As the restaurant landscape has changed—and will continue to change—due to the COVID-19 pandemic, there’s a reconsidering of the traditional restaurant model at both the chain and independent restaurant level. Pre-pandemic, operators were accustomed to dealing with some degree of uncertainty in the business (the typical joke is that in order to make a small fortune in the restaurant industry, you start with a large one), but the upheaval due to forced closures, a fearful diner and new social distancing measures add up to an unforgiving future where mistakes can be costly (or deadly).
One large chain, Panera Bread, is seeking to offset some of these issues by adopting a subscription model, similar to the “pay one fee, get unlimited access” credo of Netflix or music streaming services. “Our hypothesis is that recurring revenue based on subscription makes a lot of sense,” chief brand and concept officer Eduardo Luz told Adweek. “I believe part of our future is going to involve recurring revenue or subscription-based revenue, which is new to the restaurant world. [This is Panera’s] first attempt to go in that direction.”
The company first floated the idea last winter, and increased its profile in late June with free access to MyPanera+Coffee, a social media driven campaign running through to September. The program, launched in March and typically priced at $8.99 monthly, allows for unlimited hot and iced coffee or iced tea. Luz told Adweek that the chain is also looking to roll out a lunch program geared towards school-aged children
The idea of separating the cost of food from the actual foodstuff isn’t new: the concept of a single fee per meal has been floating around for ages (as recently as the ubiquitous Olive Garden never ending pasta bowl, which ended in 2019). The most familiar form, however, is a style of dining now considered anathema—the buffet. From hotel breakfast nooks to the lavish smorgasbords of Vegas, these types of foodservice have been forced to adapt to socially distant methods or full service table delivery. “Broad-menu buffet concepts now face a longer timeline for that reopening. And many of them already had financial problems and limited options from potential investors from the get-go,” wrote Jonathan Maze in Restaurant Business. “Add it all together, and this might well be the end for a massive portion of the broad-menu buffet business.”
Although the buffet may or may not survive as a concept, the idea of a single-fee payout for unlimited options may have traction with a fast-casual audience such as the Panera diner. For the restaurateur, the benefits are tangible: instead of variations in already thin profit margins, these subscriptions allow for a company to streamline its menu, avoid wastage and get a guaranteed and dependable revenue upfront. In addition, this model also revives the important idea of brand loyalty or exclusivity as consumers continue to develop new dining habits based on months of working from home (for those lucky enough to be able to do so). After eschewing daily rituals of different dayparts (that early morning bagel or late afternoon coffee run), the brands that capture the attention of easily distracted and flighty diners will be the ones that emerge successful. “The coffee subscription model was in our pipeline long before COVID took effect,” Luz told FastCasual. “Subscription services are table stakes in many other industries, and coffee was a product we saw fitting into that model to create a more convenient and cost-effective option—making it easier than ever for consumers to access, and providing us a recurring revenue stream.”