The subscription model has become one of the most popular ways for entertainment companies to monetize, but can it work for fast food? Taco Bell is about to find out. The national taco chain kicked off the new year by introducing the “Taco Lover’s Pass,” a digital taco subscription service that enables customers to redeem a taco a day (from seven varieties) for 30 consecutive days, all for the price of $10.
The subscription requires customers to use the Taco Bell app to buy the pass, and then “a secret category will unlock on the app menu, allowing fans to choose a taco and redeem in-restaurant.” The company soft launched the subscription back in September 2021, testing it out among customers at a Tucson, Arizona location.
Taco Bell said “many fans” participated but did not provide a number; among those who did purchase a pass, 20% were new to the Taco Bell Rewards Program, suggesting that the subscription model was at least partially effective in driving new customer acquisition. Another 20% renewed the pass for a second time, which is encouraging for customer retention and continued revenue generation.
As noted by CNBC, Taco Bell has had a challenging time during the pandemic as it tries to recover late-night and breakfast sales from customers. A subscription program could help address flagging sales, as customers who make the trip to their local Taco Bell are likely to buy other items and not just redeem their one taco. The subscription is the latest in the chain’s efforts to boost engagement. The metrics are positive so far, as a year after the launch of its Taco Bell Rewards Program, parent company Yum Brands said there’s been a 35% increase in overall spending from active loyalty members.
Taco Bell isn’t the first food establishment to experiment with subscriptions, as Panera has offered unlimited tea and coffee for $8.99 per month and gained just under half a million paying subscribers in less than a year. Burger King had attempted a $5 per month coffee subscription in 2019 as well but discontinued it only a few months later.
Interpret’s New Media Measure® shows that Taco Bell customers are quite comfortable with the subscription model for their entertainment choices, spending more than $67 per month across video, music, and gaming subscriptions. That’s ahead of McDonald’s and Jack in the Box, and it’s more than the average spend across the US population. Additionally, if there’s concern about subscription fatigue, Taco Bell’s customers currently subscribe to a total of 5.5 online entertainment services, ahead of the general population (4.7). Marketing executives in the fast food business will no doubt be watching Taco Bell’s subscription push to see if customers “bite.”