Restaurant Subscription Services: The New Way To Eat Out

Trends 21 minute read 6th April 2021

A restaurant subscription service is one of the most innovative business models in recent years. And it’s a proven hit for restaurateurs and customers alike.

Panera Bread was probably the first big-chain restaurant to launch such a service early in 2020. They started offering a $ 8.99-a-month coffee subscription service. The promo 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.

Are you eager to join the fray? Here’s everything you need to know about restaurant subscriptions. How a subscription service works, why you should consider this strategy, and how to make it work for your business.

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The Restaurant Subscription Model: How Does It Work?

The restaurant subscription model involves customers paying a recurring price for a product. Or select a group of products at regular intervals, typically on a monthly basis. The subscription services offer customers more value for their money. Additionally, it gives the restaurant a steady stream of income.

There are three common forms of restaurant subscription services:

  1. The curated subscription. You curate a mystery food item selection that appeals to your subscribed customers. Subscribers choose from a specific list of curated food selections.
  2. The replenishment subscription model. The subscription is for consumable items, such as coffee. Customers choose whether to have their items delivered conveniently or picked up regularly.
  3. Exclusive access. Subscribed customers get exclusive access to regular premium offerings, such as a monthly food-tasting event.

These proven subscription models help drive business and revenue. As an example, look at Gravitas Supper Club subscribers. Members receive a guaranteed monthly 3-course meal, fully prepared with reheating instructions. The restaurant gains extra income by offering add-ons such as a wine or cocktail pairing at an additional cost.

There are several reasons why subscription offerings like the Supper Club are beneficial. Most importantly, subscribers generate valuable data on their preferences and ordering habits. Restaurants use this data to gain insights into customer behavior, preferences, and trends. This enables the restaurant to make data-driven decisions to improve its offerings.

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6 Reasons To Consider a Restaurant Subscription Service

The restaurant subscription service is a classic business model. The decades-old practice of offering newspaper, magazine, and book subscriptions proves to deliver profitable stability. The massive success of online streaming services is a testament to this model’s soundness and enduring value.

As a result, restaurateurs see how a restaurant subscription service is beneficial to their business and customers. Let’s dive into the why. Here are six reasons to launch a subscription service for your restaurant.

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1. A Restaurant Subscription Service Offers Clear Customer Benefits

If you’re considering offering a subscription service, you might wonder why another monthly payment obligation interests customers. The better question is: If you’re a regular customer wouldn’t you want to spend less on individual monthly purchases? Regarding budget considerations, a restaurant subscription service makes practical sense. This is especially true for people who regularly eat out or order takeout.

How does a dining subscription service benefit customers? Here’s how subscriptions help customers when they sign up. - 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 more manageable.

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2. Restaurant Subscriptions Are Good for Business

Restaurant subscriptions mean selling some of your menu items at a discounted rate. At first glance, this doesn’t seem like a profitable move.

We encourage you to take a closer look. Panera Bread, El Lopo, BJ’s Restaurant & Brewhouse, and many other restaurants have adopted this business model. In turn, they reap the rewards of offering discounted monthly food subscriptions.

They immediately experienced increased foot traffic and food orders when they tested their subscription service. If you follow suit, you can encourage more people into your venue each week. You’ll see your customer base and sales increase.

Beyond the potential revenue-making opportunities a subscription service offers, there are minor benefits. For example, subscription services make table management far easier. Especially if you increase the number of regular repeat bookings. We can’t overlook more significant benefits, such as improved brand awareness and advocacy.

Last, when customers pay upfront for a subscription, the restaurant receives revenue before providing the goods or services. This helps with initial cash flow needs.

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3. Restaurant Subscriptions Might Already Fit Your Venue Perfectly

Although this business model is getting traction, subscription-based restaurants are still a novelty. But with more prominent brands gradually testing the waters and succeeding, the service likely becomes more commonplace. The trickle-down effect for independent operators is almost inevitable.

