How McDonald's and other restaurant brands are developing loyalty apps in the face of inflation (2023)

You know the saying, "There's an app for that"? Restaurants want customers to think about it the next time they're craving their favorite drink, burger or burrito.

While chains from McDonald's to Chipotle have been promoting loyalty apps for some time, they've become increasingly important in the battle for market share as inflation-driven consumers seek greater value in rewards programs. This has forced loyalty teams to rethink their offerings and dig deeper into customer perceptions about what keeps them coming back.

"You can't rest on your laurels," said Jason Scoggins, senior director of loyalty and customer relations at Chipotle, which has more than 33 million Rewards members, most of whom use apps. “Customers rate every rewards program they participate in, not just restaurants but also industries like tourism and hospitality. There are other brands that are raising the bar for what customers expect from the program, so we are now working to compete with and exceed those expectations."

Looking back:Analysis of the first year of the McDonald's loyalty program

During the pandemic, more customers have started ordering food online and limiting in-person visits, weakening their ties to the brand. Companies have started to rely on apps and loyalty programs as a means of rebuilding some of the lost connections and gaining a decent amount of their own data in the process, including emails, birthdays, and ordering behavior. All of this data has been used to increase consumer engagement or encourage them to buy more.

However, at a time when inflation-conscious shoppers are looking to save money, many brands are also struggling financially. As a result, they have either increased the number of purchases customers must make before rewards can begin, or reduced the frequency of rewards, which is at odds with what younger consumers expect from their rewards programs. According to a study by performance marketing and customer acquisition company Fluent, 57 percent of Gen Zers have at least one fast food app on their phones, and the main reason for using them is to save money.

"I'm often asked if there will be value wars again," said David Portalatin, senior vice president and food industry advisor at Circana, which analyzes consumer behavior. And the answer is: not quite. It's not about the discount menu, but more about other promotions or getting a discount on full-priced items."

Networks are increasingly presenting these deals in apps – and the promotions are tied to ads on TV and social media. Chipotle encouraged its social media followers to download the app with free Cinco de Mayo week delivery. The Chipotle app ranked 12th in the food and drink category in the Apple App Store on May 22.

McDonald's, which at the time of writing was the category leader for food and drink apps, has run several TV commercials touting the app's features, including skipping the line or earning free food in the future.

Panera used the NBA playoffs to run ads featuring basketball player Kyle Kuzma as part of the new "Unlimited Sips" network subscription for Rewards members. Panera ranks 15th in the list of food and beverage apps.

There are several approaches to building loyalty, starting with rewarding consumers for downloading an app. Subsequent purchases and voluntary customer information help generate personalized offers and opportunities. Panera is one of the networks that scours app data for target coverage.

“Maybe I don't want melted avocado chicken as a reward because I'm a vegetarian. Instead, I'll be rewarded with a salad," said Meenakshi Nagarajan, Panera's senior vice president of Digital, Loyalty and Subscriptions.

Nagarajan said that by looking at the brand's 54 million rewards members, they also helped the brand see "tensions" in its customers, including those who wanted to eat more sustainably. The brand has developednice meals,or climate-friendly options with a low CO2 footprint.

Another loyalty factor is the members-only gadgets in the app. In February,Chipotle added two quesadillasinspired by food critics TikTok, which could only be ordered through an app or online. McDonald's rewards users can now purchase Big Mac sauce through the app, a limited amount of the brand's Sichuan sauce was also availablein the app last year.(It was originally available in 1998 as part of the Happy Meal promotion for Disney's Mulan.)

Read more:How Chipotle tackled viral TikTok menu hacks

"If our app is not culturally appropriate, it will be removed," Caleb Pearson, McDonald's vice president of media and digital technology, wrote via email. "With the ever-expanding evolution of digital technology, listening to and learning from our fans is now more important than ever to cement our place - and our app - in the culture."

According to Pearson, the McDonald's app was downloaded more than 40 million times last year.

At Panera, only Rewards members can purchase the brand's "Unlimited Sips" plan, which gives customers unlimited drinks for $12 a month. While it may seem counterintuitive to add a subscription service to limited wallets, it provides a more stable revenue for the brand and can also encourage customers to buy food.

