Fast-Food Chains Invest in Loyalty Programs

McDonald’s Launches Rewards Program

For the first time in its history, McDonald’s (MCD) is rolling out a loyalty program nationwide as the company works to retain digital customers it gained during the pandemic. Other fast-food chains including Popeyes (QSR) and Taco Bell (YUM) have also launched rewards programs in recent months. Loyalty programs are helpful for these brands because they can spur more traffic, drive up the average size of checks, and provide restaurants with insight into customers’ preferences.

The McDonald’s loyalty program will go live in early July after months of testing in select markets, and customers will earn 100 points for every dollar they spend at McDonald’s. They can then use these points to redeem free menu items. To entice consumers to join the program, McDonald’s is giving customers 1,500 points following their first order as a rewards member.

Boosting Digital Sales and Improving Customer Experience

McDonald’s is integrating the new rewards program into its other technology offerings, which include its mobile app and digital menu boards. The idea is to boost digital sales, which were close to $1.5 billion in the first quarter of 2021.

In addition to increasing sales, McDonald’s wants to use the loyalty program to improve customer experience. Rewards members will be greeted by name at McDonald’s. The company will also send customers personalized emails with deals focused on their preferences.

Chipotle Tweaks its Rewards Program

At the same time that McDonald’s is launching a rewards system, Chipotle Mexcian Grille (CMG) is tweaking its own program for the first time in two years. With the changes, rewards members will be able to redeem points for items across the menu. It will take just two visits to rack up enough points for a free order of chips. Previously it took longer to accumulate points and they could be used only for a free entree. Since it rolled out Chipotle Rewards, the fast-food chain operator has amassed 22.9 million members.

From McDonald’s to Chipotle, fast-food operators are realizing that loyalty pays off. It will be interesting to see how consumers respond to a variety of new fast-food loyalty programs.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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