Dive Brief:

• Peet's Coffee now offers customers one point for every dollar spent with the Peetnik Rewards app, the company announced Wednesday. Customers can accumulate points in-store by scanning a QR code at the time of purchase, as well as through order-ahead purchases for pickup or delivery.
• The program offers more than 20 unique rewards to choose from, including espresso shots and warm breakfast items. Customers can also redeem points for up to $5 off their purchase. 
• The revamp comes as more restaurant chains add loyalty programs or enhance existing rewards offerings to attract digitally savvy consumers. Forty-seven percent of diners now use at least one loyalty program, and the share of consumers using restaurant rewards programs rose 12% between January and April. 

Dive Insight:

Peet's loyalty enhancements mark the first major change to its rewards program since its launch in 2017, according to the company. 

Loyalty programs are a a good investment for restaurant brands because they facilitate digital transactions, which tend to be higher than in-store tickets, and increase frequency. Taco Bell's rewards program, for example, drove an increase in overall spend of 35% for loyalty customers versus their pre-loyalty behavior, the company reported in its Q2 2021 earnings. 

These platforms also allow brands to capture valuable diner data and better personalize advertising. During Chipotle's Q2 call, CEO Brian Niccol said its rewards program allows the company to effectively distribute content and drive deeper engagement.

These benefits likely encouraged many chains, from Del Taco and Popeyes to Burger King, McDonald's, Wendy's and Jack in the Box, to launch new loyalty programs in the past two years. Like Peet's, Taco Bell and Chipotle have revamped their programs.

Peet's may have an advantage in an increasingly crowded loyalty space, as the coffee category already relies heavily on habituation. However, this segment is also becoming increasingly competitive. Last week, for instance, Caribou Coffee announced its first domestic franchise program to support ambitious growth plans. Meanwhile, Dutch Bros Coffee's IPO exceeded expectations in September, and Pret A Manger is taking a page from Panera by adding a subscription program in the U.S.

There are also the incumbents in the coffee space – Starbucks and Dunkin’ – to compete with for space on consumers’ mobile phones. As of October 2020, Starbucks Rewards program has nearly 20 million members and generates nearly 50% of its revenue, for instance, while Dunkin’s DD Perks program has more than 16 million members.

Overall, revenue in the coffee market is expected to grow annually by over 6% through 2025, according to Statista, as consumers return to some of their pre-pandemic routines, perhaps with more than one brand's rewards app on their phones.

Peet’s is enticing new users to sign up for its loyalty program with a two-week Peetnik Rewards Launch Sweepstakes that runs through Nov. 2. Members are guaranteed to win with every purchase or valid-free entry method, according to the press release. New members who download the app receive a welcome bonus of 125 points after their first purchase.