When loyalty programs end

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My local burrito place (Burrito Real in Mountain View) has one of those frequent buyer card programs: they have these cards which they punch whenever you buy a burrito. Buy 10 and you get your next one free. We just filled our most recent card and when we went to get another one they told us they didn't have any. There's a bit of a language barrier, but it didn't seem like they were just out but rather that they had stopped handing the cards out--though they'll still stamp them and let you redeem them. Nothing unusual about that, of course, but in the 10 years or so I've been going there, they've discontinued the program at least once before and then brought it back, and I got the impression from the cashier that they were planning to bring the program back next year. The question is: why? If you're going to have a program like this, why not run it all the time?

The initial (and not very good) answer I came up with is that they're worried about the size of their outstanding liabilities in terms of free burritos. Since they don't track how full people's cards are, and lots of people probably get a card but then lose it or forget about it, the size of this liability is going to tend to increase rather than stay in a steady state. So, you could imagine them wanting to stop giving out cards until enough have been filled out and redeemed. Still, this seems like pretty sophisticated accounting for your average taqueria.

My second theory is that they figure that the marginal value of the program in terms of pulling business decays pretty rapidly, but the costs continue to go up, so it's a compromise between advertising and cost control. But since they don't actively advertise the existence of the program unless they're actually giving out cards, you'd expect the the PR value to decay pretty rapidly during the off-months, so I'm not sure this makes sense either. Anyone got any better explanations?

Oh, one more point: given that they still honor the cards even when they're not giving them out, it's pretty easy to just get a new card every time you go until you have a whole pile and then you're covered the whole year round.

3 Comments

I would think they got hit by Kinkos copier-driven fraud, and decided to cancel the program.

Oops...that "Kinkos" was supposed to be enclosed in (strike) tags.

Maybe they want to see if they detect any drop-off in business from not having the cards, i.e. whether the cards are working as a marketing tool.

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