QSR Subscriptions Take a Bite out of Meal Kit Market Share

Quick-service restaurants (QSRs) are finding new ways to take the need to make meals off consumers’ plates as they develop subscription models in direct challenge to meal kit providers.

The direct-to-consumer (D2C) subscription model has seen volatility since high rates of inflation took hold across the United States, which caused consumers to make cutbacks in their discretionary spending. These cutbacks included consumers trimming their subscriptions from an average of 4.1 in the first quarter of 2022 to roughly 2.9 as of Q1 2023.

D2C food and beverage subscriptions are having a particularly hard time retaining members. These firms experienced churn disproportionate to other subscription providers, leading meal kit providers to make radical adjustments to their strategies. However, these new strategies — even with a resurgence of interest in meal kits — may not be enough to save the sector. More than 15% of meal kit subscribers are considering canceling their plans before being billed again.

Given these headwinds, the proprietary research prepared for PYMNTS’ May report, “Connected Dining: Ready-to-Eat Meals Are Eating Restaurants’ Lunch,” which focused on ready-to-eat meal delivery, may seem contradictory at first glance.

Among consumers ordering ready-to-eat meals, 71% of those surveyed do so regularly, mostly weekly. PYMNTS found that QSRs offer consumers the instant convenience that is mostly driving growth in this space as meal kit programs fall out of fashion.

Panera, for example, has invested heavily in a free delivery subscription model, offering the choice as a customer loyalty tool.

In an interview with PYMNTS, Eduardo Luz, chief brand and concept officer at the fast-casual bakery-café chain which has more than 2,100 locations across the U.S. and Canada, spoke about this choice.

“We expected our most loyal and frequent MyPanera members to join the program, but what’s really been interesting is the number of guests joining Unlimited Sip Club that are new to Panera,” he said. “Since the launch of Unlimited Sip Club, more than half of its members are new to our MyPanera loyalty program in general.”

Subway is another QSR giant offering a subscription option to its customers. The chain launched its Footlong Pass program in 2022, and the 10,000 available passes sold out within six hours. Subway increased the number of subscriptions available in 2023 to 250,000.

Financial services platform Square is helping smaller restaurants implement subscription options by offering a recurring payments tool. The platform announced a range of new features in April, including additional restaurant capabilities and beta testing the Square Subscriptions feature, allowing “all kinds of businesses” to set up periodic billing models.

All things must change, including how restaurants are redefining the subscription model. Consumers clamor for convenience when it comes to everyday chores, and meal kits and restaurant subscriptions may increasingly become what consumers order.