Restaurant subscriptions may seem like an out-of-the-box solution, but they are proving to be an effective solution for brands of all sizes. Taco Bell, for example, recently announced the expansion of its highly anticipated subscription model, the Taco Lover’s Pass, which allows subscribers to redeem one taco a day for 30 consecutive days.
The chain, which had reported challenges during the peak of the pandemic as late-night and breakfast sales struggled, turned to the subscription program in hopes of driving more visits from their most loyal customers while also encouraging cross-selling of other menu items when the subscription taco is purchased.
And Taco Bell is not the only brand looking to get into the subscription game. Panera, Sweetgreen, On the Border, BJ’s Brewhouse, Caribou Coffee and Coolgreens also seeing success in the subscription game and more concepts are sitting up and taking notice.
The attractiveness of the subscription model has grown far beyond expectation within the restaurant sector, and customer appetites for subscription commerce have expanded since March 2020. At least one subscription service now is used by 205 million Americans, up 13% from 182 million in the first quarter of 2020. Last year, subscription commerce sales climbed 41%, and experts estimate their value at $28 billion.
For restaurants, the approach could not come at a better moment. As many professionals continue to work remotely, restaurants that rely on office workers for the breakfast and lunch rush continue to suffer, searching for the right draw to drive daypart sales. Subscriptions seem like the solution, providing ongoing revenue and a high degree of brand engagement for shops and restaurants.
Subscriptions combine recurring income and brand involvement, as well as many loyalty methods. They, like streaming services, assist in extending the client life cycle, allowing brands the ability to charge a monthly fee that incentivizes customers to visit as frequently as possible.The best part about restaurant subscriptions is they can be relatively flexible for the brand.
Subscription models can be flexed in multiple ways to support a concept’s goals. One variation of a subscription program includes having the customer opt-in for consistent access to meals and then allowing them to pay at regular intervals. This is common for brands that provide low-cost items that can encourage upsells on other products, such as a coffee service or access to dessert options.
Restaurants can also have customers pay a lump sum and receive meals at set intervals, such as a pizza a week for a monthly fee. Both options can effectively engage customers and encourage loyal customers to increase frequency and spend. Restaurants can then benefit from a consistent income stream, the ability to be creative with menu offers, and a means to remain in touch with loyal customers.
Even in the best of circumstances, the restaurant industry is a risky business. High wages, increasing food costs, an unreliable supply chain, increasing reliance on expensive technologies, and new health regulations are hitting the sector hard and won’t soon be alleviated. Restaurants are further at the mercy of traffic patterns and inconsistent control of quantities consumed and what menu items will be purchased on any given day. So the benefits of a subscription model can be intriguing.
The benefits of subscriptions are threefold. First, they create a reliable revenue stream for the operator, making revenue and costs much more predictable. Second, they encourage customer retention and increase the probability of cultivating an emotional bond with the brand. Last but not least, there is more stickiness with the customer due to the nature of subscriptions.
Customers tend to be less likely to cancel subscription membership because they usually see value in the transaction. This is particularly true if there is a strong emotional bond to the brand. Both the restaurant and the diners gain from subscription models. Restaurants are gaining access to a regular income stream that significantly impacts their bottom line. Diners on the other hand, are seeking more ways to support restaurants, more opportunities to interact with them, establish more loyalty, and assist them in any way they can.
It’s essential to understand that customers who purchase restaurant subscriptions are searching for specific outcomes and value from the programs they join. Designing the right subscription for your most loyal customers necessitates a thorough understanding of your guest’s desires and needs.
It’s all about developing a subscription that is beneficial to them. Are they looking for a deal on frequently purchased items or access to premier offerings from your brand? Perhaps they are looking to feed their family and are seeking a reliable option that offers them a quick and healthy alternative to cooking. Whatever the motivator, your offering should deliver something above and beyond casual access to your menu.
Your customer will also expect this engagement to be quick and frictionless. Every step should be simple, straightforward, and create value for the consumer to keep them delighted throughout the subscription period (and discourage cancellations).
This requires seamless payment options and a distribution model that supports the subscription experience. This includes having a streamlined pickup process, automated reminders, and communications across multiple channels (SMS, email, etc.). You’ll also want a clear and transparent process for when a customer wants to opt-out, with flexible options and good customer service.
Early on in the consideration of a subscription model, you will want to do some market research and really hone in on what your customers want from your brand. A great place to start is by looking at your loyalty program and analyzing your customer segments to identify your top loyalty followings, most purchased menu options, and understanding the frequency of purchase. You may also want to create a pro forma to help you to determine costs on particular line items and whether your supply chain can support your new subscription model.
Second, you will want to determine pricing and availability. Your earlier analysis using your loyalty program and access to purchasing history by your customers should help support this initiative. It’s also important to understand what cap you will need to put on your subscription benefits in order to avoid fraud or abuse.
Last but not least, you’ll need to ensure you have the correct technologies in place to implement the subscription model. From POS to your KDS to your communication stream with your customer, you’ll want to consider all factors before implementing your subscription plan.
Have a clearly defined line item in your POS to help you manage your inventory, one that will provide easy access to a wealth of data for future analysis. Your loyalty program can also be used to help define what customers can be approached with the offering and help manage payment processing. Restaurants and consumers alike are being pushed to implement methods, products, and technologies that would have been inconceivable prior to the epidemic.
Subscription models are just another channel that can help them engage customers, create a more personalized fan experience and provide new incremental revenue streams.
Copyright Networld Media Group DBA Networld Alliance, LLC Jan 26, 2022 This article was written by Brittany Maroney from Fast Casual. News Features and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected]