The rise of subscriptions in hospitality: are they here to stay?

Subscriptions have transformed how industries connect with their customers. Whether it’s streaming services like Netflix or monthly meal kits like HelloFresh, the model has become synonymous with convenience, value, and loyalty. Now, hospitality businesses are taking notice. 

In an environment still recovering from pandemic-induced disruptions and grappling with shifting consumer behaviors, subscriptions offer a new way to engage regular commitment and financial stability. Bars and restaurants, traditionally reliant on unpredictable footfall and seasonal trends, are venturing into this territory by offering curated packages ranging from unlimited coffee to exclusive discounts on dining.

For customers, a subscription represents more than just savings. It’s a statement of trust and loyalty, a signal that a particular bar or restaurant has earned a spot in their routine. For businesses, it’s an opportunity to rethink how they deliver value and build long-term relationships. 

But launching a subscription programme isn’t as simple as it seems. While the concept is promising, success depends on careful planning, understanding customer preferences, and navigating operational challenges. 

How to launch a subscription for customers

Subscriptions have become a natural fit for the hospitality sector because they offer a way to create consistent revenue streams. For bars and restaurants, this means reduced financial volatility, especially during quieter periods. The shift also reflects changing consumer preferences. Modern customers value convenience, exclusivity, and personalised experiences. Subscriptions can deliver all of these while fostering a sense of “community”. 

However, businesses must tread carefully to ensure their offerings align with customer needs and operational realities.

The first step in launching a subscription service is understanding the customer base. Not every audience will embrace a subscription model in the same way. For example, a coffee shop that caters to busy professionals might benefit from offering an unlimited monthly coffee pass. 

On the other hand, a fine dining restaurant might find greater success with a membership program that provides access to exclusive events, early reservations, or complimentary wine pairings. The key is to identify what resonates most with the target demographic and design a program that feels like a natural extension of their habits and preferences.

Pricing is another crucial consideration. A subscription’s price point must strike a delicate balance. It should offer enough perceived value to attract customers while remaining profitable for the business. Underpricing can lead to unsustainable operations, while overpricing risks alienating potential subscribers. 

Many businesses choose to start with introductory offers or trials, allowing customers to experience the benefits before committing to a long-term plan. Transparency is also essential – customers need to clearly understand what they are paying for and how they can maximize their membership.

Operational logistics play a significant role in the success of a subscription programme. Restaurants and bars need systems in place to manage customer accounts, track benefits, and ensure staff are prepared to handle subscription-related interactions. Technology is often a key enabler here. 

Many businesses integrate subscriptions into their point-of-sale systems or create apps that allow members to track their usage and redeem benefits seamlessly. Without the right infrastructure, the experience can become frustrating for both customers and employees, potentially undermining the programme’s value.

Marketing and communication can be critical to gaining traction for a subscription model. A well-designed program needs to be paired with compelling messaging that highlights its value proposition. Businesses must clearly convey what makes their subscription unique and how it benefits customers. Limited-time offers, social media campaigns, and in-store promotions can help drive initial sign-ups. 

Regular engagement is also important to keep subscribers invested. This might include sending exclusive updates, offering surprise perks, or gathering feedback to refine the program over time.

The benefits for hospitality businesses

One of the most significant advantages of subscription models aimed at customers is the ability to generate predictable revenue. This stability allows businesses to plan more effectively, from staffing and inventory management to marketing budgets. 

Subscriptions also foster loyalty. Customers who invest in a subscription are more likely to remain regular patrons, and their frequent visits often lead to additional spending beyond the subscription’s benefits. For example, a coffee subscriber might purchase food items during their visits, or a dining club member might bring friends who aren’t subscribers, boosting overall revenue.

Subscriptions can also enhance brand differentiation. In a competitive market, offering a unique membership program can make a business stand out. Customers appreciate the exclusivity and value of a thoughtfully designed subscription, which can elevate a brand’s reputation and attract new patrons. Additionally, a well-executed subscription model creates opportunities for upselling and cross-promotion, further increasing profitability.

The risks

However, there are potential downsides to consider. Poorly designed subscription programmes can lead to customer dissatisfaction, especially if the perceived value doesn’t match the cost. 

Burnout is another risk. If customers feel they’re not using their subscription enough, they may cancel and develop negative feelings toward the brand. 

Operational challenges can also arise, particularly if the business lacks the resources or systems to manage the program effectively. Ensuring consistency in service delivery is vital to maintaining trust and satisfaction among subscribers.

Financial risks are one last concern. If a subscription is underpriced or overly generous, it can quickly become a liability. Businesses must regularly review their programs to ensure they remain both appealing to customers and sustainable for the company. There’s also the risk of alienating non-subscribers. If too much focus is placed on the subscription programme, regular customers who don’t participate might feel neglected or undervalued, potentially impacting overall foot traffic.

As the hospitality industry continues to evolve, subscriptions offer a powerful tool for businesses to strengthen customer relationships and build stable revenue streams. While the concept is not without its challenges, the rewards can be significant for those who implement it thoughtfully. 

By aligning subscriptions with brand identity, customer preferences, and operational capabilities, bars and restaurants can transform their approach to customer engagement.