Despite increased competition from sit-down restaurants offering mobile ordering and delivery, a number of top quick-service restaurant (QSR) chains continue to have a loyal following. In fact, the same three chains that topped last year's Foursquare Loyalty Index topped this year's version of the study.
"Last year, we learned that breakfast and coffee offerings were key to driving customer loyalty," wrote Foursquare, a self-described location intelligence company. "Many of the top ranking QSRs last year were indeed mainstay breakfast/coffee-focused chains, including Starbucks (NASDAQ:SBUX), Dunkin' Donuts (NASDAQ:DNKN), The Coffee Bean & Tea Leaf, Bruegger's, and Einstein Bros."
This year's results showed that trend continuing. The report noted that: "breakfast and coffee chains are particularly strong in terms of driving visit frequency. In fact, consumers visit Starbucks 16.4 times per year, and Dunkin' Donuts on average 8 times, respectively." Non-breakfast chains see customers return only two to six times each year.
How is the Loyalty Index created?
Foursquare uses four criteria to create the loyalty index. These are the same four it used last year, the first year it conducted this research:
- How often a customer eats at each chain in a year.
- The percentage of all QSR diners who visited the chain within a year (companies are not penalized for not having locations in a given area).
- How much of each customer's total annual QSR spend went to that chain.
- The number of visits per year it would take to be a top 1% customer for that chain.
These are the QSR chains with the most loyal customers
|Loyalty Rank||QSR Chain|
|10||The Coffee Bean & Tea Leaf Co.|
Sonic moved to fifth from seventh in 2017, while Panera Bread fell off the list (it came in 11th, not a big fall from its 10th place finish in 2017). The surprising addition to the top 10 is Subway, which has been struggling from a business point of view.
Does loyalty matter?
The data shows that QSR chains can obtain different results with different actions. The top two on the list, Starbucks and Dunkin' (the name was changed after the report was compiled), have both been trying to use incentives and new menu items to entice customers to come in during the afternoon. That's a tactic designed to appeal to existing, loyal customers -- while offering low prices can help a company bring in new diners (though they may not stay loyal when the deals end).
Starbucks and Dunkin' have made loyalty programs a major part of their business. They have robust apps and customer relationships that allow them to drive repeat business and entice customers to come back with deals, giveaways, and promotions.
Those tactics that can work for any company if employed smartly. It's not just about having an app or loyalty program. It's using it to guide customer behavior in a way that makes people want to come back.
Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool recommends Dunkin' Brands Group. The Motley Fool has a disclosure policy.