Restaurant Subscription Service: What’s All The Rage About And Why You Should Consider It

Trends 18 minute read 6th April 2021

A restaurant subscription service is one of the most innovative restaurant business models to come out in recent years, and it’s proving to be a hit — for restaurateurs and customers alike. Panera Bread was probably the first big-chain restaurant to launch such a service early in 2020, with their $8.99 a month coffee subscription service. And it paid off in a big way — the cafe chain benefitted from a 200% uplift in guest frequency and an increase of 70% in food orders. Many restaurants followed suit and also enjoyed similar success. If you’re eager to join the fray, here are the nuts and bolts of how a subscription service works, why you should consider this strategy, and how to make it work for your business.

Subscription-based restaurant business model: How does it work?

Subscription-based restaurants follow a business model that involves customers paying a recurring price for a product or selecting a group of products at regular intervals, typically on a monthly basis. The subscription service is designed to offer customers more value for their money and to give the restaurant a steady stream of income.

There are three common forms of restaurant subscription service:

  1. The curated subscription. You curate a mystery selection of food items that will appeal to your subscribed customers. The curated food selection may also be based on a specific list of items that your subscribers can choose from.
  2. The replenishment subscription model. The subscription is for consumable items, such as coffee, which are delivered on a regular basis.
  3. Exclusive access. Subscribed customers get exclusive access to premium offerings made available on a regular basis, such as a monthly food tasting event.

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6 reasons to consider a restaurant subscription service

Subscription services are actually a classic business model, — one that had been proven to deliver profitable stability by the decades-old practice of offering newspaper, magazine, and book subscriptions. The massive success of online streaming services has become an indisputable testament to the soundness and enduring value of this business model, and restaurateurs have begun to see how a restaurant subscription service can also be beneficial to their business and customers. Here are 6 reasons to launch a subscription service for your restaurant.

1. A restaurant subscription service offers clear customer benefits

Why would your customers be interested in another monthly payment they’ll need to account for? The better question to ask is this: If you’re a regular customer of a certain restaurant, wouldn’t you jump at the chance to spend less than what you normally do on individual purchases each month? When it comes to budget considerations, a restaurant subscription actually makes practical sense for people who regularly eat out or order take out.

How does a restaurant subscription service benefit customers? Here are other benefits they’ll enjoy when they sign up for your subscription service:

  • Subscription services are convenient — they’re about as ‘set and forget’ as they come.
  • They can still enjoy their favorites at a discounted rate.
  • If the subscription includes delivery, their ordering process becomes even more simplified and the service more appealing.
  • Subscriptions make monthly budgeting much easier.

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2. A subscription service is good for business

A restaurant subscription service means selling some of your menu items at a discounted rate — which may not seem like a profitable move.

But Panera Bread, El Lopo, BJ’s Restaurant & Brewhouse, and many other restaurants that adapted this business model have been reaping the rewards of offering discounted, monthly food subscriptions. As soon as they started testing their subscription service, they experienced an increase in both footfall and food orders almost immediately. If you do the same, you’ll be able to encourage more people into your venue each week and watch as the upsales increase.

Beyond the potential revenue-making opportunities afforded by a subscription service, there’s the smaller benefits (it’ll likely make table management far easier if you increase the number of regular repeat bookings), and the bigger stuff, such as improved brand awareness and advocacy.

Oh, and it’s great for cashflow, because you get the money upfront, too!

3. A restaurant subscription service may already be a perfect fit for you.

Although this business model is definitely getting traction, subscription-based restaurants are still a novelty. But with bigger brands gradually testing the waters, it’s likely that the service will become more commonplace sooner rather than later. And that means a trickle-down effect for independent operators is almost inevitable.

There have been some failures which are worth keeping in mind, though. Burger King’s $5-per-month unlimited coffee subscription was canned within months of its launch, for example.

If you run a traditional restaurant, you’ll need to think carefully about introducing a subscription service and how to go about testing it out with minimal risk for your business. Basing the subscription service around wet sales is a smart move and should encourage more food purchases, but it’s not guaranteed.

Subscriptions are currently best suited to food delivery services, such as pre-packed meals delivered straight to customers’ doors or the rising trend of ‘make it yourself’ raw ingredients delivery.

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4. The numbers stack up

There are three factors to take into account when working out the pricing for your restaurant subscription service:

  • Your costs. It’s crucial that you have a handle on what it costs to deliver your food.
  • The competition. Are they offering anything similar? Have they tried and failed? Why?
  • The customer lifetime value (CLV). Do you expect to make a profit immediately on each subscription sale, or is the service more likely to offer a return later on in the customer’s lifecycle?

