Updated Jan 9, 2022 - Economy

Tacos and chill: Fast food adopts subscription models

Photo of a phone that shows the Taco Bell logo against a white background. The phone is lying on a black keyboard.

Taco Bell launched a $10-per-month taco subscription. Photo: Nikolas Kokovlis/NurPhoto via Getty Images

The subscription economy is expanding into the drive-thru lane.

Why it matters: Subscriptions offer a source of dependable revenue, loyalty and data — the same elixir that fuels streaming services like Netflix and exercise powerhouses like Peloton.

  • The subscription economy grew nearly sixfold from 2012 to 2021, according to subscription management company Zuora’s Subscription Economy Index.

Driving the news: Fast-food chain Taco Bell on Thursday announced a $10-per-month subscription, Taco Lover’s Pass, for one taco per day.

  • Earlier this week, fast-casual chain Sweetgreen announced a special offer: $10 per month for $3-per-order discounts.
  • "There’s a lot of Americans eating fast food more than once a week, and if they see value in the subscription program, they will gladly subscribe," Adam Levinter, CEO of subscription consultancy Scriberbase and author of "The Subscription Boom," tells Axios.

Be smart: Services are often betting that many subscribers won’t take advantage of what they paid for. Subscription companies call it "breakage," Levinter says.

But restaurants like Taco Bell will benefit from subscribers who buy additional items and use their apps more often, providing data for marketing purposes.

  • When Taco Bell tested its subscription service in Tucson, Arizona, in September, 20% of subscribers were new to the Taco Bell Rewards loyalty program.

Between the lines: The strategy is also not likely a desperation pandemic move, either. The National Restaurant Association reported elevated same-store sales and customer traffic in the first half of 2021 compared to year-ago levels, which cooled only slightly in November.

  • 83% of restaurant operators said their same-store sales rose between November 2020 and November 2021, while only 7% reported a sales decline.

The bottom line: The subscription economy is entering a new dimension of our lives.

Editor's note: This story was originally published on Jan. 6.

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