The quick-serve restaurant (QSR) industry, which includes both fast food and fast casual eateries, has been doing better than other types of restaurants.
That's because consumers have been cautious with their spending. People still want to eat out, but they'd rather do so at the cheaper end of the dining spectrum.
"The burger guys, the pizza guys, the chicken category, the Mexican category -- they're all on fire," Wedbush Senior Vice President Nick Setyan told USA Today."You have positive growth in the restaurant industry, but concentrated in quick-service restaurants."
That's good news for value players such as McDonald's (NYSE:MCD) and Yum! Brands' (NYSE:YUM) Taco Bell and KFC, but it's also good for slightly pricier quick-serve options including Chipotle Mexican Grill and Yum!'s Pizza Hut. Still, despite the overall gains the sector has made, consumers have an enormous amount of choice at a variety of price points that still hover below what it costs to eat at a sit-down restaurant.
That makes customer loyalty especially important. FourSquare, which describes itself as a "location intelligence company," examined the top 50 QSR chains in the country and determined which ones had the most loyal customers using the following factors:
- How often a customer visits in a year.
- The total percentage of QSR diners who have eaten there within a year -- though chains weren't penalized for regions where they have no locations.
- How much of each customer's total spend on QSR dining each chain gets for the year.
- What FourSquare calls the fanaticism threshold: "the number of visits within a year required for a customer to be within the top 1% of customers who visit a particular chain, on a scale of 1 to 50."
These are the top 10 chains (counting down from 10 to 1) as determined by the report. The companies at the top of the list perhaps may not surprise you, but the dominance of one type of chain may.
Which QSR brands have the most-loyal customers?
|Loyalty Rank||Quick-Serve Restaurant Chain|
|8||The Coffee Bean & Tea Leaf Company|
|7||Sonic (NASDAQ: SONC)|
Companies that serve breakfast and make coffee a priority scored well on the study. FourSquare found that consumers visit coffee shops more often than any other type of restaurant. That explains why McDonald's has increased its emphasis on its McCafe line while Chick-fil-A, Sonic, and Taco Bell have all increased their breakfast offering in the past year.
The data also showed that aside from Panera, which has built its business around "clean" food, customer loyalty has little to do with the availability of healthy menu options. The winners, according to FourSquare, "are actually known for loyalty rewards programs (like Starbucks' Gold Member rewards), convenience, nationwide presence, and dependable food quality and service."
What does this mean?
Starbucks, McDonald's and Dunkin' Brands' (NASDAQ:DNKN) Dunkin' Donuts have all been leaders when it comes to using loyalty programs to drive repeat business. Starbucks has been an absolute master at the offering incentives for rewards-program members to visit during slower parts of the day. The cafe chain has even been able to drive repeat visits from non-members using its "treat receipts," which offer deals to morning customers who come back in the afternoon.
Those are lessons that every other company on this list could learn. Some, including Dunkin' and McDonald's, have copied Starbucks well, while others could build loyalty by engaging their customers in improved rewards programs or using other tactics (such as the treat receipt) that drive repeat visits.