What is a loyalty program? Restaurant rewards systems explained

A loyalty program is a structured system for rewarding repeat restaurant guests to encourage continued patronage. For restaurants, a well-designed loyalty program can increase visit frequency by 20-35% and raise average spend by 10-15% among enrolled guests. The challenge is designing one that drives real behavior change without giving away your margins.

Key facts

• Definition: Formalized system that tracks guest visits or spending and provides rewards for continued patronage
• Key metric: Member visit frequency versus non-member frequency
• Good benchmark: Loyalty members visit 2-3x more often than non-members
• Why it matters: Acquiring a new guest costs 5-7x more than retaining one. Loyalty programs make retention systematic.

The quick definition

A restaurant loyalty program gives guests a reason to choose your restaurant over alternatives by rewarding repeat visits. Programs vary from simple punch cards (buy 9 meals, get the 10th free) to sophisticated tiered systems that offer escalating perks based on visit frequency or total spending. The best programs feel like appreciation, not a transaction.

Why loyalty programs matter

The repeat visit multiplier

Loyalty members behave differently from non-members:

Even modest increases in visit frequency compound into significant revenue over time.

Predictable revenue

Loyalty members create a stable revenue base:

• They visit on slow nights to hit reward thresholds
• They choose you over competitors for routine dining
• They bring guests (who become new potential members)
• They are less sensitive to small price increases

Data collection engine

A loyalty program gives guests a reason to share their information:

Types of restaurant loyalty programs

Visit-based (punch card style)

The simplest model: visit X times, earn a reward.

Points-based

Guests earn points on every dollar spent, redeemable for rewards.

Tiered

Guests unlock higher tiers with better perks as their engagement grows.

Best for: upscale casual and fine dining where exclusivity matters.

Subscription

Guests pay a monthly or annual fee for ongoing benefits.

How to design a restaurant loyalty program

1. Set clear goals

Define what success looks like before you build anything:

2. Keep rewards achievable

A reward that takes six months to earn will not motivate anyone:

If a guest cannot earn their first reward within 8 weeks, your threshold is too high.

3. Offer rewards that drive visits, not just discounts

The best loyalty rewards bring guests back through the door:

Avoid percentage-off discounts as your primary reward. They train guests to expect lower prices.

4. Make enrollment frictionless

Every barrier reduces signups:

• Enroll with just a phone number or email
• Tie it to your reservation system so bookings earn credit automatically
• No app download required (text or email-based tracking works)
• Staff trained to mention the program at checkout

5. Automate tracking and communication

Manual loyalty programs die within weeks:

• Use your reservation system or POS to track visits and spending automatically
• Send automated progress updates (“You are 2 visits from your next reward”)
• Trigger reward notifications when thresholds are hit
• Send re-engagement messages to members who have not visited in 30+ days

Best practices

• Keep it simple. If you cannot explain your program in one sentence, simplify it. “Visit 8 times, get a free entree” is better than a point system with multipliers, tiers, and expiration rules.
• Budget for it. Plan to spend 3-5% of loyalty member revenue on rewards. Track the incremental revenue from increased visits to ensure you are net positive.
• Promote it consistently. Mention the program at every checkout, on your website, in booking confirmations, and on table cards. The best program in the world fails if nobody knows about it.
• Review quarterly. Check enrollment rates, redemption rates, and member visit frequency every three months. If members are not redeeming, your rewards are not compelling enough. If they are redeeming but not visiting more, your program is not driving behavior change.

Related terms

• Cover - Each cover from a loyalty member contributes to their reward progress
• No-show - Loyalty members have significantly lower no-show rates
• Walk-in - Walk-in loyalty members can be captured if the program is tied to phone numbers
• RevPASH - Loyalty promotions on slow nights can improve revenue per available seat hour

Related: How to get more reservations | How to reduce no-shows | How to reduce cancellations