That Subscription Life
Welcome to Expedite, a (mostly) weekly newsletter by Kristen Hawley covering what’s important in restaurant technology.
That Subscription Life
Frequency and spend. Frequency and spend. Frequency and spend.
Last month, Panera introduced a coffee subscription: $8.99 per month for unlimited hot coffee, iced coffee, or hot tea in any cup. If you live or work or walk by a Panera daily, this is a great deal, conveniently built on clever marketing and supported by digital technology — subscriptions can be purchased through the app, Panera website, on in-store kiosk.
Last week, Grubhub joined the subscription fray with Grubhub+, a $9.99 subscription for free delivery from participating restaurants. The launch took aim at competing services, offering 10 percent cash back on orders with proof of a subscription to a competing service. DoorDash and Postmates also have similar subscription plans, encouraging platform loyalty by waiving delivery fees. Uber Eats is testing a version of the same.
What’s less clear is who picks up the cost in this scenario — because surely someone has to. (No one in third party delivery likes to answer this question.) It likely requires explicit restaurant participation, because in all instances, the pool of available subscription-ready restaurants is smaller than the overall restaurant offering on any given platform.
These plans are born of convenience and a set-it-and-forget-it mentality, engaging hungry customers while encouraging loyalty and return visits. I mean, the ideal for any company is to insert itself into daily, weekly life. It’s something that Sweetgreen has managed to do in the markets it dominates, leaving lots of other restaurant businesses wondering how to replicate that kind of success in their own way. According to Business Insider, customers in Panera’s subscription test program visited store locations almost every other day, and most also purchased food. Over 90 percent of subscribers renewed their memberships. Frequency and spend!
In this year’s State of the Industry Report, the National Restaurant Association reported that consumers really want loyalty programs — over 80 percent of adults surveyed for the report said that they’d be more likely to visit a restaurant that offered a loyalty and rewards program. (It’s most popular among Gen Xers, but across the board a strong majority of consumers are into the idea.)
Restaurants wading into subscription waters also follow trends in consumer behavior. Subscription ecommerce went big a few years ago. In 2018, McKinsey reported that the subscription ecommerce market had grown by more than 100 percent a year over the previous five years. It felt novel in ecommerce at the time — suddenly there were boxes for beauty, boxes for nutrition, boxes for your dog. The subscription model has evolved, now supporting experiences (hello, Classpass). There are even a handful of other restaurant subscription products, like MealPal, which offers Classpass-esque credits for weekday lunch meals.
ICYMI, last week I wrote about modern restaurant marketing in a tech-fueled era of choice and personalization for . The gist: owning the customer relationship and talking to and engaging with customers in a way that feels modern and authentic is essential to success. The subscription thing, somehow, does feel modern right now. (This could be because it’s new.)
Are subscriptions the way forward in a new technology-enhanced restaurant industry? Probably not. Look to other areas, like news, for anecdotal evidence. According to Nieman Lab, even people who like paying for news only pay for one subscription. But it can be a good short-term boost for companies (looking at you third-party delivery) looking to boost user base, frequency, and, ultimately, brand loyalty.
What else is happening?
The coronavirus has made its way to America, and we’re feeling ripples of uncertainty. Jury’s still out on the impact to the restaurant industry — which was recently predicted to reach $899 million in sales this year by the National Restaurant Association. At the time of the report, big growth was expected in the off-premises category, which includes takeout and delivery. Central to the delivery boom, though, are the people who deliver the food. And central to that is new legislation in California — and perhaps soon, other places — that classifies drivers and couriers as employees. In a world where public health and health insurance are suddenly in the spotlight, I am very interested to watch as these companies navigate unprecedented waters. Because on one hand, home delivery of food seems like a great idea when you’re holed up at home. But on the other, with little understanding of food safety and health measures implemented by these companies, it’s a potential scary proposition.
Hello, veggie mode. Taco Bell will soon unveil “veggie mode” for its in-store kiosks, a “single swipe feature” that unlocks about 50 vegetarian menu options. The company has done similar things with its mobile app to great success — it’s an easy way to personalize the experience for a guest. (Well “easy” in the sense that it’s a simple solution for the end user, I suspect the process itself wasn’t necessarily easy.)
Expedite is produced by Kristen Hawley, a San Francisco-based journalist with over six years of experience covering the restaurant technology industry. Previous iterations of this content were available via Chefs+Tech and Skift Table. Thanks for reading.
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