The cost of the program is really the least part of the program. It costs 80 cents a day which is basically a rounding error, or leaving a few light on accidentally. I know those things can all add up but you have to look at what that does for you or what you are trying to get out of it. The real cost of the program is the reward you give out. Giving someone a free coffee or $5 off their next purchase will add up way more than the minimal cost of the service.but that is balanced by the fact you got them back in and they spent more money than the reward.
By giving your customer a loyalty point you are incentivising them to come back to you to complete this goal of obtaining a reward. A reward is an insanely strong motivation for the customer. Getting the customer to come back is worth a lot by itself. Also by collecting their phone number you can incentivise them to enter their email address by giving them a star, and now they will be added to your reachable marketing list. So now that they are on your marketing list you can hit them with a monthly email to remind them of your store and give them other reasons to come back to you.
Loyalty cards are a powerful thing that can influence a customer's choice strongly (sometimes even subliminally) which could help them choose you over the restaurant next door. Measuring their success can be hard to quantify and track but square gives you quite a bit of data to monitor. I don't think the extra 5 seconds of the customer typing in their phone number is anything to worry about. I don't know if once they've entered their phone number the first time and then use the same credit card if it automatically associated it or if it needs to be entered every time they make a purchase.
We use a loyalty card (and have for like 10 years already) and I can tell you that people will spend an extra $5-$10 just to get to that next reward punch. Now our situation is much different than yours in that we have an average purchase of $102. We would switch to Square but with a decade of cards floating around out there that is a lot to transition as they people come in and setting them up with reward stars. Plus as a person who runs a physical punch card reward system I can tell you that like 30% of punches that you give out are never redeemed, mostly because they lose the cards (though some hold onto them for dear life) so that is a nice benefit of a physical card versus a virtual one where every punch you give will never be lost.
you have to decide if giving a reward to them is how you want to maintain loyalty. It sounds like you are working on the bleeding edge of a profit margin so giving out more chunks of that may not be right for you. We build our loyalty costs into our prices so if we wanted to make $20 on a $100 item we add on an extra 5% to the profit making it $21 so that the loyalty isn't actually costing us any money from our intended profit margin.
Hopefully, some of this info helps you with your decision. I personally think Rewards systems are a good marketing plan and should be part of your marketing budget.
