Success in the restaurant world, as with any industry, requires a depth of knowledge across a breadth of spheres and specialties. I’ve always envisioned the complexities of the restaurant business model as a three-dimensional Venn diagram encompassing the economics of food, real estate, and hospitality, with overlapping affinities of cooking, culture, and consumer. A jumbo-sized assortment of moving parts.
Having worked in the hospitality space for 25-plus years, I’m wary of the proverbial “quick fix.” Incremental changes that can yield big results are out there, and they almost always originate from a customer’s insight or attitude. It’s that insight that is powering the positive results we’ve enjoyed with our recently launched “Royalty Program,” which is our elevated version of the traditional loyalty program.
To set the table here:
Like many restaurants in the summer of 2021, Rib & Chop house experienced a post-COVID dine-in boom. To say folks were merely ready to go out would be an understatement. It was a need: to be waited on, to sit with other customers, even to be taken to a table was a big deal.
It’s one thing to look at all the data points that tell this story, but quite another to watch customers file into our restaurants with a mixture of joy, and even relief, on their faces. The data wouldn’t tell you how crucial the atmosphere of dining at a real restaurant—you know, with real forks and real steak knives—was for people.
It was around this time that we started hearing, anecdotally from our employees, about how guests would come up to the host or hostess and try to hand them some money in order to get a table or get bumped up the waitlist. And it wasn’t just an outlying occurrence here and there. It became semi-regular.
Our guests were demonstrating a clear need and it didn’t take an MBA to recognize the opportunity that was presenting itself to us. The question was how to respond to it in a way that remained true to our brand promise of “Rocky Mountain Hospitality.” Rib & Chop House prides itself on its inclusivity, being a place where everyone is welcome. Rolling out a program that would provide preferential treatment among guests was a risk. At best, we were making educated guesses at what the best path forward would be.
It’s also important to note that we already had a rewards program, Rib & Chop House’s Member Rewards, which allows customers to earn 5 percent back on all purchases and $10 back for every $200 spent. It didn’t make sense to amend or extend how that program operated in order to service these guests. What we guessed at the time, and came to confirm once the program got going, was that the guest looking to skip the line would fit an already existing segmentation within our customer profile: the high-end user.
This called for something entirely new, and long story short, after a few brainstorms with the marketing team, we landed on the idea of a loyalty program the value of which would far exceed its cost. Recognizing that it needed to signal an elevated steakhouse experience, we called it the Royalty Card. But we also found the term “loyalty program” to be diluted. If everyone in the world can access it, there’s nothing to it; it’s simply a marketing tool where you accrue points to redeem for a discount or free item.
We wanted to really keep ours special and stand out in a sea of loyalty and sameness. That’s why we have to cap the number sold. Not every marketing/loyalty vehicle is meant to have unlimited growth. When you have something wonderful, take it for what it is, don’t try to expand to the point it becomes diluted. If it lost exclusivity, it would lose the soul. Capping the number of memberships also maintained the inclusive spirit of the restaurant.
We carefully considered the benefits. For $50 a month, members would receive:
$600 in gift cards annually—which is the cost of the card itself
A complimentary set of branded steak knives
10 percent off every check, including alcohol
We tested at two locations and experienced early success—with the only major kink being how the restaurant-level team messaged the priority seating to non-Royalty customers.
We are “sold out” of royalty memberships at nearly all locations. Note that Royalty member reservations do not affect the wait times of non-members, because each store sets aside tables specifically for those users. To determine how many tables are necessary every night, we use a predictive model based on seating capacity, whether it is a weekend or weekday, what may be happening in town, and how many memberships have been sold. For example, if a store has 150 memberships and it’s Friday night, it may hold five or six tables. The system assumes some Royalty members are still making reservations as well.
The customer learnings have borne out the hunches we had made early on:
A typical check for a Royalty member is 14 percent higher than a non-royalty member. They get a 10 percent discount so the total check is higher, even with the discount.
The typical Royalty member is not a discount seeker; they’re experience seekers. They’re not looking to save 10 percent but looking to take that 10 percent to upgrade their glass of wine or order a dessert.
Tips are higher for servers, too.
The average guests may visit 1–3 times per month. Royalty members are visiting five times per month. Granted, because we’re in smaller cities, we’re often the best game in town. If we were in a major DMA it would be more challenging to get those visit numbers.
Less than 1 percent have canceled their membership. It’s universally loved. So how do we grow the Royalty Program if it’s sold out? Each time we build a new restaurant (we’re looking to build 3 in the next 18 months), it provides incremental revenue.
Perhaps most interesting of all is that the most loyal Royalty members have reservations. What the Royalty card enables is capturing is an incremental visit. EG, it’s 5 p.m. on a Thursday, and the family has no plans for dinner. They decide to go to Rib & Chop House because they know the experience will be good, and there will be no wait. That’s key. It’s not about boiling the ocean with a loyalty program, it’s about making your existing top-tier guests brand evangelists.
Like many aspects of a restaurant, the Royalty Card is a work in progress. We’re considering more member-only events, like wine tastings, and even using them as a focus group, giving these guests a first taste of a new menu item. A special R&C cookbook as a gift is also in the works.
Of course, there are no formulas for success in the restaurant world. The Royalty Card program as we’ve developed it may suit a particularly Midwestern sensibility. What’s undeniable though is that insight is a key foundational element. If you’re looking for ways to grow your brand, listening to your guests is a good place to start. – Source: FSR.