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Report: Loyalty Members Defying Inflation with Higher Spending

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Loyalty spending reached the highest point on record across all restaurant and convenience store concepts in 2021. This traction reflects the value of loyalty programs as a source of revenue during inflationary periods.

According to the Paytronix 2022 Annual Loyalty Report, the most loyal 2-3% of customers drives approximately 5-17% of overall business revenue.

“The potential of loyalty to build relationships between customers and their favorite brands has never been greater,” said Lee Barnes, Chief Data Officer at Paytronix, in a company statement. “It has become increasingly clear that growing cadres of loyal customers are vital for the health of brands.”

Here are few key takeaways from the report:

Restaurant Loyalty

Fifty-five percent of restaurants reported that their loyalty check sizes have increased more than the price of their items.

Furthermore, casual dining, fast-casual, ice cream/snack/coffee, and Mexican/sandwich concepts all saw the highest annual loyalty spend per guest of any year for which Paytronix has data.

However, full-service restaurants are seeing fewer unique loyalty members — their overall visits decreased by nearly a quarter (26%) between 2019 and 2021. Quick-service restaurants also saw a 16% drop during the same period but exhibited a comparatively stronger recovery in 2021.

Generational Shifts

Over the past two years, the average loyalty member has become younger.

Millennials exhibit higher percentage of spending, while the 56+ Baby Boomers have a higher percentage of visits. While this trend indicates that Millennials are the future of loyalty programs, Gen Z consumers hold the largest untapped potential, as this group has the most guests who neither visit nor spend.

“Younger generations are increasing spend, but not visits. These age groups would rather go out less often, but be more indulgent when they do,” said Barnes, adding that QSRs need to keep an eye on Gen X. “This group has a lot of spending power and still has children in the household.”

Convenience Store Loyalty

The spend per check for convenience store loyalty members increased by about 25% from 2020 to 2021, largely due to price increases in both fuel and in-store items. At the same time, the annual spend for convenience store loyalty members increased by nearly 40%.

Furthermore, the top 8-10% of loyalty members at convenience stores visit an average of 32 times a month — more than once a day — and four times as often as the next highest tier.

“Many convenience retailers are reaping the benefits of fuel loyalty programs, but they’ve also become a daily stop for their most valuable customers,” said Paytronix CEO Andrew Robbins in the report. “While annual spend on fuel increased, gallons of fuel per stop decreased, which suggests that customers are returning to their favorite convenience stores more often for a quick bite or a coffee.”

This trend reflects consumers’ ongoing appetite for snacks and treats, which is stirring up competition between restaurants and convenience stores.

Across all concepts with the highest annual spend per guest in 2021, the difference was often minimal. However, the ice cream/snack/coffee segment was an exception, with guests increasing their spending by 20% between 2019 and 2021.