RESTAURANT CONSUMER SEGMENTATION REGARDING LOYALTY REWARDS PROGRAMS
The Rewarding Diners consumer segmentation of restaurant diners and use of restaurant loyalty rewards programs helps restaurant companies understand dining and loyalty behavior among discrete consumer segments. The segmentation is based upon a U.S. national survey with 1,122 responses from consumers aged 25 to 65 with household incomes of $75,000 or more.
For companies planning or currently executing a restaurant loyalty rewards program, this segmentation enables several things:
- Improved targeting by understanding those guests that represent the greatest opportunity. Loyalty programs are tie-breakers that allow companies to generate incremental visits by shifting visits within the category from a competitor to your brand. By understanding how many visits per month certain consumers have in the category, you may compare how many visits they have with your brand to understand how many additional visits may be shifted to your brand.
- Comparison of this national-level segmentation, with breakouts by QSR, casual dining and fine dining, against an individual company’s guest composition. This is best accomplished by comparing the data in this segmentation to a similar survey conducted with your specific guests. This segmentation study provides a framework that may serve as a starting point to use when placing guests into a segment based upon their results to a survey.
- Better understanding of the makeup and likely needs of segments to maximize relevance in marketing efforts.
The segmentation uncovers six discrete segments:
- Power Brokers
- Good Fellows
- Working Values
- On The Go
- Casually Focused
- Frugassional
POWER BROKERS
These consumers represent 7% of the population and 27% of the spending. They use restaurants for business and pleasure. They’re young (52% less than 35 years of age), successful (35% have a household income of $150,000) and they source meals from restaurants every day. Their average monthly restaurant visit rate is 30.8 and they use all types of restaurants, with 7.3 fine dining visits, 10.6 casual dining visits and 12.9 QSR visits. The highest percentage of their restaurant category spending is in fine dining (39%).
Power Brokers are 57% male and well educated – 78% have a bachelor’s degree or graduate degree. Among this group, 37% have paid a fee to join a restaurant loyalty program. They’re highly engaged with restaurant loyalty programs with an average participation of 12.2 programs. They’re highly motivated by loyalty programs – they estimate their visits will increase 43% as a result of an appealing restaurant loyalty rewards program.
GOOD FELLOWS
This segment is labeled ‘Good Fellows’ because 71% of the members in the segment are male. They use restaurants for business and pleasure. They represent 10% of consumers and 14% of spending. They cluster in the 35-54 age range (58% in that range) and in the lowest income bracket among the sample (45% with household incomes of $75,000 – $99,999). Their average monthly restaurant visit rate is 14.5 and they use all types of restaurants, with 2.3 fine dining visits, 4.9 casual dining visits and 7.3 QSR visits. The highest percentage of their restaurant category spending is in casual dining (39%).
Good Fellows are 71% male and well educated – 70% have a bachelor’s degree or graduate degree. Among this group, 26% have paid a fee to join a restaurant loyalty program. They’re moderately engaged with restaurant loyalty programs with an average participation rate of 5.3 programs. They’re highly motivated by loyalty programs – they estimate their visits will increase 39% as a result of an appealing restaurant loyalty rewards program.
WORKING VALUES
This segment represents 16% of consumers and 10% of spending. They use restaurants for business and pleasure. They cluster in the 35-54 age range (59% in that range) and in the lowest income bracket among the sample (46% with household incomes of $75,000 – $99,999). Their average monthly restaurant visit rate is the lowest in the ‘business and pleasure’ category at 6.7. They use all types of restaurants, but at a moderate rate with 1.1 fine dining visits, 2.4 casual dining visits and 3.3 QSR visits. The highest percentage of their restaurant category spending is in casual dining (44%).
Working Values are 56% male and well educated. 65% have a bachelor’s degree or graduate degree, but of note is the fact that this group has the highest percentage of graduate degrees in the study (25%). Among this group, only 14% have paid a fee to join a restaurant loyalty program. Their engagement level with restaurant loyalty programs is low with an average participation rate of 2.0 programs. However, they’re still motivated by loyalty programs – they estimate their visits will increase 36% as a result of an appealing restaurant loyalty rewards program.
