With deal-related traffic increasing at quick-service restaurants even in the most recent period of economic weakness, it’s clear that deals have been keeping the segment afloat during this downturn.
But while many in the industry predicted that brands would pay for heavy reliance on dealing when their fans moved over to the next bigger, better deal at their competitors, that has not been the case for the top 10 quick-service chains.
Dealing, in fact, has not eroded chain loyalty, according to The NPD Group’s QSR Market Monitor, an ongoing awareness, attitude and usage tracking survey.
“During these tough times consumers remained loyal,” said Bonnie Riggs, an analyst with the Port Washington, N.Y.-based market research firm.
To measure the recent trend in interaction, NPD conducted a survey of the top 10 major chains’ customers. The survey reveals that even though cash-conscious consumers have been taking advantage of the growing number of quick-service deals in the last two years, they visited as many different chains in this past year as they did in the year prior. In 2009, the number of different chains visited in a four-week period was 3.1; in 2010, that number essentially remained the same at 3.0.
For the survey NPD defined the top 10 quick-service chains as McDonald’s, Burger King, Wendy’s, Jack in the Box, Sonic, KFC, Subway, Taco Bell, Dunkin’ Donuts and Starbucks.
“This would suggest that deals need not take attention away from the benefit obtained through increasing chain loyalty,” Riggs said.
So who are these loyal diners? Multimeal customers, the data reveal. A multimeal buyer is a consumer who visits a chain at more than one daypart, while a single-meal buyer visits at only one meal occasion, according to NPD.
Last year multimeal buyers accounted for 21 percent of all buyers at the top 10 quick-service chains and 35 percent of all visits. Single-meal buyers accounted for 79 percent of all buyers and 65 percent of all visits. However, multimeal buyers made 4.6 visits in a four-week period, compared with just 2.2 visits made by single buyers during the same period.
The numbers dipped just slightly from the prior year, when multimeal buyers accounted for 23 percent of all buyers at the top 10 quick-service chains and 38 percent of all visits. Single-meal buyers accounted for 77 percent of all buyers and 62 percent of all visits. That year multimeal buyers made 4.7 visits in a four-week period, compared to 2.3 visits made by single buyers during the same period.
Furthermore, NPD reports that in both of the last two years multimeal buyers visited fewer different competitive chains in a month than those who used a chain for only one meal occasion. Last year multimeal buyers visited just 1.5 different chains in a four-week period, while one-meal buyers visited 2.5 different chains.
In 2009 multimeal buyers visited 1.6 different chains, compared to 2.5 different chains for one-meal buyers.
With chains receiving twice the return from multidaypart buyers that they obtain from those who visit during just one meal occasion, the benefit to converting more customers to visit for multiple meals is clear, Riggs said.
In addition, the data reveal that converting consumers from single visitors to multimeal visitors builds chain loyalty.
“It costs a lot more to reach a new buyer than it does to generate more visits from existing buyers,” Riggs said. “You really want to hold on to that loyal customer.”
Many chains are helping to retain these customers’ loyalty through the use of rewards programs. Whether it’s an old-fashioned punch card or high-tech geo-targeted mobile phone app, just about every major chain now has some kind of program to reward customers for their brand allegiance.
“Consumers have said they want to be rewarded for their loyalty,” Riggs said. “They are going to keep coming back to some place if they’re rewarded.”
To increase visits from existing heavy users and convert light users into heavy users, major quick-service chains have been investing significant time and energy into either revamping their current loyalty programs or creating innovative new ones.
To convince its devoted customers to visit even more frequently, CKE Restaurants, the parent of Carl’s Jr. and Hardee’s brands, in December launched Happy Star Rewards, a custom GPS-driven app that rewards diners for checking in at its restaurants. Available for iPhone and Android phones, the program rewards customers after every fourth check-in with a chance to spin The Wheel of Awesome and win prizes ranging from discounted and free food to branded gift cards and merchandise. The more often customers check-in, the bigger the rewards.
“[We’ve] always been targeting our own avid fans, our multidaypart users,” said Brad Rosenberg, manager of digital strategy and marketing for CKE. While CKE could have tapped into an existing check-in application, such as FourSquare, the chain decided to differentiate itself by creating a customized app of its own.
“[Happy Star] is all about giving the customer choices,” Rosenberg said. “That’s why we built it ourselves, so it doesn’t feel the same [as other rewards programs].”
Starbucks also is connecting with loyal customers via smartphone. The coffee chain recently enhanced its 2-year-old My Starbucks Rewards card with an app for iPhones or select Blackberries.
“Our loyalty members have responded enthusiastically to this platform, enjoying the ability to check program status and progress toward earning free benefits — right at their fingertips,” said Stacy Speicher, director of loyalty at Starbucks.
Offering flexible rewards
After internal research revealed that Qdoba Mexican Grill customers wanted a more flexible way to use the Qdoba Rewards Card, the chain’s existing loyalty program, the brand revamped its program. Earlier this year Qdoba upgraded its loyalty program to a new platform that allows customers to link their purchases to a loyalty card, a keychain fob or a scannable sticker that can be placed on just about anything.
In addition, consumers can now use their points immediately or save them for use at a later date.
“Guests are bombarded with these and don’t have the space in their wallet or purse for everything,” said Chris Bingel, marketing projects manager for the fast-casual chain. “We wanted to give them the luxury of a keychain card, which had been highly requested from our current members, or a barcode sticker with an even smaller footprint for attaching to a wallet or phone.”
Dunkin’ Donuts — with its Dunkin’ Perks loyalty card tied to users’ e-mail and mobile devices, a presence on FourSquare, Facebook and Twitter, and a brand channel on YouTube — is no stranger to engaging guests digitally. However, the brand says it continually is exploring ways to extend its existing programs to drive more engagement and increase visits, especially among existing loyal fans.
“We’ve done some piloting on targeting actual guests that have a.m. activity but no p.m. activity [on their loyalty cards],” said Dave Tryder, director of interactive relationship marketing at Dunkin’ Donuts. “The opportunity for us to drive a percentage of consumers back in the afternoon could really drive business.”
In addition, Tryder said Dunkin’ is looking closely at the “intersection of social media and loyalty” and exploring ways to drive engagement among its more than 3 million Facebook fans.
“We’re really trying to crack the code on how we drive loyalty [on social media] and figure out a way to measure it,” he added.
While these chains and others like them are attempting to differentiate themselves from competitors’ rewards programs, some industry experts warn that loyalty can’t be bought with discounts and freebies.
“Loyalty has to be defined one experience at a time,” said Arjun Sen, president and founder of Restaurant Marketing Group, a division of ZenMango. “Instead of our team members doing the right thing, we are outsourcing it to a data card. External, prepackaged rewards cannot be your only solution.”
To build true, long-term loyalty, Sen advises operators to focus on training team members to know their customers and give customized, one-on-one attention. For example, he said operators should find a way to give rewards customers what they actually want instead of canned offers that they may or may not be interested in. He also said giving customers a proper greeting, remembering their order preferences and thanking them for their visit all go a long way to build loyalty.
“If you can ‘wow’ a customer, the ripple effect lasts eight to 10 visits,” Sen said. “It stays with them. That’s power.”