Rewards Programs Can Boost Restaurant Sales as Chipotle and Venmo Team Up

March 12, 2019

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Chipotle Mexican Grill continues to invest in digital sales and a national points-based loyalty program designed to encourage greater frequency and connection between the brand and their customers. Recently teaming up with Venmo, the digital wallet company and depositing surprise dollar amounts ranging from $1-$500 in fan accounts through March 15. Chipotle hopes to create engagement with consumers to strengthen the connection and build new connections with lapsed or non-customers. It’s expected that 25,000 fans per day will receive the rewards.

What’s in it for the consumer? Rewards translate into free stuff. According to FoodserviceResults recent Off-premise Insights Report, only 50 percent of consumers participate in restaurant loyalty programs. Building loyalty program participation allows restaurant brands to digitally market to their customer base, reminding them to consider their restaurant. Marketing is often focused at specific times during the day when consumers are hungry and are looking for a place to eat. In fact, the Off-premise Insights Report’s consumer survey identified 68 percent of consumers decision to dine-out are based on impulse and not planned. Consumer dining behavior can be very spontaneous and often is based on top of mind thought. These decisions are impacted by social media images, billboards, radio and television advertising. The ability to market directly to a consumer’s mobile device or computer can be a very powerful tool.

Source: FoodserviceResults Off-premise Insights Report

What do consumers look for in loyalty rewards? Some reward programs offer features and benefits like access to secret menu items, exclusive marketing promotions, skip the line benefits and access to new products. Although younger consumers appreciate these perks, only 5 to 11 percent of consumers indicated that these benefits drive loyalty participation according to the report. Preferred perks included free food, discounts and coupons driving participation with 82 to 89 percent of consumers surveyed (based on a survey of 1,500 consumers). Freebies continue to be the relevant driver for consumer loyalty.

Source: FoodserviceResults Off-premise Insights Report

Restaurant brands like Chipotle have much to gain by rewarding their customers with incentives. First, this engagement forces customers to sign up with the brand, providing information and access to the consumer. The data can be mined for consumer intelligence in how, when and where consumers use the restaurants. Access can build marketing touch points which drive impulse decisions and keep the brand top of mind and relevant to customers. Second, rewards build traffic and frequency to Chipotle restaurants. As creatures of habit, US Consumers often get accustom to certain behavior which can be repeated. These occasions can include work lunch, social meetings with friends, dinner with family or significant others. This investment builds sales, often with volumes above the reward amount resulting in sales growth. Lastly, brand direct perk programs encourage consumers to purchase directly from the brand through their mobile app. Costly third-party delivery programs don’t always provide the perks, driving more consumers to order directly from the restaurant. Direct purchase can be more profitable for restaurants as they don’t have the typical 30 percent surcharge.

As I see it, restaurants will continue to invest in digital strategy and perks programs that are simple and easy to use. Relationships with younger consumers who actively use Venmo and other applications or mobile wallets can allow smooth access to rewards. Today, 50 percent of consumers use restaurant loyalty programs and engagement and participation continues to increase. Investments in programs will continue to benefit customer usage as rewards continue to move from nice to have to must have for many consumers.