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TF #007: Building Recurring Revenue: The Subscription-based Model

By August 7, 2023The Foodpreneur Newsletter4 min read

The Foodpreneur #007

Especially when your heat-and-eat business is getting off the ground, one-off orders and packages can be a huge win. Not only are you introducing a new audience to your brand, but you’re letting them create a customized experience based on their tastes, their timing, and their budgets—they choose exactly what they want, when they want it. And that’s the foundation for an incredibly positive customer experience.

The only problem? One-off orders can be inconsistent—and even the most satisfied customer might not come back. Whether it’s reconsidering the cost or simply needing a short-term break from meal prep, it’s almost impossible to rely on this audience, especially if you’re looking to scale.

The alternative? Implement a subscription-based model. Dependable, consistent, and built for growth and scale, offering audiences options for subscribing can be a huge win for your heat-and-eat business—while saving customers time, money, and consideration. Here’s what to consider—and how to maximize value for your company and your customers by integrating subscriptions into your model.

Benefits for your heat-and-eat business: consistency, retention, and scale

Again, one-off sales are great—and if you’re already successfully offering them in your business, there’s no reason to stop. One-off orders can be a substantial revenue stream and, again, introduce a new audience to your meals. But the real growth comes in shifting customers from sporadic purchasing to a stable, ongoing relationship. With a subscription model in place, you’ll benefit from:

Predictable revenue—and better scalability
With customers committing to regular purchases, your business can better forecast revenue. This stability, then, sets the groundwork for better planning, budgeting, and investments.

Having predictable revenue can also help your business better scale. With consistent orders and a clear understanding of demand, you can build a more efficient inventory management processes, optimizing supply chains and minimizing waste. This can lead to significant cost savings—and those cost savings can be passed on to customers, driving even more new subscriptions. 

Increased customer retention

When you subscribe to anything, there’s a sense of commitment that comes with—and your heat-and-eat meal service is no exception. Lean into that powerful connection by offering continuous value through fresh, high-quality meals. This ensures they’re more likely to stick with your service for the long-term, rather than hopping between competitors.

Another strategy for keeping your “community” engaged and active? Ensure you’re communicating regularly, with exclusive offers, and personalized services. This helps create that sense of loyalty, and sets your heat-and-eat business apart from the rest. 

Enhanced customer data and insights

While you no doubt have a strong persona built around your core audiences, regular subscriber interaction enables you to flesh those insights out even more. Given the ongoing interaction, you’ll have a chance to gather more accurate preference and behavioral tracking. This information can be leveraged to tailor offerings, build customer satisfaction, and create targeted marketing strategies based on what your current audience wants right now.

Benefits to your heat-and-eat audience: savings, selection, and loyalty perks

A subscription model doesn’t just benefit your business, it also benefits your audience. That’s key to driving a successful subscription-based service—ensuring your consumers recognize the value that comes from subscribing and why it outweighs the convenience of one-off ordering. Here’s where to start:

Offer tiered subscription plans

No two subscribers are the same. As you’re planning your subscription offerings, consider offering customizable packages to ensure people get exactly what they want. An entry-level subscription, for example, may include three to five single-portion meals per week while more robust packages could include family-style meals for breakfast, lunch, and dinner.

Not only does this approach ensure people can find the subscription that syncs with their budget and immediate needs, but it provides a pipeline for your business—promote “upgrading” from more basic packages to premium offerings with special incentives, free trials, and other high-value offers.

Be Flexible

One of the reasons people are reluctant to commit to meal delivery programs is the perception that they’re “locked in”—locked into schedules, meals, or quantities that don’t always align with their exceptions (or taste buds). Be sure your heat-and-eat subscription service offers meaningful flexibility—that people can choose meals, quantities, delivery schedules, and more, and that those preferences can easily be adjusted days, weeks, or even months from now.

Fast-tracking your subscription model

Granted, there’s a lot that goes into integrating a subscription model. Bringing in ongoing subscribers means careful planning, a deep commitment to customer needs, and an ability to deliver ongoing value. By understanding the benefits of subscriptions and creatively incentivizing both new and existing customers, your meal delivery businesses can create loyal customer bases and enjoy a consistent, predictable revenue stream.

Those customer benefits, again, are key. In a market characterized by growing competition and increasingly discerning consumers, subscription models need to lend value to both sides—to provide subscribers with ongoing value and the perception of ongoing value, while helping your business secure recurring customers and stabilized revenue.


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