- More diners are using restaurant loyalty apps to get cheap or free food.
- One customer told BI his family compares fast-food apps and orders "whatever's the cheapest."
- McDonald's said loyalty-platforms sales more than tripled in three years. At Starbucks, its app accounts for 30% of transactions.
Diners are turning to fast-food loyalty apps for cheaper meals as years of price hikes catch up with customers.
Fast-food restaurants raised prices during the pandemic to offset rising labor and food costs. The cumulative price increases are now catching up with diners, who say that fast food no longer represents value.
Some restaurants' loyalty apps offer diners discounts on meals. McDonald's app, for example, gives personalized offers, while Wendy's is currently offering $2 Dave's Doubles to app users. Other top-ranking restaurant apps on Apple's App Store include Chick-fil-A, Taco Bell, and Domino's.
Many restaurant apps give diners points based on how much they spend, which can be redeemed for free food. In some cases, customers can get loyalty points if they order via the chains' websites, too.
People on Reddit say they're using loyalty apps to save money and get free meals.
"I have 30 different food apps downloaded and it's been at least four years since I've paid full price for any chain restaurant meal," one Reddit user posted last year. "If the app doesn't have a deal, I don't eat there."
Martin Jennings, a 51-year-old truck driver from Florida, told Business Insider that his family had apps for "pretty much every" fast-food restaurant in a quest for special offers.
Jennings said that his family had really "scaled back" on fast-food consumption because of rising prices, but that when they do order it, his wife will look at her apps to see what has the best deal that day and order "whatever's the cheapest."
By ordering through the app, his family doesn't have to wait in the drive-thru line either, Jennings said.
Warren Colehour, a 40-year-old student from Kentucky, told BI he can generally get a burger, fries, and drink from McDonald's for around $9 by ordering through the app.
"I literally drive to the restaurant, pull up into the parking lot, order through the app so I can try to get a better deal … That's the way to get the discount," he said.
'Aggressive discounting' on the app encourages loyal customers to come back
By encouraging diners to download their apps so that they can sign up for their loyalty programs, fast-food chains can also collect more customer data.
They can then use this to target their promotions: If you almost always get a strawberry milkshake from a certain chain, its app might prompt you to add it to your order, for example. It also might offer you a personalized discount on this specific item.
Sharon Zackfia, an analyst at William Blair, told BI that she'd seen some chains offering "pretty aggressive discounting via the app." She said that this enabled restaurants to "incentivize" their loyal customers to return without offering money off to diners who aren't loyal.
McDonald's lists a range of reasons why customers should download the app on the app store: You can collect points, order ahead, get delivery, and receive personalized offers.
McDonald's CEO Chris Kempczinski told analysts at an investor update in December that the company had 150 million loyalty program users who had been active in the last 90 days across its top 50 markets. "This provides us with scalable data to serve each of our customers in unique and engaging ways," he said.
Joe Erlinger, president of McDonald's US, said that loyalty customers in the US visited 15% more often and spent nearly twice as much as non-loyalty customers in markets including the US and Canada.
Systemwide sales through McDonald's loyalty platforms more than tripled in the last three years to over $20 billion, Erlinger added. He said the company expected this to hit $45 billion by 2027.
Starbucks has also been investing heavily in its app. CEO Laxman Narasimhan told analysts in January that a record 30% of Starbucks orders are now made on its app.
Customers who used the app "developed a routinized long-term relationship with our brand that increases both traffic and transactions," he said.
Starbucks CMO Brady Brewer said that through the app, Starbucks can also send personalized communications to encourage regular customers to spend more and occasional customers to visit more often.
Is fast food just too expensive nowadays? Contact this reporter at [email protected].