As technological advancement races into new AI territory every day, it is easy to join the conversations of concern about operations and employment. There are always two sides to every coin, and any time a business is on the brink of change, it also means a new opportunity awaits. The ever-evolving digital realm is just such an opportunity, and though it requires nimble adjustment and a willingness to let go, it behooves restaurant owners to reframe from negative to positive thinking.
Steve Bocska, CEO of PUG Interactive, writes about this very thinking pattern for Nation’s Restaurant News (NRN), as it applies to loyalty programs at restaurants. “If a brand cannot prove its loyalty program has a meaningful, profitable impact, then it’s time to rip off the bandage and put better solutions in place,” he says. “The industry keeps applying cosmetic enhancements to structural problems, hoping new tiers or more points will mask the weaknesses, but they will not. The gap between what loyalty programs are supposed to do and what they actually accomplish has become impossible to ignore.”
Bocska argues that the main reason restaurants are losing loyalty program customers is that tired loyalty programs ignore what customers believe should be standard: value and engagement. “Loyalty programs have been stuck…for years: viewing loyalty as a rewards mechanism, treating engagement as optional, and relegating differentiation to an afterthought. If this represents the cutting edge, the industry’s imagination has stalled.”
His encouragement toward modern thinking is applicable in all aspects of restaurant management, operations, and community engagement. The study of flailing loyalty programs and how to fix them is a micro-observation of what growing, thriving restaurants are choosing to implement in all their systems.
As Bocska continues, he calls out the looming threat of the AI-generation and how most restaurant owner-operators are choosing to ignore the issue altogether. This sleepy strategy will only find these businesses left in the dust. The time to learn, adopt, and implement is now. “These systems are already embedded in search, commerce, and payment layers, and they will soon influence everyday food and retail choices,” he says. Becoming an active participant in emerging technologies grants new—and better—understanding to the modern customer as well. “These new agentic “customers” do not feel an emotional connection to brands. They do not care about point balances, nor do they appreciate tier status. They prioritize functional requirements and optimize value with machine precision, even when instructed otherwise.”
“Loyalty, as the industry currently defines it, cannot survive in an AI-mediated world,” Bocska warns. “But authentic brand-customer relationships build upon reciprocal benefit, pleasurable experiences, creativity and engaging narratives most certainly can. Fortune favors the bold, and boldness is exactly what the industry needs now.”
What is true about restaurant businesses of the past and restaurant businesses with successful futures is the same: their models are truly customer-centric. They have strong but flexible brands, with timeless quality and care that is willing to adapt to the times. For a business to be truly focused on the customer experience, there must be a willingness to know, understand, and adjust to what the current customer is looking for—not just what they have wanted in the past.
Richard Weil, owner and principal of National Restaurant Consultants, primarily agrees with Mr. Bocska’s views. However, he also notes, “Emotional connection to brands, based on consumer-sustaining loyalty and awareness of tier status, may waiver as an AI emerges. But it is my belief that loyalty will sustain within most consumer demographics when the experience meets guests’ expectations. “Consumers are still human and feeding consumers’ egos with opportunities to create greater engagement still should remain at the forefront for attracting and retaining loyal guests. Just look at any airplane loading process and this will confirm that tier status and loyalty remain important—and that, in my opinion, translates to the foodservice industry.”