By Evie Liu
If you're a big spender at Starbucks, you might get a chance to travel to Tokyo, Milan, or Costa Rica to "explore and celebrate coffee culture globally" -- with all expenses paid by the company.
The coffee giant has a not-so-secret weapon to lure new customers and get regulars to spend more: loyalty programs. It recently revamped its program, introducing a three-tier structure that offers ways to earn points faster, but also dangles exclusive merchandise and curated experiences for its top-tier members.
"With the scale of the program, small changes in behavior can compound quickly," CEO Brian Niccol said on the company's investor day on Jan. 29, noting that one additional transaction from half of its active members -- currently more than 35 million -- could generate roughly $150 million in incremental revenue.
Starbucks isn't alone. Years of inflation-driven price hikes have put pressure on restaurant traffic as consumers pull back. Chains are leaning harder on rewards programs as a way to drive repeat visits while defending margins, as heavy discounting can erode profit.
Most companies don't report revenue from loyalty programs as a separate line item, but executives say rewards programs help keep customers coming back and spending more.
In August, McDonald's said U.S. customers more than doubled the frequency of their visits after joining its program. In the fourth quarter, the fast-food giant posted nearly 7% comparable sales growth in the U.S., bouncing back from the weaker performance a year ago.
According to data from Placer.ai, a disproportionate share of McDonald's foot traffic gain came from customers who visit four or more times a month. High-frequency diners -- those visiting eight or more times a month -- accounted for 33% of sales in the second half of 2025, up from 25% in 2019, said Placer.ai.
Active members of McDonald's loyalty app globally have grown 40% in the past two years to nearly 210 million, while sales from loyalty members nearly doubled, making up a quarter of total sales in 2025, according to the company. McDonald's stock is up 9% over the past 12 months.
Most large chains' programs are operated through mobile apps that track consumer purchases and behavior in real time. The data allow brands to tailor rewards to individuals. That direct line of communication also helps restaurants reach customers faster with new product launches and limited-time offers. "Digital apps have really opened the door for more creativity with loyalty programs," says R.J. Hottovy, head of analytical research at Placer.ai.
Rather than the old "Buy 10 and get one free" model, companies today often design their programs like a game, using time-sensitive missions, milestone tracking, and peer ranking to encourage repeat visits and higher spending.
Last year, Chipotle Mexican Grill launched a "Summer of Extras" campaign for its 21 million active loyalty members. Customers make qualifying entree purchases to earn reward points, collect badges, and increase their chances in a lottery draw to win the grand prize -- one free entree per week for a year and a $100 gift card.
The published rankings have pushed many members to share their progress on social media, says Nicole West, Chipotle's vice president of digital experiences. Loyalty sign-ups rose 14% year over year during the campaign, the company says, and members' visit frequency and point redemptions were higher than in prior summers.
Chipotle is still working to regain momentum. In the fourth quarter, comparable sales were down 2.5% from a year ago, but Placer.ai data suggest that foot traffic has improved since late November. The stock has declined 30% from a year ago.
Traditional punch cards have gone by the wayside because they treat infrequent visitors and heavy spenders the same, which leave top customers feeling underappreciated, says Evercore ISI analyst David Palmer.
Tiered rewards aim to fix that by escalating benefits. Higher-tier members may receive early access to new products or invitations to attend exclusive events, which strengthen their connection with a brand.
Starbucks' new program, for example, allows Gold members -- those earning 500 stars in 12 months -- to keep their stars without expiring, and they're given extra days to redeem birthday treats. Reserve members -- those earning 2,500 stars in 12 months -- unlock premium perks such as the chance to vie for those trips. "It helps to reward your whale customers -- the most intense loyalists," Palmer says.
Amid its turnaround effort, Starbucks in the first quarter delivered positive U.S. same-store sales growth for the first time in two years -- a notable shift after an extended stretch of softer demand. The stock is down 13% over the past 12 months, but has risen 16% so far this year.
Management expects the redesigned program to drive up comparable sales growth by one percentage point for U.S. company-operated stores, where 60% of sales come from rewards members.
To be sure, loyalty programs need to be well designed to change behavior. Setting reward thresholds too high could discourage new customers from engaging; handing out free meals to customers who already visit regularly would hurt margins. "If you don't do rewards right, you're just giving away things," says Palmer.
And if a brand feels dated, uninspiring, or slow to innovate, no amount of points, freebies, or app notifications will fix the problem. In the end, people don't fall in love with a restaurant because of its loyalty program; they come back because they like the food and the experience is worth repeating.
"It comes down to having a digital app that's able to communicate with customers, and having unique products that offer innovation and value," Placer.ai's Hottovy says. "It goes hand in hand."
Write to Evie Liu at evie.liu@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 26, 2026 03:00 ET (08:00 GMT)
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