Does Your Restaurant POS System Also Run Your Loyalty Program?

Priyanka Bhadani9/20/2022

What is a loyalty program?

A loyalty program is a rewards program offered by a company to encourage customers to continue doing business with them. Customers earn points for each purchase they make, which can be redeemed for discounts, free merchandise, or other benefits.

What Are Restaurant Loyalty Programs?

A loyalty program is just what it sounds like- a program that allows you to earn points for every dollar you spend. And while most restaurants offer rewards, they can be difficult to earn. Have you ever followed a diet plan? If you are consistent with your efforts, it works. If you slip and cheat, it fails. For customers, a loyalty program is akin to a diet plan- one needs to be consistent with it and stick to it, or else there will be no benefit.

Most restaurant loyalty programs are simple- diners earn points for every dollar they spend and can cash them in for freebies like meals, discounts, or other rewards. The key to successful restaurant loyalty programs is engagement -- getting diners to sign up and keep them coming back.

The best way to increase engagement is to make the loyalty program as rewarding as possible. Of course, the most common reward is a discount, but there are several ways to design a loyalty program. For example, some restaurants offer freebies, such as free meals or merchandise; some let customers rack up points for dining, referring friends, or sharing promotions on social media; then there are the ones that require customers to sign up on the restaurant's social media account and provide their contact details. Some others offer bonus points at certain hours of the day or on special occasions. These points can then be redeemed on a later date, or sometimes on the same day itself (companies do this for repeat business while customers are still in the store).

Loyalty programs can be customized to fit the needs of a business. However, no matter what program you create, the goal should be the same- turning your most loyal customers into frequent visitors. By rewarding customers, restaurants encourage repeat visits and build long-term relations with their best guests. Loyalty programs also lure new customers to sign up, giving businesses valuable customer data.

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Why Should Restaurants Offer Loyalty Programs?

Today, customers have more options than ever when it comes to where they eat. And these options are only increasing year on year. A recent IBIS World report says that single-location, full-service restaurants alone have grown 2.2% every year between 2017 - 2022 in the United States.

In such a competitive space, to keep the customers returning to your restaurant, you need to offer something other businesses don't. That's where loyalty programs come in. By offering loyalty program members special discounts, complimentary items, or early access to new menu items, you are making your customers feel appreciated and encouraging them to return.

We can look at Starbucks' customer loyalty program as an example. 'My Starbucks Reward' is a gamified rewards program. Users must accumulate 'Stars' to earn rewards on their visit to Starbucks. Stars are granted with every purchase using the brand's mobile app or loyalty card. The stars can be utilized for free drinks or early access to new products.

Loyalty programs are an excellent way to tell your customers that you value the business they bring. They also provide an incentive for customers to return to your restaurant.

  • Increased Customer Retention- Customers are incentivized to return to your restaurant with a loyalty program. It is natural they'll want to rack up points or earn rewards, so they'll be more likely to stick with your business instead of trying out new places.
  • Improved Customer Satisfaction- A loyalty program shows that you value your customers and their repeat business. It also gives them a chance to offer feedback about their experience and get rewarded for it. Done right, this can lead to improved customer satisfaction rates.
  • More Word-of-Mouth Marketing- Satisfied customers are more likely to tell their friends and family about your restaurant if they know they'll get something out of it (like rewards points). This word-of-mouth marketing can be invaluable for driving new business.
  • Increased Average Order Size- With a loyalty program, you can encourage customers to spend more money per visit to earn bigger rewards. This can significantly increase your average order size, which is great for boosting profits.
  • Access to Better Customer Data- Another big benefit of loyalty programs is that they give you access to valuable customer data. You can track people's preferred rewards, how often they come in, etc. This information can refine your marketing efforts and ensure you're targeting the right people with the right messages.
  • Gain valuable insights into customer behavior- By tracking how often customers visit and what they purchase, restaurateurs can gain valuable insights into consumer behavior patterns. This information can be used to make strategic decisions about marketing, menu development, and more.
  • Enhanced Branding- Loyalty programs provide an excellent opportunity for enhancing your branding and creating top-of-mind awareness among consumers. You can make your brand stand out from the competition by offering branded rewards (like co-branded credit cards) or exclusive deals and discounts.

Types of Restaurant Loyalty Programs

A loyalty program is all about creativity, how much you value the business that every new customer brings in, and what you can do to turn them into long-term loyal customers. The possibilities are infinite, here are just a few ways to include a rewards program in your restaurant business-

Loyalty Points-
The simplest way to reward regular customers is to give them an incentive to keep coming back. Loyalty points do just that. Customers earn points for every dollar spent. These points can then be redeemed on their next purchase. The more loyalty points a customer has, the bigger the discount. It benefits businesses and customers equally. Customers return to redeem points, and businesses earn by smartly nudging them to spend more. Some restaurants offer additional perks for customers with high loyalty points, such as special events and priority seating. One of the many loyalty program examples is Subway's 'My Way' initiative, launched in 2018. Customers earned four tokens for every dollar spent. Two hundred tokens equaled a $2.00 reward voucher. The more tokens, the greater the benefits.

Tiered Loyalty Programs-
These go a step ahead of basic loyalty points. They give customers different levels of benefits based on their spending. For example, a restaurant might have three tiers- bronze, silver, and gold. Customers spending a certain amount within a set period qualify for a tier, with bronze being the lowest tier and gold being the highest. Each tier has its own perks, such as free appetizers or desserts, 10% off your bill, or even a free entree. Of course, the higher the tier, the better the perks. The advantage of tiered loyalty programs is that they give customers an incentive to keep spending more money at your restaurant to move up to the next level and gain better benefits. And voila, just like that a restaurant keeps its best customers happy with exciting offers, and motivates them to spend more to reach the top tier. A good example of a tiered loyalty program is the one run by the chain Chick-fil-A. The starting tier grants the customer membership; silver status is achieved after earning 1000 points in a year; then comes the red status after earning 4,000 points; and finally, signature on earning 10,000 points a year.

