Food by Subscription

In the food-delivery business, membership-based companies are all the rage.

April 20, 2016

SAN FRANCISCO – The subscription model has been around for a long time as a way to both reward customers and to guarantee a receptive audience for merchandise. Now, food delivery companies are turning to memberships to retain and engage customers, Bloomberg reports.

For example, Munchery, which brings refrigerated meals made by chefs directly to customers, started offering a subscription service for entrée discounts. “If Munchery wants to be that dinner solution for people every night, then it has to be a very approachable price point,” said Tri Tran, CEO. “Then, hopefully, you order more.”

Postmates customers can pay $10 a month to forgo delivery fees on $30 or more restaurant orders, while Sprig customers can pay the same for free delivery of meals made in its kitchens. Already Instacart and Amazon have annual memberships that allow subscribers to bypass delivery fees and receive extra rewards.

“The field is getting crowded, and those working on slim margins and financial support are not likely to survive,” said Bonnie Riggs, a restaurant industry analyst at NPD Group. “The only way you're going to drive traffic is through building loyalty.”

For these food delivery startups, customer loyalty is key to staying in business. Tran pointed out that by giving subscribers a discount on menu items, Munchery can more accurately predict costs, which would be more difficult to do if delivery fees were lowered or eliminated.

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