When San-Francisco-based Osito opened in 2021, yet another COVID-19 variant (Omicron) was sweeping the nation. Simply not enough people were coming through the restaurant’s doors, and as months went by, seats remained empty.
Like many restaurants during the pandemic, the management team started brainstorming innovative ways to fill the dining room. Fast forward to summer of 2022, and Osito launched its first membership program, joining a growing number of restaurants creating subscription-based offerings designed to lock in customers.
Osito’s quarterly program offers guests $525 in dining credits for a flat rate of $500, along with additional perks like priority reservations, access to special events, and wine pairing consultations with the restaurant’s wine director.
“It gives people an opportunity to feel invested and connected to us, like they’re a part of this special community,” says Osito co-founder Jennifer Yoo. “For restaurants as a low-margin business, there’s the recurring revenue, plus you get to shape this program that supports your mission and what you want to be in the community.”
As more and more restaurants launch various membership models, research indicates customers may be ready for it. A recent PYMNTS survey of over 2,000 adults showed 44% of those surveyed use loyalty programs at full-service restaurants and 38% do so at quick-service restaurants (QSRs).
“Whether it’s a super-fine, three Michelin [star] all the way down to a Chick-fil-A, smart organizations are using subscription tools to generate the loyalty that will yield a stronger customer lifetime value,” says James E. Griffin, a professor at Johnson and Wales who studies restaurant loyalty. “And it’s pretty clear, loyalty programs are here to stay.”
Planning to join in on the strategy? We break down how to get started and some ideas to consider.
What is a restaurant subscription/membership program?
Restaurant subscription models provide customers regular access to products, services, discounts, perks, and/or experiences in exchange for a fee paid in advance. Customers typically pay at recurring intervals (i.e., monthly, quarterly, annually, etc.). The programs are designed to help restaurants secure regular customers, which can be particularly important as budgets tighten in the wake of inflation and rising food prices.
“You have the opportunity to engage your best guests and the people who are looking to support you in a more meaningful way,” says Greg Lutes, chef-owner of 3rd Cousin, which launched a membership program last spring, providing participants with house accounts pre-loaded with dining credits, plus perks like a dedicated concierge for bookings.
On-premise membership programs, like monthly dining credits or exclusive member experiences, help restaurants strengthen their brand, drive new customers, and encourage existing customers to visit more often. These can also act as a medium for restaurants to experiment with creative ideas that are more ideal for smaller audiences.
For well-known brands, subscription programs often become an opportunity to turn fans into superfans. Take Panera, for example, which has its “Unlimited Sip Club”, drawing in repeat business through a $11.99 per month all-you-can-drink coffee and tea deal.
Of course, not all subscription programs are on-premise. Many restaurants offer at-home options, like curated wine clubs, product packages, or meal kits. The primary benefit here is a brand new revenue stream. Determining which model is best for you will depend on your restaurant style, brand, and customer base.
What to consider when starting a restaurant subscription program
So you want to start a subscription program – but how do you make sure customers actually sign up? Generally it comes down to doing a bit of upfront research and strategic planning.
Identify your goal(s) for the program: Do you want more butts in seats? Are you looking to reward your regulars? Are you a new restaurant trying to build up your brand? Or are you an established restaurant trying to add a new revenue stream? Shape your program around specific business goals in order and set parameters to track its value. “I’d also recommend thinking about what’s unique about your brand, and craft offerings that bring those front and center,” says Vivien Sin, co-founder of restaurant subscription management software The Third Place.
Understand your customers’ wants: After you determine your own goals, dig into your customer data to figure out what kind of perks your customers actually value. Without customer buy-in, your program isn’t likely to sell. “Loyalty programs are driven by the deep understanding of who your customers are, what their values are, and what their emotional experience needs to be to optimize their time with your establishment,” says Griffin. “What does that point to? You have to have strong analytics and a strong suite of digital tools to track your customers.”
Consider your restaurant model: Membership strategies vary broadly across restaurant models. Identifying where you fit helps guide the planning process. “At the higher end of the restaurant marketplace, it’s often about using exclusivity to drive success – it could be an exclusive product, location, or specific occasion, but here, you have customers who want a complete emotional experience,” says Griffin. “When you scale back to fast-casual, you’re dealing with a desire for convenience and personalization.”
