Potbelly Is Amping Up Sales With Its Modified Rewards Program
Rewards programs are having a moment right now. Different restaurant chains are experimenting with different program models from fast food loyalty apps to Panera's longstanding rewards program (which has been getting worse over the years). In January, sandwich chain Potbelly hopped on the bandwagon, updating its Perks loyalty program to lock in the repeat traffic it attracted during the fourth fiscal quarter (Q4) of 2023. Per the update, 12 different menu items can now be redeemed as prizes and customers can accrue points more quickly — and it worked. Loyalty program membership grew by 87%, and digital sales now account for 40% of Potbelly's business, reports Restaurant Business Online.
The update has already been driving real business results. Potbelly's same-store sales rose 6.3% for Q4, and the chain achieved 12% year-over-year growth. The strong sales have been fueled by workers swinging through on their lunch breaks. Repeat traffic led Potbelly to enjoy total revenue growth of 8.7% for the year, raking in $491.4 million. It's worth noting that the fast-casual sandwich chain has also increased menu prices (which is perhaps a little annoying, but less so considering Texas Roadhouse just raised its menu prices for the third time in under a year). So, what made the revamped rewards program such a success?
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Nothing To Cry Over, But There Are Still Tiers
Compared to Potbelly's previous loyalty program, fans have increased control over which rewards they get this time around. Members also receive random members-only benefits throughout the year and access to the app-only "Underground Menu." Potbelly's updated Perks program also changed its currency system, swapping the former "points" for bankable "Coins" which (as before) are based on the amount of dollars that customers spend per visit. Perhaps most notably, Potbelly's rewards program is tiered with levels Rookie, Pro, and Boss. To reach the Boss level, fans must spend close to $500 at Potbelly over a year. Rookies get 10 Coins for every $1 spent, and as they level up to higher membership tiers, they earn more Coins per dollar.
The tiered reward model is similar to that of Subway. Last September, Subway implemented MVP Rewards, a program based on how much money guests spend. Separating perks into different tiers has emerged as a popular model for many restaurants recently. Even Chuck E. Cheese just rolled out a tiered membership program with hierarchical benefits. However, not every restaurant is into tiers — unless we're talking about layers in a cake. As of The Cheesecake Factory's latest egalitarian reward program, rewards aren't based on the dollar amount that customers spend. The tiered loyalty model is certainly emerging as a growing industry trend as chains try to hold on to repeat traffic, but time will tell whether it sticks.
Read the original article on Tasting Table.
