Restaurants Seek More Loyal Customers

Apparently loyalty programs, somewhat akin to frequent flyer miles, are catching on in the restaurant industry.  Restaurant meals are some of the first casualties of recessions--McDonald's did well immediately after the crash, but many in the "casual sit-down" category got crushed.  The initial reaction was to offer heavily discounted value menus, but this doesn't seem to have been a long-term sustainable strategy.  Since restaurants, like airlines have high fixed costs and a perishable product (if you don't fill a seat at dinner, you lose that revenue, period), I suppose the next logical step is to try to lure repeat customers with a sort of "frequent diner" program.

The article says that this can provide a noticeable boost to sales, but I wonder how long that lasts.  Presumably Red Lobster et al are simply cannibalizing business from each other, rather than generating new willingness to dine out . . . so while this may boost revenue in the short term, as more and more places add these programs on, things will probably shake out to roughly where they were before.  That is, Red Lobster will gain the business of customers in their loyalty program, but lose the business of folks who are flying Applebee's or Ruby Tuesday.  Overall, it's not clear to me that this addresses the restaurant industry's core problem, which is that many people have seen their incomes decline, and many more are worried about income decline and want to save . . . and food prepared by someone else is one of the least traumatic categories in which to do some fairly serious budget trimming.