<p><img src="https://static1.businessinsider.com/image/60107d821d2df20018b70fa5-569/Free Unlimited Coffee 6.22.jpg" border="0" alt="Free Unlimited Coffee 6.22" data-mce-source="Panera Bread" data-mce-caption="Panera Bread launched a coffee subscription program in 2020."></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Wineries do it. Gyms do it. Food delivery companies do it. And, streaming services like Netflix and Spotify are masters of it. In the subscription economy era, these pioneers have hooked consumers with prepaid services for everything from doorstep wine delivery to streaming music.</p><p>Now, restaurants want a piece of the action.</p><p>Subscriptions have been around for decades but the business model is now spilling over into new sectors as consumers have learned to accept paying regular fees for goods, services, and experiences, experts say. Restaurant industry innovators like Panera Bread, Urban Plates, Pret a Manger, BJ's Restaurants, and Lazy Dog Restaurant & Bar are among the first to enter the $64 billion space.</p><p><strong>Read more</strong>: <em><a href="https://www.businessinsider.com/panera-bread-rolling-out-virtual-catering-and-panera-to-you-2021-1">Panera hopes 'Virtual Catering' will win back major clients and revive its part of the $60 billion industry</a></em></p><p>They hope to drive sales and visits by adding coffee, food, and beer subscriptions.</p><p>"It's a brilliant strategy. What they are doing is creating a habit," said restaurant consultant Gary Stibel, founder of The New England Consulting Group.</p><h2>The Netflix playbook</h2><p>Taking a page from Netflix's playbook is proving fruitful for businesses and gaining steam globally, according to various reports.</p><p>In a recent report, subscription management platform Zuora said the so-called "subscription economy" has grown more than 400% over the last 8.5 years as consumers have demonstrated "a growing preference for access to subscription services over the ownership of products."</p><p>Even <a href="https://www.businessinsider.com/meal-kit-ceos-navigate-skyrocketing-demand-during-coronavirus-2020-5">meal kits</a> services like Blue Apron, which had been slumping prior to the pandemic, are seeing a boost in subscriptions. The sector has benefited from consumers looking to expand their chef skills while stuck at home. </p><p>The subscription market for physical goods is expected to grow globally from $64 billion in 2020 to more than $263 billion in 2025, according to Juniper Research.</p><p>"We see businesses that are playing in subscriptions are out-competing businesses that are not," said Sean Keith, director of new business development at Eagle Eye. The technology company powers a new coffee subscription program at Pret a Manger.</p><p>In September 2020, Pret rolled out "YourPretBarista'' subscription service at 360 locations in the United Kingdom. Members get up to five drinks per day in exchange for paying a monthly fee of 20 British pounds, which is about $26.60 in US dollars. </p><p>Now in place for several months, Keith said the Pret subscription program is driving customer acquisition and loyalty at cafe locations. </p><p>"We've seen frequency jump by more than 200% among those customers that are subscribed," Keith told Insider during a recent interview. "The program really sells itself."</p><p>And unlike other refillable programs, Pret's program covers a large variety of barista-made drinks such as cappuccinos, tea, hot chocolate, smoothies, cold brew, and frappes. The five drinks per day can be collected every 30 minutes. </p><p>For a daily $5 latte drinker, the subscription pays for itself in a week. </p><p>"For those that are going even more regularly, that's where we really see sort of the lift moment happening and the sort of perceived value for customers being quite high," Keith said. </p><p><img src="https://static2.businessinsider.com/image/60107eb36dfbe10018e0018c-520/Pret-800.jpg" border="0" alt="Pret 800" data-mce-source="Pret a Manger" data-mce-caption="Pret a Manger rolled out a coffee subscription program in the United Kingdom."></p><p>By contrast, Panera Bread's MyPanera subscription program, which launched in early 2020, does not include specialty drinks like lattes. </p><p>But it's also about three times less expensive than Pret's. </p><p><a href="https://www.businessinsider.com/panera-bread-rolling-out-virtual-catering-and-panera-to-you-2021-1">Panera Bread</a> coffee <a href="https://www.businessinsider.com/panera-unlimted-coffee-subscription-review-2020-3">subscribers</a> get unlimited hot coffee, iced coffee, and hot tea for a monthly fee of $8.99. </p><p>When the bakery-cafe chain of more than 2,000 restaurants launched the program nearly a year ago, Panera said the membership program could save customers up to $1,000, the average amount most consumers pay for coffee each year.</p><p>At the time, Panera CEO Niren Chaudhary said the chain is "challenging the status quo" and "disrupting the coffee business" with the unlimited subscriber plan.</p><p>The company, known as an innovation pioneer in the industry, declined to disclose specific membership numbers.