Restaurant Loyalty Program

What is Restaurant Loyalty Program?

A restaurant loyalty program rewards guests for coming back. Guests identify themselves when they order, earn points, visits or status, and redeem them for free items, discounts or perks. The best-known examples, such as Starbucks Rewards and MyMcDonald's Rewards, run through an app, although many programs work with a phone number at the register.

A loyalty program does two jobs at once. It gives guests a reason to choose you a little more often, and it turns anonymous transactions into identified ones, so you know who your guests are, what they order and when they stop visiting.

For multi-location brands, that second job is often the bigger prize. The program becomes a main source of first-party guest data, which powers personalized offers, recovery for unhappy guests and win-back messages at every location.

How a restaurant loyalty program works

Most restaurant loyalty programs follow the same cycle, whatever the reward structure.

1. Enroll. A guest signs up through an app, website, QR code, the POS or a message, sharing at least a phone number or email.
2. Identify. At each order, the guest scans an app code, gives their phone number, orders while signed in or pays with a linked card.
3. Earn. The loyalty platform adds points, visits or credit once the order is paid.
4. Redeem. The guest exchanges what they've earned for a free item, discount or perk, applied at checkout.
5. Communicate. The program sends balances, offers and reminders by app push, email or SMS.

Loyalty programs and the POS

The integration between the loyalty platform and your POS decides how smooth the program feels. When it works well, a cashier can look up a guest in seconds and rewards appear as a discount on the check, without manual codes.

Loyalty programs and online ordering

Digital orders are naturally identified, because the guest is usually signed in, which is why many brands design rewards to pull guests toward ordering direct. Third-party delivery orders are harder, since marketplaces generally keep their own customer relationships.

Types of restaurant loyalty programs

Points loyalty programs

Points programs give a set number of points per dollar and let guests redeem them for rewards at different thresholds. Because they reward spend, larger orders earn more, which suits restaurants with a wide range of check sizes.

MyMcDonald's Rewards is a points program. In its July 8, 2021 announcement of the nationwide launch, McDonald's said members would earn 100 points for every dollar spent on qualifying purchases, after tests that began in late 2020 in Phoenix and New England.

Visit-based loyalty programs

Visit-based programs are the digital version of the punch card: buy nine coffees, get the tenth free. They're easy to explain and suit cafés and quick service brands where checks are similar.

Their weakness is that a visit is a visit, whatever the guest spends. Starbucks moved from visit-based to spend-based rewards in 2016, giving two Stars per dollar, so a single coffee and a large group order no longer earned the same reward.

Tiered loyalty programs

Tiered programs add status levels, such as silver and gold, earned through spend or visits within a year. Higher tiers unlock better earn rates or perks, which gives regulars a goal and a reason to concentrate their spending with you.

Paid and subscription loyalty programs

Paid programs charge a fee for ongoing benefits. Taco Bell launched its Taco Lover's Pass nationwide on January 6, 2022, offering one taco a day for 30 days for $10 through its app.

Panera announced its Unlimited Sip Club, a monthly subscription for self-serve drinks, in April 2022. In 2026, Nation's Restaurant News reported that Panera would cap the plan at 30 self-serve drinks a month, which shows how closely subscription economics need watching.

App-based loyalty programs

Many brands deliver their program through their own app, combining rewards with ordering, payment and push messages. Downloading an app is a real barrier for occasional guests, so many brands also accept a phone number at the register.

Cashback loyalty programs

Cashback programs return a percentage of spend as credit for a future order. Card-linked versions identify guests automatically through their payment card, which removes the need to scan or give a phone number.

Cashback is simple to understand, although it works much like a permanent discount.

Loyalty program data and guest profiles

Every identified visit adds to what you know about a guest, and the value grows when loyalty data is joined with other sources. A unified guest profile links loyalty activity with online orders, reservations, surveys and reviews, so you can see both what a guest did and how they felt about it.

Loyalty data also makes guest lifetime value measurable, since spend, frequency and retention can be calculated for each guest and segment.

Feedback adds the missing context. Momos's guide to loyalty that keeps coming back describes inviting a guest to join in the same conversation where they shared positive feedback, and issuing points or rewards as part of recovering an unhappy one.

Loyalty program economics

A loyalty program pays off when the extra margin from incremental visits exceeds the cost of rewards, software and marketing. The difficulty is that much of what members spend would have happened anyway.

Incremental visits vs. subsidized visits

Frequent guests are the most likely to join a program, so members naturally spend more than non-members. Some of that difference is caused by the program, and some simply reflects who joined.

Every reward given to a guest who would have visited anyway is a discount on existing behavior. A program that mostly rewards existing habits can cost a great deal while adding few visits.

Breakage and loyalty liability

Breakage is the share of points or rewards that guests earn but never redeem. It lowers the program's cost, although very high breakage suggests the rewards motivate nobody.

Under US accounting rules (ASC 606, adopted by public companies from 2018), points that give guests a benefit they wouldn't otherwise receive are a separate performance obligation. Part of each sale's revenue is deferred as a liability until points are redeemed or expected to expire unused.

Expected breakage is recognized as revenue in proportion to redemptions, and IFRS 15 works similarly, so checking the treatment with your accountant before launch is sensible.

