The definitive guide to loyalty programs in the F&B industry
In the past few years, the food & beverage sector went through several crises: the pandemic kick-started a digital revolution in the food and beverage industry, but the recent economic downturn is now making customers more price-conscious with their spending habits.
Adapting to the ever-changing situation is hard, and a loyalty program might be the perfect solution to continue engaging with new and returning customers.
Starbucks, for example, has been successfully weathering these trying times thanks to “deep customer engagement and loyalty” among other features as protecting factors. “We are not currently seeing any measurable reduction in customer spending or any evidence of customers trading down,” Starbucks CEO Schultz said.
The brands that are using digital loyalty have more tools at their disposal to increase engagement, and crucially they have the data to truly understand their customer.
Loyalty apps can easily persuade customers to create digital profiles that link in-store and digital purchases across all channels. As a result, brands can collect data and make better decisions about how, when, and what they should reward loyal customers with.
The result: customers are delighted with offers and rewards suited to their lifestyle, and brands that create personalised experiences make consumers 72% more likely to repeat purchases compared to brands that don’t bother with customising rewards.
We’ve outlined the different loyalty programs that are currently available across popular food chains in this sector so you can understand how technology can help you grow your business.
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Loyalty programs in the food and beverage sector
Food and beverage loyalty programs, as their name implies, are customer retention strategies commonly implemented by restaurants, cafes, diners, food delivery services, packaged F&B manufacturers, and fast food chains within the food and beverage industry.
These programs aim to foster customer loyalty by offering incentives, rewards, and exclusive benefits to patrons, encouraging repeat visits and long-term engagement with the establishment.
By providing these value-added perks, food and beverage businesses can enhance customer satisfaction, boost brand loyalty, and ultimately drive revenue growth.
“Loyalty is the single biggest driver of digital adoption and MyMcDonald’s Rewards has exceeded expectations in terms of enrolment and participation,” McDonald’s CEO Chris Kempcziski said. “After just six months in the US there are over 30 million loyalty members enrolled and 21 million active members earning rewards.”
Factors affecting customer loyalty in the F&B sector
This industry faces several specific challenges:
Low customer retention rates
This industry is characterised by small, if frequent, purchases, cutthroat competition, and behavioural changes that often lead to a rethinking of brand strategies. According to a recent study, the F&B industry is among the lowest industry averages for customer retention.
Reliable contact with customers
Reliable contact with customers is hard for this industry, so a loyalty program is a great way to keep them close while giving them the opportunity to earn points or level up to a new tier.
High churning rate
Customers in the F&B sector are at a high risk of churning after a single bad experience. Repeat customers tend to spend 67% more in 31 to 36 months as a client than in months 0 to 6, so it’s essential for brands to retain customers.
No unified customer profile
Hard to have a unified customer profile because customers are alternating between online and offline purchases and across different channels (even within online or offline channels). Without a unified customer profile it’s harder to offer personalised experiences - which make consumers 72% more likely to repeat purchases.
Food & Beverage loyalty programs best practices
Here are some best practices every business should keep in mind when creating a loyalty program in the F&B industry:
Use customer data
Be strategic with the customer data you collect using your loyalty program: with the right technology, you can measure retention rates, customer lifetime value, and churn rates.
This can help you make strategic decisions on how to evolve your loyalty program or when it’s time to make some changes or introduce new experiences and rewards.
Be truly omnichannel
Provide mobile app integration to help customers access their loyalty accounts, redeem rewards and check rewards status as seamlessly and easily as possible.
The right loyalty program software should be able to support various channels, including in-store, online, and mobile.
Reward your customers for more than just purchases
Reward points for actions like leaving a review, referring a friend and even interacting with your brand on social media.
Use the right technology to track your users’ activity on social media and offer incentives for following, liking and posting content: White Label Loyalty’s social engagement module can help you do just that.
Choose the right promotions and campaigns
Design and launch targeted promotions and campaigns to improve customer engagement and sales, including personalised offers, birthday rewards, tier-based promotions and referral programs.
Which types of F&B brands should use loyalty programs?
Loyalty programs can benefit many brands and companies in the F&B industries, so let’s see some of them:
- Fast food chains: loyalty programs work great for these brands because of their large customer base and high transaction volume. A loyalty scheme is a great way to collect customer data, run targeted marketing campaigns and offer personalised deals to such a large audience.
- Cafes, pubs & restaurants: these establishments should use loyalty programs to encourage returning customers, avoid customer churn and create loyal communities. A great way to do so is a referral program, to create word-of-mouth publicity over time.
- Food delivery brands: all leading food delivery services have digital loyalty platforms to engage and retain customers.
- Bakeries: these establishments can leverage food and beverage loyalty programs to promote new products, seasonal offerings, or limited-edition items to loyal customers - and keep customers that would otherwise switch based on the best offering.
- Packaged F&B manufacturers: these companies can use digital loyalty programs not just to sell their packaged foods and beverages in huge volume but to create a sense of familiarity among their customers. A rewards program can be an amazing way to get closer to their end customers without relying on middlemen such as retailers and wholesalers.
The top 5 examples of best loyalty programs in the food and beverage industry
The brand’s app-based rewards program is at its core simple and easy to use, making it one of the most popular loyalty programs out there.
