One of the many restaurant trends accelerated by the COVID-19 pandemic is subscription programs aimed at driving loyalty. Brands from Pret A Manger to Panera and Taco Bell to Dickey’s Barbecue Pit have jumped into the subscription space with favorable early results.
Now, Sweetgreen wants in on the action. The company announced today a pilot of a new subscription service, called sweetpass, in which customers purchase a $10 subscription and get $3 off their order within 30 days of that purchase. Sweetpass will be tested from Jan. 3 through Jan. 16 at all 150 locations.
Daniel Shlossman, senior vice president of digital and growth, called the program “an evolution” of the chain’s initial loyalty program, launched over five years ago, which rewarded customers with $9 in credit for every $99 they spent in restaurants or on the app.
“We sunsetted that program because it was more of a one-size-fits-all approach. We wanted to iterate our loyalty program to better understand what customers want and what the future of loyalty looks like,” Shlossman said during a recent interview. “We always think a bit different from a digital perspective and we’re bringing that into loyalty to talk to customers and form what our program should be. One of the things we wanted to test was that membership aspect.”
With a lower barrier to entry at $10, Schlossman is confident the new program will generate high usage from existing customers and appeal to new customers as well. In fact, such subscription and loyalty programs have gained favor with brands because they typically generate such frequency, create loyalty and habituation and keep brands top-of-mind. They also tend to capture higher tickets, as evidenced by Panera’s program.
These trends are especially a big deal now in the wake of the pandemic that deeply affected urban-centric Sweetgreen. Shlossman believes the chain’s diversified and healthier menu will particularly fit that frequency piece.
“We have a customer base that eats Sweetgreen every day. There are few cuisines and restaurants that you can have that variety and healthy aspect where you can do that. We think there’s a big opportunity for us with this,” Shlossman said.
Sweetgreen will be able to glean plenty of data from its sweetpass users as the program is only available through its native channels. The company has done plenty of work to entice customers to order through those channels, versus third-party, by launching digital-only products and exclusives. It also keeps its menu prices about 10% lower on its owned channels.
The chain’s focus on digital has paid off. Through Q3, 68% of its sales came through digital channels and 47% of those sales were through the brand’s native digital channels. Its digital prowess has generated confidence for growth from Cowen analysts who note that the digital mix of sales is even higher in Sweetgreen’s new stores, “which facilitates a stickier guest relationship and aides data collection.”
“Digital customers are a huge base for us, and the key is when you are a digital customer, you come back 46% more often per quarter and spend 20% more. So, it’s not just frequency, it’s basket size. These customers interact with us at a higher level,” Shlossman said.
Shlossman adds that the ultimate goal is to create a program that can target promotional offers based on individual customers’ use of the brand, which will get them to come back more often.
“There are a few companies ahead on this trend. Starbucks does a good job of making it feel like it’s your personal loyalty program. We want to look at that direction,” he said.
The chain, fresh off its IPO, is intentionally testing the program in January, when consumers strive to eat better. When the trial period is up, Shlossman said the company is going to “look at the numbers,” talk to customers who signed up and measure their sentiments to determine next steps.
“We’ll figure out what they want differently and what they absolutely loved, and we’ll continue to iterate. In the world of loyalty and digital, it’s all about iterating,” he said. “This is our first test of a subscription membership and it’s tough to say where we go from here, but we know we want to build something for each customer that feels like it was built just for them.”