Reward system needs reboot to keep casual diners coming back
Customers who are rewarded early tend to spend more over time.
Fast-food chains should simplify their loyalty programmes and allow occasional customers to experience benefits sooner if they want to retain customers and increase their lifetime value, analysts said.
Many quick-service restaurants launch loyalty programmes whose value is not too obvious to customers, said Catriona Woodward, director of digital and technology business development and product enablement at Pizza Hut.
“What we are seeing is that people are feeling that loyalty programmes are delivering less value, therefore, they feel less valued as customers,” she told the QSR Media UK Redcat Conference & Awards 2025 in London on 16 June.
Woodward likened it to a pizza arriving late. If a delivery is delayed, a store should act fast, acknowledge the issue, offer an apology, or provide a voucher. The loyalty programme should support this recovery process, she pointed out.
Most loyalty programmes fail because it is hard for consumers to see their value and takes time before one can enjoy the reward, said Nick Watson, vice president for business consulting at Tennessee-based Marigold Loyalty, a platform that helps businesses create and manage personalised customer loyalty programmes.
He said QSRs should design “micro journeys”—small, personalised interactions within the programme that give customers a sense of progress by rewarding them early. This would draw customers in, change behaviours, and sway them from competitors.
“For example, you can get someone who comes regularly but spends less to keep coming regularly, but have them increase their basket size,” Watson told the conference.
Last year, Marigold’s partnership with KFC in the US led to a 95% increase in customer lifetime value amongst loyalty members who redeemed rewards, compared with those who didn’t. This shows that reward redemption not only boosts engagement but also improves long-term customer value.
To scale and make its loyalty initiatives more effective, Pizza Hut is aligning its tech development with other Yum! Brands, Inc. chains such as KFC and Taco Bell. This lets the group avoid duplication and streamline operations, Woodward said.
She said the company is working with Marigold on a global platform where each market can have its own workspace. This would let Pizza Hut and other Yum! brands build loyalty mechanics, templates, and programmes at the global level, which can be quickly adapted and launched locally.
Each market can activate loyalty programmes more quickly using shared infrastructure and best practices, Woodward said. “All we have to do is look at their data, configure the program mechanics, and they can go live much quicker.”
She also said they seek to roll out artificial intelligence (AI)-driven marketing tools more efficiently to boost customer engagement.
