Restaurants Refine Rewards Models to Deliver Loyalty

This week in restaurants, major brands step up loyalty rewards, and drone delivery takes off.

Fast-casual chain Noodles & Company, for one, which has more than 450 locations, announced Monday (April 3) that it is updating its Noodles Rewards program to make perks available daily to drive customer frequency. These benefits include discounts and free upgrades or add-ons, among other possibilities.

“The growth and strength of the Noodles Rewards program has been incredible, and we’re dedicated to finding new ways to give back to our Rewards members,” Stacey Pool, the brand’s chief marketing officer, said in a statement. “As many brands across the industry make meaningful changes to their rewards programs, we are committed to adding extra value and Extra Goodness to the perks we offer our members.”

Certainly, many brands have been modifying their rewards program in recent months, with some, such as Starbucks and Chick-fil-A devaluing rewards and others souping up their programs with increased personalization or new payment capabilities.

By offering daily rewards, Noodles & Company appears to be learning from restaurant brands that have launched loss-leading subscription programs to keep customers returning more often. However, rather than charging consumers a flat monthly rate, the brand aims to maximize the program’s reach by offering daily benefits to all members.

El Pollo Loco Shifts to Tiered Rewards Model

In additional rewards news, fast-casual chicken chain El Pollo Loco, which has nearly 500 locations across seven states, announced Tuesday (April 4) via emailed press release that it has relaunched its loyalty app.

Once a flat points-per-dollar model, the program has been shifted to a tiered points structure where those who spend more get exclusive access to certain perks and promotions. The update also includes improvements to the ordering and points redemption experience.

“We have redesigned our Loco Rewards offers to make sharing and dining together with friends and loved ones as seamless as possible. Paired with the ease of ordering on our app, we hope to inspire more loyal customers to explore our menu of new and classic El Pollo Loco foods together,” the brand’s vice president of digital, Gabe Alonso, said in a statement. “The new app experience gives our new and existing members a better way to gain points and tier status, earn rewards, find out about deals, and experience exclusive offers.”

Loyalty programs can be key to driving direct digital engagement. “The 2022 Restaurant Digital Divide: Restaurant Apps And Websites In The Spotlight,” which draws from a survey of nearly 2,000 U.S. consumers, finds that 72% percent of those who prefer to use eateries’ direct ordering channels had used loyalty programs in the prior 30 days, a greater share than who said the same for third-party or in-restaurant customers.

Flyby Announces $4 Million Pre-Seed Funding as Restaurants Explore Drone Delivery

As restaurants seek ways to meet delivery demand while maintaining profit margins, and as consumers look for on-demand options that are possible within their budgets, demand for automated solutions is high.

On Wednesday (April 5), drone delivery firm Flyby Robotics announced the close of a $4 million pre-seed funding round and the launch of its pilot, delivering smoothies, salads, sushi and other foods and beverages, charging consumers a $3 delivery fee.

The drones currently operate at level 3 autonomy, where they are mostly self-operating with some remote driver assistance.

“Our AI-powered autonomous systems allow any merchant to dramatically reduce the cost of delivery to their customers,” founder and CEO Jason Lu said in a statement.

Delivery represents a small but growing share of total restaurant orders, and if more affordable fulfillment options become available, that share will certainly increase significantly. Research from PYMNTS’ study, “Connected Dining: Rising Costs Push Consumers Toward Pickup,” which draws from a survey of more than 2,100 U.S. consumers in January, finds that 10% of consumers reported having ordered their last restaurant meal from delivery. This share was up significantly from 7% just the month before.