Dive Brief:
- Cracker Barrel has added a rewards program, first tested in July, across its system, the company announced Wednesday.
- Customers earn one point, which the brand refers to as “Pegs” in homage to its peg game, for every dollar spent. Diners can redeem a variety of items at 75, 150 and 225 points.
- The company is expecting the rewards program to help bolster traffic and sales after restaurant and retail sales fell below expectations in Q4, CEO Sandy Cochran said on Cracker Barrel’s earnings call last week.
Dive Insight:
Implementing tiered rewards redemption options is a common way for brands to differentiate and create a perception of progression in points-based reward programs for customers.
For Cracker Barrel, customers can redeem $5 take-home meals — prepared meals that diners can add to regular entree orders— at the 75-point level. Diners can also redeem individual sides, $5 in retail rewards, “Barrel Bites” and drinks at this level, according to the about page for the program.
At the 150-point redemption level, customers earn kids entrees, desserts or $10 in retail rewards. For 225 points, customers can redeem any entree or $15 in retail rewards.
The company is also offering a free “Barrel Bites” order for signups, a free dessert on customers’ birthdays and 10 bonus points on the anniversary of a customer’s signup.
There are, however, limits to the program’s points accumulation. According to the program’s terms and conditions, customers can accumulate a maximum of 500 points at any one time, and cannot earn more than 5,000 points in any calendar year.
Another condition, likely intended to limit overdiscounting as menu prices rise, limits the total monetary value of redemption: “75 Peg Rewards are capped at $7.50; 150 Peg Rewards are capped at $12.50; 225 Peg Rewards are capped at $20.00; 300 Peg Rewards are capped at $27.50; 375 Peg Rewards are capped at $35.00; and 450 Peg Rewards are capped at $40.00.”
In a statement emailed to Restaurant Dive, Cracker Barrel said the higher tier options gave customers the ability to redeem multiple 225-point options, and gave the brand flexibility to add rewards tiers above the ones that currently exist, should it so choose.
Cracker Barrel has struggled to meet its sales goals in recent months, and has shed a net 4 Cracker Barrel stores since the end of Q4 2022, according to its latest earnings release. According to the release, “comparable store restaurant sales increased 2.4%, including total menu pricing increases of 8.7%.” The significance of menu pricing in that sales growth suggests traffic declines.
Cochran confirmed traffic declines at the brand on its most recent earnings call.
“Our traffic declines were broad-based. They were against all of the age cohorts, which was a bit of a shift. The younger cohort held up better than the over 65,” Cochran said. Traffic has been stronger with lower-income cohorts, Cochran said, likely reflecting the chain’s value proposition, despite its menu price increases. Cochran did not attribute falling traffic to pricing action, however, and instead blamed it on weakened marketing.
“The volume and substance of our marketing messages in the fourth quarter were not as effective as we’d wanted, particularly against the backdrop of a highly competitive and promotional marketplace,” Cochran said.
