Acquiring a new customer costs 5-7x more than retaining an existing one. A well-designed loyalty program turns occasional visitors into regulars — but the wrong program just adds cost without driving results.

Here's how to build a restaurant loyalty program that actually works.

Why Loyalty Programs Matter

Loyalty programs turn occasional visitors into regular customers

The Numbers

• Repeat customers spend 67% more than new customers
• Loyalty members visit 35% more often than non-members
• Top 20% of customers drive 80% of revenue
• 5% increase in retention = 25-95% increase in profits

What Loyalty Programs Do

1. Encourage repeat visits — Rewards give reasons to return
2. Increase spend per visit — Customers add items to earn points
3. Capture customer data — Email, phone for marketing
4. Differentiate from competitors — Why choose you over alternatives
5. Create emotional connection — Customers feel valued

Types of Loyalty Programs

Points-Based

Customers earn points per dollar spent, redeem for rewards.

Example: 1 point per $1 → 100 points = $10 off

Pros: Simple to understand, flexible rewards
Cons: Can feel slow to earn

Punch Card (Visit-Based)

Traditional "buy X, get one free" model.

Example: Buy 10 coffees, get 11th free

Pros: Very simple, clear goal
Cons: No spend incentive, easy to game

Tiered

Different benefit levels based on spending.

Example: Bronze (0-$500), Silver ($500-1500), Gold ($1500+)

Pros: Encourages higher spending, status motivation
Cons: More complex, may exclude casual customers

Cashback

Automatic credit based on spending.

Example: 5% back on every purchase

Pros: Instant gratification, simple
Cons: Lower perceived value, less excitement

Top Loyalty Program Platforms

1. Square Loyalty — Best for Square Users

Square Loyalty integrates directly with Square POS for seamless operation

Price: $45/month per location
POS Integration: Square only

Square Loyalty works seamlessly with Square for Restaurants, making it the obvious choice for Square users.

Features:

• Points or visits-based programs
• Automatic enrollment at checkout
• Customer text/email reminders
• Reward customization
• Basic analytics
• Works with Square marketing

Pros:

• Tight POS integration
• Easy setup
• Affordable
• Automatic tracking

Cons:

• Square only
• Basic features
• Limited customization

Best for: Square POS users wanting simple loyalty

2. Toast Loyalty — Best for Toast Users

Price: $50-99/month
POS Integration: Toast only

Toast's loyalty program integrates with their POS and marketing tools.

Features:

• Points-based rewards
• Tiered programs available
• Email/SMS marketing integration
• Customer insights
• Online ordering integration

Pros:

• Full Toast integration
• Combined with marketing
• Good analytics

Cons:

• Toast only
• More expensive
• Requires Toast ecosystem

Best for: Toast POS users

3. FiveStars — Best Standalone Option

Price: ~$200-400/month
POS Integration: Multiple (Square, Clover, others)

FiveStars is one of the largest restaurant loyalty platforms, working with multiple POS systems.

Features:

• Points, visits, or hybrid programs
• Tablet at checkout for enrollment
• Marketing automation
• Multi-location support
• Customer analytics
• Reviews integration

Pros:

• Works with many POS systems
• Strong marketing features
• Established platform

Cons:

• Higher cost
• Tablet required at counter
• Can be complex

Best for: Multi-location or serious about loyalty

4. Thanx — Best for Chains

Price: Custom (typically $300+/month)
POS Integration: Multiple

Thanx focuses on larger restaurant groups with sophisticated needs.

Features:

• Credit card-linked loyalty
• No app required for customers
• Advanced segmentation
• Personalized offers
• Detailed analytics

Pros:

• Seamless customer experience
• Advanced features
• Enterprise-ready

Cons:

• Expensive
• Overkill for small restaurants
• Complex setup

Best for: Restaurant chains

5. Stamp Me — Budget Option

Price: $24-79/month
POS Integration: Limited (mostly standalone)

Stamp Me offers affordable digital punch cards.

