The addition and evolution of loyalty programs includes a sharpened focus on targeted messaging and offers
We heard quite a bit about the “noisy” environment during third-quarter earnings calls, especially as it pertained to value offerings across segments. Several restaurant brands are attempting to cut through that noise by getting more personal with their customers through still-growing digital channels.
McDonald’s focus on personalization sharpened earlier this year, when chief executive officer Chris Kempczinski noted that the company is pulling artificial intelligence-driven insights from its growing loyalty program to make ordering easier and faster.
“As we continue to attract millions of new loyalty members, we can get even smarter with our pricing methodology and tailor our digital offers to our fans, making them even more personalized,” Kempczinski said in February.
In October, CFO Ian Borden added, “Over the mid-to-long-term, digital will become a much bigger part and then we’ll bring value to life at an individual level with a lot of data and insights, which will allow us to effectively target value what's most relevant for that individual consumer … That’s the area of greatest opportunity and why we're focused on getting that right.”
It’s also something more customers want now from their restaurant experiences. Earlier this year, a study from MasterCard Services found that 80% of consumers are more likely to do business with a company that offers personalized experiences.
To meet this growing demand, Yum Brands recently launched “personalized AI-driven marketing campaigns” that have so far generated significant increases in consumer engagement, increased purchases, and reduced consumer churn, CFO Chris Turner said during the company’s earnings call in November. This technology was created by the company’s proprietary global data hub and is expected to scale across all of its brands, including Taco Bell, KFC, Pizza Hut, and Habit Burger & Grill.
Taco Bell is first out of the gate here, connecting its digital ecosystem to enable loyal customers to identify themselves at the drive-thru and in-store kiosks, which creates a more personalized experience.
“In the Taco Bell environment, it leverages the fact that we have the (point of sale system) in the store, the digital menu boards, and the ability to actually bring these to life at the store and through our loyalty programs and through our connections with customers in the app,” Turner said. “We’ve got many ways to bring it to life, but it essentially allows us to do more personalized tailoring of offers and to learn and refine much more rapidly than we could before.
“We believe we’re still only scratching the surface of the full value creation potential of our capabilities with exciting innovations.”
Chipotle is also working on AI-driven personalization and is in the early stages of what such a model could look like to drive more efficiency with its loyalty members, CEO Scott Boatwright said during his company’s earnings call in late October.
“We think that's really searching out whether you're a lapsed user, an at-risk user, or an active user within the program. How do we serve up a bespoke experience, beyond some of the traditional format pitches that you typically get in a loyalty program, but something that's really tailored for the user,” he said. “When you enter the experience, you'll see something tailored for you as an individual based on your needs, your usages over the past. We think it's a cool play on how to continue to drive incremental value within that platform.”
Noodles & Company is attempting to get more personal through its new customer data platform, which aggregates all the information about its known customers in one area. According to CEO Drew Madsen, this system has enabled the company to reactivate lapsed loyalty members and engage customers using “smart, relevant personalized offers with fewer discounts to drive profitable traffic growth.” The reactivation piece is especially important, as active loyalty members visit 50% more and have 2.5 more visits per year than Noodles’ average customers.
CAVA and Jack in the Box are also working on personalized experiences through their digital channels. CAVA recently launched its Reimaged Loyalty Program with the priority of developing deeper relationships with customers, for instance. It includes an earn-and-bank points model with a menu of reward redemption options. Since its launch, the program’s percentage of sales has grown more than 200 basis points, according to executives. Meanwhile, Jack in the Box just launched a new app aimed at accelerating the acquisition of loyalty members. According to CEO Darrin Harris, the app allows the company to create more personalized messaging, including offers and promotions.
This work of creating deeper connections with guests is even extending to casual dining. Red Robin’s new loyalty program provides incentives for return visits and signups, and so far, new member transactions have increased 141% versus last year. Those members visit and spend more than non-loyalty members.
“Through segmentation, behavioral triggers, and personalization, we're able to drive effective messaging to these guests designed to accelerate the frequency curve,” CEO GJ Hart recently said. “In addition, we are beginning to unlock the full power of our new customer data capability to drive visitation with our guests. This includes our ability to now send much more personalized communications and trigger messaging based on each member's unique visitation habits and menu preferences.”
Red Robin is adding gamification, member exclusives, and other tactics to further drive engagement through its new program.
Finally, Dutch Bros accelerated its Dutch Rewards segmentation efforts in the third quarter to provide even more personalized and relevant offers for the nearly 70% of its guests who use the program. CEO Christine Barone said as the industry continues to evolve, Dutch Bros customers will continue to “place an even larger emphasis on personalization.”
Expect such efforts to continue ramping up in the New Year as the value environment sticks around. Indeed, TouchBistro’s newly released 2025 State of the Restaurants Report shows that 70% of operators now send personalized offers to customers.
Contact Alicia Kelso at [email protected]
