Quick Guide to the Restaurant Subscription Model

Sep 24, 2020
5
min read
Written by
Wisely
Wisely’s Winter is Coming content series explores revenue-building strategies for restaurants when cold weather restricts dine-in sales. The series covers:
The Ins and Outs of the Restaurant Subscription Model
Cold Weather Outdoor Dining Strategies
How to Maximize Profits via Gift Card Strategy
W

hen cold weather shuts down the patio, and dining room restrictions put a cap on in-restaurant sales, what can restaurants do to maintain and boost revenue? 

In Wisely’s new content series we explore the whys, how-tos, and possible benefits of three strategies that can build profit when Winter Is Coming.

The first of these strategies takes a page out of the retail playbook and examines subscriptions for restaurants. This quick guide outlines:

  • What is a restaurant subscription?
  • The benefits and risks of restaurant subscriptions
  • Things to consider when designing a subscription

What is a Restaurant Subscription?

Subscriptions flip the script on a restaurant's relationship with sales. Instead of single event sales, the subscription model aims at selling over a period of time.

Customers win because restaurant subscriptions are convenient and break up the monotony of home-cooked meals. Restaurants win with a predictable revenue stream, an opportunity to be inventive with menu offerings, and a way to stay connected with loyal guests.

Types of Restaurant Subscriptions

Option 1

The customer opts for consistent access to meals and pays at regular intervals — think Blue Apron, or essentially the Netflix or Apple Music model applied to food.

Examples

Option 2

The customer pays a lump sum and receives meals at set intervals — think Farm CSAs, Goldbelly’s “Best Of” box, Omaha Steaks “Steak of the Month Club”, or Mouth’s pickles or bourbon of the month — but for restaurants.

Examples

Why Consider a Restaurant Subscription

The short answer? Predictability. In these uncertain times, restaurant leaders, financial advisors, and board members/investors are looking for more predictable revenue. The good news is, customers are also looking for routines that create predictability.

The pandemic has accelerated trends that were already in motion, especially when it comes to consumer expectations for value and convenience.

Research shows that consumers will continue to use pandemic-driven, convenient ways of engaging with business in the future. For example, 56% of consumers will continue to use Buy Online, Pick Up in Store services, and 45% will continue their elevated use of delivery for food and groceries.

Subscriptions done right can tick the boxes of both value and convenience for customers, while also providing that much desired predictability for restaurants.

Benefits and Risks of Restaurant Subscriptions

Do the benefits of subscriptions outweigh the possible risks for restaurants? Each brand will balance them differently.

Possible Benefits

Reliable Revenue

A subscription model provides a business with a more steady cash flow because both revenue and costs are more predictable.


Customer Retention

As customers have committed to a relationship for a certain time-frame by paying for meals in advance, there is a higher probability that the customer will build a strong emotional bond with the brand.


All Hail the Auto-pay

Research shows that for many reasons, subscribers are less likely to cancel subscriptions, especially if they already have a strong emotional relationship with a brand.


Possible Risks

Reliable Product

To sustain the trust that customers put in a restaurant when buying a subscription, it’s essential to maintain or even improve the quality of the food/meals for each installment.


Waste

Restaurant subscriptions can lead to food waste because customers may not need every periodical delivery—take in mind how to recycle or reuse the product.


Customer experience

Problems ordering, paying, or with pick-up/delivery can hold more weight when the promise of a subscription is predictability and convenience.


Workload

From designing packaging, to coming up with menu items/combinations, subscriptions can be like starting a mini-business within your business.

Tips for Designing a Restaurant Subscription

To maximize benefits and minimize risk, subscriptions need to be thoughtfully designed, with the needs of both the customer and operations in mind.

Things to consider when designing a successful restaurant subscription:

1. Use the Existing Customer Relationship to Learn About Needs and Preferences

Customers who buy restaurant subscriptions aren’t looking for products for their own sake, they are really subscribing to the outcomes they want. 

Designing the right subscription for the right customer requires:

  • Knowing who your valuable customers are
  • Understanding the problem they need solved
  • Creating a subscription that provides value for them

Feed Families

Parents might be solving for a quick, healthy, reliable mid-week dinner because after work and teaching school they need an alternative to cooking.

Socialites Seeking Alternatives

Young professionals who once relied on a fully booked calendar of restaurant reservations may be craving a sense of normalcy and desire to bring a cocktail/snack/dinner experience home.

2. Ensure a Frictionless Experience

The true value of restaurant subscriptions comes with use over time. To keep customers satisfied across the lifetime of a subscription (and to avoid cancellations), every step should be easy, clear, and add value for the customer. 


  • Payment: What’s the number one rule of business? Make it easy to pay. Better to go with a pay-up-front model if the experience will be seamless, than risk a poor experience with recurring payments.

  • Distribution: Streamline the pick-up process. Automated reminder emails, and two way texting when the order is ready, reduce friction (and no shows). Designated pick up and curbside zones add clarity and convenience for the customer. 

  • Cancellation & Refunds: Research shows that maintaining a good customer relationship through cancellations requires proactive communication, flexible cancellation options, and transparency.

3. Create a Retention Plan

Beyond the restaurant subscription, the end game is continuing the customer relationship when a subscription has run its course.


  • Get proactive about feedback: a subscription is meant to solve for customer needs—early and regular feedback is critical to learning if the solution actually solves for the problem.

  • Turn feedback into a better experience: directly address stated problems. Pick up location isn’t clear? Add signage. Vegetarians want to get in on the fun? Consider a plant-based option.

  • Create outreach for a segment of subscribers: from renewal prompts to menu items/events they might like—will keep the relationship fresh long after the subscription ends.


Re-imagining the Future of Dining

The quickly shifting times are driving restaurants and customers alike to adopt systems, products, and innovations that might’ve been unthinkable pre-pandemic.

The boom in off-premise sales is pushing lifestyle brands to adopt ghost kitchens, and fast-casual brands to try out drive-throughs. New infrastructures restaurants are building now to survive, will continue to shape how customers behave down the road.

Restaurant subscriptions might feel out of the box, but it’s time to re-think what it means to be a restaurant.