Author: Jacqueline Yipp, Graphics: Bella Aharonian
The BRB Bottomline
The subscription industry has skyrocketed in profits and popularity within the past few years. Now, other industries, such as restaurants, are testing out subscriptions in order to generate customer retention and loyalty.
As COVID-19 rates start to slowly decline, the economy has found a new way to encourage spending – through subscription services. One industry that has capitalized on this is the restaurant business, as owners and CEOs have started developing and implementing new ways to attract customers when most people want to stay at home.
What is a subscription?
Subscription services have increased exponentially within the last decade, and with outside environment factors such as COVID-19 coming into play, subscription popularity has only gone up. Subscriptions are a service in which customers pay a recurring price in a certain amount of increments in order to continuously obtain a product or service. Subscription services come in the forms of all different products, ranging from Netflix selling movies and TV shows to newspaper companies selling newspapers. Additionally, there are specific subscription companies tailored to certain target marketing audiences like Fabfitfun, a subscription service that provides beauty, health, and lifestyle products; Ipsy, a make-up subscription service; and Universal Yums, a company in which customers are able to purchase international snacks on a monthly basis.
What’s the difference between subscriptions and loyalty/rewards programs?
Although subscription services and loyalty/rewards programs are similar, they vary in terms of benefits. Subscriptions are formed off the ability to pay a price upfront to receive benefits over the course of a certain period of time. The benefits for loyalty programs only come after you buy products from a store.
The Rise of Subscriptions
The subscription industry and services have risen gigantically, with over a 430% increase in the economy over the past 9 years, as much as a 300% increase in the past 7 years, and a prediction of an economy worth $1.25 trillion by 2025. Customers are attracted to subscription services due to its personalization preferences with subscription services offering more choices in products. COVID-19 has certainly added to the steady uptick in the subscription economy as more and more consumers are actively choosing to order subscription services straight to their homes instead of going out and purchasing retail products.
Restaurants Diving into the Subscription Industry
Recently, restaurants have begun to join the subscription industry to add value to its products and attract more customers. The first restaurant to introduce a subscription service was Olive Garden in 2019, which welcomed the Pasta Pass, offering pasta-lovers the chance to eat an unlimited amount of bowls of pasta for nine weeks at the low price of $100. From there, more and more restaurants have hopped onto subscription passes and the industry, primarily because it creates a reliable stream of revenue for the company while simultaneously encouraging customer retention and loyalty. Various restaurants have started to join the bandwagon such as Taco Bell and Sweetgreen, who offer food and salad passes, and Panera and BJ’s, who have come out with drink subscriptions.
Taco Bell’s Lover’s Pass
In January, restaurant chain Taco Bell introduced its Taco Lover’s Pass, a subscription pass in which customers can pay a monthly fee of $5-$10 (depending on the Taco Bell location) for a taco every single day of the month. Some Berkeley students took advantage of this offer with the Taco Bell located on Durant. Even though the pass is no longer offered according to the website, Taco Bell fanatics went crazy for the pass. “It may be a happy holiday for a lot of you, but for me it is a sad day…The Taco Bell Taco Lover’s Pass is no longer available. Thoughts and prayers are appreciated at this time,” said one Twitter user after Taco Bell announced its decision to discontinue the pass in mid-April.
Alternatively to Taco Bell, salad restaurant chain Sweetgreen introduced the Sweetpass, going in a different direction. Instead of offering salads everyday for a month, the Sweetpass was a $10 subscription that enabled subscribers to get $3 off all of their Sweetgreen purchases within the first 30 days of paying for the subscription, deeming the service useful if customers would purchase salads frequently. Once the 30 days expired, purchases would go back to their original prices. The pass was tested from beginning to mid-January, but similar to Taco Bell, the pass is currently no longer available, according to the website.
Panera’s Unlimited Sip Club
Unlike Taco Bell and Sweetgreens, bread and cafe chain Panera’s subscription service is still currently running. Pivoting to drinks and beverages, the special Sip Club offer allows customers to have access to unlimited lemonades, iced and hot coffees, iced and hot teas, and Pepsi fountain beverages for $10.99 a month, lasting until July 4th. The service is a little over two years old, and was successful in test markets before launch, with a sharp increase in visits to Panera, as well as a 70% uptick in food spending at Panera.
BJ’s Brewhouse Beer Club
Similar to Panera’s drink subscription service, restaurant and brewhouse chain BJ’s offers their Brewhouse and Beer Club, where subscribers have access to exclusive beer releases every other month, unlimited 16-20 ounce beer upgrades, as well as one large deep dish or tavern-cut pizza every other month as a take-out perk, and a free pizookie and appetizer as a dine-in perk every two-months. The Beer Club package is currently offered at $30 over a two-month period. The program is fairly new – it was introduced in March – so doesn’t have much feedback or analytics yet, but seems to be promising, as BJ’s has implemented similar subscription plans in the past.
Other industries have been joining the subscription trend, such as at-home meal companies like Blue Apron and Hello Fresh who offer meal kits that people can make at home for a certain monthly price. Similarly, the airlines such as Alaskan Air Groups have copied this approach with its Flight Pass, in which a $50 per month fee enables users to cover six flight trips per year.
Movie theaters have also joined the trend, offering customers the chance to attend multiple screenings over a monthly or annually period for a small fee. Some hotel chains such as Freehand hotels and Selina, another boutique hotel chain, have offered customers hotel packages that can be redeemed multiple times within a certain period of time for a fee. Even health products such as Peloton have come out with services to market to customers for a continuous monthly payment. With the subscription industry growing every year, it seems as if the introduction in subscription services in various industries is only just beginning.
- The subscription industry and economy is at an all time high, and is only increasing
- Because of this, other industries such as restaurants are following in subscription companies’ footsteps and introducing their own packages
- Similarly, airlines, hotel chains, movie theaters and more have been copying this trend