Due to inflation, consumers are spending less money at restaurants. Visit frequency is down across the industry, with Black Box Intelligence reporting that year-over-year comp traffic dropped 3.5 percent in April 2023. Declining traffic and consumer spending means quick-service restaurants are competing as hard as ever before to earn sales and customer loyalty.
Loyalty programs have always been built to offer consumers value while establishing a long-term connection between a brand and a consumer. Some brands have been adding a subscription model in addition to their loyalty program—Panera Bread’s Annual Unlimited Sip Club membership would be a pioneering example, where consumers can pay $11.99 per month and enjoy unlimited coffee, tea, and soft drinks.
“The idea of subscription food passes has been around the industry for a while, but in the past year it’s really started to heat up,” Diane Le, Punchh senior director of enablement & loyalty strategy says. “It’s because restaurant brands are seeing other brands do it and achieve really strong results. And on the other side of things, consumers are open to it as they’ve grown more accustomed to the recurring payment model across different industries and feel they are getting value from it.”
Indeed, data shows that subscriptions may be poised to be the next big thing in the loyalty space. Consider that the Morning Consult found that 60 percent of millennials, and 53 percent of Gen Z are interested in a paid restaurant subscription. Or—pivotally—the figures that show subscription models can be extremely effective: Punchh has found that a $6.99 monthly beverage pass (even when limited to one beverage per day) lifts visit frequency by 6.5 percent, and increases customer lifetime value by 163 percent over the first six months.
Punchh, the industry’s leading digital loyalty and engagement app, used by over half of the top 100 quick-service brands, always looks for innovative strategies and tools to help brands engage their customers. The Punchh team went to work evaluating how effective a subscription model could be for its clients and was impressed by the results.
The AI-powered Punchh platform integrates a seamless way for brands to add a subscription model to their loyalty program. Brands now have an additional tier of membership they can provide customers to amplify loyalty and increase satisfaction.
“I think the perfect marketing program would ideally be a free loyalty program with the option for a paid subscription,” Le says. “There are a lot of people who would want a subscription—we know this because of research we’ve done and the results that we’ve seen for other brands—but your loyalty program should really cover the gamut of the different goals and ways you want to engage with a customer and how they prefer to be engaged with.”
Now brands can leverage Punchh not just as their go-to loyalty platform, but to also launch the next headline-grabbing subscription model that will help create sustained foot traffic and brand loyalty. Le stresses that a subscription model can both stand apart from, and integrate with, a loyalty program. In other words, a subscription model is less of an “either/or” proposition, and more of a “yes and yes.”
Punchh automates things like renewal processes and marketing messaging and encourages sign-ups via targeted promotions. Because Punchh is integrated with PAR Technology’s full suite of products, restaurant operators can easily track the impact and ROI that their loyalty and subscription program is achieving.
“At Punchh, we are here to guide every single brand in building out their loyalty strategy,” Le says. “We can show brands the ROI and benefits they’d see from moving people into their marketing funnels through different loyalty and engagement programs that are unique to their brands and guests.”
To find out more about launching a subscription model, visit the Punchh Subscription Loyalty Program