The Difference Between a Discount and a Reward (And Which One Builds Real Loyalty)

You live and die by the number of covers you do each night in your restaurant. It’s a relentless cycle of attracting new diners while keeping your regulars coming back for more. In the heat of the battle, the easiest weapon to reach for is the discount. "20% Off Tuesdays!" "Free Appetiser with Any Main!" It’s a quick fix, a shot in the arm to boost a quiet evening.

But is it building a business, or just buying transactions?

The difference between a discount and a reward

There’s a world of difference between offering a discount and giving a reward. Understanding this distinction is the key to moving from a customer base of fickle deal-hunters to a loyal community that will see you through thick and thin.

What’s a Discount? It’s a Handshake with a Stranger.

A discount is a straightforward, transactional incentive. It's a price reduction offered to entice a customer to make a purchase immediately. It appeals to the rational, price-sensitive part of a customer's brain.

• The Pro: It works in the short term. A well-timed discount can fill empty tables on a slow night or encourage someone to try your new menu.
  

• The Con: It attracts mercenaries, not missionaries. The diner who comes for the 20% off is likely to go to your competitor next week when they offer 25% off. You’ve won their custom for a night, but you haven’t won their loyalty. Worse still, constant discounting can devalue your brand, making customers hesitant ever to pay the full price.

What’s a Reward? It’s a Drink with a Friend.

A reward, on the other hand, is earned. It's a token of appreciation for repeat business and loyalty. It’s not about the initial transaction; it’s about the relationship. A reward says, "We see you, we value you, and thank you for choosing us again."

This appeals to the emotional side of the brain. It makes customers feel recognised, special, and part of an exclusive club.

• The Pro: It builds what we in the business call "stickiness." Rewarded customers have a genuine connection to your brand. They come back for the experience and the relationship, not just the price. This is how you build a higher Customer Lifetime Value (CLV).
  

• The Con: It requires a bit more thought than slashing prices. It’s a long-term strategy, not a quick fix.

So, Which Should You Use?

It’s not a simple case of one being "good" and the other "bad." They are different tools for different jobs.

Think of discounts as a tool for acquisition. A "Welcome Offer" for a first-time visitor is a fantastic way to get them through the door. You’re lowering the barrier to entry for them to experience how brilliant your food and service are.

But once they're in, the game should shift to rewards as a tool for retention. The goal is to make that first-time visitor a second-time visitor, and eventually, a regular who brings their friends. This is where you can get creative:

• A digital stamp card for a free coffee or dessert after a certain number of visits.
  

• Exclusive access to a new dish before it hits the main menu.
  

• A surprise "on the house" glass of wine for a loyal regular.

This is how you build a community, not just a customer list. You’re turning a transactional relationship into a personal one.

Making Rewards Effortless

"That all sounds great," I hear you say, "but I'm busy running a restaurant! I don’t have time to manage a complex rewards system."

That’s where the right technology comes in. Historically, this kind of sophisticated engagement was only available to the big enterprise brands with million-dollar budgets.  But that's no longer the case.

At meed, we believe in making loyalty simple for independent businesses and seamless for their customers. Our platform allows you to set up a proper, rewards-based loyalty program in about the time it takes to pull an espresso. You can create digital stamp cards, welcome offers, and other rewards that your customers can access with a simple QR code scan—no app download required.

By turning the model on its head and putting the customer experience first, you can finally offer the kind of loyalty people actually want.  You stop buying one-off visits with discounts and start building a loyal following with meaningful rewards.

Now you know the difference between a discount and a reward

Create your free loyalty program today on meed. Click the banner below: