As on-demand delivery companies attempt to navigate the murky waters of turning a profit, more and more are turning to a solution that consumers have found hard to swallow: monthly membership fees.
But that's the path that Munchery has embarked on as it launched a new $8.95 per month membership plan, VentureBeat reported. Alongside fees for individual ready-to-eat meals, Munchery will be offering discounts up to 20 percent on those charges, as well as others associated with delivery and service.
With most Munchery meals ranging between about $9 and $15, CEO Tri Tran told TechCrunch that the hope is new diners will be persuaded by the few dollars off each, while the monthly membership covers the costs incurred by the company for each order it makes, packages and ships at a loss.
“When you order enough, it doesn’t make a business for Munchery because then Munchery would lose money the more orders people make,” Tran said. “With this new program, we truly encourage people to order as much as they like.”
In a rather candid interview with Fortune, Tran explained that Munchery is all but excluding one-time or infrequent customers from signing up with its new membership-based plan. However, if it's true that, as Tran says, 90 percent of the service's customers aren't one-off buyers but repeat habitual ones, then the service may find solid ground.
Still, Munchery is making it as low risk for new diners as it possibly can. The first month comes absolutely free, and though fees are charged on a monthly basis, there are no contracts by which consumers are bound, meaning they leave during the middle of a month without forfeiting an entire year's worth of a subscription.