ON THE GO
This segment represents 10% of consumers and 20% of spending. They use restaurants only for pleasure. They cluster in the 35-54 age range (53% in that range) and in the lowest income bracket among the sample (55% with household incomes of $75,000 – $99,999). They use restaurants regularly, with an average monthly visit rate of 22.3. They use fine dining about twice (2.1 times) per month, but the lion’s share of their restaurant visits are in the QSR (12.4 visits per month) and casual dining (7.8 visits per month) categories. The highest percentage of their restaurant category spending is in casual dining (48%).
On The Go are 57% female and well educated. 64% have a bachelor’s degree or graduate degree, but of note is the fact that this group has the second highest percentage of graduate degrees in the study (24%). Among this group, only 13% have paid a fee to join a restaurant loyalty program. Their engagement level with restaurant loyalty programs is moderately low with an average participation rate of 3.3 programs. They’re motivated by loyalty programs but at a rate lower than the population average – they estimate their visits will increase 30% as a result of an appealing restaurant loyalty rewards program while the overall population average is 35%.
CASUALLY FOCUSED
This segment represents 18% of consumers and 18% of spending. They use restaurants only for pleasure. They cluster in the 45+ age range (64% in that range) and in the lowest income bracket among the sample (52% with household incomes of $75,000 – $99,999). They use restaurants about once every three days, with an average monthly visit rate of 10.3. They use fine dining occasionally – about once (.9 times) per month. Most of their restaurant visits are in the QSR (5.3 visits per month) and casual dining (4.1 visits per month) categories. The highest percentage of their restaurant category spending is in casual dining (57%).
Casually Focused are 65% female and moderately well educated. 56% have a bachelor’s degree or graduate degree. Among this group, only 4% have paid a fee to join a restaurant loyalty program. Their engagement level with restaurant loyalty programs is low with an average participation rate of 1.9 programs. But, they’re motivated by loyalty programs – they estimate their visits will increase 38% as a result of an appealing restaurant loyalty rewards program.
FRUGASSIONAL
This segment represents 39% of consumers and 11% of spending. They use restaurants only for pleasure. They cluster in the 45+ age range (74% in that range) and in the lowest income bracket among the sample (56% with household incomes of $75,000 – $99,999). They use restaurants about once per week or less, with an average monthly visit rate of 3.8. They use fine dining rarely – about once every three months (.3 times per month). Their sparse restaurant visits are in the QSR (1.9 visits per month) and casual dining (1.6 visits per month) categories. The highest percentage of their restaurant category spending is in casual dining (58%).
Frugassional are 65% female and moderately well educated. 57% have a bachelor’s degree or graduate degree. Among this group, only 1% has paid a fee to join a restaurant loyalty program. Their engagement level with restaurant loyalty programs is very low with an average participation rate of just .6 programs. But, they’re motivated by loyalty programs – they estimate their visits will increase 31% as a result of an appealing restaurant loyalty rewards program as compared to 35% for the overall population.
IMPLICATIONS
Two segments – Power Brokers and On The Go – represent just 17% of consumers but 47% of spending. On the other end of the spectrum, Frugassional and Casually Focused represent 57% of consumers and just 29% of spending.
For fine dining restaurants, Power Brokers represent the greatest opportunity. They dine out daily, use fine dining restaurants on a regular basis and spend the greatest percentage of their restaurant spend with fine dining restaurants. They’re quite likely to pay a fee to join a rewards program and are highly motivated by rewards programs. Good Fellows are a secondary focus for fine dining restaurants and a primary focus for casual dining.
For casual dining restaurants and QSR, On The Go represents the greatest opportunity. They dine out more than 22 times per month and are more focused on casual and QSR than fine dining. They’re not as highly motivated by rewards programs as other segments, but they still estimate a visit rate increase of 30% as a result of a good loyalty program. Good Fellows and Casually Focused are a strong secondary focus for casual dining because of their concentration of spending in that category and their level of motivation as a result of loyalty programs.
The Working Values and Frugassional segments are not strong targets for restaurant rewards programs. They are motivated by rewards programs, but their lifestyle or life stage dictates a limited level of restaurant usage. Their conditions may change in a manner that encourages or allows more restaurant usage, but restaurant companies should be mindful that if they engage with these consumers in a loyalty program, they will demonstrate a low visit rate.
