enticing reward sooner by spending more. Ideally, the loyalty rewards offered are based on past purchases and what customers want to buy. Sheetz convenience stores have three tiers: Fans,  Friends, and Freaks through their MySheetz Card program. 
3. Spend-Based Programs: These are like tiered programs but focused only on the total spending over a certain period. High spenders may anticipate receiving rewards sooner as well as exclusive benefits. For example, Dunkin’ Rewards offers a Boosted Status to reward more frequent customers with additional points per dollar spent once they meet program criteria. 
4. Brand Loyalty Programs: A brand loyalty program is driven by an emotional connection with the brand and often incentivizes engagement that resonates with the customer's values and lifestyle. Ben & Jerry’s Flavor Fanatics brand loyalty program offers 10% off orders and an ice cream surprise on the customer’s birthday. 
5. Coalition Loyalty Programs: Multiple businesses band together to offer a unified loyalty program, accelerating the benefits for everyone involved, including customers. The most well-known coalition loyalty program in the U.S. is the now-defunct Plenti. A similar program called Shop Your Way is still operating. However, we’ve learned having too many brands involved in a coalition loyalty program, customers see the rewards program as less relevant. 

Beyond basic rewards, these programs can also offer members-only perks non-members cannot access. Exclusive rewards may include free products others can simply purchase. Members-only perks may include special sales access, birthday bonuses, exclusive event invitations, or early product releases.  

Tailor your program’s structure to match your customers’ preferences and purchasing patterns, which maximizes engagement with your brand. You can also ensure your loyalty program supports your business objectives. For example, if you aim to promote a new product line, you might offer bonus points for members who try items from this line.  

What Is a Brand Loyalty Program? 

A brand loyalty program is a mutually satisfying business strategy designed to deepen customers' emotional and psychological ties to a brand. This connection goes further than incentivizing repeat purchases and focuses on building a strong, enduring relationship between your brand and your existing customers. A customer loyalty program rewards customers for purchases with loyalty points or perks. The best customer loyalty programs aim to create a bond that will continue beyond future purchases. These programs seek to engender a sense of belonging and affinity toward the brand and influence buying behavior on a deeper level. 

For example, a brand loyalty program might involve customers in various tasks like storytelling or sharing brand values. The program can then involve them in community or charity events reflecting the brand's identity. This approach retains customers and turns them into brand advocates. 

4 Key Benefits of Focusing on Brand Loyalty 

1. Stronger Customer Retention: Customers who feel connected to a brand remain loyal more often. According to a report from Motista, they tend to stay with a brand for 5.1 years as opposed to 3.4 years for other customers. This emotional investment is key to maintaining a predictable customer base that grows over time. 
2. Higher Customer Lifetime Value: Customers loyal to a brand spend more over time. The same report says emotionally connected customers have a 306% higher lifetime value. By aligning with a brand’s values and identity, they are more likely to choose premium services or products and make frequent purchases. 
3. Free Marketing: Brand-loyal customers often become advocates for the brand. Motista also found customers are more than four times as likely to share positive experiences and recommendations with friends and family. This word-of-mouth marketing is potent and cost-efficient. Approximately 90% of all purchases are influenced by word-of-mouth and 37% of Americans decide which restaurants to eat ate based on word-of-mouth (Persuasion Nation).  
4. Competitive Advantage: A strong brand loyalty program is vital in crowded marketplaces. Such a program can differentiate a brand from its competitors—not only at the product level but also in how customers resonate emotionally. 

Brand loyalty programs impact a business’s growth and sustainability when executed well. These programs are crucial for hospitality and retail brands because such businesses already face small profit margins daily.  

What Is a Coalition Loyalty Program? 

Coalition loyalty programs involve multiple businesses offering a shared loyalty program. This approach allows customers to earn and redeem rewards across different but related brands or products. 

Overview of Coalition Loyalty Programs 

In these programs, companies from different sectors unite under one loyalty platform. For example, customers can accumulate points at a grocery store and then use them at a partnering gas station or online store. This interconnectivity increases the utility and appeal of the loyalty program and makes it more attractive to a bigger audience without equal amounts of manual labor involved. 

3 Pros and Cons of Joining a Coalition 

Pros: 

1. Broader Reach: By partnering with other businesses, brands can reach a larger customer base. 
2. Shared Marketing Costs: Marketing expenses are distributed among the coalition members, often reducing individual costs for each brand. 
3. More Accurate Customer Data: Brands gain shared insights into customer behavior across different sectors. In the right hands, this information leads to better business decisions and greater access to valuable data.

