Subscriptions and monthly passes have definitely been the trend of 2022: everyone from the fast-food industry to airlines has started wading into this space in the last few months.
A month after launching its monthly Taco Lover's pass, Taco Bell of Yum! Brands (YUM) has found that visits to its restaurants increased threefold. The $10 offer, which lets owners order one of the chain's seven popular tacos each day in a given month, has seen a renewal rate of 16% and a sign-up rate of 20% for its loyalty program.
The most dedicated 1% of eaters truly got their money's worth and had a taco every day that the pass was valid.
"I really am rooting for the customers that want to take advantage of the pass and redeem that free taco every day for 30 days," Taco Bell's Chief Digital Officer Zipporah Allen told TheStreet. "That is a love commitment that I applaud."
Allen sat down with TheStreet to talk about everything from digital trends to why subscriptions are the future of the industry.
TheStreet: After testing the pass at select restaurants in Arizona, Taco Bell took the subscription model nationally. Has it been living up to business expectations so far?
Zipporah Allen: We've seen exactly what we hoped we would: customers who had the pass increased their visits to Taco Bell three times more compared to when they didn't have the pass. Twenty percent of the passes that we sell are completely new customers that are coming into the Taco Bell rewards program and formalizing their membership with the brand.
Our customers are really seeing the value of it because you only actually have to come a few times to break even but from a business standpoint they are redeeming more than just the free taco. About half the time, they're actually adding other things onto that visit; our franchisees and our restaurants are really seeing the benefit.
Many fast food companies have been trying to move more of their customers to online ordering in the last few years. Is that your strategy as well?
Everybody in the quick service restaurants has launched some sort of a reward program in the last year and a half. Anybody can kind of do and earn-and-burn points but the rewards program we launched last year really is about giving our fans the best experience that Taco Bell has to offer through the mobile phone and through our app.
That's why we'll do things like early access to all of our limited time only products. We know that our fans look forward to [finding out] the next new food item that Taco Bell is going to have and so we give them early access. We do exclusives like our Build Your Own Cravings box. [The pass] is just the next iteration of how we're creating value for our customers through digital.
Do you believe that the fast-food industry is moving so far toward online ordering as to ever get rid of in-store orders entirely?
I think the consumer and the fans are going to really dictate that for us. You've seen it in a number of other industries where the consumer does want to interact more and more online because it is easier and it is more personalized. But the way that I think about our digital experience and our restaurant experience is wanting to meet the customer where they are. At the end of the day, that is what we're trying to create. And so whether they want to order on the phone or at the drive-thru or in the future maybe they want to order through voice on their phones, we want to make sure that that is as easy and as personalized an experience as we can give them.
The 1% of customers who used the Taco Lover's Pass every day in a month are what one could call your "superfans." What does that tell you about the Taco Bell customer base?
I really am rooting for the customers that want to take advantage of the pass and redeem that free taco every day for 30 days. That is a love commitment that I applaud. About 1% of the customers that buy the pass redeem it every day for 30 days and that is a pretty high percentage when you think about it. There are also regional skews to what happens with the pass. The West Coast is dominating our sales as about a third of all passes are sold there.
You will, naturally, be turning toward these insights and data to see what else you can do with both subscriptions and the digital space in the coming years?
Now that we have the subscription model and it seems to be working, the world is kind of our oyster now. It's like: what are the other applications of a subscription service? This might be a fun space for us to play with and I'm sure we'll have more to share later.
