SMS Loyalty Programs for Restaurants: Retain Customers with Text Messages

Keep diners coming back with text-based loyalty programs! Learn how to enroll customers, reward them effectively, and use SMS messages to encourage repeat visits. Simple strategies and sample messages included.

Acquiring new customers can be expensive, but turning first-time diners into loyal regulars pays dividends for years. According to 2023 US data, increasing customer retention by just 5% can boost profits by 25–95%. SMS loyalty programs offer a direct, intimate channel to deliver rewards and keep your restaurant top-of-mind.

In this guide, we’ll discuss how to qualify customers for an SMS-based loyalty program, how to retain them once they sign up, sample SMS templates that inspire repeat business, and a step-by-step execution strategy to ensure your loyalty program thrives.

How Diners Qualify for the Loyalty Program

A loyalty program (especially one integrated with text messaging) might require:

  1. Opt-In Consent
    • In the US, you must comply with TCPA guidelines. Customers can text a keyword like “JOIN” to enroll or fill out a quick form.
    • Provide details about how frequently they’ll receive texts and how to opt-out.
  2. Eligibility Criteria
    • Some restaurants offer loyalty membership to all. Others set a minimum spend or invite only top spenders or frequent visitors.
    • Decide if you want a single-tier (everyone earns points the same way) or a multi-tier system (Silver, Gold, Platinum levels).
  3. Initial Sign-Up Incentive
    • Encourage that first step with a “Welcome offer.” E.g., “Sign up and get a free appetizer on your next visit!”
    • This instant reward can push uncertain customers to enroll.
  4. Collect Minimal Data
    • Typically, phone number, name, and possibly birthdate for special birthday messages.
    • Keep it simple to reduce friction—avoid forcing them to fill out a lengthy form.

How to Retain Customers in the Program

After sign-up, many loyalty programs go dormant if there’s no engagement. Here’s how to keep them active:

  1. Timely Rewards
    • Don’t let them wait months to see any benefit. For example, offer small rewards (like free coffee) after 2–3 visits.
    • Larger rewards (like a free entrée) can be a more distant milestone.
  2. Regular Communication
    • Update them on how many points they have, or remind them they’re one purchase away from a free item.
    • Example: “Hi Carla, you have 80 points! Earn 20 more by Sunday for a free dessert. You can do it!”
  3. Tiered Perks
    • If you have a multi-level program, highlight the next tier’s perks. “Only $15 away from Gold Status—enjoy free drinks once you’re there!”
    • People love leveling up.
  4. Exclusive Offers & Events
    • Loyalty members appreciate feeling “in the club.” Send them invites to VIP tasting events, early access to holiday reservations, or special menu previews.
  5. Birthday Surprises
    • Collect birthdates during sign-up. Then, automatically send a celebratory text like: “Happy Birthday, Alex! Celebrate with a free slice of cake—valid all week.”
  6. Expiry Nudges
    • If points or rewards expire, send warnings. “Your 50 points expire next week—use them for a free side dish before they’re gone!”

Sample SMS for Loyalty Programs

Below are 10 sample messages covering different scenarios:

  1. Welcome
    • “Welcome to [Restaurant Name] Rewards! Enjoy a free appetizer on your next visit. Show this text at checkout.”
  2. Points Balance Reminder
    • “Hi [Name], you’ve got 120 points! Earn 20 more for a free entrée. Dine in or order takeout before Sunday.”
  3. Birthday Offer
    • “Happy Birthday from Spice House! Treat yourself to a free dessert this week—show code BDAYTREAT.”
  4. Tier Upgrade Notice
    • “Congrats [Name]! You’ve reached Gold Tier. Enjoy priority seating & monthly $5 off any meal. Thanks for your loyalty!”
  5. New Menu Preview
    • “VIP Exclusive: Try our new seasonal dishes first. Show this text for 15% off any new entrée tonight only!”
  6. Re-Engagement
    • “We miss you, Sam! It’s been a month since your last visit. Come by this week for 2x points on any purchase. Hope to see you soon!”
  7. Expiring Points Warning
    • “Heads up—your 70 points expire in 7 days! Redeem them for a free side or dessert before they’re gone. Code: LASTCHANCE.”
  8. Referral Incentive
    • “Refer a friend to our loyalty club, and both of you get 50 bonus points! They can text ‘FRIEND’ to 12345 to join.”
  9. Thanksgiving or Holiday Perk
    • “Give thanks for points! Earn double points on any turkey entrée this week—just show code GIVETHANKS at checkout.”
  10. Special Event for Members
  • “Loyalty Night: Next Friday, half-price wine for members only. Reply YES to reserve your seat!”

Execution Strategy

Building a robust SMS-based loyalty program is more than just handing out freebies. Here’s a structured approach:

Step 1: Define Your Program Goals

  • Do you want to increase average spend? Focus on tiered rewards encouraging larger orders.
  • Is your goal more frequent visits? Offer small freebies after a certain number of visits.
  • Are you seeking wider brand awareness? Include referral bonuses to expand your base.

Step 2: Choose Your Platform

  • Look for CRM or marketing software that integrates with SMS. For example, loyalty programs from Toast, Square, or dedicated apps like LoyaltyLion can connect with Twilio or other SMS providers.
  • Make sure you can track points, issue unique codes, and automate messages.

