Loyalty programs in hospitality: how guests become regulars

Why regulars are especially valuable

Winning new guests costs time and money: advertising, photos, platform fees, promotions. A guest who has already been and was happy only needs a good reason to return. Regulars know the menu, order with confidence, forgive a busy evening more readily and recommend you to others. Many are also glad to write an honest review if you ask them kindly.

A loyalty program does not replace good food or warm service. But it amplifies what already works: it turns a third visit into a fourth and gives you a reason to stay in touch with guests. It works especially well in businesses with frequent, rather small visits, such as a café, a bakery, a snack bar, a lunch spot or a bar. In fine dining or in a hotel, personal gestures tend to work better than stamps: an amuse-bouche from the kitchen, the favourite room, an invitation to a wine tasting.

Stamp card, wallet card or app?

For hospitality businesses there are essentially five options. They are not mutually exclusive: many venues start with a paper card and add a digital version later.

For most small businesses the answer is pragmatic: start with a well-made stamp card that matches your brand. Once you see that guests take part, moving to a digital card is worth it. Your own app almost never pays off for a single venue, because hardly any guest installs an app for just one café.

Digital loyalty card in Apple and Google Wallet

Apple Wallet on the iPhone and Google Wallet on Android phones can store loyalty cards, just like boarding passes or concert tickets. Apple and Google provide technical interfaces for businesses; in practice, small venues use a specialised provider that handles design, issuing and stamping. The guest scans a QR code at the counter or on a table stand, saves the card with one tap and shows it on the next visit.

A big advantage is notifications: many solutions can show notices on the card, such as “Two more stamps until your free coffee” or “Regulars' evening tonight”. Use them sparingly. Depending on settings and content, what counts as advertising may fall under the rules for direct marketing; more on that in the data protection section.

Rewards guests actually want

A loyalty program lives or dies by its reward. It has to be attractive enough to make collecting worthwhile, and chosen so that it doesn't ruin your costing. Always calculate the reward at food cost, not at menu price: a free coffee after ten paid ones only costs you the ingredients, but to the guest it feels like the full price. The price calculator shows how to work out food cost and prices.

• Classic stamp reward: the tenth coffee, the sixth lunch menu or the eleventh beer free.
• Upgrade instead of discount: a large drink for the price of a small one, a dessert with the main course, an extra topping at the snack bar.
• Experiences: an invitation to the regulars' evening, a tasting of the new seasonal menu, a reserved favourite table.
• Targeted at quiet times: double stamps on Mondays or before 10 am, loyalty rewards redeemable on weekdays only.
• A gift to pass on: a voucher for a companion that brings new guests in. You can design it with the gift voucher generator.

Birthday offers and newsletters

Birthdays are the classic personal occasion: a glass of sparkling wine, a dessert or a slice of cake on the house costs little and is remembered. Often the birthday guest brings a whole group along. Only ask for day and month, not the year of birth: you don't need more, and less data is always better for data protection.

If you want to send birthday greetings or promotions by email, you are essentially building a newsletter. How to set up sign-up with double opt-in, which content works and how often to write is explained in the guide to newsletters for restaurants. Many guests prefer short messages on their phone: how to do that within the law is covered in the guide to WhatsApp Business.

Data protection: what applies in Austria and Germany

An anonymous paper stamp card raises no data protection issues. But as soon as you store names, email addresses, phone numbers, birthdays or visit data, the General Data Protection Regulation (GDPR, German: DSGVO) applies. You need a legal basis, usually the guest's consent, must inform guests transparently and may only collect as much data as the purpose requires.

For marketing by email, text message or messenger, national rules come on top. In Germany, § 7 UWG (the Act against Unfair Competition) generally requires prior express consent. In Austria, this is governed by § 174 TKG 2021 (the Telecommunications Act); here too, prior consent is the norm. Both countries have a narrow exception for existing customers, tied to several conditions, such as advertising only your own similar products and pointing out the right to object when the address is collected. For a loyalty program, clear consent is usually the safer route.

Costs: what to expect

The cost of a loyalty program is not just the technology. The biggest item is often the redeemed rewards themselves, followed by the time you and your team put into maintenance and communication. Provider prices vary widely; compare offers using your real numbers and watch out for minimum contract terms.

A simple calculation helps you decide: how many extra visits a month do you need so that contribution margin minus rewards covers the provider's fee? If that number is realistic, a trial over a few months is worth it. The free break-even calculator also shows how many guests a day cover your fixed costs.

Measuring success: the key metrics

Many venues only count how many cards they have handed out. What happens afterwards tells you more. With paper cards you can at least count redeemed rewards, for example with a dedicated button on the till. Digital solutions and POS modules provide more figures.

• Rewards redeemed per month: the most honest sign that guests are really collecting.
• Active members: how many cards received a stamp in the last 30 or 90 days?
• Return visits: how many days pass on average between two visits, and is the gap getting shorter?
• Spend per visit of members compared with other guests, as far as your till shows it.
• Open and unsubscribe rates of newsletters and notifications.

Before launch, decide what should be achieved after three and after six months, and adjust the reward or rules if things stall. How to also analyse visits to your website and views of your Google profile is shown in the guide to website statistics.