Grubhub Says Subscription Commerce Is Taking Over the Restaurant Industry

Grubhub is stepping up its subscription program as membership schemes increasingly supplement or replace points-based rewards programs for restaurant customers.

In an interview with PYMNTS following Grubhub’s announcement of its loyalty subscription relaunch Tuesday (July 25), Launika Raykar, the aggregator’s vice president of loyalty, customer engagement and partnerships, said subscription models are becoming the standard for loyalty across the restaurant industry.

“You look Walmart+, Instacart+, Grubhub+, obviously. … Within our industry, I feel like it’s fairly standard, but it’s expanded to even [quick-service restaurants (QSRs)],” Raykar said. “Panera has a subscription program. Now Tim Hortons does. So, I actually think it’s become more synonymous with loyalty and become an expectation of customers.”

With Tuesday’s announcement, changes to the subscription program include lower service fees, 5% credit back on pickup orders, and additional perks to come, including Fuel Rewards in partnership with Shell (5 cents/gallon savings at the company’s gas stations).

Regarding the pickup perk, Raykar noted that consumers are going to order via the channel anyway, often considering it the most convenient option, and as such, the aggregator can gain share of pickup sales.

“It’s about customers feeling like Grubhub is the area to do it, … so giving an additional incentive to engage with us … is what’s really exciting for us,” Raykar explained.

The move to reward pickup adoption makes sense, given that consumers typically turn to restaurants’ direct channels for these kinds of orders. According to PYMNTS’ study “The 2022 Restaurant Digital Divide: Restaurant Apps and Websites in the Spotlight,” which drew from a survey of nearly 2,000 U.S. consumers last year, 16% primarily order food via restaurants’ direct ordering channels such as their website or their app, while 8% stated they mainly order food via third-party aggregators.

Plus, pickup represents a far greater share of restaurant orders than delivery. According to data from PYMNTS’ study “Connected Dining: Rising Costs Push Consumers Toward Pickup,” which drew from a survey of more than 2,100 U.S. consumers earlier this year, just 10% of restaurant customers reported having placed their last order for delivery, while 39% had done so for pickup.

In addition to driving pickup orders, Grubhub also leverages its subscription to incentivize adoption of its additional verticals, with subscribers tending to “over-index” on convenience, grocery and alcohol, according to Raykar.

To date, Grubhub’s strategy for driving membership has had a lot to do with its partnerships, offering free limited-time subscriptions to Amazon Prime members, Bank of America card holders and Lyft Pink subscribers.

Raykar shared that these partnerships have been successful at retaining subscribers even after the free memberships expire, particularly with Prime customers. This effect is especially beneficial for Grubhub considering how wildly popular Amazon’s Prime program is; PYMNTS research found that 65% of consumers hold an Amazon Prime account.

“They really do stick around, and they’re ordering quite a lot, especially our Amazon customers,” Raykar said. “They’re used to getting more to their door. It’s a really good fit with that brand, and we are seeing that long-term retention and frequency from those customers.”