Discounts vs. Profits: The Restaurant Loyalty Program That Works!

The Loyalty Dilemma: Discounts vs. Profitability

Some restaurant leaders hesitate to invest in loyalty, as a common fear among their franchisees is that discounts given may benefit other locations and eat into their profits.

Without a clear view of revenue and the true impact a loyalty program can have on a restaurant business, it’s tough to get buy-in from everyone involved. As a result, many turn to basic programs (simple apps or disconnected platforms) that fall short of modern consumers’ expectations.

Loyalty’s Value, Backed by Numbers

Loyalty shouldn’t just be an afterthought—it should be a top priority. Supported by facts!

• 65% of revenue comes from repeat customers.
• Acquiring new customers costs 5-25x more than retaining current ones.
• You have a 60-70% chance of selling to an existing customer, versus a 5-20% chance of selling to a new prospect.
• A 5% increase in customer retention correlates with a 25% increase in profit

This raises another question: Should we really be giving discounts to loyal customers who are already likely to return? And if we do, could it cut into profits unnecessarily?

To reduce the risk in profitability smart restaurant chains are shifting from discount-driven attempts to experience-driven retention.

Loyalty that Goes Beyond Discounts

We studied top loyalty programs across the restaurant, e-commerce, and hospitality sectors, ran extensive A/B tests, and surveyed over 5,000 consumers across Europe to find out what truly resonates. The result is S4D’s 360-degree loyalty program that goes beyond discounts—it brings together the best features with strategies that protect your bottom line. How?

1. Personalized landing pages

Customers log in to a personalized welcome with product suggestions based on their preferences (like gluten-free or vegan options). Loyalty members see exclusive deals tailored to them, while non-members receive prompts to join. Every interaction feels personal.

2. Targeted Push Notifications

Keeping customers engaged is all about timing. Well-placed push notifications—like reminders about points balance, an upcoming birthday reward, or a limited-time offer—capture attention when it matters most. Loyalty points can even incentivize purchases during slow hours or for items that need a quick sale.

3. Data-Driven, Customized Marketing

No more one-size-fits-all promotions. With logged-in members, you can tap into customer data to understand preferences on an individual level. Our platform enables personalized, data-driven campaigns that resonate with each customer’s needs.

4. Intuitive UX and UI Design

Frustration is the enemy of loyalty. We found that customers consistently gravitate towards loyalty programs with clean interfaces that make it easy to access their profile, track points, and redeem rewards. No one wants to struggle with login faults, and filling in multiple forms, when they are hungry. Place all your loyalty promotions on one page, so customers know exactly where to go.

5. Loyalty Point Redemption

Enroll logged-in customers automatically in your loyalty program, so they start earning points without any extra steps or signups. Redeeming points is just as easy—customers can apply them right from the product page, where they’ll see the point equivalent for each item.

Unlike typical points-for-money setups, you stay in control of what’s redeemable. Instead of discounting every item, focus rewards on high-margin products to make loyalty a win-win, boosting customer satisfaction while protecting your bottom line.

6. Constant Engagement & Innovation

The key is keeping customers constantly engaged. Tiers, for example, are a great way to introduce fun dynamics and tap into the psychology of FOMO (fear of missing out). People love leveling up—it gives them that sense of achievement. Knowing they need to maintain or upgrade their status to keep their points and rewards motivates them to stay active.

Our loyalty program doesn’t just exist on the app or website; customers can access loyalty deals wherever they choose to order—online, at the kiosk, or at the counter. It all comes together in a seamless omnichannel experience.

The Bottom Line

Customer loyalty is increasingly expensive to buy but invaluable to earn. It’s no longer about discounts – it’s about creating experiences worth coming back for. And here’s the answer to your loyalty dilemma: when done right, those discounts offered through loyalty points become an investment that pays back x2, building a customer base that’s not only loyal but actively engaged and spending more over time.

We Hear You: Time-Saving Solutions for Busy Executives

At S4D, we’re not just another provider that hands over a system and walks away. We understand that the hesitation often comes down to uncertainty—not knowing what will work best, what the program can bring, or how to show its value to franchisees.

That’s why we gather data, deliver tailored insights, and provide a clear view of what works best for your customers. With this knowledge, you’ll have the confidence to demonstrate the program’s value, convince franchisees, and show the added benefits every step of the way.