Dine, Save, Repeat: The Art and Science of Successful Restaurant Subscription Models

The emerging restaurant subscription trend has gained significant traction since the beginning of 2020. These programs not only offer unique benefits to customers but also provide a predictable revenue stream for businesses—among other benefits. Let’s explore the intricacies of restaurant subscriptions, showcasing various structures and examples that have proven successful so that you can decide which, if any, are right for your business.

The Subscription Model and How It’s Relevant to Restaurants

Subscription businesses are booming. Over the last 11 years, subscription-based businesses have grown 3.7 times faster than the companies in the S&P 500. Consumers have warmed up to having many active subscriptions, which take up an increasingly large part of the typical American’s budget. Americans are so comfortable with subscriptions they sometimes forget about them. According to one study, consumers underestimated their monthly subscription spend by $133 per month, on average. Most of the subscription spending is for media and entertainment-related services, spending that might be more sensitive to changes in economic conditions. The average American spent more than one-third of their food spending at restaurants in 2022, a 16% increase from 2021.

A restaurant subscription is a membership program for which the customer pays a monthly fee to enroll. In exchange, they receive benefits that can include discounts, free items, improved loyalty program benefits, and others. These subscriptions are prepaid and usually tied to a customer loyalty program. This allows businesses to glean marketing insights from their customers that extend far beyond participation in a subscription program. The costs of implementing subscription programs on their own, however, can be much less than a full loyalty program implementation and with an abundant potential upside.

Examples of Restaurant Subscription Programs

Subscription programs come in all shapes and sizes but share an important trait: they make customers more loyal to your brand and visit your business more often. Below are some of the most common subscription models, with examples from some of our favorite restaurant concepts:

The Discount-Based Subscription – For a monthly membership fee, members get a discount on some or all products in the restaurant. This model may benefit brands with higher-priced, luxury offerings, encouraging customers to more regularly purchase items that are out of their usual price range.

Free Item Subscription – For a monthly membership fee, members get a free item during their restaurant visits. This model may benefit brands that offer low-cost items, such as drinks and desserts, for free, which pair well with their other offerings.  

Prepaid Food Subscription – For a monthly membership fee, members get a benefit at regular intervals. This model may benefit brands that have repeat customers but operate in highly competitive spaces.

Other Types – The restaurant subscription model is flexible and can be tailored to meet a restaurant’s strategic objectives.

Some popular examples include Panera Bread’s “Unlimited Sip Club,” which allows consumers access to free drinks, every two hours, for $12 per month. Limited release programs, such as Taco Bell’s “Taco Lovers Pass” or Applebee’s recent “Date Night Pass,” offer discounts or free items for an annual or monthly membership fee. The type of subscription program you select can provide varying benefits, including some of the following.

Advantages of Restaurant Subscriptions

More Frequent Customer Visits – Subscribers tend to visit more frequently, boosting foot traffic and overall sales.

Increased Customer Spending – Subscriptions often result in higher customer spending because individuals seek to maximize the benefits of their subscription.

Predictable Monthly Revenue Stream – Subscriptions provide a steady and predictable income, facilitating more effective financial planning.

Enhanced Brand Loyalty – Customers who subscribe to a restaurant's offerings are more likely to develop a strong sense of brand loyalty.

Access to Customer Data – Subscriptions enable businesses to gather valuable customer data, aiding in targeted marketing and personalized experiences.

Considerations Before Implementation

Determine the Model That Works Best for Your Business – Choose between offering a free product, a low-cost item, a high-margin product, a flat discount, or something unique.

Profitability Analysis – Assess the profitability of each item in the subscription and consider the operational impact of increased product volume.

Budgeting and Inventory Management – Evaluate the benefits of converting sporadic sales into predictable subscription revenues, simplifying budgeting and inventory management.

What’s Next?

Implementing and managing a successful subscription and rewards program requires a combination of technological and financial expertise. Look for a business advisor that is well-positioned to assist your business in evaluating, implementing, and optimizing these programs. This advisor should have comprehensive knowledge and experience and help you unlock the full potential of restaurant subscriptions, ensuring sustained growth and customer satisfaction.