There’s no definitive calculation for working out the cost of a subscription service. Having a good handle on your venue’s profitability is always a great starting point. Here are some tips to help you with your number-crunching:

  • First, note down your costs: the average cost of the product(s) you want to include in the subscription; any material costs (such as delivery boxes); the cost of any fulfillment (such as a delivery service); your transaction fees for accepting payment.
  • Look at your average spend per customer, based on the products you want to include in the subscription fee. You can do this by estimating the number of return visits for your loyal customers and the total price they pay each month, on average, for those products.
  • From here you’ll have two numbers: your costs to provide the products and what loyal customers pay on average each month to receive them. Your subscription pricing should be placed somewhere in-between in order to either enable you to break even or maintain a small slice of profit (whichever you’re most comfortable with), but at a rate which offers a ‘no-brainer decision’ for the customer.

If you’d rather take the long-term approach, pricing your subscription at a loss but at a rate which should encourage more upsells and increase the LTV of each customer is the way to go.

5. Subscriptions are a good foundation for building loyalty

It’s not guaranteed, but if you get your restaurant subscription service right, it’s highly likely you’ll see more brand advocacy among your customers and customer loyalty will grow.

There are tons of compelling data on the psychology of loyalty, and it has been established that a key element of a successful loyalty program is the feeling of being part of an exclusive club. This is where subscription services score highly; they draw people in on the basis that they’re part of a select group that’s offered the opportunity to get more value for their money.

According to Mary Pilecki, a Forrester analyst who covers loyalty marketing, “subscriptions are yet another extension of rewards programs,” “[combining] several loyalty tactics, including recurring revenue and brand engagement.” Restaurant subscription services will also likely prolong the customer life cycle, in much the same way that online streaming services do. “Paying a monthly cost encourages customers to go in as often as possible,” she added.

6. Consumers have developed a bigger appreciation for restaurant apps and food delivery services

The recent worldwide pandemic prompted countless consumers who got stuck at home for weeks or months at a time to subscribe en masse to various services and apps. Food deliveries became much more common as restaurateurs worked out ways to maintain a decent revenue stream or create a new one, and as social distancing naturally led to a greater customer preference for delivery services. Restaurant subscription services are the logical next step in this chain of events, especially with the wide range of restaurant apps available for restaurateurs and customers alike.

Best restaurant delivery service subscription plan and other subscription ideas

If you need inspiration to start your own subscription service, here are some of the best restaurant delivery service subscription plan ideas you can play around with and test out.

  1. Subscription to refillable drinks. For cafes, Panera’s Unlimited Sip Club subscription is a great template. Panera’s offer is only available for in-store consumption, but you can offer a beverage delivery subscription that customers can get with no limit for a monthly price.
  2. Subscription for takeout meals. Takeout meal subscriptions are popular among customers who don’t have time to cook. Prepare a monthly menu with several meal options per day; subscribed customers can pick up their curated meals or have them delivered on a regular basis. You can also have your takeout meal subscription available only on weekdays or weekends — pick an option that works best for you and your target customers.
  3. Dine-in subscription service. This is the ideal option for regular dine-in guests. El Lopo’s dine-in subscription club is a great example. Club members receive $100 in credits for $89 a month, and are served meals based on their personalized sign-up selections.
  4. Alcohol subscription service. If you serve alcohol in your restaurant, this can be a big hit among your regulars and will likely bring in new customers. A monthly beer subscription is a great place to start.
  5. Food delivery service subscription. Find out if you can tie-up with a food delivery service in your area. Check out Grubhub+ which offers unlimited zero-delivery fees for orders over a certain amount and from partner restaurants, and DashPass from DoorDash which has the same subscription plan.

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Pairing a restaurant subscription service with WiFi marketing for an enhanced guest experience

Whether you’re offering a dine-in or takeaway restaurant subscription service, you can leverage your guest WiFi system to further enhance your customers’ experience. If you choose the right WiFi for your restaurant, your guests can enjoy fast connectivity, a seamless loyalty rewards process, a convenient feedback option, and quick access to your latest promos and updates. A fully customizable WiFi platform, like Beambox, allows you to offer all of these and more.

Use your branded WiFi platform to build and nurture customer connections in more ways than one. Create your email list or SMS subscriber list, drive sales with time-sensitive deals and promos, drive customers to your social media pages, and climb up on online ranking platforms through real-time customer reviews. Accelerate your business growth — start your Beambox free trial today!

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