Krispy Kreme switching to points-based loyalty scheme

Dive Brief:

On April 23, Krispy Kreme will switch from its current punch-card style rewards system to a points-per-dollar rewards system, according to a notice of changes to the terms and services of the program emailed to Restaurant Dive.
The complete version of the new terms of services shows Krispy Kreme will offer 10 points for every dollar spent but does not lay out the points cost of redemption.
Krispy Kreme’s existing loyalty program offers customers a free coffee, specialty coffee, doughnut or dozen doughnuts after the purchase of 12 of the corresponding items, an effective discount rate of 8.3%, which is just above the 6% to 8% sweet spot recommended by some loyalty program experts.

Dive Insight:

The program offers special rewards offers, which the company said may be personalized based on consumer purchasing behavior and preferences, or may serve a more general promotional purpose, indicating that the program has a surprise-and-delight element in addition to its points basis.

But Krispy Kreme does not list the cost to redeem its goods in the loyalty program’s terms for service, so it is impossible to calculate, as of now, the change to the discount rate implied by the new program.

“Krispy Kreme reserves the right to modify the Rewards Menu in any way and at any time, including by removing Rewards and changing the number of Points required to obtain Rewards,” according to the new terms of service. Krispy Kreme did not immediately respond to a request for comment on discount rates.

Doughnuts and beverages will comprise the rewards menu, according to the new terms of service, but the specific composition of the menu may change over time. To redeem rewards, customers must follow a multi-step process. First, they convert the relevant points into a reward in the app, then they show a barcode or provide a phone number to a cashier for an in-store purchase, or apply the reward to an online or app order. To actually order the redeemed product in the app, customers must add the relevant product to their order.

Once a customer converts the points to a reward, they have 30 days to apply that reward to a purchase before the reward expires. On expiration, the unused points are not returned to the account. Points themselves expire after 365 days of inactivity.

Krispy Kreme’s sunsetting rewards program also had time limits: Customers had 90 days to redeem their earned reward for a product.

The company made little mention of loyalty in recent quarters. On its Q4 earnings call, Krispy Kreme CEO Josh Charlesworth said its program had reached 15 million members; on its Q3 call, Charlesworth mentioned unspecified efforts to “strengthen our premium offerings for special occasions and improving e-commerce and loyalty programs.”

The general tendency among restaurant loyalty programs recently has been toward greater personalization and increasing complexity, with some chains adding paid tiers, partnerships with firms in other industries and expanded redemption offers. These have shifted the industry away from points-based programs to an extent, which may be driven by the greater opacity of personalized, surprise-and-delight rewards or by the steady revenue offered by a subscription service. But many restaurant programs remain based on points-for-dollars schemes, which are easy for consumers to understand and offer predictable accrual of rewards.