"This $3.50 or $4 drink is free with your subscription, so maybe you'll get a bagel with free coffee or a cookie with your afternoon iced tea," Nagarajan said.

At McDonald's, loyalty data has led to more efficient ordering. According to Pearson, customers wanted faster and smoother ordering and collection processes. Now, McDonald's ads encourage customers to place orders in advance on the app to save time and show them to skip long queues and queues at the restaurant or have their order delivered to their home. Customers can also enable location services on their phones, giving restaurant staff time to prepare food more efficiently to keep it hot when mobile customers arrive.

“This enhancement uses technology that allows restaurant teams to start preparing mobile orders when customers are near the restaurant, making it faster and more convenient for those who pre-order through the McDonald's app, as well as a more seamless experience for members of our crew, Pearson said.

The apps are even linked to the marketing of video games. For example, Chipotle allows Rewards members to earn points for playing Street Fighter 6. Starting June 2, players will be able to earn Fighter Coins in game currency by placing digital orders in the Chipotle app and website. For each qualifying order, players will receive a code for 250 Warrior Coins while supplies last, which can be used to purchase in-game characters, outfits, and gear. Chipotle is well versed in associating games with a brand. It provided promo codes to reward members who completed the brandDolhof BoritozGrillsymulator i Roblox.

According to Julie Craig, VP of Shopper Insights at Kantar, another area to watch out for is the transition from restaurant to retail. "Think of branded salad dressing or chick-fil-A sauce or a frozen supermarket option," she said. “What if apps could help fill that gap and help consumers find store locations, or reward them by proving they bought a branded product in-store?”

Another tactic is to release branded goods to reward customers first. Panera launched in Aprilgoods online storewhich was only available to members of the award before it opened to the public. McDonald's has changed its app tosummer camp experiencewith app-only deals, merchandise, and musical performances. Chipotle Rewards members can redeem their points for free food or merchandise or donate to Chipotle's charitable partners, including the National Young Farmers Coalition.

However, giving the right discount or reward to the right customer at the right time is a challenge. Despite the amount of data, accurate personalization can be difficult to achieve.

"I always order our McChicken sandwich," said Ian Borden, McDonald's vice president and chief financial officer, during the brand's recent earnings call. "I say this to the team: I should never have gotten an offer on my app for a McChicken sandwich. We're not at that level of sophistication yet, but we'll get there."


How does McDonald's build brand loyalty? ›

Firstly, they work on a customer centric approach and McDonalds is usually engaged in developing new and modernized strategies for their customers. Secondly, the marketing strategy of McDonald is quite crystal clear and they have the tendency to fulfill their promises.

How does McDonald's retain loyal customers? ›

MyMcDonald's Rewards is an app-based, tiered loyalty program that rewards customers with points when they buy McDonald's menu items. For every dollar customers spend, they'll be rewarded with 100 rewards points. They can save these points on their profile/app and exchange them for select items from the McDonald's menu.

What is the new McDonald's loyalty program? ›

Download the McDonald's app and join MyMcDonald's Rewards to get your free large Fries with $1 minimum purchase.* Plus, when you join MyMcDonald's Rewards, you start earning points on every eligible order—points you can put towards more free food.

Does McDonalds have a customer loyalty program? ›

You will earn 1 point for every penny you spend on our menu items when you order using the McDonald's app at participating restaurants. That includes through the Kiosk, Drive-thru, McDelivery® via our app and the front counter. The more points you have the better the Rewards!

What are 3 reasons McDonald's is successful? ›

Quality, Service, Cleanliness and Value” was Kroc's motto.

These efforts towards process repetition and efficiency not only set the basis for McDonald's success from the standpoint of customers' expectations, but also help McDonald's stay on top in a culture where producing at a quick pace is commonly expected.

Why is the McDonald's brand so successful? ›

By focusing on advertising, franchising, and constant innovations, McDonald's was able to develop a strategy with an effective business model. They targeted their advertisements by branding it as a fun place to go for families. Their mascot, Ronald McDonald, was also created to appeal to the younger demographics.

