Should your restaurant be considering a subscription program?

More than six months into the COVID-19 pandemic, the restaurant industry has been put to the test — and achieved previously unimaginable evolution at a previously unthinkable pace.

Operators have coped with a complete revamping of day parts such as breakfast and lunch, which are still struggling mightily, according to our October restaurant trends. Some brands had to quickly rethink their menu design, delivery strategy and even menu presentation, with QR codes easing safety concerns for customers returning to dining rooms. And this summer, meal kits became an instant favorite for families looking to spice up at-home meals.

Now, a new trend is emerging as restaurants continue to look for ways to survive. Enter the subscription model.

The potential rise of subscriptions

Of course, subscriptions aren’t new —according to a New York Times study conducted by Mint, Americans spent $640 per year in 2019 on digital subscriptions.

But subscriptions haven’t been popular in the restaurant world until now. In February, Panera Bread launched its monthly coffee subscription program, which has proven successful despite the pandemic. The $8.99-per-month unlimited coffee offering has approximately 750,000 subscribers, and Panera is taking it a step further with its refer-a-friend program. Now those in the program who sign up five or more people receive free, unlimited coffee through the end of October, and new subscribers get free coffee, too.

The program has been such a hit for the fast-casual brand that Pret A Manger, a British sandwich and coffee chain also owned by Panera’s parent company JAB Holding, is taking the idea overseas. Pret recently announced its subscription program, offering five drinks a day for £20 per month. The initiative is an attempt to drive people back to Pret stores — many of them located in London’s business district — as restrictions continue.

What’s in it for your restaurant?

Now is the time for brands to experiment. With people increasingly used to subscriptions in the food environment, particularly due to the growth in meal kits and subscription boxes, a well-thought-out program could help bring customers back into your stores. From a consumer behavior perspective, the price point is extremely attractive. Using Panera as an example, the cost of $8.99 per month looks affordable when converted to a daily cost of 30 cents (or compared to a latte or two).

In addition, subscribed customers are likely to visit your establishments more frequently — and pass on a competitor’s brand to make the most of their subscription program. Because of the subscription’s perceived value and the power of temptation, customers commonly treat themselves to an accompaniment, too. In its initial test study, Panera reported that the program increased guest frequency by more than 200%, and food attachments to coffee orders increased by 70%. A similar program could work as a habit-forming tool and strengthen your customer loyalty while providing a positive customer experience.

Another benefit is the opportunity to collect customer data. By linking a subscription program to a loyalty program or having customers scan a QR code, brands can learn a lot about them. This data will allow for personalized marketing strategies and targeted promotions geared toward specific customer segments.

Before you jump right in, RMS recommends testing your program out. Taking the time to test the program allows operators to experiment with low risk. Select the right number of stores in the right locations to best understand how your customers will react. Make sure to run your test long enough to gather the amount of data you need to analyze the information. Using real customer sites to understand your consumers’ reactions will help you implement changes for optimum results and revenue, ensuring your program is successful and your brand stays ahead of the competition.

Are you looking for ways to increase your average check or drive customer frequency? Wondering if a new idea, such as a subscription model, is right for your business strategy? Our team is here to listen and share practical tips on how best to address your current challenge. Contact us today to schedule a free 30-minute consultation.

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