</p><p>But Eduardo Luz, chief brand and concept officer at Panera, told Insider that Panera intends to "lead the way subscriptions" as the program has led to increased revenue, while also adding value and convenience for customers. </p><p style="font-weight: 400;">"Panera's coffee subscription program has helped drive both traffic and attachment, driving revenue for our cafes," Luz told Insider in an email. "Right now we are focused on expanding the current value proposition for unlimited coffee subscription and continuing to grow the program."</p><p style="font-weight: 400;">Panera and <a href="https://www.businessinsider.com/pret-a-mangers-coffee-subscription-was-inspired-by-fellow-jab-chain-2020-10">Pret</a>, both owned by JAB Holding, are not the first restaurant chains to try coffee subscriptions.</p><p><a href="https://www.businessinsider.com/dunkin-extra-charged-coffee-with-more-caffeine-on-sale-2020-12">Dunkin</a>' and Burger King gave coffee subscriptions a shot but have since discontinued the programs. </p><p><strong><em>Read More: </em></strong><a href="https://www.businessinsider.com/restaurant-trends-ma-consolidation-menu-cuts-to-escalate-in-2021-2020-12"><em>The pandemic caused the restaurant industry to radically reinvent itself in less than a year. Experts say these 4 trends will remain even after COVID-19 recedes</em></a></p><p>Both chains declined to comment for this story. </p><p>In the case of Panera, industry analyst Stibel said the chain's coffee subscription is likely driving revenue because most consumers won't leave the store without buying something else from the menu.</p><p>"Nobody goes to Panera for a cup of coffee and nothing more. Once you're there, you realize you're hungry," Stibel said.</p><p>The rise of coffee subscriptions comes as the sector faces headwinds and changing consumer habits due to the pandemic. According to market research by Allegra Group, US branded coffee shops saw sales drop 24% over the last 12 months as COVID-19 lockdowns wiped out the morning commute.</p><p>When deciding what type of subscription to offer, Stibel said restaurants should be creative. Think outside the box like offering diners exclusive seating during peak hours. </p><p>"In this environment today, when people are wanting to go out and want to stay safe, you could have subscription pricing for the 4 p.m. meal," he said.</p><p>Still, as restaurants dip their toe into subscriptions, most chains are sticking to memberships tied to food and specialty beverages like beer, wine, and coffee.</p><p>Illinois-based Cooper's Hawk Winery & Restaurants has offered monthly wine club memberships for years. The membership prices range from $19.99 for one bottle per month to $37.99 for two bottles per month, according to the casual dining chain's website. </p><p>Cooper's Hawk, whose key investor is Ares Management Corp., could not be reached for comment. In 2019, Cooper's Hawk told <a href="https://www.nrn.com/news/coopers-hawk-ceo-tim-mcenery-whats-next" target="_blank" rel="noopener">Nation's Restaurant News</a> that its wine club program boasted 400,000 members. CEO <a href="https://www.nrn.com/top-200-restaurants/fastest-growing-chains-2018-cooper-s-hawk-winery-restaurants">Tim McEnery has said</a> most members come into their local restaurant to pick up wine and that about 65% make an ancillary purchaseoften a drink at the bar or dinner.</p><p>And, that's the beauty of subscriptions. They not only add a new revenue channel, but prepaid plans often lead to more frequent visits by loyal consumers. That's crucial to an industry that has struggled with stagnate traffic for years. And, the pandemic has only. made matters worse. In December, traffic declined 11% compared to a year ago, according to data released Wednesday by The NPD Group.</p><p><img src="https://static2.businessinsider.com/image/601083766dfbe10018e001be-556/UP_PlatePass_2020_webslider-1.jpg" border="0" alt="UP_PlatePass_2020_webslider 1" data-mce-source="Urban Plates" data-mce-caption="Emerging fast-casual chain Urban Plates recently rolled out a subscription program for $10 entrees."></p><p> </p><p>Urban Plates, a 21-unit, fast-casual concept, offers discounted meals for subscribers. </p><p>The Southern California chain is known for its chef-driven entree plates that typically cost about $13.50. In December, the brand rolled out a $20 "Plate Pass," a two-month $20 subscription value plan. During the two-month subscription period, customers can buy meals featuring salmon or grass fed steak for $10 per entree.</p><p>Urban Plates sold about 2,000 passes during the initial pilot; this week the chain told Insider that it plans to make the subscription service permanent. </p><p> CEO Saad Nadhir called Plate Pass a big idea for the emerging concept. It is not only affordable for customers, but it "allows our most loyal fans to help us operate more efficiently and we, in turn, pass the savings back to them," he said in a statement. </p><h2><img src="https://static1.businessinsider.com/image/6010ae436dfbe10018e0027d-1066/LazyDog-beers.jpg" border="0" alt="Lazy Dog beers" data-mce-source="Lazy Dog" data-mce-caption="Lazy Dog Restaurant launched a quarterly craft beer subscription program in early 2019.">Subscriptions are evolving</h2><p>Analysts say subscription services are evolving beyond offering consumers value on products. </p><p>In the food and beverage space, subscriptions can be leveraged to create unique experiences for dinersfrom getting first dibs on the coveted 6 p.m. dinner seating to receiving exclusive craft beers from their favorite restaurant.