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...loyalty programs in 2021
It wasn’t long ago that we got excited when a quarter of sales at a restaurant group came through digital channels. Execs loved it, investors loved it, customers loved it.
Digital sales growth has become an important part of any large company’s quarterly reporting. In the last three months of 2020, Chipotle’s digital sales represented just under half (!!!) of its overall sales. The chain saw a similar number in the fall, representing sales that were an order of magnitude higher than 2019. The pandemic’s effect on online ordering at restaurants is impossible to miss.
McDonald’s recently reported growth in digital sales, too, though it’s not as pronounced, accounting for 20 percent of systemwide sales — that’s $10 billion — across its top six markets. Restaurant Brands International, the parent company of Burger King, Popeyes, and Tim Horton’s reported global digital sales of $6 billion in 2020, more than doubling year over year.
What do these companies have in common besides a renewed affinity for the drive-thru and suburban markets? They’re all counting on robust and technically integrated loyalty programs to continue to drive digital sales and customer retention. New data just released from PYMNTS/Paytronix found that in 2020, customers registered with loyalty programs spent more than twice as much on takeout as those who weren’t part of a program.
Burger King is testing its new loyalty program, Royal Perks, in several markets. “When we talk about a loyalty program, it's, it's really a lot more about knowing your guests, showing them you know them, and then showing them you care all in the service of making their experience easier,” Burger King chief marketing officer Ellie Doty said during a Clubhouse chat on Friday. (Clubhouse chat! More on that below.)
McDonald’s is also entering a new phase of testing its rewards-based loyalty program. It’s the company’s first (!!) in the U.S., which… wow. Diners earn points with purchases; McDonald’s workers earn points by completing specialized training sessions.
The program is similar to other successful rewards- and points-based initiatives like Chipotle’s and — the gold standard of digital rewards initiatives — Starbucks. (Speaking of Starbucks, in its most recent report, the company said mobile orders represented 25 percent of domestic, company-operated transactions. Its loyalty program has an eye-popping 21.8 million members.)
All of these numbers to say: loyalty is an especially important component of an increasingly digital world, and not just at large publicly traded companies.
New York-based, produce-focused, fast-casual chain Dig (formerly Dig Inn) has taken a huge hit during Covid, reportedly closing more than half its restaurants and laying off 40 percent of its workforce. The company is fundraising to help bridge the gap to the other side of the pandemic, gradually opening more currently shuttered restaurant locations in urban markets like New York, Boston, and Philadelphia. But it’s also appealing to its customers with a new, custom-built loyalty program that launched last week attached to a brand-new mobile app.
The company spent months publicly preparing customers for the switch from its previous loyalty program on LevelUp. (Grubhub bought LevelUp for $390 million in cash in 2018 and bills it as the company’s development shop.) When the new program launched, Dig said it would transfer unused credit to new Dig Rewards programs. The ubiquitous LevelUp at-register QR codes are gone, too, and the chain has debuted a sleek online ordering page. The loyalty program is, of course, rewards-based; customers earn $5 for every $50 spent, and are slotted into tiers based on spend.
Restaurant brands are right to make plays for their diners’ information and loyalty, especially in the face of third-party delivery service growth. (Aha! You thought I wasn’t going there this week, didn’t you?) Uber reported that participation in its subscription programs, which include Eats Pass and Postmates Unlimited had reached 5 million members, and some Amex cardholders can enjoy free yearly subscriptions. DoorDash’s DashPass subscription had 5 million members as of the end of September 2020; the company will announce its fourth quarter and full 2020 earnings later this month.
In the Club(House)
Invite-only, iOS-only audio chat app Clubhouse is having its moment(s) in the sun. The mobile app has been downloaded millions of times by excited participants ready to jump into conversations with peers, strangers, and celebs. I host a weekly news chat with Andrew Genung of the Family Meal newsletter fame on Monday mornings at 10:30am ET/7:30am PT. It’s early! But it’s also a great time to talk through important news of the week, and we definitely want to hear from lots of people.
I have also publicly complained a few times about the app; I find it inconvenient and repetitive at times (I have young children, I do not have two hours to spend listening to stale ideas.) I’ve seen many, many male-dominated industry conversations scheduled. Until Friday, I hadn’t heard a large corporation mobilize the app. But that’s what Restaurant Brands International, the parent company of Burger King, Popeyes, and Tim Horton’s did.
Execs from the company hosted a room on Clubhouse. It was billed as a democratized version of the quarterly earnings call, and I wrote about it in detail this week for Insider($).
RBI’s chief corporate officer told me that he plans to continue hosting these chats every other Friday with different company leaders. I expect more large companies will follow suit; unfettered public access to a CEO is rare, and RBI’s leadership seemed to really enjoy the show.
What else is happening?
Oops! Here’s something I missed! Buried in an end-of-year blog post from OpenTable CEO Debby Soo, an announcement that the company’s chief operating officer, Andrea Johnston, left the company at the end of 2020. She worked in a variety of roles at OpenTable since 2010.
Guy Fieri launches a new virtual brand. Hello and welcome to Flavortown Kitchen, a 23-state delivery-only chain operating out of underused restaurant kitchens at Buca di Beppo, Brio Italian Grille, and Bertucci’s. Fieri’s new concept is in partnership with Virtual Dining Concepts, the company behind such hits as TygaBites and MrBeast Burger. Its founder, Robert Earl, is also the owner of Bertucci’s, Bravo, Brio, and Buca di Beppo. The duo also own a small chain, called Chicken Guy, together. In mid-February 2021, none of this is surprising. But the full story, on Eater, is definitely worth a read.
ICYMI: I wrote another Insider($) piece about DoorDash’s recent Chowbotics acquisition and the company’s potential plans to deploy the 3’x3’ machines in restaurants and other locations.
My debut on Fine Dining Lovers: a (very surface level) piece about the importance of guest data to any restaurant business and challenges to owning that data in the year 2021.
Expedite is produced by Kristen Hawley in San Francisco.