For each $1 spent on McDonald’s products, the customer earns 100 points that can be later exchanged for free meals.
The program is divided into four points-based tiers: 1500, 3000, 4500, and 6000 points for different rewards from the 16 menu items. The more points you have, the higher tier you belong to - and therefore can redeem more valuable prizes.
The fast-food chain already had wildly popular “free to play” customer acquisition-driving promotions, and the brand’s customer-centric approach is the key to achieving brand loyalty.
Tiered loyalty programs are a great way to encourage clients to spend more in order to get bigger rewards: check out our dedicated guide here.
One of the most well-known in the food and beverage loyalty program industry, Starbucks Rewards has nearly 31 million active members. Starbucks attributes 40% of its total sales to the rewards program and has seen store sales rise by 7%.
The brand built its program around three key factors: making sure that it was engaging, and convenient and that it provided a unique experience to its members.
The program is available via your smartphone, and participants earn 2 stars for every $1 spent using either the mobile app or registered gift card.
The program was updated in 2023, and it now features five different reward categories, with each category unlocking a new freebie depending on the number of stars you spend.
The rewards range from customising your drink with an extra shot of your favourite syrup for free to the chance of taking home a signature cup, drink tumbler or your choice of coffee merch up to $20.
The company also recently added NFT rewards to its offerings and allows members to earn stars even quicker with bonus challenges, double star days and exciting games.
Subway MyWay Rewards
Subway’s new tier system is based on yearly consumer spend. Customers spending less than $200 fall in the Pro tier, which offers 10 points per dollar spent, 5% bonus points on mobile orders, anniversary and birthday discounts and points challenges.
The two higher tiers, the Captain tier and All-Star tier, have more bonus days, anniversary and bonus points rewards, and exclusive access to brand merchandise.
Subway does a great job at making the customers want to spend more to get to the higher tier, both by offering a great range of exclusive rewards and with its marketing strategies.
On its website, Subway promotes the All-Star tier by saying “from accelerated points earning to exclusive bonuses, amped-up freebies and other member-only benefits, you’ll want to get in on All-Star status.”
The coffee shop relaunched its Costa Club Rewards Scheme in 2021, switching from a physical loyalty card to a digital app complementing the brand’s incentives to reward “green” customers with ‘beans’ each time they bring a reusable cup into stores.
The program rewards customers with “beans” that can be exchanged for their favourite drink: members earn a free drink for every 8 beverages purchased, and Costa Club also offers free birthday cake and some exclusive rewards available via the mobile app.
One of the key reasons behind the success of this loyalty program is the personalised offers based on the purchasing history of the members, as well as more ways to earn extra beans throughout the year.
Chipotle has a reputation for constantly adding new exciting features to its loyalty program, from branded merchandise to limited-edition freebies, expanding its rewards beyond just food.
The company also gives members the chance to use their points towards noble causes, such as supporting nonprofit organisations helping farmers, struggling communities, and local businesses.
Members of the rewards scheme earn 10 points for every $1 in the restaurant, in the app or online, with a free gift for their first order. Members can also earn extra points and collect achievement badges, effectively playing into the gamification trend that has been on the rise in the past few years.
Gamification is such an important part of the program that Chipotle launched an online video game to promote the updated loyalty scheme. Race to Rewards Exchange was available to all Chipotle Rewards members, and players were able to earn points while playing and then exchange them for food and additional rewards.
Loyalty program success: Burger King case study
Burger King Europe wanted to retain more of its existing customers and increase the frequency with which they visited the restaurant chain, and at the same time learn more about their behaviour.
Solving their issues also meant providing a restaurant loyalty software solution that would consistently capture transaction data across three different POS systems.
White Label Loyalty scoped, built and deployed an end-to-end loyalty program for Burger King Switzerland in under three months utilising our loyalty engine, unique loyalty microsite and receipt scanning technology.
We configured our existing receipt scanning system to be able to understand the different receipt layouts Burger King Switzerland was using, working across 75 stores owned by 14 different franchises.
We also integrate a branded microsite into the existing Burger King app, effectively removing the need for customers to re-register to access the new loyalty program.
Head over to our case study to see what Katrin Anthes, Burger King EMEA’s Digital Business Direct Markets Manager had to say about us!
What do successful F&B loyalty programs have in common?
A thriving loyalty program in the food and beverage industry has to be easy: all of the most successful programs have a mobile app that allows you to scan codes or make payments for the food and get points automatically.
A tiered loyalty program is the perfect loyalty structure for this industry: the goal of ultimately reaching a higher tier gives members the push they need to come back to your brand.
Those already in a higher tier are less likely to switch to your competitors to avoid giving up their hard-earned privileges.
Referrals are another great tool you can use to foster customer retention without having to spend lots of money on advertising or marketing.
Reward customers who recommend your services, and if you already have existing gamification or a campaign, make sure to include referrals as another way to help customers in their scoreboard.
Creating a compelling customer loyalty program isn’t just an extra in the F&B industry: it’s a necessity.
Whether you're a fast food chain, a restaurant or a packaged F&B manufacturer, White Label Loyalty has a solution for you: get in touch with our loyalty experts here.
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Content Marketing Executive
Sara is our Content Marketing Executive. She shares engaging and informative content, helping businesses stay up-to-date with the latest trends and best practices in loyalty...