A loyalty program economics example

Suppose a brand launches a points program in 15 locations and keeps 15 similar locations as a control group. Over six months, sales grow 6% in the test locations and 2% in the control locations, a lift of 4 percentage points.

On $9 million of sales in the test locations, that's $9,000,000 × 0.04 = $360,000 in incremental sales. At a 60% gross margin, the program adds $360,000 × 0.60 = $216,000 in margin.

Members spent $3.6 million and earned rewards worth 5% of spend, or $180,000. If 80% of rewards are redeemed (20% breakage), redemptions total $3,600,000 × 0.05 × 0.80 = $144,000 at menu price.

The program nets $216,000 − $144,000 = $72,000 before software and marketing costs. Without the control group, the brand might have credited the program with all $3.6 million of member spending.

How to measure loyalty program lift

The cleanest way to measure a loyalty program is to compare similar guests or locations that differ only in their exposure to it. There are three common designs.

Offer holdouts are the most practical for an established program. A random 10% of members who receive no bonus offer shows how many would have visited anyway, which is the same method a win-back campaign uses.

Beyond lift, a few operating metrics show whether a program is healthy. Your repeat guest rate and visit frequency among members show whether guests come back, while enrollment rate, active member share, redemption rate and reward cost as a share of sales show whether the program is working as designed.

Loyalty program examples

Large restaurant brands publish loyalty figures in their earnings, which shows how central these programs have become.

• Starbucks Rewards. Starbucks reported 35.8 million US Starbucks Rewards members active in the previous 90 days in its fiscal third quarter of 2026. Its program began as My Starbucks Rewards in 2009.
• MyMcDonald's Rewards. McDonald's reported nearly 210 million 90-day active loyalty users and nearly $37 billion in systemwide sales to loyalty members across 70 markets in 2025.

Programs at this scale show what's possible, although their results make a poor benchmark for a regional group.

How to design a restaurant loyalty program

A good design starts with what you want the program to change, since adding visits from occasional guests calls for a different structure than raising check size among regulars.

• Model the economics first. Estimating reward cost, breakage and the incremental visits needed to break even shows whether the earn rate is sustainable.
• Make joining effortless. Enrollment by phone number at the register, in the app or through a post-visit survey reaches guests who would never download an app.
• Choose rewards guests value and you can afford. Items with low food cost and high perceived value, such as drinks or sides, usually work better than cash discounts.
• Build in a control group. Launching in test locations, or holding out a share of members from offers, makes lift measurable from day one.

Loyalty program vs. CRM vs. win-back

A loyalty program is one source of guest records, and a restaurant CRM uses them to market to every guest you know. Recovery fits naturally alongside, since points and an apology give an unhappy member a reason to return.

Limitations of loyalty programs

• Members are self-selected. Frequent guests join first, so comparisons between members and non-members overstate the program's effect.
• Rewards can subsidize existing habits. Points given to guests who would have visited anyway are a cost without a matching benefit.
• Effects on loyalty are debated. Grahame Dowling and Mark Uncles argued in Sloan Management Review (1997) that loyalty programs often raise costs without creating much extra loyalty.
• Competitors copy quickly. When every brand has a program, rewards become an expected discount.
• Anonymous guests stay invisible. Walk-in guests who don't join and many delivery guests remain outside the program.

Best loyalty program tools for restaurants

The right loyalty platform depends on your POS, ordering channels and goals. For multi-location brands, deep POS and online ordering integration, flexible reward rules, offer testing with holdouts and reporting by location matter most.

Loyalty platforms run the earning and redemption, while guest data and feedback tools help you understand and recover members. Comparing options against your own systems and locations, with the help of Momos's roundup of the best restaurant loyalty program software, will help you choose.

Common loyalty program mistakes

• Judging the program by member spend. Members were often your best guests before they joined, so their spending says little about the program's effect.
• Setting the earn rate without modeling it. A generous reward can quietly become a permanent discount on your best guests.
• Making enrollment hard. Requiring an app download and a long form loses guests at the register.
• Collecting data nobody uses. A program that never feeds segments, messages or reports leaves most of its value untapped.
• Excluding guests by channel. Programs that work only in-store or only in the app frustrate guests who order both ways.
• Changing the rules abruptly. Devaluing points without notice damages trust with your most loyal guests.

History of restaurant loyalty programs

Rewarding repeat customers is an old idea. In 1896, the Sperry & Hutchinson Company began issuing S&H Green Stamps, which shoppers collected at participating stores and redeemed for merchandise, a model that remained popular in the US for decades.

American Airlines launched AAdvantage in May 1981, one of the first frequent flyer programs, which made the account-based points program familiar to millions of travelers. Restaurants long relied on simpler versions, especially paper punch cards.

Researchers questioned the effect. Dowling and Uncles's "Do Customer Loyalty Programs Really Work?" (Sloan Management Review, 1997) and Byron Sharp and Anne Sharp's study in the International Journal of Research in Marketing (1997) found modest effects on repeat buying.

Digital programs changed restaurant loyalty. Starbucks launched My Starbucks Rewards in 2009 and moved to spend-based Stars in 2016. McDonald's launched MyMcDonald's Rewards nationwide in the US in July 2021, and Taco Bell and Panera expanded paid subscriptions in 2022.