Shifting loyaltiesShifting loyalties

Mark Brandau

The restaurant loyalty card is evolving.


While the “loyalty” proposition remains the same, the “card” part is increasingly being tied to the way people pay, through mobile phones and bank cards linked to social apps.


Marketers are finding that even if customers are ditching paper punch cards or keychain fobs, restaurants can run loyalty programs on smartphones and credit cards, without which today’s customers seemingly never leave home.


Dallas-based Yumilicious, a 14-unit chain of modern, tech-savvy “yogurt lounges,” uses mobile-payment service Mocapay to execute a loyalty offer of a $10 mobile coupon for every $100 spent via cell phone. Customers link their card or bank information to their phone number using Mocapay’s website.


“We really bring in a cutting-edge customer group,” said David Farris, head of franchising for Yumilicious. “They don’t carry bulky wallets, but the cell phone is the one thing they always have with them. We do business with them the way they want to do business with us.”


Mobile payments and mobile loyalty programs like Mocapay are scalable for an expansion-minded company, Farris added.


“Anyone with Internet access can get onto this service,” he said. “We’re rolling out new stores all the time and trying to reduce costs. If we have to print and distribute cards, and they have swipe fees, that’s not cost effective.”


Codes replace cards


Peter Pappas, a seven-unit franchisee of Baldinos Giant Jersey Subs in North Carolina, discontinued paper loyalty cards years ago “because employees could just give things away” by over-punching friends’ cards.


But with the mobile app Punchh, customers only get a “punch” on their virtual loyalty card by taking a picture of their receipt. The app reports the transaction to Baldinos’ point-of-sale system and Pappas’ analytics dashboard. After racking up five visits, Punchh users can bring the full “punch card” on their phone to redeem a $6-off discount that only can be spent on the premises of one Baldinos location one time — triggered and verified by the smartphone’s GPS capability.


“In four months, I have a 20-percent redemption rate, which is beating the pants off my e-mail club,” Pappas said. “It hasn’t increased the check average, but it has increased guest frequency. … It’s nice, because we’d been absent from a loyalty program for a long time because it wasn’t measurable.”


He also likes to see the Facebook posts that Punchh users can automatically send out each time they get their virtual cards punched, which increases his restaurants’ awareness online and drives social referrals.


Analytics are a major benefit, as well, for 54th Street Grill & Bar, a nine-unit casual-dining chain in the Kansas City, Mo., area that uses the Front Flip mobile loyalty app. Front Flip can show how long users have gone without coming back to one of the brand’s restaurants, said the chain’s guest relations and marketing manager Kelly Reid.


“On the portal end, it’s been amazing to me,” Reid said. “We’ve had as many as 3,200 users per location.”


Each restaurant has a unique Flip Code that users can scan from a table tent using a camera phone, which pulls up a digital scratch card on the Front Flip app. Restaurants can craft margin-friendly bounce-back offers as the card’s prize. Of the nearly 17,000 scans 54th Street tallied from November to January, 85 percent of those users returned within 60 days, and 55 percent came back within 30 days, Reid said.


LevelUp, a mobile loyalty app from established platform SCVNGR, gives each user a unique QR code that is used to pay for meals. A customer presents his or her code to a restaurant’s cashier, the restaurant staffer scans the code, and LevelUp takes money from the user’s linked debit or payment card and deposits it directly into the merchant’s account.


Eight-unit Guy & Gallard in New York is one of 1,200 restaurants to sign up with LevelUp since the application launched last October. According to a LevelUp spokeswoman, about 1,000 customers have paid for a meal at Guy & Gallard with LevelUp, and 36 percent of those guests have made repeat visits. About 38 percent of those customers increased their spending above the value of their rewards, typically $5 for every $25 spent.


“It’s very easy for both the user and our cashier,” said Russell Sooknanan, catering events director for Guy & Gallard. “Customers love it because they get incentives to come back. For us, it’s one of the easiest programs I’ve ever seen, and we save 1.5 percent per transaction because the processing is cheaper [than for credit and debit cards].”


Regular cards, extra credit


Susan Han, owner of Cranberry Café in Blue Bell, Pa., ended up using a hybrid loyalty system through Groupon that included Groupon Rewards, the company’s loyalty system in test in the Philadelphia market.


She started with a Groupon Now deal, which offered a $12-off voucher for $6, redeemable only at certain times, and supplemented the offer with a traditional featured deal, offering a five-lunch punch card for $25.


“Every time those guests returned to get another punch, they brought in somebody new with them,” Han said.


For customers who liked that loyalty offer but not paper cards, Groupon Rewards presented a solution, Han said. Every time Groupon users visited Cranberry Café and paid with the credit card linked to their Groupon accounts — whether they redeemed a deal or not — Groupon tracked their spending at the restaurant. When they reached $75 spent, Groupon Rewards sent an offer for a $15-off voucher for $3 to their registered e-mail accounts.


“By using all three services, I’m drawing attention and people who don’t want to spend a lot for a place they’ve never been, while Rewards gets me more regular customers,” Han said. “Many times, people lose a punch card, but because Groupon does all the paperwork for them, they just need their credit cards.”


In the Washington, D.C., market, startup Womply also tracks transactions completed with customers’ Womply-registered credit cards, which are linked to their favorite places.


But rather than trigger another discount or bounce-back offer, Womply users earn a rebate applied to their linked credit cards when they visit a participating restaurant three times. 


Womply’s “effortless offer” rebate value varies, but customers at D.C.’s Cashion’s Eat Place and 1905 Bistro & Bar receive $35, and Smith Commons guests get $30 back. 


Contact Mark Brandau at [email protected].
Follow him on Twitter: @Mark_from_NRN.