Are we in for loyalty program overload?
McDonald’s missed Wall Street’s expectations when it reported its fourth-quarter results this week, but it wasn’t for a lack of loyalty.1 The chain’s loyalty program grew 45 percent last year; its 150 million members worldwide spent $20 billion at McDonald’s.
At Starbucks2, 34.3 million people actively participate in the chain’s loyalty program, according to its earnings report released earlier this month. Starbucks Rewards is tied to the coffee chain’s mobile app; the app accounted for nearly a third of all purchases in the last three months of 2023. The program’s future success, Starbucks execs have said, depends on its continued ability to offer certain customer cohorts deals that will keep them coming back.
Advances in loyalty tech have proven this strategy effective: programs are no longer a successful punch-card, one-size-fits-all operation. (Were they ever?) We’ve known this. But the proliferation of hugely successful — and growing — programs at some of the country’s biggest chains will only underscore the importance of building and maintaining a robust cohort of customers for every restaurant. Which begs the question: are we in for too much of a good thing?
I am extremely guilty of signing up for marketing emails and text messages from new-to-me brands in hopes of a 15 percent purchase discount.
I do this all the time. With embarrassing frequency. And at some point, usually a few weeks later, I have to clear out a clogged email inbox, unsubscribing from marketing communications, scrubbing my phone of brand text messages by replying “stop” over and over and over; deleting apps I installed to snag an initial discount. By the end of this purge, I’m usually left with one or two connections that might matter.
Enter loyalty’s close relative: subscription plans. They collect money upfront, essentially locking customers into restaurant loyalty — or, at the very least, paying for it. Popular plans that charge customers to join seem to offer value, like a nominal price reduction, or even freebies like Blank Street’s coffee subscription program that runs a wait list of thousands hoping to join.
Last week, salad darling Sweetgreen announced a new subscription option: an annual $100 membership to its loyalty program Sweetpass. The paid program offers members $3 off an order every day and promises special insider access to even more. Previously, a monthly $12 subscription plan was the only way fans-of-Sweetgreen could access the paid program. Sweetgreen also offers a free version of Sweetpass tied to its mobile ordering.
Sweetgreen won’t report its recent financial results until the end of this month; it hasn’t shared much about the success of its Sweetpass program so far. Speaking as someone who runs her own monthly and annual subscription business (funny enough, at a similar cost to consumers), annual subs are a nice way to gauge loyalty, interest, and ongoing support for a brand. Are they enough to cut through the noise of handfuls of growing, successful loyalty programs? That’s still TBD.
No industry is immune! Why wine businesses are investing in influencer partnerships. — SevenFifty Daily
CloudKitchens lost its chief financial officer last month. John Curran joined the company after spending more than a decade at Amazon. — Business Insider
Have high prices killed the joy of eating at new restaurants? Bon Appetit asks a fair question as the cost of dining out keeps rising. — Bon Appetit
Google killed off its native food ordering integration, but it will still support third-party ordering via that big blue “order” button in search results. Which begs the question: did anyone actually use this? Currently, restaurants are able to set their preferred ordering partner in Google’s business settings. — Restaurant Business
Restaurant website builder and online ordering company Owner.com raised $33 million. It wants to “improve the online experience for Mom & Pop restaurants,” which is a thing we’ve heard more than a few times. But celeb investors from Kimball Musk (Elon’s restaurateur brother) to Jack Altman (that’s OpenAI Sam’s brother) participated in the round. Per a headline in the Wall Street Journal, the company’s founder, also a high school dropout, “hasn’t taken a day off for six years.” We’ve heard that one before, too. — WSJ
It was actually, per the company, due to international boycotts of the brand related to Israel’s invasion of Gaza; McDonald’s CEO attributed this behavior to “misinformation” last month.
Also the target of a significant months-long boycott