Cons: 

1. Profit Sharing: Rewards costs are shared, which can lead to reduced profit margins on redeemed rewards. 
2. Complex Management: Brands must coordinate between multiple partners. This challenge can complicate the management of the loyalty program. 
3. Customer Overlap: There is a risk of diluting brand loyalty. Customers might not associate their loyalty with one brand but the whole coalition. 

Coalition loyalty programs offer a unique way for businesses to expand their reach. They can also boost the utility of loyalty offerings. Yet, such programs require careful management to balance benefits against potential drawbacks. 

What Is a Tiered Loyalty Program? 

Tiered loyalty programs categorize customers into levels based on their engagement or spending. These levels provide escalating rewards and benefits as customers reach higher tiers. A tiered system motivates customers to deepen their loyalty to receive better perks. 

Overview of Tiered Loyalty Structures 

The structure of a tiered loyalty program involves several levels, each offering a greater degree of rewards than the last. For example, a basic level might offer 5% off purchases, and the next level might offer 10%. 

A top tier might provide exclusive access to new products or special events. The criteria for moving up in tiers can vary, but they are often based on points accumulated through purchases or activities over a defined period. 

RaceTrac Rewards offers a tiered loyalty program where members earn points on purchases, which they redeem for free food and fuel discounts. Basic RaceTrac Rewards loyalty members earn one point for every dollar spent on qualifying purchases and one point for each gallon of fuel purchased. To become a RaceTrac Rewards VIP through its paid loyalty program, customers pay $2.49 a month for membership but save up to 10 cents a gallon on gas.

How Tiered Programs Improve Customer Engagement 

Tiered programs encourage increased engagement by rewarding customers for their loyalty. Here are four ways they boost engagement: 

1. Incentives for Higher Spending: Customers know higher tiers offer better rewards. They’re likely to spend more to reach these levels. 
2. Personalization of Rewards: Tier-specific rewards cater to the behaviors of different customer segments. This can make the rewards feel more personalized and valuable. 
3. Personal Sense of Achievement: Moving up a tier creates a sense of accomplishment among customers, enhancing their emotional connection to the brand. 
4. Increased Brand Interaction: Customers want to maintain or advance their tier status. To do so, they may engage more frequently with the brand. This could be through purchases, social media interaction, or event participation. 

Tiered loyalty programs are effective because they create a continuous cycle of engagement. Customers are motivated to maintain their current benefits and aspire to the next level’s rewards. This ongoing engagement helps build deeper customer relationships and increases customer lifetime value. 

5 Customer Loyalty Programs Examples 

Points-Based System: Starbucks Rewards 

Starbucks Rewards is a leading example of a highly successful points-based loyalty program. Members earn stars for every dollar spent at Starbucks, which they can redeem for free drinks, food items, and branded merchandise. 

Starbucks’ loyalty program is exceptionally user-friendly. Members can track their stars and rewards via the Starbucks app. 

Members also enjoy special perks like free birthday drinks, mobile ordering, and free refills on basic coffees and teas while in the store. These benefits simplify transactions and enhance customer experience, increasing repeat visits and brand loyalty. 

Tiered Program: Subway MVP Rewards 

Subway MVP Rewards is a tiered loyalty program with three levels: Pro, Captain, and All-Star. As customer spend more money, they move to higher tiers with additional benefits.  

Based on annual spending thresholds, each level offers better perks than the last. Benefits range from birthday gifts and extra bonus earn days to access to Subway® swag and Free Chips Fridays. To incentivize mobile orders, members of all levels earn 5% more for placing digital orders.

Spend-Based Programs: My Chili’s Rewards 

My Chili’s Rewards is a robust example of a spend-based loyalty program. Members earn personalized rewards based on their past orders including free kid’s meals, appetizers, delivery, and desserts.  

Customers get free dessert on their birthday, as well as a free order of Chips & Salsa or a non-alcoholic beverage on every visit. There is no cost to join the rewards program so many customers join simply to get a free drink or chips and salsa during their visit. Since these items are very low-cost, it is an easy way to reward loyalty.  

Brand Loyalty Program: Little Caesars Challenges 

Little Caesars Challenges is an excellent example of a brand loyalty program known for deeply engaging its customer base. Little Caesars Challenges are individual food challenges personalized for each customer.  

To participate, customers must download and log on to the Little Caesars® App. Customers then review and select a new challenge from the Challenge tab to earn exclusive rewards for future online orders.  

Members receive many benefits beyond typical rewards, including Super Bowl tickets and NFL Insider Info. Each challenge and reward are personalized. There are also exclusive rewards on football gamedays. 

