The Growing Importance of Loyalty Programs in QSRs: Challenges and Opportunities

Loyalty programs have become essential for quick-service restaurants (QSRs) to maintain customer relationships, drive repeat visits, and boost sales. With 81% of Americans holding a QSR loyalty membership and 63% for full-service restaurants, the prevalence of loyalty programs continues to grow. However, while the widespread adoption of these programs demonstrates their popularity, the real test lies in how effectively they engage customers and drive consistent participation.

Loyalty Program Trends and Engagement

QSRs have seen strong sign-ups to their loyalty programs, but engaging those members is proving more difficult. Only one-third of loyalty members interact with these programs weekly, which leaves a significant portion of customers unengaged. This engagement gap means that a large number of loyalty members aren’t fully experiencing the benefits of the program or they simply don’t care, and QSRs are missing out on the potential revenue these members could bring in.

However, the data shows a clear opportunity. Customers who engage with loyalty programs spend more: Taco Bell reports that loyalty members spend 40% more annually than non-members. This pattern holds globally as well, with loyalty members who redeem rewards spending 3.1 times more than non-redeemers. Despite the potential, low engagement rates suggest that many QSRs need to explore new strategies to activate their loyalty members.

Challenges for QSR Loyalty Programs

Several challenges impact the effectiveness of loyalty programs in the QSR space. One key issue is managing marketing budgets while optimizing customer acquisition costs. Many QSR brands are tasked with balancing limited marketing resources while trying to acquire new customers and retain existing ones. This creates pressure to ensure that loyalty programs not only bring in new members but also maximize the value of current customers.

Another challenge is the declining impact of traditional loyalty marketing channels. Customers are constantly bombarded with messages, causing key promotions and rewards to get lost in the noise. According to Open Loyalty experts, the volume of emails and notifications leads to fatigue, making it harder to reach loyalty members effectively. Combined with underutilized rewards and low engagement, these factors leave many QSRs struggling to fully capitalize on their loyalty programs.

Yet, the demand for loyalty programs remains high. A survey by Toast shows that 37% of restaurant guests expect loyalty rewards programs to be available, highlighting the need for QSRs to offer compelling benefits that meet customer expectations and keep them engaged.

The Solution: Local Advertising as the Next Step

To overcome these challenges, QSRs must turn to local digital advertising as the next step in boosting the effectiveness of loyalty programs. Local advertising enables QSR brands and their franchisees to use loyalty data to create targeted campaigns that reach customers on a more personal level – all in a way that resonates with the specific community each location serves.

Loyalty programs are a critical tool for QSR franchises to increase customer retention and spending. However, to fully unlock their potential, brands need to share loyalty data with franchisees and empower them to leverage digital local advertising for more personalized and targeted campaigns. 

Learn more about how to harness your loyalty data for impactful local advertising. Download our playbook The Next Step in QSR Loyalty Programs.