Network's Rewards Program-
Such programs for restaurants usually offer discounts or other incentives to customers who dine at participating establishments with specific cards. The programs are often sponsored by credit card companies or other businesses that seek to promote their own products and services through affiliated businesses. Often, the programs will offer a certain percentage off the total bill when customers use their rewards card or coupon. For example, customers who spend $100 at a participating restaurant may receive $5 back in rewards. The specific details of each network's rewards program will vary, so it's important to read the terms and conditions carefully before signing up.

Experiential Rewards Program-
An experiential rewards program aims to curate an atmosphere that customers enjoy to the extent that they return for more. It usually involves creating memorable events and improving the dining experience. One can do it in different ways. For example, a restaurant can partner with local businesses, like a winery, and offer a free wine tasting with the purchase of entrees on certain nights. Or one could work with a local farm-to-table purveyor and provide discounts on menu items made with fresh, seasonal ingredients. Not only will these partnerships give guests a range of experiences, but also help support other businesses in your community. Another way to add distinctiveness to your business is by giving guests the VIP treatment. This may include offering complimentary valet parking or coat check facilities, providing access to exclusive areas of the restaurant, or offering champagne or unique non-alcoholic cocktails upon arrival. There are limitless things to do. Just ensure it's something that wows your guests and leaves them wanting more.

Social Media Loyalty Program-
The best part about social media loyalty programs is that they can be tailored to each restaurant's needs and goals by considering the customer's online behavior. For example, one restaurant can offer a discount for every check-in on Facebook; another can give a free appetizer for every 10th tweet about the restaurant; yet another can reward a customer for a TikTok video or an Insta reel that features the restaurant as the backdrop. Again, the possibilities are endless, and the benefits are numerous. Social media loyalty programs not only help build brand awareness and increase customer loyalty, but they also help in word-of-mouth publicity about your restaurant. And since these programs are often tied in with popular social networking sites, they can reach a large audience quickly and easily.

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Advantages of Having Your POS System Run Your Loyalty Program

Restaurants must seek any advantage to get ahead of the competition to continue driving sales. In current times, when every business is looking at technology to solve its most pressing issues, it would be detrimental not to integrate loyalty programs with customer-facing software solutions, like point of sale systems. It can also help streamline operations and improve customer service. As it is, some of the most common and best loyalty programs are already integrated with top POS systems.

Running a loyalty rewards program through a POS system has many benefits, including-

1. Easier Redemption of Rewards- If rewards are automatically applied to a customer's account when they make a payment, they are more likely to redeem them.
2. Improved Customer Data- With all purchase and redemption data in one place, a business can better understand its customers' behavior and preferences. This wealth of data can help improve marketing efforts and make better decisions for day-to-day operations.
3. Greater Efficiency- Automating certain tasks associated with managing a loyalty program can save time for both, employees and customers. In the long run, it will also save the business money.
4. Fewer Paper Coupons- Digitally redeeming rewards is more eco-friendly and eliminates the need for paper coupons that can be easily lost or forgotten.

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How Does a POS System Manage a Loyalty Program?

A POS (point of sale) system is vital for managing customer loyalty programs. It allows businesses to automate and keep track of important customer data. The most common way a POS system manages a loyalty program is through customer cards. Every time customers purchase and swipe their cards, they earn points. These points can then be redeemed for discounts or free items. Some POS systems have built-in loyalty programs for which customers can sign up, making it easy for the business to run the program.

A POS system can automatically track customers' purchases and store their information in a central database. This makes it easy to see which customers frequently visit the restaurant or order online and award them points or benefits accordingly. It is also easier to redeem points or rewards with a POS system when the history of purchases and points accrued over time are in one place.

Best POS Systems for Restaurants

Plum POS-
This is an all-in-one point-of-sale software for restaurants. With several built-in features, it makes operations smooth for businesses. Easy transactions, employee management, table management, online ordering, and payment processing are only some features that Plumpos offers. In addition, its ability to process payments faster helps swiftly turn tables, creating a positive customer experience. This point of sale system is also adept at helping restaurants create and run discounts and customer loyalty programs. With its data analysis features, restaurant owners can also store and easily access customer data and monitor and process loyalty points, gift cards, vouchers, and discounts.

Clover POS-
This system provides restaurant owners with all the necessary tools to run the business. From letting a business manage its online orders and deliveries, to creating dynamic floor plans, and seamless third-party software integration -- this POS system offers it all. It also helps you create a functioning and easy-to-navigate website. Moreover, whether you run a full-service or a quick-service restaurant, you have options to tailor the software accordingly. It also offers customized customer rewards programs.

This is an intuitive POS system that easily integrates with the most popular software used in restaurant management. The system's simple and effective features help run all types of restaurants, nightclubs, bars and cafes. It is extremely proficient in managing finance, inventory, and staff. Its in-depth reporting features help analyze and improve sales performance and customer service. In addition, it is highly customizable and integrates loyalty rewards programs without hassle.


Marketing has taken a dramatic spin over the last few years. Marketing teams are the first to access a new business plan to gauge its viability with a target group. And marketing initiatives have become more creative, often incorporating loyalty programs in their planning.

Such programs are not only a vehicle for brand promotion, but are also the best way to reward and appreciate loyal customers. There are many ways to run loyalty rewards programs at a restaurant -- through social media, by crediting loyalty points for every purchase, and by providing unique customer experiences -- but not everything works for every business. So, choose the loyalty rewards program that works in the best possible way for your business.

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