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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Restaurant chains make it cost more to be loyal

Lizzy Laufters, a digital account executive in Raleigh, N.C., switched to Starbucks after Dunkin’ changed its loyalty program.  (EAMON QUEENEY)
By Julie Creswell New York Times

At least twice a month, Lizzy Laufters could count on getting a free coffee.

A member of the Dunkin’ loyalty program, Laufters, a 22-year-old digital account executive for a public affairs firm in Raleigh, North Carolina, stacked up points by frequently buying her favorite drink – a medium caramel iced coffee with two creams and two sugars.

Then, last fall, Dunkin’ changed its rewards program.

“I lost one of my free drinks each month,” Laufters said. “Prices were already increasing, and I was like, ‘I can’t believe they’re doing this.’ I felt like all of the free perks I would get were now gone.”

So Laufters ditched Dunkin’ for Starbucks. This month, Starbucks changed its reward system. “Are you kidding me?” Laufters asked when told of the changes.

During the pandemic, many fast-food chains and restaurants used rewards programs to encourage customers to use mobile apps. It helped speed up ordering and reduced bottlenecks at drive-thru lanes and pickup counters. The apps were also helpful in driving customers to the stores at different times with offers of free food and drinks. In exchange for sharing their information, including email addresses and favorite orders, customers could accumulate points that earned them free burgers, burritos, lattes or other items.

But now, restaurants are changing up the rewards programs, much to the annoyance of their loyal customers. In some cases, the programs are becoming more complicated, involving “tiers.” Even more often, they are simply requiring significantly more points to qualify for a free entree or beverage.

The companies say inflation is to blame, that the costs of all those free burgers and Frappuccinos are adding up. But changes to rewards programs risk angering customers, sometimes the most loyal ones, who are already irritated by sharp price increases for their favorite foods and drinks in the past year.

“Oh, yes, the companies are worried that they could anger customers, and the good ones are taking a lot of steps,” like sending bonus points for free food and drinks directly to key customers, said Kate Hogenson, principal consultant at the Mallett Group, a brand-loyalty consulting firm.

Many of the reward programs had not changed since before the pandemic, which meant customers were accumulating points and rewards more quickly as prices for food and drink soared in the past two years. “Customers got used to how fast they were earning points and rewards,” Hogenson said, and now can feel cheated.

In October, Dunkin’ drew criticism across social media when it made changes to its loyalty program. Customers who used to earn a free beverage, including fancy premium drinks, after spending about $40 now have to spend about $90 to earn a signature latte.

“Why is Dunkin’ Donuts changing its rewards program?” Boston Public Radio asked about the Massachusetts-based company. “How are you handling this catastrophe?”

Scott Murphy, the president of Dunkin’, which is owned by privately held Inspire Brands, said the company had rolled out the new program to deliver what customers had been asking for – food. Customers can now redeem points for food, including hash browns and breakfast sandwiches. He also said Dunkin’ had added 2 million new loyalty members since the changes.

“Since launching Dunkin’ Rewards in October, we continue to see positive momentum and strong results with the new program,” Murphy said.

Chipotle faced a similar social media backlash for changing its rewards program twice in the last two years. When the program began in 2019, loyalty members could earn a free entree after accumulating 1,250 points, the equivalent of spending about $125. The redemption points were bumped up to 1,400 early last year and then again to 1,625 in the fall. That means customers now need to spend $162.50, or $37.50 more than a year ago, to earn a free burrito.

In a call with analysts in early February, Brian Niccol, the chief executive of Chipotle, said the number of rewards members in 2022 had grown 20% from the previous year to 31.6 million. He added that digital transactions constituted 39%, or $3 billion, of all sales.

“In 2022, 60% of our rewards program promotions were personalized, and we plan to increase this going forward to drive engagement and enroll new members,” Niccol told analysts.

Starbucks, whose loyalty program dates to 2008 and is one of the oldest in the industry, alerted its customers in a late December email that changes were coming to its program in February.

Basic drinks like coffee and tea that were once redeemable for 50 stars, or after a customer spent as much as $50, now require 100. Fancy lattes and Frappuccinos climbed from 150 stars to 200. (Customers receive more stars by paying with a preloaded Starbucks card.)

Starbucks lowered the number of stars required for simple iced coffee and iced tea. The company, which said the changes were needed to “ensure the long-term sustainability” of the program, said no executives were available to comment.

Some Starbucks customers said they were fine with the changes.

“They’re giving jobs to people,” said Adam Rowe, 40, a pharmacy technician for an online pet retailing company in Louisville, Kentucky. “They have to pay rent. There are reasons why they are having to do this.”

Rowe said he still had his Starbucks reward card from 2012 and enjoyed his interaction with employees when he ordered his coffee: a grande with a splash of almond milk and a Splenda.

Laufters, however, sees the freebies she gets as a key part of the loyalty program. She recently joined McDonald’s rewards program and received a free Big Mac and free six-piece McNuggets meal.

“I am downloading the restaurant apps and giving them my information,” she said. “I value my privacy, so the rewards are what they are giving me in return.”

This article originally appeared in The New York Times.