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Serving up repeat business – how restaurants are using technology to drive customer loyalty

A loyal customer is your best customer. Over their lifetime, loyal customers spend 10 times more than non-loyal customers,(1) and a five percent increase in customer retention can produce as much as a 100 percent increase in annual profit.(2) Yet creating customer loyalty remains one of the biggest challenges for even the most sophisticated restaurant or food service operator. 

With restaurant gift cards being the second most popular type of gift cards purchased by consumers,(3) and restaurant closed loop gift card spending projected to top $19 billion in 2015,(4) a gift card program seems like an obvious choice for driving customer loyalty. According to Boston Consulting Group™, nearly 40 percent of restaurant loyalty program members increased the frequency of their visits after joining full-fledged programs, and nearly 25 percent increased the amount they spent.(5)

At the most basic level, gift cards extend your restaurant’s brand. But when you begin thinking of gift cards as powerful loyalty-building tools, magic can happen. Take Durango Joes for example. This small-town coffee shop chain marketed their gift cards as “Cash Cards,” driving customer loyalty that resulted in over 50K in gift card sales in just four years.

“We’re in the people business, not just the coffee business,” notes Durango Joe’s owner Joe Lloyd. “The Cash Card puts us in a place that’s just a little ahead of our competition and adds to our customer base.”

Other restaurants, like Tipsy Turtle Pub & Eatery in Luzerne County, Pennsylvania, are building customer loyalty with creative gift card promotions. Tipsy Turtle offered 50 percent off gift cards during a two-hour promotion on Black Friday. They sold $45,000 in gift cards, and same store sales increased by 20 percent after the promotion.

“Not only are regular gift card sales up 500 percent,” says Jack Walker, Tipsy Turtle co-owner, “but we have definitely seen new customers from the Black Friday promotion.”

Larger-sized food operators, like CulinArt Group, which provides customized onsite dining, are integrating new technologies to drive customer loyalty. CulinArt implemented Vantiv Integrated Payments’ stored value solution that facilitates mobile payments and offers customers cash back rewards and auto-reload capabilities. At one location, the Mercury StoreCard’s cash back rewards feature was enough to motivate over 60 percent of customers to sign up within just a couple weeks.

Whether you run a quick serve or fine dining restaurant, Vantiv Integrated Payments offers gift and stored value solutions that can help you build a loyal customer base. We have experts on hand who can assist with designing and marketing a program that meets your goals. Contact us to find out more.

1. Loyalty360, http://loyalty360.org/resources/article/focus-on-loyal-customers-over-new-acquisitions, Sept. 2013
2.QSR, http://www.qsrmagazine.com/outside-insights/race-long-term-customer-loyalty, Nov. 2013
3. National Retail Federation, http://research.nrffoundation.com/Default.aspx?pg=9007#.VLbwqVXn86Y , Nov. 2014
4. CEB, http://www.executiveboard.com/exbd/financial-services/tower-group/gift-cards/index.page, 2014
5. QSR, http://www.qsrmagazine.com/promotions/loyalty-advantage, July 2014

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