Rewards Programs Boost Restaurant Biz

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Three-fourths of restaurant operators believe that customer loyalty programs helped to grow their business during the economic downturn, according to an online survey by the National Restaurant Association, which polled 1,300 members. 

Additionally, nine out of 10 survey respondents say that they feel rewards programs give their business a competitive edge, while 84% plan to maintain or increase their financial investment in these programs through 2010.

Customer rewards programs establish brand loyalty by offering incentives and discounts to frequent patrons. Starbucks, for example, lets customers use a prepaid Starbucks card that earns “stars” entitling them to free coffee, coupons and even VIP concert passes. Outback Steakhouse, P.F. Chang’s, Red Lobster and T.G.I. Friday’s boast similar versions of these loyalty programs.

”Repeat customers are a very important demographic for restaurant operators to grow their business, and loyalty programs can provide strong incentive to increase visits from those individuals,” Hudson Riehle, senior vice president of the Research & Knowledge Group with the National Restaurant Association, says.

According to the Wall Street Journal, restaurateurs have been slower on the loyalty program uptake than other industries, despite market research from firm NPD Group Inc that says total restaurant traffic declined by 3% in the year ending in May.

The association’s new survey found 41% of respondents currently operate a loyalty program, and that nearly half (47%) plan to launch one in the near future.

Additionally, about three-quarters of respondents use social media to support their loyalty program. Facebook, unsurprisingly, was the most common social networking site used (65%), followed by Twitter (40%) and blogs (17%). (Check out this MainStreet article to learn about how small businesses can take advantage of social media.)

Restaurant owners may have faith in their rewards program, but how can you implement an incentive initiative that works? Check out “Do Rewards Programs Work for Small Biz?

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