Value Incentives are Undermining Restaurant Loyalty Programs

Many restaurant loyalty programs revolve around discounting. From BOGO to dollar menu offerings, these loyalty rewards are focused on bringing greater value to members. However, these discount-driven loyalty programs are not as powerful as they used to be.

Both restaurant customers and loyalty members have come to expect discounts, and brands are dependent on those same discounts to drive traffic. But now, many brands are waking up to a dangerous reality: they’ve trained customers and franchisees alike to expect promotions as the norm, and pulling back is proving far harder than anyone anticipated.

At a time when everything, from food to labor to electricity, is more expensive, discounts are impacting profitability. Meanwhile, many restaurant brands, especially QSRs, are fending off a new breed of competitors, convenience stores.

Convenience stores, such as Wawa, Sheetz, Casey’s, Kwik Trip, and Buc-ee’s, are not just selling better food. They are reorganizing the customer journey around it: order at the pump, via an app and pick up in-store. They are offering surprisingly quality meals at price points that undercut traditional QSRs by half. And what’s more, convenience combines fuel and increasingly credible foodservice under one operational roof – with lower real estate costs, longer hours, and a transaction already built around habitual visits centered around emotional loyalty.

Convenience store threat

With this threat looming on top of a shifting economic backdrop, brands that quietly try to remove or scale back broad discounting from their loyalty programs see sales drop immediately. It’s not gradual or subtle; it’s a cliff, with brands publicly lambasted by frustrated consumers. That dynamic says something important: the traffic those programs generated wasn’t necessarily loyal, it was just cheap.

Franchisees feel it acutely. Many are seeing traffic hold steady while profitability erodes. They are caught between the corporate mandate to compete on value and the reality that every BOGO, every dollar-menu loss-leader, every app-exclusive 20 percent off code is coming out of their P&L first. The tension between franchisor marketing strategy and franchisee bottom-line economics has never been sharper.

Squeezed financially, brands are re-evaluating their loyalty programs. In theory, loyalty offers a smarter vehicle for value: targeted, personalized, and tied to behavior the brand actually wants to encourage. But the application has been uneven, and in some cases, it has backfired.

Take McDonald’s. In late 2025, the brand quietly cut the expiration window on MyMcDonald’s Rewards points from 12 months to six. In May 2026, it raised point costs on most redemption items by roughly 500 points each. None of this was advertised with the same fanfare that accompanied the $5 Meal Deal, the McValue Menu, or the return of Extra Value Meals. To customers paying attention—and loyalty members are, by definition, paying attention—it looked like one hand was waving a “VALUE” banner while the other was reaching into their point balance.

The backlash was predictable and earned. Members started calling it “inflation on rewards.” Ironically, the most regular customers a brand could ask for are the exact demographic most likely to notice, calculate, and resent being shortchanged.

Chipotle’s path has been more additive, at least on the surface. In April 2026, it relaunched Chipotle Rewards under a “Rewards on Repeat” framework, emphasizing more frequent free-food drops, expanded redemption options, and a redesigned app experience. The company has been careful to frame the overhaul as fully additive with no existing benefits removed. Curt Garner, the chain’s president and chief strategy officer, positioned it around “immediate value, personalization and a seamless experience.”

But even additive programs carry risk. When every brand is refreshing, expanding, and relaunching its loyalty framework – Starbucks, Red Robin, Sweetgreen, Pizza Hut, Subway, and others have all done so over the last two years—differentiation becomes harder, not easier.

Research from Alchemer published in 2026 found that 85% of QSR loyalty members say saving money is the most important benefit, outweighing status, exclusivity, or convenience. Discounts and free items, in other words, are what drive enrollment and engagement. While loyalty programs are supposed to build emotional attachment, consumers have wisened up and are treating them like financial tools instead.

Which raises an uncomfortable question: if loyalty programs are primarily mechanisms for delivering savings, and chains feel compelled to keep making those savings deeper and more accessible, are they genuinely moving away from discounting or just making it more precise?

Alternative approaches

From a practical perspective, brands can adopt one of three approaches to this value conundrum.

• Continue widespread value offers. This preserves traffic in the short term but deepens the brand’s dependency on it. Franchisees bear the margin cost, and customers remain price-elastic. But every cycle makes the eventual withdrawal more painful.

• Shift toward targeted and personalized rewards. In theory, this is the most attractive approach. The loyalty program leverages member data to deliver the right offer to the right customer at the right time, protecting margins while maintaining engagement. Today, if a brand has a loyalty program, it has the ability to personalize offers. Unfortunately, too many brands, especially QSRs, do not have the willingness and strategy to do so. Instead, they have shifted away from segmentation and blast the same generalized offers out to all their members.

• Introduce alternative engagement mechanics. A guest engagement program can leverage visit challenges, gamification, and tiered experiences to reward behavior beyond spend. Chick-fil-A One has moved in this direction with points that don’t expire, rewards that can be gifted, redemptions that include experiential or emotional value rather than pure transaction. The program is geared toward loyalty as a relationship, not just ledger.

Too many brands are still viewing loyalty programs as a margin lever rather than a customer strategy. In a K-shaped economy where higher-income guests spend freely and lower-income consumers pull back, treating all members the same is a recipe for continued frustration. Programs built for a single “average” customer no longer reflect how anyone eats.

The brands that overcome the loyalty program value conundrum are the ones willing to do three hard things:

• First, segment and define your guests. Know who your high-frequency organic visitors are versus your deal-seekers who only show up with a coupon attached. Then, build your program around that distinction.

• Second, protect the highest-value members from stealth devaluations. Shrinking points or compressing expiration windows may juice short-term liability numbers, but it corrodes the exact trust that makes a loyalty program viable.

• Third, accept that value is not the same as discounting. Value can mean speed. It can mean accuracy. It can mean recognition, consistency, or an experience that justifies a slightly higher price. C-stores are gaining partly because they’ve made convenience feel valuable. QSRs have a narrower window to make the same pivot.

The discounting treadmill is not an inevitability. But getting off it requires more than a new app interface or a tiered points system. It requires a genuine strategic reset, one that asks what a brand wants from its customers, not just what it’s willing to give away to keep the register ringing.

Ian Quintana is a senior strategist at Paytronix, where he parters with leading restaurant brands to improve customer engagement, loyalty and retention by connecting data from each guest interaction into actionable, AI-driven insights and actions.