WOWorks, Shipley Do-Nuts, Noodles & Company execs say loyalty programs a must-have

Loyalty platforms have become bigger and more intuitive than ever before. As restaurants fight to win against the competition, most can't afford to give discounts, and coupons and freebies only go so far.

During a breakout session titled My Loyalty Don't Cost a Thing, at the Restaurant Franchising and Innovation Summit in Miami, Florida, held March 20-22, 2023, a panel of speakers looked at how loyalty programs can help restaurants get ahead without crushing their bottom lines. The event was hosted by Networld Media Group and sponsored by platinum sponsors AT&T Business, evocalize, schoox, TASK and TikTok.

Panelists Blake Johnson, VP of marketing for Craveworthy Brands, Donna Josephson, CMO of Shiply Do-Nuts, Mark Kreiner, VP of marketing for WOWorks and Stacy Moss director of brand marketing for Noodles & Company discussed how their loyalty programs have helped their brands succeed. Derek Canton, CEO and founder of session sponsor Paerpay, moderated the event.

Three of the seven concepts under Craveworthy Brands have loyalty programs, with Genghis Grill running the largest program. It's a points-to-reward system where guests earn $1 point per dollar and points unlocking free bowls or free beverages.

Josephson said Shiply Do-Nuts just put a POS system in for the first time and launched its loyalty pilot. "At Shipley, what that also gives us is our first-ever text program and the brand also had no email marketing programs," she said. "We had no email communication with the guest."

Today, Shipley's loyalty program is set up in tiers, so as guests earn points they move through a four-tier system, "and you also have some surprises and delights along the way to keep them engaged," Josephson said.

Kreiner said he wants to keep WOWorks loyalty program as simple as possible. "Mine's about earning rewards as quickly as possible to get them back in the restaurant quickly," he said.

Moss said Noodles & Company has had a loyalty program in place for about four years, "but we're actually in the process of rethinking about ease, which we know is the No. 1 priority for our guests, and making sure that we're thinking about it in terms of personalization and what do you what versus making sure the system is easy to navigate, easy to understand, easy to work your way through the tiers as it is today and making sure that, again, we're driving those repeat visits while giving away as little of those discounts as we can."

To discount or not to discount

Canton asked the panelists how they can engage with consumers without doing discounts. Moss said Noodles & Company looks at what they can give rewards members that they're not giving to every other customer. First is driving signups and making sure they're growing the program while at the same time keeping the engagement throughout the program. "So we're looking at how can we launch products that are available sooner to our rewards members than they are for everyone else," Moss said. "We're also looking at other added-value opportunities. We recently did a partnership with Better Health and that was really to focus on mental-health awareness."

Kreiner said he wants to give value to guests immediately after they download the loyalty program. "I don't really believe in giving them something for free for downloading because I really want quality versus quantity, because I can have half a million people registered but I only have 100,000 active. So what do you do with the other 400,000 that messing up your numbers? I like to keep things clean. When you download, you automatically get a 10% discount. So you spend $50, you get a $5 reward. That's how we have it structured."

Josephson said to the guest, it's about the 6% to 8% yield based on their spend, so it's a little bit less than a 10% discount. "We're trying to maintain that percentage as we go on," she added.

Above and beyond the discounting, Josephson, said Shipley Do-Nuts didn't have a database of people and starting a loyalty program affords them that opportunity. Inviting them to special events and starting some R&D with tastings gives the brand the opportunity to engage with its customers. Beyond engagement, it's about the personalization, she added.

The guests at Genghis Grill like the exclusivity of the program, like first looks at new menu items. "With the discounting strategy, it's not just like a one-and-done, everybody gets the same thing," Johnson said. "We've started slicing and dicing the data, and what we've found is the top spenders who come most often, they don't really care about discounts. That's not what drives them. What drives them is exclusivity. They really love the gamification – points mean a lot to them."

Finding success

Canton asked the panelists what a successful loyalty program looks like. What should a brand benchmark their program against to measure success?

Johnson said his brand collects everything from dietary needs to average spend and visits. They benchmark their success on participation and reward, which is how saturated a loyalty program is against their overall business and is measured by people who use a loyalty program and make purchases over people that don't. "A healthy number for us is 25% (or) 30%," he added. "Starbucks is at like 70%, but they have a lot more money to spent to get them there. … The whole goal of a loyalty program is to grow frequency, so we're constantly looking at average frequency of our loyalty users and trying to move the needle up, up, up and trying to tailor our message to do that."

Kreiner said the participation rate is number one for WOWorks. "When I run a campaign, I want to be able to anticipate what it's going to do … what's the overall spend? So, really, it's understanding what's going to happen when I deploy any kind of program. … especially when a franchisee is hurting and they want to leverage their loyalty program. Say I have a thousand guests in my loyalty program. What's that going to do for me? If the participation rate is only 10%, and they only are spending $24 every time they come in, there's only so much I can do."

Networld Media Group will host several other food-service summits this year, including the Pizza Leadership Virtual Summit July 26, 2023, the Fast Casual Executive Summit Oct. 8-10, 2023, and #QSRNext Nov. 9, 2023.