The Fall of the Traditional Restaurant Loyalty App

The traditional restaurant loyalty app seems to be on the brink of extinction. The idea that a multiunit restaurant brand—outside the league of giants like Starbucks or notable pizza brands—can launch an app and reap substantial rewards is fading fast....

The traditional restaurant loyalty app seems to be on the brink of extinction. The idea that a multiunit restaurant brand—outside the league of giants like Starbucks or notable pizza brands—can launch an app and reap substantial rewards is fading fast. The reason? Consumer reluctance to clutter their smartphones with yet another app is a significant barrier, supported by outside data indicating a general app fatigue among users. Additionally, a lack of understanding on the value of points-based systems.

For many smaller or even mid-sized restaurant chains, the traffic required to justify the investment in a dedicated loyalty app simply isn’t there. Unlike Starbucks, which sees tremendous daily customer volume, most restaurants don’t have enough traffic to warrant frequent use making the app forgettable.

Furthermore, a lot of restaurant brands do not engage enough customers through their apps to make the numbers work. This leads to loyalty apps languishing on users’ devices, unused and unhelpful, failing to generate the repeated engagement necessary to justify their existence.

Moreover, developing a custom app comes with a hefty price tag and a high cost of ownership, including ongoing maintenance, updates, and customer support. If it’s an out of the box app, there are usually large initial development fees in addition to hefty ongoing SaaS fees based on location count. All for an interface that’s run of the mill with features. Building from scratch is a huge undertaking without enough upside for brands under the 50 unit level. Suffice to say, the allure of going native with a restaurant app often ignores the reality of these continuous operational expenses.

However, it’s not all doom and gloom for digital engagement in the restaurant industry. The future lies in a hybrid development approach that combines the best of purchased and built systems. This model advocates for the integration of various software systems to create cohesive and intuitive digital experiences that give brands complete control to dream big.

Brands like Burger King and Starbucks already employ this path. The experience you see on your computer is the same you see through the app. Outside of the restaurant industry brands like Netflix and Uber also employ the hybrid approach.

By leveraging existing technologies and platforms, restaurants can reduce costs, streamline operations, and provide a seamless experience for customers. Additionally, there’s only one code base to support since all touchpoints come from a centralized source. This makes maintenance much less cumbersome and expensive. And, no SaaS fees outside of the bought systems’ fees.

Such systems not only lower the barriers to entry when compared to fully custom solutions but also offer scalability and flexibility in the ever-evolving digital landscape.

Data from sources like Qu’s State of Digital report and Tillster’s Phygital Index provide a clear indication that integrating technology in ways that align with consumer habits and preferences is key to future success. These reports highlight the growing trend towards integrated experiences that meet customers wherever they are, be it online ordering, delivery, or loyalty rewards, and emphasize the importance of a unified digital strategy.

For restaurant brands aiming to stay competitive and relevant, ditching the traditional standalone app in favor of a more integrated, hybrid approach isn’t just an option; it’s a necessity. This strategy promises lower costs, higher returns, and the agility to adapt to new market demands, paving the way for more dynamic and successful digital engagements in the restaurant industry.