The Restaurant Revolution, Subscription Edition
When it comes to food and caffeine, many of us are creatures of habit. Days begin with coffee; we frequent our favorite places for lunch; we follow traditions like Taco Tuesdays. The restaurant industry is in tune with these patterned tendencies, and with the subscription economy poised to surpass $1.5 trillion by 2025, it was only a matter of time before food joints recognized the potential behind the membership model, from recurring revenue to customer loyalty and data.
Fast food and restaurant subscriptions began popping up before the pandemic. In early 2020, Panera Bread introduced a coffee membership for $8.99 a month, offering subscribers unlimited coffee and tea—any size, any time of day. Other kinds of restaurant subscriptions emerged, too—look no further than the 2019 launch of the exclusive Tavern by WS restaurant, a luxury dining club in New York.
What these restaurants didn’t know, however, was that their early adoption of the subscription model would provide a lifeline at an unprecedented time. The pandemic shook the restaurant industry to its very core, with sales dipping $240 billion below its 2020 pre-pandemic forecasts. But subscriptions offered a path forward. Today, subscriptions are not only giving restaurants steady revenue at an uncertain time, but are also shaping inventive new business models and securing loyalty for better days ahead.
Why Subscriptions Are on the Menu
When Panera introduced its subscription plan, the aim was to drive repeat business. “This is a new way to add value for loyalty members and really help them subscribe to long term loyalty,” Sara Burnett, Panera’s vice president of wellness food and policy, said back in February 2020. But when the pandemic hit just a month after the program launched, subscriptions provided the chain with “guaranteed revenue in a time when nothing was guaranteed,” food blogger Joy Manning wrote.
So far, the model has been a success. During a three-month trial period, the company saw a 200% increase in visit frequency, a 70% increase in customers making food purchases when they came for their coffee, and 90 to 95% of subscribers renewing their plans. By October 2020, the 800,000 subscribers Panera had signed when the service first became available decreased but stabilized at a healthy 500,000 subscribers. And the retention rate has remained consistent—today, roughly two thirds of the cafe chain’s subscribers are repeat buyers while a third are new customers.
The company was on to something, and the industry noticed. Taco Bell, for example, went on to introduce its own subscription program in September 2021, rolling out a trial in Tucson, Arizona. The “Taco Lover’s Pass” offers subscribers one taco a day for 30 days and costs $5-10 (the cost varies because taco prices vary by location). The pass is available exclusively via the Taco Bell app, which means that subscriptions not only give Taco Bell recurring revenue, but also provide the restaurants with a wealth of data on consumers’ behavior. And that data is powerful—the brand can use it to inform product development, improve recipes, make marketing decisions, and more.
Any Restaurant Can Reap the Benefits of Subscriptions
Fast food franchises with established corporate infrastructures—restaurant apps, marketing teams, etc—may have an easier time deploying subscription models than other types of restaurants. But that doesn’t mean they can’t do it. In fact, subscription services from local restaurants thrived during the pandemic, serving as a comfort for consumers and a lifeline for business owners.
When indoor dining was halted, restaurants adapted by selling boxes of wine and beer, snacks, and meal kits. To supplement its takeout menu revenue, San Francisco Tapas restaurant El Lopo added a $44 subscription box to its menu, consisting of a bottle of wine and several snacks. Meanwhile, BJ’s Restaurant and Brewhouse, a restaurant known for handcrafted beer and deep dish cookies with locations throughout the U.S., created its own beer club. Members paid $30 every two months for small-batch, barrel-aged beers available only to the group. The exclusive offerings incentivized subscribers with beers beyond the BJ’s menu—and the restaurant enjoys consistent income despite shuttering its doors during the pandemic.
Inspired by this type of creativity within the industry, entrepreneur Sam Bernstein even spun up Table22, a platform that helps local businesses find their footing with subscriptions. Launched in May 2020, the app empowers restaurants to design and build their own subscription model, including meal and cocktail kits, pantry provisions, and pre-cooked meals. For example, Frankie’s Spuntino, a popular Italian restaurant in New York, partnered with Table22 to offer a “cook the book” subscription, curating a box of ingredients required to cook a dish from its cookbook.
While subscriptions may have saved restaurants at the height of COVID-19, this business model isn’t just for tough times. Though Table22 started with a single restaurant in Austin, today it serves 150 restaurants across 50 cities and many see six figures in annual recurring revenue with higher margins than traditional dining alone. And similarly, now that El Lopo has reopened, owner and chef Daniel Azarkman has turned one menu item into an in-restaurant subscription. Regulars can pay $89 a month for $100 in food and drink credits toward an option the eatery calls Just Take Care of Me. “They never have to see a menu or pay a bill onsite,” Azarkman said. “When we see them come in, we just start sending them stuff.”
No Reservations Needed
As restaurants continue to grapple with an uncertain future, subscriptions offer a sustainable model that complements traditional dining and takeout. And as subscriptions deliver savings and exclusive experiences, consumers’ love for their favorite places will only grow.
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