Why is McDonald's marketing so successful? ›

McDonald's demonstrates that time and time again, they understand how and why their customers choose their brand. It's this intricate understanding of their audience tastes, motivations and behaviours that truly sets them a part.

When did McDonald's launch loyalty program? ›

Rewarding experiences. McDonald's launched its rewards program in July 2021 and has reported membership count for the first nine months.

How many loyal customers does McDonald's have? ›

For McDonald's, the brand's U.S. rewards membership base totals more than 25 million, and overall, the program is live in more than 50 markets internationally. Amid a range of external factors, including consumers' return to pre-pandemic behaviors and skyrocketing food inflation, channel preferences have been shifting.

How many McDonald's Rewards? ›

For every dollar you spend on eligible products, you will receive 100 points. You can start redeeming your MyMcDonald's Rewards when you have 1500 points.

Is McDonald's loyalty program off to a strong start? ›

McDonald's loyalty program is off to a strong start. By Jon Springer. Published on October 27, 2021. More than 21 million U.S. customers have enrolled in McDonald's digital rewards program since its launch in July, helping the burger giant drive higher sales in its fiscal third quarter.

What is restaurant loyalty program? ›

With a points-based loyalty program, customers earn a certain number of points for each dollar they spend, or for simply visiting the restaurant. Many restaurants with this type of program award members one point for every dollar spent.

Is McDonald's loyalty card ending? ›

McDonald's is officially ending their “free drink” program with stickers on coffee cups. The fast-food giant said they will stop handing out their loyalty sticker cards as of August 2022, however, if you have full reward cards, you have until December 31st, 2023 to use them up.

What is the best strategy that McDonald's have currently? ›

McDonald's generic strategy is cost leadership, which builds competitive advantage through cost minimization. The company has standardized processes designed to maximize efficiency, minimize costs, and ensure profitability despite the use of competitive selling prices.

What competitive advantage does McDonald's have? ›

McDonald's is an industry leader in the fast food industry. Its key competitive advantages have included nutrition, convenience, affordability, innovation, quality, hygiene, and value added services. The success of the organization has been its ability to leverage its key strengths so that it can overcome weaknesses.

What is the marketing strategy of McDonald's? ›

McDonald's marketing strategy uses TV and radio to get the word out about its brand and promote new menu items, meal discounts, and charitable work. Its broadcast channels and times are chosen so that most people will watch or listen.

Does McDonald's have a strong brand image? ›

McDonald's achieves 'exceptional' branding score with eyebrow raising ad. Having won over marketers with its subtle approach to branding, McDonald's new campaign scores high on brand recognition and short-term sales potential, according to effectiveness firm System1.

What is the brand reputation of McDonald's? ›

McDonald's is also in the top ten most valuable U.S. brands of 2021 based on brand value, with its brand value of 154.92 billion U.S. dollars placing it ninth on the list.

What is the brand awareness of McDonald's? ›

When it comes to restaurant chain customers, brand awareness of McDonald's is at 96% in the United States. The survey was conducted using the concept of aided brand recognition, showing respondents both the brand's logo and the written brand name. How popular is McDonald's in the United States?

How does McDonalds attract customers? ›

McDonald's leads in the fast food industry with its promotional techniques that include offers and freebies to regularly attract customers. For example, McDonald's offers a "Happy Meal," which consists of a main meal, side, and drink for a discounted price.

How did McDonalds gain competitive advantage? ›

As the machines delivered quickly, the volume of sales increased and further helped McDonald's to sell quality hamburgers cheaper than other competitors. Quality in Product -As the machines handled most of the tasks, the McDonald brothers were free to work on the quality of the product at every step.

What is the customer retention rate of McDonald's? ›

Customer loyalty: According to the data, McDonald's retains the most customers in the burger category, year-over-year. A whopping 88 percent of customers who dine at McDonald's will return the following year.

When did loyalty programs start? ›

18th Century

Loyalty programs and cards date back to 1793, when American retailers started giving out copper coins to every customer after their purchase. The customer could collect these coins and redeem them on their next purchases from the same retailer.

