National French Fry Day: Brands leverage free fries to boost customer loyalty

It's National French Fry Day, and big brands are leveraging the salty "holiday" to boost customer loyalty.

Fast food giant McDonald's (MCD) will be giving away free orders of large fries (no purchase necessary) all day on Wednesday — but only to customers who order through the McDonald's app and are members of the chain's 26 million-plus loyalty program.

Similarly, Wendy's (WEN) is offering free fries throughout the week with specific purchases that change daily. The catch? They're only free if ordered through the Wendy's app, which (surprise!) requires customers to join the brand's digital loyalty program, which had about 19 million members at the end of last year.

Other chains are leaning in on the trend, too, with Burger King's (QSR) "Royal Perks" members receiving a free order of chicken fries with any $3 purchase, while Sonic Drive-In customers who purchase through the app can enjoy free medium tater tots or fries.

The greater push toward online and digital rewards comes as restaurants seek to attract new customers and retain existing ones as competition in the fast food space intensifies.

"Without question, restaurant organizations that invest in loyalty see greater sales, higher retention of customers, and, we believe, higher margins long-term," Savneet Singh, CEO of restaurant management platform PAR Technology, previously told Yahoo Finance.

According to Singh, reward programs lead to greater customer loyalty, which, in turn, drives frequency, spend, check averages, and engagement — especially during tough economic times.

PAR, the parent company of loyalty app Punchh, whose client list includes top brands like Taco Bell, Pizza Hut, KFC, and Arby's, among others, helps brands improve operations to better capture the long-term value of a customer.

"When you build a loyal following, that following comes back to your restaurant. You don't need to re-market to them, but more importantly, you have more data on them," Singh said.

He added, "Loyalty programs are an incredible way to build a bond with that customer so they stay with you for the long run."

Recent data proves the benefits of these types of offerings with Chipotle (CMG) announcing last month that it has expanded its loyalty program to Canada.

"The thing that's most attractive to us is we can have a more personalized one-to-one relationship with [these customers]," Chipotle CFO Jack Hartung told Yahoo Finance in an interview, revealing that the Mexican chain's loyalty program boasts 28 million members and counting.

"Those who join loyalty come to Chipotle more often, and they spend more when they come," the executive continued.

Similarly, Taco Bell (YUM) revealed earlier this year that members of its subscription service, the Taco Lover’s Pass, were three times more likely to visit a Taco Bell restaurant per month.

The company added that the program boosted new reward members by 20% and generated a 35% increase in overall spending from active members.

Peter Saleh, managing director and restaurant analyst at BTIG, told Yahoo Finance that "almost everybody has a rewards program."

He described it as a necessary "lever" to drive growth, emphasizing that most companies will need to eventually utilize their own digital-first programs as they mature.

But the analyst noted that the most powerful factor of a rewards program is "you get to learn a lot about your customer."

"Restaurants that have loyalty programs know when a customer ordered, what they ordered, how much they spent, what location they visited, their age — all types of data that allows these restaurants [to make better decisions]," he explained.

Singh added that technology has also created a more sophisticated way of tracking loyalty programs by utilizing that real-time data to better drive long-term customer value.

"Rewards and digital go hand-in-hand," Saleh agreed. "The most powerful thing is all the data that these companies capture over the course of time."

Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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