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The pandemic has reshaped the economy in a litany of ways. Of all the sectors hit hardest, the restaurant industry has had perhaps the roughest go, having to deal with service and health restrictions that inhibit revenue flow. Restaurants and eateries have been looking for deliveries, take-out, and subscriptions to fill the gaps where indoor service isn't possible. Subscriptions could provide a multitude of ways for restaurants to survive the pandemic by generating a reliable, somewhat fixed, recurring source of income. These profit margins can help balance the cash flow of restaurants and help them reach new consumer segments.

While the subscription monetization trend is showing it can work for restaurants, sustainable success and optimization are not guaranteed. Restaurants and other food services will need to consider unique challenges in customer acquisition, retention, and experience, as well as what tools they need to sustain subscription operations.

Consumer demand exists for restaurant subscriptions

In a typical restaurant subscription, subscribers pay a flat monthly fee instead of one-time charges for their meals. Such a subscription model has obvious advantages for those running an eatery, assuming that consumer demand does not fluctuate too much. It appears that such demand is in fact steady. A survey of NYC residents by PropertyNest found that 55% would be willing to pay a monthly fee for a restaurant subscription service.

So why has the demand for restaurant-quality productions stayed somewhat consistent even amidst an economic downturn? Restaurant subscriptions are popular with foodies and non-foodies alike for a few reasons:

• Subscriptions help consumers adjust to the new normal when dining-in is scaled down or disallowed by introducing lack-of-time restrictions, variety, and options for purchasing and consuming. Subscriptions also allow eaters to be flexible post-pandemic, adding more options for delivery and consumption into their lives that deliver value no matter the health and economic climate.
• Subscriptions allow customers to support their favorite local, small businesses during unprecedentedly difficult times for such businesses. (5% in the NYC survey by PropertyNest said this would be their primary motivating factor for signing up)
• Subscriptions are experiences in and of themselves. They are accompanied by options and exclusive perks that can be comparable to the full dining-out experience. A subscription makes trying new things under today’s various restrictions a lot easier and safer.

Five ways to grow with restaurant subscriptions

Many restaurants that are starting to explore subscriptions may be unfamiliar with the challenges and best practices. For one, it’s easy to get sidetracked and focus too heavily on creating an attractive offering. To be successful with subscriptions that meet the test of time and economic detours, restaurants must change and adapt to consumer demand and marketplace trends. Here are five best practices for restaurant subscription services:

1. Retention

Focus on maximizing customer retention while reducing churn. Many restaurant subscriptions make the mistake of not diversifying their sales channels by which customers can be reached. Successful retention as a restaurant means launching subscriptions and different ways to pay (e.g., gift cards) that enable customers to recall their order histories, restaurants to partner up, and restaurants to re-engage customers with communications.

2. Versatility

One advantage restaurant subscriptions have over subscriptions in other industries is inherent value, essentialness, and versatility of products. Restaurant subscriptions offer various value propositions simultaneously – whether it’s delivery, bundles, promos, or the menus themselves. Communicating effectively with customers is crucial for helping customers get more value out of the subscription.

3. Reviews

Eateries thrive on reviews – both good and bad. It’s important for restaurant subscriptions to leverage customer reviews for educating customers via other eaters’ firsthand experiences. Additionally, it’s important to dissect knowledge from reviews and merge that unique knowledge along with the latest food and service industry knowledge to continuously improve the restaurant subscription.

4. Bundling

Bundling subscriptions and partnering with other eateries and businesses is a surefire way to increase value in the eyes of the customer. By enhancing the number of possible choices and selection, a restaurant subscription bundle provides customers with convenience, variety, and a mode for culinary exploration.

C’mon, we can all relate to feeling like having Chinese one day and the Mediterranean the next. With the large variety of restaurants now active in the subscription market, there are more than enough opportunities to connect and bundle with other restaurant subscriptions. More importantly, this retention strategy keeps customers intrigued as they get more bang for their bucks. The Bodega Bundle from Limbo Bar/Riot Cafe, for example, features an interesting selection of food and beverages from Black chefs, designers, and entrepreneurs. Bundling goods from various businesses into a subscription is a great way to support a multitude of businesses simultaneously.

5. Intelligence

Utilize subscription intelligence to drive personalization and growth. Subscription intelligence – industry and customer knowledge combined with strategic growth recommendations tailored to your unique business – enables eateries to optimize revenues by focusing on delivering what customers want.

For example, in the survey of NYC residents, 5% said they'd only buy a subscription if it had free delivery and 9% answered similarly regarding special discounts. If subscriptions are open-ended, they'll need to track individual customer-level data to combat churn and enhance the experience. Subscription intelligence can gather and discern all these facts and figures, forming a solid foundation for making decisions.

Big and small brands are wading into subscriptions

National brands have been among the most notable entrants into the subscription landscape. Take Panera Bread, which recently introduced its MyPanera+ program. For $8.99, subscribers can get unlimited coffees and exclusive rewards. Sweeter yet, the first three months are free—a tactic proved time and time again to be effective at acquiring long-time users.

Meanwhile, Buffalo Wild Wings tied its subscription offering to the 2020-21 NFL regular season. For $99, wing fanatics could purchase a Blazin' Season Ticket, which entitled them to 10 boneless or regular wings for each of the season's 17 weeks. Only 1,000 passes were made available, but the brand also had a special offer for Cleveland Browns fans. For $750, Brown's supporters could purchase a "season ticket" that would give them access to a special seating section inside one of 10 Buffalo Wild Wings units in and around the team’s home city.

Examples across the country

Subscriptions have enticed restaurants and eaters across the nation, not just the largest brands. As a way to keep doors open amid plummeting foot traffic and to secure recurring revenue, the model allows both larger and smaller brands to build consistent customer loyalty and brand recognition during these slower times. Once the world fully reopens, eateries offering subscriptions will have a leg up in the food industry.

For instance, small businesses that have taken to subscriptions include:

• Larder, a Baltimore hotspot, launched a subscription service for weekly pre-cooked meals that are made from scratch and use local organic ingredients. The subscription can be had for $182 to $559 a month, depending on the meal size. The Baltimore Sun also reported on a wine shop offering monthly discounts for bottles, as well as a restaurant selling a pasta club subscription.
• Chicago is known for a couple of things: the wind, da Bears, and hot dogs. Portillo's, the local fast-casual favorite, actually started its subscription service in 2016. Portillo's 365 offers customers a monthly box full of Second City favorites like Italian beef sandwiches, Chicago-style dogs, and ribs. The six-month subscription is $399 and the full year is $749.
• Summerlong Supper Club in NYC is offering a package of 16 dinners from some of the finest restaurants in the city. The program runs from Jan. 19 2021 through the end of April and can be bought for $800 (pickup) or $960 (delivery). All proceeds go directly to the restaurants included in the subscription.
• CultureMap Austin reported on four local eateries that began innovative subscriptions. The restaurants include Chop Chop, which offers three membership tiers for noodle cups plus perks, as well as East Side King, a sushi spot that also has three subscription tiers that include a range of Japanese dishes as well as curated beer, sake, and wine (for the highest level).

How Vindicia can help

The Vindicia product suite helps restaurants efficiently manage and grow their subscription offerings using a range of tools and services. Vindicia Subscribe, Retain and MarketONE provide restaurant businesses everything they need to drive success, from monetization to data analytics to automatic retention to a diverse ecosystem of subscription businesses with which to bundle. The Vindicia suite offers a holistic growth strategy dedicated to driving customer satisfaction and revenue for businesses in the restaurant and food services industries.

Contact us today to find the myriad of ways Vindicia can help you reach your goals.