Brief:

• Chipotle is letting customers use its mobile app and website to sign up for a pilot of its new loyalty program, Chipotle Rewards, where they earn points to redeem for free food. The burrito chain is testing it in Phoenix, Kansas City (in Missouri and Kansas) and Columbus, Ohio, per a statement.
• Chipotle plans to launch the loyalty program nationally next year. Enrollees can earn 10 points for every $1 spent at the fast-casual chain and can trade 1,250 points for a free entrée. For a limited time, customers can earn 15 points for every $1 spent in the app and online, and customers in test markets also will get free chips and guacamole after their first purchase using Chipotle Rewards.
• The loyalty program is part of the chain's effort to digitize and modernize the restaurant experience, Curt Garner, chief digital and information officer at Chipotle, said in a statement. Chipotle Rewards is powered by a personalized CRM program that lets the chain use targeted communication to drive trial, menu exploration and brand affinity.

Insight:

Chipotle, which has been promising a loyalty program for some time, is somewhat late to the game, as mobile loyalty apps have proven to be popular with customers for chain's like Starbucks, Domino's and Pizza Hut. Building the loyalty program on a CRM platform that will enable the chain to provide relevant offers will help it address consumer demands for personalized messaging. The loyalty news follows Chipotle's August launch of in-app ordering and delivery through DoorDash.

Chipotle's test of a rewards program follows the efforts of other chains to use mobile technology to increase customer loyalty and engagement by tracking dollars spent to earn points for free food or other perks. Starbucks, for example, has successfully been able to make its mobile app a central part of its loyalty program and transaction capabilities. At TGI Fridays in the UK, the restaurant saw an increase in customer visits after rolling out its new loyalty app that included a "Scratch, Match and Win" game. While it's too early to gauge how it's doing, Pizza Hut just this week also updated its Hut Rewards to let members for the first time earn points for in-store purchases as the pizza chain tries to drive foot traffic into restaurants. 

Mobile optimization is a key part of engaging customers with a loyalty program, according to researcher Gartner L2. Integrating loyalty programs into branded apps also opens the possibility of linking rewards to mobile wallets. Brands are recognizing the need to diversify rewards with more than simple financial benefits like discounts, with 61% of brands this year offering experiential rewards and monetary benefits, compared with 47% in 2017, Gartner L2 found. Experiential rewards can include birthday perks, invitations to exclusive events, free service and early access to products and sales. 

Chipotle's loyalty program comes as the burrito chain works to rehabilitate its image after several food poisoning incidents that scared away customers. The company last week unveiled a national ad campaign to showcase its commitment to healthy food and natural ingredients. Chipotle's "For Real" campaign includes a second Instagram account, @ChipotleForReal, to support the marketing push, its latest effort since hiring Taco Bell veterans Brian Niccol and Chris Brandt as CEO and CMO, respectively, this year.