</p><p>"People are looking for experiences versus simply owning things," said Amy Konary, global vice president at subscription management company Zuora.</p><p>Konary is the founder of the Subscribed Institute, a think tank of more than 500 subscription companies that research best practices to ensure success in the subscription economy. </p><p>For the restaurant industry, Konary said now is a good time to take the plunge as consumers are more willing to pay for services that "surprise and delight" them. </p><p>Restaurants are also realizing that subscriptions offer more than a predictable revenue stream. Konary said business owners are using subscriptions to establish better relationships with customers.</p><p>"Companies are really trying to connect with customers in more personal ways than before," she said.</p><p>That certainly is the case at Lazy Dog Restaurant & Bar in Southern California.</p><p>Chris Simms, founder of the emerging casual dining chain, launched a craft beer membership program in early 2019. It was created for "aspiring beer geeks" who had become fans of the chain's rotating selection of curated craft beers, he said.</p><p>"We were kind of like that beer club originator in casual dining," said Simms, a self-described craft beer fan. "For Lazy Dog, it was our desire to connect with our guests in a deeper way, through a shared passion."</p><p>For $35 a quarter, Lazy Dog beer club members get eight, 20-ounce beers (bottles or cans) brewed exclusively for them from four different breweries handpicked by Simms. Some of the featured breweries have included Saint Archer Brewing Company, Belching Beaver Brewery, and Revision Brewing Company.</p><p>"You get to experience four new breweries that you've likely never seen before. And, and then all of the labels and the beers are specifically made for us," said Simms.</p><p>Lazy Dog beer club members get other perks including priority access to new or rare beer releases and upgrades when dining at the restaurant. For example, members get a 22-ounce beer pour, but they are charged at the 16-ounce price.</p><p>If there's a wait for a table, they get priority placement in the wait queue. Takeout orders for members also come with a 10% discount. </p><p>Casual dining chain BJ's Restaurants began testing a similar beer subscription program in fall 2020.</p><p>Chief Marketing Officer Kevin Mayer said the chain which has been brewing its own beer for 25 years, began thinking about a beer membership program more than a year ago.</p><p>When the pandemic hit, the company fast-tracked the rollout.</p><p>It is now offered at eight restaurants in Northern California. For $30 every two months, consumers receive beers brewed exclusively for members. Like Lazy Dog, BJ's also offers other complimentary perks during the two-month period: a large deep dish pizza, a Pizookie dessert, and one appetizer. Members also get $5 growler refills. (One per visit)</p><p>"The objective was first and foremost to bring that VIP beer experience to our guests," Mayer told Insider.</p><p>Based on positive feedback in the pilot program, Mayer said the Huntington Beach, California-based company plans to expand the beer subscription program to more restaurants in their home base of California.</p><p>Sibel said it is smart for chains like Lazy Dog and BJ's to add perks on top of the exclusive beer experience.</p><p>"They are making it something cool, fun, and unique. They are giving you a reason to pay more because it's special," Stibel said. </p><p>Still, Simms thought Lazy Dog's subscription program would be doomed when the pandemic hit as consumers might cancel due to financial hardship. </p><p>Ultimately, the opposite happened. Memberships doubled. Beer club subscribers ordered takeout more often and spent more money on both carryout and dine-in orders.</p><p>"Their revenue per guest is much higher than a normal guest," he said.</p><p>It turns out, beer kit subscribers stuck at home during the pandemic gravitated to the program because they looked forward to trying a new batch of suds, Simms said. </p><p>"In a world of Groundhog Day, where every day is the same, you look for excitement," Simms said.</p><p> </p><p><strong>SEE ALSO: <a href="https://www.businessinsider.com/panera-bread-rolling-out-virtual-catering-and-panera-to-you-2021-1" >Panera hopes 'Virtual Catering' will win back major clients and revive its part of the $60 billion industry</a></strong></p><p><a href="https://www.businessinsider.com/restaurants-turn-to-coffee-and-beer-subscriptions-to-drive-sales-2021-1#comments">Join the conversation about this story »</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/worlds-most-expensive-liquid-thoroughbred-horse-semen-2020-3">Why thoroughbred horse semen is the world's most expensive liquid</a></p>
Click here to read full news..
