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Breaking the discount bind: Loyalty schemes provide effective alternative for restaurants

1 commentBy Luke Nicholls , 20-Jul-2012

Related topics: Business, Venues, Trends & Reports, Restaurant Trends, Restaurants, Pubs & Bars

Deep discounts, special offers and the use of daily deal websites could soon become a thing of the past for restaurants and pubs as customers are becoming more attracted to outlets which offer rewards for loyalty as opposed to money off, according to new research.

Loyalty cards could be the most effective escape route from discounting for casual dining restaurant chains

Loyalty cards could be the most effective escape route from discounting for casual dining restaurant chains

A survey of 2,000 UK restaurant-goers commissioned by Plastic Card Services reveals that almost half (48 per cent) of 18-24 year olds would be more likely to visit a pub or restaurant that offered a loyalty card, compared to one in four for a discount programme.

When asked to rank their loyalty to a range of elements in their lives, those surveyed placed their favourite pub or restaurant towards the top of scale, just behind sports teams and hairdressers.

“As this poll shows, cheap food and drink isn’t the be-all and end-all,” said Rob Nicholls, managing director of Plastic Card Services. “Customers are more open to long-term rewards and being acknowledged for their repeat custom, however effective loyalty schemes within the hospitality sector are few and far between.

“In fact, in this survey, it was found that just one per cent of UK adults regularly use a loyalty card for a pub or bar, and one in three respondents utilise restaurant schemes on a regular basis.

“In the current climate, it’s critical that that brands and outlets are doing all they can to create loyal customers, and in turn, repeat business.”

The discounting bind

Discount vouchers have traditionally proved an effective tactic by some operators in encouraging consumers to eat in their outlets and have risen in popularity since the recession. But the popularity of these schemes, particularly among mid-market, casual dining restaurant chains, has raised concerns that some operators are now becoming reliant on them.

  • A review of discounting activity in the casual-dining sector earlier this year by Restaurant magazine showed that many restaurant chains who pledged to shake off their old deep discounting habits this year had already fallen off the wagon.
  • Then, in a BigHospitality audio podcast held last month, we asked a selection of industry experts and restaurateurs about the positives, negatives and potential pitfalls of special offers and deals for restaurants, in a bid to find out if it is actually possible for a large chain to escape from the treadmill of discounting.
  • And just last week, we evaluated the effectiveness of one of Whitbread’s marketing campaigns, The Reward Club, in our new-look Ideas from your Peers column. We questioned Whitbread if it was a worthwhile alternative to discounting in increasing trade.

Loyalty at Las Iguanas

Earlier today, BigHospitality spoke to Las Iguanas, which has continued its expansion across the UK and seen like-for-like sales increase despite eschewing across the board discounting.

“We’re definitely very glad that we’re not bound into having to offer discounts,” said Lucy Harwood, Las Iguanas’ marketing and brand manager. “We prefer to be seen as somewhere that offers great value all the time and the quality of the food and the experience is worth the price on the menu.

“A lot of the other brands have got quite stuck with discounting and that comes through with how they’re now having to engineer their menus and their offer and we don’t really want to do that. We already reward the loyalty of those on our mailing list and we’re always looking at other ways of doing things, so a loyalty card is possibly something we would look at doing.”

The survey by Plastic Card Services also reveals:

  • Men are more frequent users of reward card schemes in restaurants than women
  • With bar loyalty cards, men are twice as likely to use such programmes compared to women. Over half of men (51 per cent) were ‘loyal’ or ‘very loyal’ to the same pub or bar.
  • Customers in the North East are the highest users of bar loyalty programmes.
  • Those in the East Midlands are the most frequent users of fast food outlet loyalty schemes.

For more information on the survey, visit www.plastic-card-services.co.uk

1 comment (Comments are now closed)

meaningfull results on 2000?

60,000,000 people in the UK
Let’s assume that 30% visit restaurants more than once per month so 18,000,000
Let’s go with caution and half this figure again to 9,000,000
2000 people as a percentage of 9m is 0.0002%
Even if you could prove that these respondents follow the Gaussian distribution, the actual percentage collected would make this meaningless for statistical putposes

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Posted by keith devanney
13 August 2012 | 17h02

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