NUMBER CRUNCH
The Next Fast-Food Battlefield is Customer Loyalty
McDonalds is the latest chain to offer a loyalty rewards program
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6000: That’s how many points you need to get a free Happy Meal in McDonald’s new loyalty program, aptly named MyMcDonalds Rewards, which begins its nationwide launch on July 8th.
McDonald’s is the latest in a long line to run a rewards program. Chipotle launched one in 2019. Taco Bell has one. Burger King is testing one. Popeyes just announced one. Like all things in the fast-food industry, if you can’t beat them, you join them. Step aside chicken sandwich wars; the new battlefield is customer loyalty.
After trialing the scheme in November 2020, McDonald’s announced that its rewards program would launch nationwide on July 8th, allowing customers to earn 100 points for every dollar spent on “qualifying purchases,” and spend them on 16 different menu items. McDonald’s is giving customers 1,500 points after their first order as a reward to encourage signups. The company plans to use the scheme to add a personal touch to its operation; workers will greet members by name, and customers will receive personalized emails and tailored deals.
The restaurants aren’t just offering the programs to acquire customer data. With the pandemic pushing more customers online — McDonald’s recorded digital sales of almost $1.5 billion during its first quarter of 2021— fast-food chains need to find ways to meet them and keep them there.
Chipotle has been one of the first fast food chains to demonstrate the power of loyalty programs. Pre-pandemic, the chain’s program had 8.5 million members. Now, it has more than 21 million members. Starbucks, which has had a loyalty program since 2008, reported that 52% of second quarter sales at U.S. company-owned cafes came from Starbucks Rewards members.
Those are the sort of returns McDonald’s is hoping for, but it faces stiff competition. Its advantage is the huge capital it has at its disposal and the ability to integrate the program into its “MyMcDonald’s” platform, which brings together its app and digital menu boards, making it easier for customers to order and pay for their food. Expect to see the company quickly capture a large share of the rewards market.
The pandemic has shown there’s a huge consumer appetite for rewards; now fast-food brands are racing to feed that demand.