When did McDonald's become popular? ›

Growth was so swift in the 1990s that it was said a new McDonald's opened somewhere in the world every five hours. It effectively became the most popular family restaurant, emphasizing affordable food, fun, and flavours that appealed to children and adults alike.

What are McDonald's Rewards points? ›

For every dollar you spend on eligible purchases, you will receive 100 points. You can use your points to redeem FREE rewards like any size Premium Roast Coffee or a Vanilla Cone starting at 2,000 points!

How often can you use rewards on McDonald's app? ›

How many McDonald's deals can be used at a time? You can only redeem one McDonald's deal per person, per visit.

Who has the most McDonald's points? ›

Jonathan Bender holds the record for most points scored in a McDonald's All-American Game with 31. Michael Jordan is the only other player who has ever scored 30 points in the game.

What is McDonald's branding strategy? ›

McDonald's marketing strategy includes investing in online and offline marketing methods that spread its clear, brand-centered messages to a large audience and using other channels like its dedicated mobile app to reach and keep loyal customers.

How is brand loyalty built? ›

Brand loyalty happens when you forge a connection with your audience. The best way to do that is by building a community around your brand to further cultivate relationships. There are a few ways to do this: Respond to your audience's messages on social media and encourage engagement on your posts.

How does McDonald's attract customers? ›

McDonald's leads in the fast food industry with its promotional techniques that include offers and freebies to regularly attract customers. For example, McDonald's offers a "Happy Meal," which consists of a main meal, side, and drink for a discounted price.

How effective is McDonald's advertising? ›

According to System1's Test Your Ad platform, which tests ads with 150 consumers, 98% recognised the 60-second spot was a McDonald's ad before the end. The average score within the category is 91%, indicating the ad's “exceptional” strength in brand recognition.

What is McDonald's mission and strategy? ›

Our mission is to make delicious feel-good moments easy for everyone. This is how we uniquely feed and foster communities.

What methods has McDonald's used to maintain brand association with consumers? ›

McDonald's uses TV and radio to engender general brand awareness, as well as promote new menu items, meal deals, and philanthropic initiatives. Its broadcast channels and timings are chosen specifically for maximum viewership and listenership.

What is the competitive advantage of Mcdonalds? ›

McDonald's is an industry leader in the fast food industry. Its key competitive advantages have included nutrition, convenience, affordability, innovation, quality, hygiene, and value added services. The success of the organization has been its ability to leverage its key strengths so that it can overcome weaknesses.

Is McDonald's a successful brand? ›

With over 39,198 restaurants in over 100 nations, $112 billion in global sales and $23 billion in revenue for 2021, McDonald's is the largest fast-food restaurant chain in the world.

What is brand loyalty examples? ›

Brand loyalty is when a consumer chooses to repeatedly buy a product produced by the same company despite competitors' efforts to entice them. For example, some customers will always buy Pepsi while others will buy Coke every time. Brand loyalty is often based on perception.

What are the benefits of brand loyalty? ›

Here are five benefits of brand loyalty in retail marketing:
  • It builds consumer retention. In the eyes of consumers, marketing personalization is generally seen as a better value transaction. ...
  • It reduces customer acquisition costs. ...
  • It boosts sales. ...
  • It improves marketing ROI. ...
  • It nurtures brand engagement.
Aug 16, 2022

What factors encourage brand loyalty? ›

High-quality products, exceptional customer experience, satisfying customer service, and shared values are all factors that influence brand loyalty.

Why are mobile apps important to businesses and brands like McDonalds? ›

There are clear benefits for big consumer brands to invest in mobile apps since apps typically increase the average order size per customer and make the check-out process faster. Both of those things are major benefits for fast-food restaurants.

Why McDonalds is so good in marketing? ›

Understanding their customers in context

McDonald's demonstrates that time and time again, they understand how and why their customers choose their brand. It's this intricate understanding of their audience tastes, motivations and behaviours that truly sets them a part.

Who is McDonalds biggest customer? ›

The McDonald's target audience is mainly lower to middle class consumers, who are interested in fast, cheap and convenient food. During the pandemic, the famous McDonald's drive-thru became even more popular. In 2020, the average drive-thru purchase took 349 seconds.


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