Features:

• Digital punch cards
• Customer app
• Basic analytics
• QR code scanning
• Custom branding

Pros:

• Very affordable
• Simple to use
• Good for punch card fans

Cons:

• Limited POS integration
• Basic features
• Manual tracking often needed

Best for: Small restaurants wanting digital punch cards

Comparison Table

Designing Your Loyalty Program

Step 1: Choose Your Structure

Match your loyalty structure to your customer behavior

For cafés/frequent visits: Punch card (buy 10, get 1 free)
For casual dining: Points-based (1 point per $1)
For high-end restaurants: Tiered (VIP perks for top spenders)

Step 2: Set Reward Thresholds

Balance attainability with profitability:

Too easy: 50 points ($50 spend) for $10 off = 20% discount (too expensive)
Too hard: 500 points ($500 spend) for $10 off = 2% (not motivating)
Sweet spot: 100-150 points for $10 off = 6-10% effective discount

Step 3: Define Rewards

Options beyond discounts:

• Free items (popular menu items)
• Exclusive menu access
• Priority seating
• Free delivery
• Birthday rewards
• Early access to new items

Step 4: Plan Enrollment

Make signup frictionless:

• At checkout (POS prompt)
• Phone number only (no app required)
• Incentivize signup (bonus points)
• Train staff to mention it

Step 5: Marketing Integration

Use loyalty data to drive targeted marketing

Loyalty data powers marketing:

• "You're 20 points away from a reward"
• Birthday rewards
• "We miss you" campaigns for lapsed customers
• New menu item announcements
• VIP-only promotions

Implementation Tips

1. Keep It Simple

Customers won't learn complex rules. One sentence should explain your program.

Good: "Earn 1 point per dollar. 100 points = $10 off."
Bad: "Earn points based on tier status, redeemable for category-specific rewards within 90 days of earning."

2. Train Staff

Staff are your enrollment engine:

• Script for mentioning program
• Know how to enroll customers
• Understand rewards and redemption
• Can troubleshoot common issues

3. Promote Visibly

• Table tents
• Counter signage
• Receipt messaging
• Website/social media
• Order confirmation emails

4. Track Key Metrics

Monitor program health:

• Enrollment rate
• Redemption rate
• Visit frequency (members vs. non-members)
• Average check (members vs. non-members)
• Member lifetime value

5. Iterate Based on Data

Review monthly:

• Are members visiting more often?
• Is average check increasing?
• What rewards are most redeemed?
• What's the cost per redemption?

Common Mistakes

1. Too Generous at Launch

Starting too generous is hard to walk back. Start conservative and add value over time.

2. No Staff Buy-In

If staff don't mention the program, enrollment will be low. Train and incentivize them.

3. Ignoring the Data

Loyalty programs generate valuable data. Use it for marketing and menu decisions.

4. Making Redemption Difficult

If redeeming rewards is confusing, customers will be frustrated. Make it automatic when possible.

5. Set-and-Forget

Programs need active management. Send campaigns, adjust rewards, engage members.

Alternatives to Traditional Loyalty

QR-Based Loyalty

Fuudey and similar QR solutions can include loyalty features without traditional loyalty software.

See our QR menu guide

Simple Email Collection

Even without a formal program, collecting emails at checkout enables:

• New menu announcements
• Special promotions
• Birthday offers
• Re-engagement campaigns

Social Media Engagement

Build loyalty through community:

• Instagram stories
• User-generated content features
• Social-exclusive offers

Frequently Asked Questions

How much does a loyalty program cost?

$24-400+/month depending on features and scale. POS-integrated options (Square, Toast) are typically $45-99/month.

Do loyalty programs actually work?

When well-designed and actively managed, yes. Expect 10-20% higher visit frequency from members.

Should I require an app download?

Ideally no. Phone number or email-based enrollment has much higher adoption than app-required programs.

What's a good redemption rate?

20-40% of points earned should be redeemed. Lower suggests rewards aren't appealing; higher suggests you're being too generous.

Can I run loyalty without POS integration?

Yes, with platforms like Stamp Me. But manual tracking adds friction and reduces participation.

Conclusion

A well-designed loyalty program turns occasional visitors into regulars

Loyalty programs work when they're simple, valuable, and actively managed. Match your program structure to your customer behavior, integrate with your POS for seamless operation, and use the data for targeted marketing.

Our recommendations:

• Square users: Square Loyalty ($45/month)
• Toast users: Toast Loyalty ($50-99/month)
• Multi-location: FiveStars ($200-400/month)
• Budget: Stamp Me ($24-79/month)
• Alternative: QR ordering with built-in loyalty

The best loyalty program is one customers actually use. Start simple, measure results, and improve over time.