By Richard Delvallée
Senior VP of Consulting Services, Revenue Management Solutions
Restaurant subscriptions and passes are getting another look from major restaurant brands. Panera has continued its Sip Club beverage subscription, while McAlister’s Deli and Taco Bell have also experimented with recurring food and beverage passes.
Olive Garden has brought back its $100 Never-Ending Pasta Pass, giving customers 13 weeks of unlimited pasta, toppings, soup or salad and breadsticks. The pass is a limited-run promotion rather than an ongoing subscription, but it points to the same trend.
A restaurant subscription program is a recurring-fee or limited-run offer that gives guests ongoing access to discounted or free items in exchange for predictable, repeat revenue for the brand. The model works when it changes behavior, not when it just discounts a purchase the customer was already going to make.
This renewed interest comes as restaurants search for ways to offer compelling value while encouraging repeat visits. But operators still need to ask a more fundamental question: Does the proposition work for both the customer and the business?
Revenue Management Solutions (RMS) explored that question in 2020 in “Is a Subscription Program Right for Your Restaurant?” At the time, Panera’s coffee subscription provided an early example of how a recurring offer could increase guest frequency and loyalty.
Six years later, the market looks different: more bundles, apps and loyalty rewards, and a consumer who’s increasingly price-sensitive. The challenge is determining which approach fits the customer and the occasion.
Value Looks Different Throughout the Day
RMS’ recent report, Snacking Scenarios: Revenue Beyond Lunch & Dinner, shows why a one-size-fits-all approach to value may not work.
Value is the top purchase motivation at lunch and dinner, with 38% of consumers choosing it for lunch and 36% for dinner. Convenience leads at breakfast, morning snack and late night, selected by 34%, 32% and 22%, respectively. Afternoon snack is split between value and convenience, at 26% each.
The daypart becomes important when restaurants consider how to structure a subscription or other loyalty offer.
A recurring lunch bundle that saves customers money may address the primary motivation for that occasion. A breakfast subscription might be more effective if it makes a routine purchase easier or faster. A late-night offer could emphasize convenience rather than savings.
No approach is inherently better than another. The value proposition has to match the reason customers are buying.
When Does a Restaurant Subscription Make Sense?
A subscription can be a good fit when a restaurant has a product or occasion that naturally encourages frequent visits.
Coffee and beverages are obvious examples. A customer who regularly buys coffee may see clear value in a recurring beverage program. A restaurant with a strong lunch occasion might instead consider a monthly meal pass or recurring bundle.
Before launching a subscription, operators should consider:
- Does the customer have a reason to come back frequently?
Subscriptions work best when the underlying purchase is habitual or when the offer can create a new habit. - Will the subscription drive incremental visits?
A program should encourage customers to visit more often, not simply discount purchases they would have made anyway. - Will customers make additional purchases?
A free or discounted item can create opportunities to upsell food, beverages or other items alongside the subscription benefit. - Do the economics work?The cost of the benefit, redemption frequency and potential incremental revenue all need to be considered.
Subscriptions Aren’t the Only Path to Restaurant Loyalty
Restaurants are experimenting with loyalty in several ways beyond subscriptions.
Panera’s new points-based MyPanera program gives members more choice in how they earn and redeem rewards, with Sip Club folded into the broader loyalty ecosystem. Panera also capped Sip Club at 30 drinks per month as part of the update, a reminder that subscription economics need ongoing management even for an established program.
Other brands are using tiers, gamification, exclusive menu items and personalized promotions to give customers additional reasons to engage.
As Restaurant Dive recently reported, “Treating every member the same is the losing loyalty program.”
Test the Subscription Before Scaling It
The best way to determine whether a subscription is right for a restaurant is to test it.
RMS recommended testing subscription programs in its 2020 analysis, using selected restaurants and locations to understand customer response before rolling out a program more broadly.
That approach remains relevant. A controlled test can help operators evaluate whether an offer changes visit frequency, average check, attachments or other key measures and whether the incremental business justifies the cost of the offer.
Before running a live test, conjoint analysis can help narrow the field. It measures what customers actually value and how much they’d pay for it, so operators can prioritize which subscription or bundle concepts are worth testing in market rather than guessing.
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The Right Value Proposition Depends on the Customer
ThRestaurant subscriptions may be back in the spotlight, but the bigger opportunity is understanding how customers define value.
The daypart data makes the point: restaurants should start with the customer behavior they want to influence, not the format of the offer. For some brands, that means a subscription. For others, a bundle or loyalty reward will do more.
The goal is the same either way: create an offer customers want to use that generates incremental, profitable business for the restaurant.
If you’re weighing whether a subscription, bundle or loyalty program is the right move for your brand, our team can help you find the answer.
