“Death of Loyalty”? I Don’t Think So.

This headline grabbed my attention the other day: Is There a ‘Death of Loyalty’ in Fast Food? (https://retailwire.com/discussion/loyalty-fast-food-restaurants/).? Hmm, I thought, I wonder how this article will relate to some of the ideas I addressed a while back (https://nventiv.ai/resources%2Fblog/f/decoupling-rewards-from-the-%E2%80%9Cdigital-experience%E2%80%9D-for-restaurants) about what the future holds for loyalty and rewards, given the importance of apps in the QSR space.

But is that what it was really about?? The actual premise of the piece, which discussed a number of concepts raised in other linked articles, is as follows:

RETHINK Retail once referred to a potential “death of loyalty” in the fast food industry, highlighting the risk of losing formerly brand-loyal burger-and-fries enthusiasts. But does this trend truly exist? And regardless of the answer, what strategies can quick-service restaurants implement to drive traffic and improve customer retention on a broader scale?

From the headline, I thought the author was going to suggest that the ubiquitous loyalty programs in QSR aren’t working and are starting to be sunsetted.? But that’s not what the opening paragraph discussed, and with what followed, there are several issues.

First, the entire premise is troubling.? There are no “brand-loyal burger-and-fries enthusiasts” or any other type of brand-loyal QSR enthusiasts that you can lose.? Even the most die-hard fans are unlikely to devote much more than 1/3 of their visits to the same restaurant.? Convenience, need for variety, etc. play a role in restaurant choice.? And as such, the concepts of attrition and retention, switching, defection, etc. don’t apply to restaurants to the extent they might in other categories – think cellular carriers or streaming services, for example.? In QSR, it is all about share of requirements.

Second, the article fails to differentiate between loyalty programs and rewards.? As everyone in this space knows, or should know, they’re not the same thing.? A loyalty program is a mechanism that provides incentives to consumers to encourage ongoing purchases, and that may or may not include a rewards schedule, which gives back, generally in proportion to visit frequency or spend.

The last paragraph of the article suggests this is an especially critical problem among lower-income households, many of whom have to choose between dining out and eating at home, due to inflation.? Is that what is driving results?? It is true that recent months have not generally been positive for many chains, but not necessarily across the board, and that has led to many adopting “value meal” strategies, which seem to be bringing traffic back, if not revenue.? But changes in consumption patterns aren’t isolated to lower-income households, and changes in behavior are more a reaction to rising prices, not directly related to loyalty programs and other promotional mechanisms.? ?

Since the original source is a Retailwire article, it ends with a discussion question, “Will targeted in-app offers and increased gamification — and other omnichannel approaches to provide value and build trust — be enough to woo back the much-desired loyal customer in the fast food space?”

That’s more a question about whether promotional activities can be effective for QSRs in the current environment.? Not the same as “the death of loyalty”.? That’s not happening.? Sure, programs will evolve, as they always do.? As I have said before, I expect the role of rewards will diminish in QSR as the app, providing convenience through pre-ordering and payment, remains paramount.? But “loyalty” as a motivating concept within organizations and as a primary driver of relationship building mechanisms, in whatever it's form, will remain a critical tool for QSRs.