Subscriptions for Netflix, Spotify and now your favorite restaurant?

·3-min read
In the United States, the fast-food industry is salivating over the success of subscriptions that offer unlimited coffee.

You've embraced the subscription principle for enjoying unlimited music and video streaming catalogs with Spotify and Netflix. So why not do it for your lunch on the go? In the US, this formula is being used to win back consumers who have deserted restaurants during the pandemic. The goal is to build loyalty and regain market share.

Do you want your taco with a hard or soft shell, with or without a side? Enjoy it, it's free, well almost... You actually paid for it in your $10 monthly subscription. American taco giant Taco Bell has just officially launched its subscription concept, after testing it in the state of Arizona last September. It's a new form of loyalty program that has allowed the fast food chain to gain 20% more new customers, who were not yet taking part in its rewards system, reports CNBC. Meanwhile in Los Angeles, Sweetgreen restaurants, which have structured their salads and bowls around a healthy, vegetable-intensive menu, are proposing a subscription concept to their customers until mid-February during a test phase. For ten dollars a month, you will be given a three-dollar voucher if your order is at least $9.95.

After an extensive dry period resulting from closures and other restrictions, restaurants are looking for new ways to exit the crisis in a sustained fashion. In the US, diversifying ordering channels is not the only means being used to keep customers coming back. An increasing number of restaurant chains are adopting the subscription model as an extension of consumers' new habits of accessing must-see TV shows on Netflix. According to an analysis for the New York Times by Mint, Americans spent $640 in 2019 on their digital subscriptions alone. So how much of a monthly budget are consumers willing to dedicate to dining out?

Coffee, a prime example of a subscription product

This new marketing technique is supposed to bring back customers, but also to build loyalty. However, while turning to a subscription model may be a trendy approach for winning back consumers, it is impossible to offer an entire restaurant's menu up for unlimited consumption in such a manner. For the moment, coffee is the product that has been most subject to subscription. A chain of bakeries and coffee shops, which operates outlets in the United States and Canada, Panera Bread, launched its subscription offer in February 2020. For $8.99 a month, you can place unlimited orders for any hot or cold drink, without even having to pay extra if you prefer almond milk in your coffee. During a three-month test phase, Panera Bread saw a massive 200% rise in visits to its restaurants. And in 70% of the cases when a customer requested a coffee, the order was completed with another food product, which wasn't included in the subscription.

While some fast-food giants were early adopters of the subscription approach even before the pandemic -- such as Burger King, which in 2019 offered a free coffee every day for five dollars a month -- others like Pret A Manger are counting on this formula to regain market share. However it's important to be absolutely transparent about the concept and what's included and what's not, something that the British fast-food chain may have learned the hard way. The company didn't get the best press when many subscribers complained that several varieties of drinks were unavailable when they ordered, even though they had subscribed to a monthly subscription worth 20 UK pounds...

In addition to relying on the subscription concept to ensure sustainable cash flow, the international data firm Revenue Management Solutions raises another interesting argument for adopting this type of loyalty program: the collection of customer data. A subscription service is an opportunity for restaurant owners to personalize their marketing strategy by sending targeted offers and promotions.

Of course, the principle of paying a flat fee to access an unlimited culinary offer is not remotely new in and of itself. It is the very principle of the buffet, whose concept has been undermined by the health restrictions imposed by covid-19.

Bérangère Chatelain

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