Burger King is testing a rewards program. Here's why restaurants love them
Posted February 13, 2021 9:20 a.m. EST
Updated February 15, 2021 12:21 p.m. EST
CNN — Burger King is the latest fast-food chain to establish a rewards program aimed at expanding its customer base and enticing existing patrons to be more loyal. It joins a growing number of restaurants embracing digital payments and rewards incentives during the pandemic.
Beginning this week, Burger King is rolling out its new Royal Perks program in five areas of the US, including Los Angeles, Miami, New Jersey, New York City and Long Island, New York. It works a lot like its competitors' plans: Every $1 spent earns 10 "crowns" that participating customers can use to redeem free food or upgrade orders. Availability of the rewards program will expand throughout the year.
Burger King said in a statement that Royal Perks is "one more step on our digital journey" that has recently included adding online and delivery orders and digital coupons. The chain, owned by Restaurant Brands International, is in the midst of a modernization phase, which includes revamped restaurants and high-tech drive-thrus.
Ultimately, the goal for Burger King and other brands with loyalty programs is to increase sales and lure in customers, ideally on a daily basis, by giving them reasons to choose them over their competitors. The programs also give restaurant owners access to customers' data and ordering habits that help target diners with customized deals.
Many large chains have seen a substantial increase in rewards members and digital orders during the past year, brought on by the pandemic and changing customer habits. Here's how they're benefiting.
Barely two years old, Chipotle's rewards program already has 19.5 million members with 10 million of them joining in 2020. The chain entices customers with exclusive menu items, free guacamole offers and occasional extra points on orders. Users get 10 points for every $1 spent and can redeem them for a free meal when they hit 1,250 points.
CEO Brian Niccol said in the company's most recent earnings call that the program "gives us the ability to communicate organically with a large and passionate community of Chipotle fans." Increasing awareness of its app and rewards program has helped Chipotle rake in a massive amount of digital orders, accounting for 46% of sales last year.
It's surprising that the world's biggest fast-food chain doesn't yet have a rewards program. But it's changing that this year with "My McDonald's."
About 900 US locations are testing the program with users gaining 100 points for every $1 spent that can be redeemed on more than a dozen items depending on how many points users have collected.
CEO Chris Kempczinski said the company is "moving aggressively" to expand the program in 2021. McDonald's currently offers a limited rewards program for coffee on its app.
Starbucks Rewards have been a bright spot for the beleaguered coffee chain. The number of active members increased to 21.8 million within the past 90 days, a 15% jump compared to a year ago.
In its most recent earnings call last month, Starbucks said that Rewards members contributed to 50% of US store sales in the quarter ending December 27, 2020, record highs for the company. Starbucks regularly offers special point-earning challenges and Double Star Days to encourage members to spend.
Last year, in order to motivate more customers to join the program, the company broadened the payment options for its rewards program to include cash, credit cards and Apple or Google Pay. Previously, members had to load money onto a Starbucks card to earn points. The coffee chain also has a branded credit card linked to its loyalty program.
Wendy's Rewards launched last summer, giving customers 10 points for every $1 spent that can be redeemed for free food and drinks within one year.
Points can be earned via orders made on the Wendy's app, or customers can scan their QR code at store registers or drive-thrus. The rewards include a small Frosty milkshake for 150 points or a Breakfast Baconator sandwich for 450 points.
"We are very pleased with the launch of our new Wendy's Rewards program and the early results are in line with our expectations," CEO Todd Penegor said on a November earnings call. App downloads have increased 15% and the company is registering "higher average checks and higher frequency," he said.