Coalition Loyalty Program: Air Miles 

Air Miles is one of the most well-known coalition loyalty programs, particularly popular in Canada. Members earn miles when they shop at various participating companies across different industries. These include grocery stores, gas stations, and online shopping portals. Miles can be redeemed for flights, merchandise, or event tickets.  

The program includes major brands such as Shell, Sobeys, and Staples. The variety of partners highlights its broad appeal and flexibility. Air Miles is a prime example of how a coalition loyalty program can offer added value to customers. This program allows users to earn rewards across a spectrum of everyday purchases. 

Combination Program: McAlister’s Deli McAlister’s Rewards 

McAlister’s Deli’s McAlister’s Rewards is an excellent example of a points-based loyalty program offering multiple functions to customers and restaurant owners. 

Like other points-based loyalty programs, McAlister’s Rewards gives 10 points for each dollar spent. The accumulated points are redeemable for beverages, entrées, and desserts. It also provides special offers and birthday treats for repeat customers. 

What sets McAlister’s Rewards apart from other customer loyalty programs examples is its design to encourage customers to prioritize more customer referrals. When customers share their unique referral code and new customers sign up, they get free tea and 500 referral bonus points.

Frequently Asked Questions About Loyalty Programs for Restaurants and C-Stores 

What is the best example of a loyalty program? 

One of the best examples of a loyalty program is Starbucks Rewards. The coffee giant’s program allows members to earn "Stars" with each purchase, which can be redeemed for free items and perks. Members also enjoy birthday rewards, exclusive offers, and personalized promotions.  

Starbucks has designed its program to be engaging and easy to use. Through the Starbucks mobile app, customers can track their progress, order ahead, and receive rewards seamlessly. Starbucks Rewards succeeds by offering rewards matching what customers actually want—like free drinks and food—and by making it easy to access these perks through a user-friendly mobile app. 

What are the types of loyalty programs? 

Loyalty programs come in various types, including: 

• Point-based programs 
• Tiered programs 
• Paid or premium programs 
• Value-based programs 

Here's what each of these means: 

• Point-based programs: These allow customers to earn points for every purchase. The points can then be redeemed for various rewards, such as discounts or free products, encouraging customers to shop more frequently. 
• Tiered programs: These provide increasing benefits as customers move up through different levels. Each level offers more attractive rewards, motivating customers to engage more with the brand. 
• Paid or premium programs: These offer one or more perks for a fee, as is the case with Amazon Prime where subscribers enjoy lower prices, exclusive TV shows, and movies.  
• Value-based programs: A value-based loyalty program rewards customer loyalty by donating to causes such as environmental initiatives or community support. This approach creates a sense of shared values between the brand and its customers. 

What are the five Rs of loyalty rewards programs? 

The five Rs of loyalty programs are: Retention, Rewards, Relevance, Recognition, and Revenue. These core elements drive the success of the program: 

• Retention focuses on keeping customers engaged and buying as long as possible. 
• Rewards are incentives for repeat purchases. 
• Relevance ensures your loyalty program meets your customers’ needs and preferences for as long as possible. 
• Recognition makes customers feel valued, often through personalized offers and exclusive perks. 
• Revenue reflects the total income generated from customer interactions, which sustains business growth.

What is the most successful loyalty program in the world? 

McDonald's MyMcDonald's Rewards is one of the most successful loyalty programs globally, with 150 million active users over a rolling 90-day period and over $20 billion in sales from loyalty members (McDonalds.com). The program is set to continue its rapid growth, with a goal of reaching 250 million active users by 2027. 

MyMcDonald’s Rewards' success stems from its easy-to-use points system, where customers earn rewards with every purchase, redeemable for free menu items and exclusive offers. By offering personalized promotions and tangible benefits, MyMcDonald's Rewards has become the go-to for McDonald's customers. 

The Bottom Line 

Understanding the various types of loyalty programs is an important step in fostering customer loyalty and increasing engagement. From points-based systems to spend-based programs, each type offers unique benefits and is designed to meet different business needs and customer preferences. 

A well-structured loyalty program can transform your business for restaurants and convenience stores. Loyalty programs work when they change how customers interact with your brand and boost your bottom line. 

This is where our platform comes into play. Our advanced loyalty solutions empower customer engagement and profitability in a way your team has never seen before. You can create customized programs that resonate with your brand and customer base.  

A well-implemented loyalty program can change the game in today’s competitive market. Schedule a demo now to see what we can do for you.