Carefully think about introducing a restaurant subscription and how to test it with minimal risk to your business. Basing the subscription service around wet sales is smart and should encourage more food purchases. However, it’s not a guaranteed success.

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

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4. Do Your Restaurant Subscription Numbers Stack Up?

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

  • Your costs. What are your food and other associated costs? You must know what it costs to purchase and deliver your food.
  • The competition. Do your competitors offer anything similar? Have they tried and failed? Why? Use your competition as your guide. If they offer a widely popular subscription, you should provide something similar. If they have a failing subscription, steer clear. Or use their experience to create something better.
  • 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 in the customer’s lifecycle? These questions are essential to ask as you assess your income and return on investment.

There’s no definitive calculation for a subscription service’s cost. 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:

  • Note down your costs. Include the average price of the product(s) you want to include in the subscription. This average contains material costs, the cost of any fulfillment, and payment transaction fees.
  • Look at your average spend per customer. In your average, include products you want to have in the subscription fee. Estimate the number of return visits of customers and the average total price they pay for those products each month.
  • Now, look at the average pricing. Take your two averages—Your subscription pricing is somewhere between. This price point enables you to break even or maintain a small slice of profit. It’s also a rate that is cost-effective for your customers as well.

If you’d rather take the long-term approach, price your subscription at a loss. This might sound counter-productive. But if your price is a rate that encourages more upsells, you’ll increase the LTV of each customer.

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5. Restaurant Subscriptions Are a Good Foundation for Building Loyalty

It’s not guaranteed, but if you get your restaurant subscription service right, you’ll see more brand advocacy among your customers. In return, your customer loyalty will grow. There is compelling data on the psychology of loyalty.

Research shows a vital element of a successful loyalty program is feeling like 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. A group offered the opportunity to gain more value for their money.

Mary Pilecki, a Forrester analyst who covers loyalty marketing, says, “Subscriptions are yet another extension of rewards programs.” She explains that subscriptions combining “several loyalty tactics, including recurring revenue and brand engagement” is effective.

Restaurant subscription services will also likely prolong the customer life cycle. It does so much the same way that online streaming services do. “Paying a monthly cost encourages customers to go in as often as possible,” she added.

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6. Consumer Appreciation for Restaurant Apps and Food Delivery Services

The recent worldwide pandemic has prompted countless consumers to subscribe en masse to various services and apps. As a result, food deliveries became much more common as restaurateurs worked out ways to maintain a decent revenue stream. Social distancing naturally led to a more significant customer preference for delivery services.

The logical next step in this chain of events was restaurant subscriptions. Especially with the wide range of restaurant apps available for restaurateurs and customers alike.

Currently, restaurant apps and food delivery show no signs of slowing down. Every restaurant, coffee shop and bar has an app where they communicate with customers frequently. Utilize this technological advance to your advantage. Set up a geofence enticing customers to visit your location.

Or, use your app to offer special restaurant subscription prices to repeat customers.

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Monthly Restaurant Subscription Plans and Other Subscription Ideas

Not all subscription programs are the same. You’ll need to research the one that works best for your business. If you need inspiration to start your subscription service, here are some subscription plan ideas. Test them out until you find the best monthly restaurant subscription.

  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 regularly. 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 meals based on their personalized sign-up selections.
  4. Alcohol subscription service. If you serve alcohol in your restaurant and it’s a hit among regulars, you 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 collaborate 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. DashPass from DoorDash also has the same subscription plan.

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Final Thoughts on Restaurant Subscriptions

Restaurant subscriptions have emerged as a game-changing trend within the culinary industry, offering numerous benefits to diners and restaurateurs alike. With the growing consumer demand for convenience, flexibility, and exclusive perks, these subscription-based dining models are a win-win solution. In the ever-evolving landscape of dining preferences, restaurant subscriptions represent an exciting step forward.

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