Step 3: Craft Enrollment Points

  • In-Store Signs: Table tents or posters: “Join our rewards—Text PIZZA to 12345!”
  • Website Pop-Up: “Join our VIP text club for 10% off your next order.”
  • Post-Checkout: On receipts, highlight sign-up instructions.

Step 4: Plan Your Reward Structure

  • Points per Dollar: Typically 1 point per $1 spent. You can calibrate the exchange rate.
  • Visit-Based: 1 stamp per visit, free item after 5 or 10 visits.
  • Hybrid: Some items earn double points, or you can have targeted promotions.
  • Decide on a sweet spot so the freebies are compelling yet profitable.

Step 5: Automate SMS

  • Use automation to send:
    1. Welcome messages upon sign-up.
    2. Points balance updates periodically or after each purchase.
    3. Birthday/Anniversary messages.
    4. Re-engagement if inactive for 30 days.
    5. Tier upgrade notifications.
  • You can create twist by adding plots for point boost and deductions. You can also create opportunity for point pooling, transfer and sharing. Some have also created a tribal system to maximize competitiveness.

Step 6: Promote & Refine

  • Promote the program across social media, your website, in-store signage, and staff mentions.
  • Refine based on redemption rates, unsubscribes, or feedback. Maybe free coffee is more popular than a discount. Tailor rewards to what your audience loves.

Handling Common Challenges

  1. Low Enrollment
    • If sign-up is sluggish, sweeten the initial reward or simplify the process. “Text FOOD to 12345 for a free appetizer now.”
    • Provide immediate gratification so they see the benefit instantly.
  2. Inactive Members
    • Re-engage with double points promotions or personal messages referencing a past favorite meal.
    • Example: “We miss your usual chicken burrito order. Come in this week for 2x points!”
  3. Fraud or Multiple Redemptions
    • Track usage closely. Use unique redemption codes or limit freebies to a single phone number.
    • If they must show the text at checkout, your staff can confirm validity.
  4. Compliance
    • Different regions have varied laws (US’s TCPA, Canada’s CASL, UK’s PECR).
    • Always ensure opt-in is explicit. Provide an easy “Reply STOP” method.
  5. Balancing Rewards vs. Profit
    • Evaluate if your freebies eat too heavily into margins. Adjust point thresholds or discount sizes accordingly.
    • Aim for a break-even or slight cost if it fosters consistent repeat business and higher lifetime value.

Measuring the Impact of Your SMS Loyalty Program

A few critical KPIs help track success:

  1. Enrollment Rate
    • The percentage of customers who join the program after seeing your invite.
  2. Retention/Churn
    • Are members staying active or unsubscribing quickly?
  3. Redemption Rate
    • How often do they redeem points or coupons? A high redemption rate can indicate good engagement.
  4. Visit Frequency
    • Compare how often loyalty members dine vs. non-members.
  5. Average Spend
    • Loyalty members often spend more per visit, so watch if that’s happening.
  6. ROI
    • Evaluate total additional revenue from loyalty members minus costs (discounts, free items, SMS fees).

Real Example: Suppose your data reveals that loyalty members visit 3 times a month on average vs. 1.5 visits for non-members. That’s double the frequency—suggesting the program is effectively driving engagement, so your freebies may be justified.

Real-Life Scenario: A Tiered SMS Loyalty Program

Scenario: “Urban Eats,” a casual dining spot, wants to boost repeat visits. They launch a 3-tier loyalty system:

  • Bronze: Earn 1 point per $1. Every 100 points = free appetizer.
  • Silver: Spend $200 total to unlock. Now earn 1.25 points per $1, plus a free dessert on your birthday.
  • Gold: Spend $500 total. Earn 1.5 points per $1, a free meal on your birthday, and early access to events.

Implementation:

  • They use a POS system integrated with Twilio to track spend and send automated messages.
  • Welcome: “Thanks for joining Urban Eats Rewards! You’re Bronze now. Earn a free appetizer at 100 points. You have 0 so far—grab dinner soon to start earning!”
  • Points Update: After each meal, a text: “You just earned 45 points—total 45/100. Keep going!”
  • Tier Upgrade: “Congrats, you’re Silver! Enjoy 25% faster point earnings. Show text SILVER next time for a free dessert on us.”

Results: Over 3 months, membership surges to 1,200 diners, half of them reach Silver, and overall monthly sales jump 15%.

Expanding Beyond Simple Rewards

  • Gamification: Add challenges, e.g., “Order 5 different specials in a month, earn 50 bonus points.”
  • Surprise & Delight: Randomly gift a free item to a loyal member.
  • Referral Tiers: Reward members for bringing friends into the loyalty program.
  • Cross-Promotions: Partner with local businesses or events. “Show your membership text for a discount at the neighboring theater.”

Conclusion

Retaining customers is far more profitable than constantly chasing new ones. By integrating loyalty offers with SMS, you harness the immediacy and personal feel that email or social media can’t match. The key is providing real value—meaningful discounts, freebies, or exclusive events—rather than trivial promotions that fail to excite.

Design your loyalty tiers thoughtfully and ensure your messaging is consistent, whether it’s a “Happy Birthday” treat or a nudge to use soon-to-expire points. Over time, your loyalty program can evolve into a powerful engine for stable, predictable revenue and a brand community that actively promotes your restaurant to others.

Ready to Retain More Customers?

Get started by picking the right SMS platform, brainstorming a compelling reward structure, and rolling out a straightforward sign-up process. Then, keep refining your approach based on data and diner feedback—leading to a robust, high-retention program that benefits everyone.

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