Pay-monthly pizza? The rise of the subscription model for restaurants
At a time when margins are being squeezed, costs are up, and spending is down, the last thing restaurants really want to do is have to discount their product. Could the ‘membership’ model prevent the need to do that while still offering a great price to their regulars?
It’s the age of predictable revenue
and arguably the one sector that’s not been quite so quick to the table (excuse the pun!) is consumer-facing restaurants.
For years, suppliers have offered subscription services to the hospitality sector (sometimes disguised as spreading the monthly cost of a product over a long time period and other times sold more directly - such as HR service subscriptions). However, aside from the meal delivery subscriptions such as Gusto, we’ve not seen a huge number of restaurants go down this route.
Last year, Pressed Juicery, the successful California based Juice bar (and a personal favourite of mine when in the US - I recommend the Greens 1 Juice!) launched a monthly member subscription service. For a minimum of $10 a month, you set up a direct debit and gain access to $5 juices (a significant reduction from the $6.50 non-member price). A big saving for regular customers and a great way for the business to receive consistent predictable cash flow.
But is this a model that could cross the Atlantic and work feasibly in the UK market? Whilst taking off in America, it has to be noted that differences in US/UK consumer culture may make the likes of the subscription sushi bar or pay-monthly pizza joint difficult to emulate across the pond.
Considering evidence from Business Insider’s 2018 report on the average UK vs US work day, the rise in subscription services may favour the US worker who tends to have less leisure time, longer working days, and a higher chance of having no lunch break - thus benefiting from having a predictable routine of both spending and knowing where to spend.
Looking at the original model, restaurants could increase prices to ‘non-members’, therefore making their member price look very attractive, and this of course gives great opportunity for promotions such as a ‘non-member weekends’. Not eaten here before? Everyone can try our food with ‘member prices’ all weekend!
Whilst customer loyalty is key and I’m sure you’d actively want to encourage customers to visit regularly (and spend more), there is no doubt that, similar to gym memberships, there would be a proportion of subscriptions that simply go unused. Credit could either expire or have to be used in a certain period of time.
Does your establishment operate in a business-heavy area - have you got lots of regular lunch customers?
This would be a prime target market to trial a new subscription model. There are clearly lots of pros (and some potential cons) to going down such a route, so I’m curious to see the effect such a scheme would have on a UK business, and whether a subscription plan would work better than a generic loyalty scheme.
With Netflix and Amazon Prime now very much the norm when it comes to TV, which restaurant is going to be first to the table with a subscription model? For a business not wanting to take the risk of an ‘all inclusive’ model, the Pressed Juicery member pricing model could be a great way to test the water.
£25 a month for unlimited coffee in my favourite coffee shop? Count me in!