Earlier this month, White Castle announced the launch of its first national rewards program, Craver Nation. Customers who sign up for the program get a free combo meal right away, along with other perks through September. They’ll also gain access to discounts and coupons each month.
The rewards program was “something we were thinking about and working on for a while,” said Jamie Richardson, a vice president with the company. But the pandemic reinforced the need for a loyalty program, he said. “Now’s a great time to continue having that more engaged conversation with our customers,” he explained.
The trend “was starting to take shape before Covid,” said Morningstar restaurant analyst R.J. Hottovy. “But it certainly has accelerated as more consumers continue to order through phones and computers right now.”
Competition for customers is fierce among fast food restaurants. Loyalty programs are a way to “keep people locked in and more engaged,” said Hottovy. “If you can give one more incentive to order on your platform, it prevents your customers from going somewhere else.”
But there’s no such thing as a free lunch.
Loyalty programs share a ton of customer data with restaurants, said Peter Saleh, a restaurant analyst with BTIG, like “what they purchase, when they purchase, where they live.”
White Castle rewards members get breaks based on their purchase history. Through the program “we would be able to know, does this person like cheese sticks or do they prefer french fries?” Richardson said, adding that the brand can also ask members how they feel about potential menu innovations.
When joining rewards programs, customers should be aware of just how much they’re giving up, said Brian Vecci, field CTO for the data security company Varonis, especially because the United States doesn’t have a national privacy law, which would dictate how companies can utilize customer data.
“You’re basically making a bargain: I am going to give you information about what I’m buying, and you’re going to give me some benefit,” he said. “You are certainly giving up some rights and some data and some privacy.”