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Restaurant loyalty is the new black

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Restaurant loyalty is the new black
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You know business is going well when the toughest question you have in the day is “where should we have lunch?”. Surprisingly this simple question can turn into a heated debate among friends. “I want quick”, “I want healthy”, and “I don’t care, you decide” are all responses typically volunteered, some being more helpful towards making a decision than others.

Imagine how you could elevate the complexity of the conversation if you asked your mates “would you like to dine at a “fast casual” or “casual dining” establishment? Unless your mates are industry insiders, you’ll probably get a frustrated response, “whatever dude, you pick”.

There is a clear distinction between the Fast Food category of restaurants and the others. Fast Food establishments trade on convenience, speed and value. There is always a drive-through window available for pick-up. Nutritional excellence and high service standards may vary. You can find the QSR Top 50 list here.

The difference between restaurants categorized as Fast Casual and Casual Dining is more subtle. Fast casual restaurants sit squarely between Fast Food chains and Casual Dining restaurants, the key difference being full service wait staff is not available in the Fast Casual setting. In these venues, customers order at a counter, pick up their food and tend to their own needs table-side. There are obvious differences in food quality and menu prices as would be expected.

Leaders in the Fast Casual segment includes Au Bon Pain, Bruggers Bagels, Chipotle, Elevation Burger, Firehouse Subs, Five Guys, and Panera Bread. Casual Dining is defined by those restaurants that have full service wait-staffs as they seek to deliver a more leisurely shared dining experience.

The list of top Casual Dining chains includes familiar names Applebees, Chilis, Olive Garden, Red Lobster, Outback, TGI Friday, Cheesecake Factory, and Ruby Tuesday. Consumers interact with these chains quite differently as they are reported to visit Fast Food outlets about twice as often as Casual Dining, and may visit up to 5 different Fast Food chains per month versus 2.5 in Casual Dining.

There is a distinct distribution of customer loyalty approaches across this spectrum of restaurants as well. While every category of restaurant mentioned leads its consumer marketing with coupons and discounts, Fast Food chains only venture beyond these basic tactics to include contests and sweepstakes. Some, like Carl’s Jr., use a mobile app to deliver their discount offers in a gamified environment. Others like Arby’s build communities around new sandwiches, in this case using PunchTab to support an engagement strategy.

Fast Casual and Casual Dining restaurants are fans of collecting customer emails to deliver the familiar coupons, discounts and the occasional menu update. Carrabba’s has used its Amici Club effectively to gather emails and distribute low cost communications to drive additional visits. Only a handful among both groups have a formal customer loyalty structure in place. Starbucks, Dunkin, TGI Friday’s all have currency based programs that award freebies tied to visit frequency. Starbucks and Dunkin have taken the additional step to center their programs on a reloadable prepaid card. Panera Bread has the most unique program in these two categories, with MyPanera built around a “surprise and delight” strategy.

Taken as a whole, the Fast/Casual dining segment represents a growth area for customer loyalty. With high visit frequency, lower price points, and varying profit margins, there isn’t a one-size-fits-all strategy waiting to be served up. It’s also an ideal test-bed for Contextual Loyalty© as these chains need to engage and entice customers while they are on the move, encouraging them with easily understood, transparent, and easy to redeem rewards.

The next time you’re standing in line at the counter or drive through, think about what you really want from the restaurant where you are about to test your lunch decision. Share your ideas with the manager or write an email with a few ideas. After all, loyalty marketing is supposed to be a customer-inspired business.

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