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Restaurants using loyalty cards to reward customers

01:00 AM EDT on Monday, July 2, 2007

BY WILL SHANLEY

The Denver Post

DENVER — The airline industry for years has used frequent-flier programs, enticing consumers to fly more with the promise of perks and prizes.

Now some restaurant companies are using the same strategy, rolling out electronic loyalty cards that reward consumers for eating and drinking more.

The latest example is Brinker International, the Dallas-based company that owns Chili’s Grill & Bar and Maggiano’s Little Italy, among other brands. Brinker in May launched its “Eat & Enjoy Rewards” program, with Colorado’s Front Range serving as a test market.

“It’s the same as airline points — you work to earn them, and then you spend them on your family,” said Kurt Turner, 56, of Castle Pines, who enrolled in the program at a Chili’s in Littleton last month. “It gives me a greater sense of value when I eat here.”

Restaurant loyalty programs are not entirely new. Sandwich shops and other casual eateries have long given out punch cards that, after a certain number of purchases, are redeemable for a small discount or a free meal.

But Brinker and other sit-down restaurant chains have gussied up their programs, using an electronic format and offering a slew of unusual prizes to woo patrons.

For instance, when Brinker patrons earn 3,500 points, the equivalent of $350 spent, they can redeem those points to bypass the wait list and receive the next available table at any of the company’s four restaurant brands. Other prizes range from a free dessert, for the equivalent of $100 spent, to a wedding reception hosted at a Maggiano’s restaurant, for $100,000 spent.

Brinker decided to test the program in Denver for two reasons, said Lisa Miller, a vice president for the publicly traded company.

First, the Denver metro area has all four of the company’s brands: Chili’s, Macaroni Grill, Maggiano’s and On the Border. Second, the Front Range has historically been one of Brinker’s strongest-performing markets, she said.

If successful here, Miller said, Brinker would consider rolling it out in other markets across the country.

However, the program does present a handful of business pitfalls, said John Imbergamo, a Denver-based restaurant consultant.

Imbergamo said some people, for instance, might like Maggiano’s but dislike Chili’s. By highlighting the fact that one company owns both, Brinker runs “a tiny” risk of damaging one or more of its brands in the eyes of some consumers.

Imbergamo pointed out that companies such as Tampa, Fla.-based OSI Restaurant Partners, which owns Outback Steakhouses and Roy’s, a high-end eatery that offers Hawaiian fare, have sought to keep the two restaurant brands separate by not promoting the parent company.

Imbergamo said Brinker’s loyalty program is the first time he has seen the company promote the parent brand — not just the individual restaurant chains.

In addition, Imbergamo said the Brinker program could prove to be a financial loss, in part because of expenses related to the rewards. He said Brinker must be careful that the program is actually driving additional business — not just rewarding customers for visiting the same restaurants the same number of times.

He said it also might prove difficult for Brinker to persuade consumers to sign up for the program. “It’s a challenge to get those cards in people’s wallets,” he said.

Kenny Sonoda, owner of Sonoda’s Sushi & Seafood, said he has signed up 45,000 people for his customer-loyalty program. He said he pays a monthly fee to a California-based company that helps run the program, an expense that comes out of the company’s advertising budget.

“The goal is that people who eat once a month will come out twice a month,” said Sonoda, who operates four Denver-area locations. “This costs the customers nothing.”

“It’s the same as airline points — you work to earn them, and then you spend them on your family. It gives me a greater sense of value when I eat here.”

Kurt Turner
Chili’s patron
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