It's not the entire purpose of the loyalty program. The other reason (possibly the bigger reason) is simple price discrimination. McDonald's found that there are two distinct groups of customers: habitual fast food eaters, who go to their restaurants on a very regular basis, and opportunistic fast food eaters, who grab some fast food once in a blue moon because they want something fast.
replyThey found, perhaps counterintuitively, that the opportunistic customers are vastly less price sensitive than the habitual customers. The solution was a somewhat involved loyalty program, which is deliberately enough effort to set up to weed out the sporadic customers from using it. Now, they can charge the less-price sensitive one price, and their more price sensitive customers a different, lower price. As an added bonus, habitual customers are probably more susceptible to advertising/prompting.
I think lot of habitual eaters are also doing price comparisons between different options. So just being slightly cheaper than competition can move that specific purchasing decision from one brand to an other. So also being able to nudge them specifically will not affect the other group.
replyI suspect there is actually three groups, because the app also has a sort of coupon-ing in it. The lowest price requires you to search the app to find a "deal" that is currently available, rather than just use your loyalty points to get a discount.
replyOne of the ideas of classic coupons was to offer a lower price to the most price sensitive customers. The people willing to deal with the fuss of finding and cutting out the coupons.