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Loyalty & retention

Subscriptions: locking in frequency before the competitor gets a chance

Delivery passes, pizza clubs and prepaid plans: how to price them so they raise frequency without giving away margin to your heaviest users.

Loyalty & retention4 sections3 questions answered
Loyalty & retention illustration

Subscription changes the customer’s decision from "where shall we order from" to "we already pay for this". That shift in default is worth a great deal, which is why every major delivery platform sells a pass. Independents can run the same play, and they capture the whole benefit rather than renting it.

Three workable models

ModelOfferBest forMain risk
Delivery passFree or fixed-fee delivery for a monthly chargeDelivery-led shops with real delivery feesHeavy users consume more than they pay
Pizza clubA monthly fee including one or two pizzas plus member pricingShops with strong regulars and headroom on ticketComplex to operate at the till
Prepaid creditBuy $100 of credit for $85Cash flow, carryout-led, simple to runIt is a straight discount unless it lifts frequency

Price against the frequency you want to create

The pricing question is not "what is this worth" but "at what price does this change behaviour without losing money on the customers who use it most".

Model three customers at your proposed price: a light user, a median user, and your heaviest realistic user. The heavy user should be roughly break-even to modestly negative on direct margin, and clearly positive once their increased frequency and the reduced likelihood of them ordering elsewhere are counted. If your heaviest realistic user is heavily loss-making, add a fair-use cap or raise the price.

The real benefit is the default, not the discount

A subscriber who has already paid this month has a reason to order from you rather than from anyone else, and that reason applies on every single occasion for the whole month. The behaviour change is larger than the nominal discount would suggest, because it operates on choice rather than on price.

This also makes subscribers unusually resilient to competitor promotions, which is where much of the value sits for shops in contested trade areas.

A subscription does not make you cheaper. It makes you the default, which is worth more.

Operational reality check

Subscriptions fail operationally more often than commercially. Staff must be able to identify a member instantly, apply the benefit without a manager override, and handle the failed-payment case without an argument at the counter.

Run it through the ordering system with an automatic benefit, not through a list by the till. If applying the benefit takes more than a moment, the programme creates friction at peak and staff will start working around it.

Questions

What churn rate should I expect?

Restaurant subscription churn is typically higher than software churn: monthly churn in the 8–15% range is common. Design onboarding to drive a first redemption within the first week; subscribers who use the benefit early churn far less.

Should the subscription include free delivery or free food?

Free delivery is cheaper to give, easier to operate and easier to price against heavy users. Free food has more pull but requires a fair-use cap and much tighter modelling. Most independents should start with delivery.

How do I stop heavy users making it unprofitable?

A fair-use cap stated plainly at signup: a maximum number of covered deliveries per month, or a minimum order value for the benefit to apply. Customers accept caps when they are clear upfront and resent them when they appear later.

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