Determine how you’ll execute and track your program: Running a subscription program requires additional management and organization, which makes it highly valuable to partner with a subscription management company. The right software will help you keep track of aspects like recurring payments and member benefits (ex: pickups, deliveries, redemptions) and also manage relationships with members. The Third Place, for example, lets restaurants view subscribers’ contacts and purchase history in one place, and use factors like their average total spend or most frequently purchased item to send targeted emails and text messages. “At the core of every subscription is the customers and building a history with them,” says Sin.
How should you price your membership? This depends on what you’re selling. But again, here’s where knowing your customer base and restaurant model come into play. Are your customers interested in getting a deal or do they place more value on being part of an exclusive community with special perks or insider conveniences, like a house account?
“We charge $300 per three months, which was based on our per person check average and how often people come in on average within three months,” says Lutes, who’s membership program doesn’t include a dining discount. “We don’t believe in discounting our brand for anything, but we’ll do special events just for them as a thank you.”
At Osito, members receive a free $25 in credits per quarter. “The bonus is modest, but we want people to feel that their decision to come back is something that we see and value,” says Yoo.
Sample restaurant subscription program ideas
For a membership program to become successful, it’s crucial that it be tailored to your individual restaurant’s brand and audience. However, for inspiration, we’ve shared a few ideas below.
Curated beverage subscription: If you’re a restaurant that’s known for its good taste in wine, coffee, or cocktails, consider crafting a beverage club through which you curate a selection of your favorite varietals or mixers to share with guests each month/quarter. Beverage clubs can entice guests by giving them an opportunity to learn or be introduced to something new.
Specialty product subscription: Can you freeze your famous tamales or package the house sauce that all of your customers rave about? Maybe you’re known for your fresh pasta, bread, or other pantry items that customers could cook with on their own. Product subscriptions encourage customers to buy take-home offerings on a regular basis. If you’ve got a retail section of your restaurant, you could draw on that, too, and curate a quarterly basket of your favorite products or fresh finds.
Meal kit subscription: Before investing into a meal kit program, it’s a good idea to survey your customers to gauge their actual interest. But depending on your customer base, you might find there’s an appetite for cooking your chef-selected recipes at home. One-off ideas, like pizza kits, sometimes work well, too.
Dessert club: Are you famous for your flaky pastries or buttery cookies? Dessert baskets let customers treat themselves, while regularly bringing a piece of your restaurant home – keeping your brand top of mind.
Typically restaurants use a combination of perks, such as those listed below, to create an on-premise membership.
Discounted dining deals: There’s a lot of room to play here. For example, members could pay $90 every month to receive $100 in dining credits. Or you could offer 10% off their bill when they dine at the bar before 7 p.m. Or maybe the membership includes a free appetizer per month. Weigh your return on investment with your customer’s values to determine discount parameters.
House account: Some members find that their favorite perk is simply being able to have a credit card on file so that they don’t have to go through the payment process at the end of every meal. If using this perk, be sure to address a built-in gratuity.
Chef’s table club: Have a chef’s counter at your restaurant? Give members a biannual, guaranteed seat, and build the tasting menu into the subscription cost.
Members’ only events: Whether it’s a meet-and-greet with your executive chef, a wine tasting with your wine consultant, or a members-only cocktail party, special events help build a community that makes members feel more connected to your brand.
Wine consultations: If you’ve got a somm team, consider giving members special access.
Exclusive menu item access: Make guests feel special by treating them with off-menu items. “Say we get a small quantity of fresh razor clams – we’ll save it for our Take-Care-of-Me members,” says restaurant owner Daniel Azarkman of El Lopo’s membership club.
Priority reservations and event access: Reservations are a popular membership tool. Some restaurants give members guaranteed reservations. Others offer priority for popular nights or events, like New Year’s Eve. And assign a dedicated concierge, allowing members to bypass online systems like OpenTable and Resy, and also request special tables.
Birthday specials: Treat members on their birthday, whether with a complimentary entree, meal, or as neighborhood restaurant Stationaery does, a free bottle of bubbly.
Unlimited chips, soda, etc.: Giving away free low-cost items is a popular perk among fast casuals and can lead customers to choose you over competitors. But of course, choose your items wisely.