It seems like almost every fast-casual dining establishment offers some sort of rewards card, which is perhaps why my cheap wallet barfs out its contents into my purse approximately once a week. Poor wallet -- it just can't handle all this rectangular paperwork promising discounts and freebies.
Because I am a) compulsive and b) cheap, I keep every discount/freebie card I am offered, even if I know with absolute certainty I will never return. (Yes, sometimes food can be that bad.)
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Overall, I think rewards cards are a good way to inspire repeat business and to continue to motivate already loyal patrons. The science -- or math, rather -- behind these cards, however, confounds me: How in the world do they come up with the formula of x items purchased equals y item(s) free?
I'd like to believe it's a complicated algorithm that takes into account factors such as raw material expenses and profit margins as well as nuanced statistics regarding the average likelihood for returning for, say, that fifth (free) burrito within a certain period of time. But in truth I'm highly dubious there's that much thought involved, especially in smaller chains or local one-site businesses that lack the resources to hire math geeks fresh out of MIT to figure such things. Leave that to Netflix.
I guess one obvious explanation for the quantitative variation among rewards cards is that a burrito is not equal to a burger is not equal to a cookie is not equal to a bottled soda in terms of labor and production costs. And then there's the idea of diminishing utility; Pondicheri can require a purchase of nine cookies for a single freebie because they know people are apt to buy multiple during a single transaction to share (or eat by yourself). If, however, Elevation Burger only gave me a free burger after 15 burgers bought, I'd be likely to suffer burger fatigue or to say "screw it" and frequent another burger joint with a more favorable reward ratio. The key is, I think, inspiring enough excitement in the consumer so that s/he is motivated to return to an establishment because there is a reasonable/likely hope of receiving something free within the foreseeable future.
Thoughts, readers? Do you know of any restaurants or shops that offer insanely good or insanely bad purchase-to-freebie/discount ratios on their rewards cards?