American Express Accounts Payable and Receivable Trends and the Path to Profitability November 2023 Banner

Taco Bell CDO: Short-Term Subscriptions Drive Long-Term Loyalty

Taco Bell

As restaurants tinker with ways that they can use subscriptions to boost customer loyalty, Taco Bell is finding that offering short-term menu item “passes” can speed up the process of building loyalty with a given customer, as Chief Digital Officer Dane Mathews told PYMNTS.

In the past, the quick-service restaurant (QSR) giant has offered limited-time drops of 30-day Taco Lover’s Passes, offering one free taco a day for 30 days for $10. Last week, the company announced its Nacho Fries Lover’s Pass, which extends the model to its Nacho Fries.

In an interview with PYMNTS following the launch, Mathews discussed how these passes are driving customer engagement beyond the 30-day period of daily items.

“It’s helped us build this new muscle, which is how do you build relationships with consumers, … and how do you have a good medium- and long-term view on how those relationships are growing?” Mathews said. “… We see consumers not only increasing their behavior, but even holding some of their behavior after they use the passes. The passes have almost become an accelerant to stronger relationships with the brand as far as digital and loyalty.”

Subscriptions and similar types of programs can be key to reaching the kinds of restaurant customers most open to becoming super fans, PYMNTS Intelligence found. The study “Digital Divide: Restaurant Subscribers and Loyalty Programs,” which drew from a survey of more than 2,000 U.S. adults, found that 78% of restaurant subscribers and 73% of those interested in subscriptions are very or extremely loyal toward their preferred quick-service restaurants (QSRs), while 41% of those uninterested in subscriptions said the same.

Taco Bell, for its part, has seen its food passes driving engagement across other parts of its menu, with consumers making more frequent trips not only to redeem their daily freebie but also to “combine that pass activity with other things on the menu,” Mathews said. As such, by centering its latest iteration of the program, the Nacho Fries subscription, on a side dish, the brand can further drive add-ons.

Additionally, the model incentivizes eCommerce engagement, which can drive long-term growth, tying customers’ behavior back to their digital profiles. Mathews noted that key to the success of such programs is the ability to recognize “not just transactions, but your customers connected to transactions.”

Looking ahead, Mathews said he sees the possibilities of applying similar models to not just menu items but also services, perhaps similarly to how, for a time, P.F. Chang’s offered a delivery subscription, and Panera Bread has added free delivery as a perk for annual subscribers to its Limited Sip Club program.

“We actually see passes migrating towards other things that the brand might offer — for example, services,” Mathews said. “… Is there a way that consumers can buy those services upfront and get as much as they want of those? I don’t want to share too many of those ideas here, but we got some good ideas in terms of how subscriptions and passes will continue to offer more for consumers in a 21st-century, innovative way.”