Costco. Amazon Prime. Are you a member of either?
Can you fathom offering membership to your restaurant? I don’t mean a loyalty program that’s open to everyone. Everyone is launching those right now. I mean a true members club. Where people pay an annual fee to unlock privileges.
Now, in the case of Costco and Amazon, their memberships have one purpose for consumers: to unlock greater savings on purchases. But they’re not alone in offering paid memberships. Some restaurants currently do this:
41 Ocean in Santa Monica sells memberships. You’re looking at $2K to join.
Vintage Cave in Honolulu sells memberships. You’re looking at either $50K or $500K to join their “Society.”
President Obama caught flak recently for dining there. Let’s keep those exclusive clubs in mind and talk about your restaurant. Or your sports bar. Or even your cafe.
Could you pull off a membership program?
There’s an intriguing article (granted, it’s from three years ago) on several restaurants in the Houston area offering membership clubs. Check it out when you’re done here.
There’s also some outstanding background on what real loyalty looks like from Dave Andreadakis that serves as the inspiration for this idea.
And I’ve recently spoken to Will Reeves of a new startup called Membo, which aims to provide the framework for a small or medium business (including restaurants) to offer paid memberships. Check Membo’s website out or follow them on Twitter or LinkedIn.
What’s intriguing about Membo is they take all of the elements you’d feel most uncomfortable with — selling memberships, capturing email addresses, leveraging the members for feedback and surveying, and tracking expiration dates of memberships — so you can focus on delivering the benefits. Super cool, I really hope they succeed.
So let’s talk about the blue-sky possibilities and the challenges inherent in launching a paid membership for your restaurant concept. (No reason why these principles wouldn’t apply to multi-locations as well, though.)
What would you offer members?
One of the great promises of loyalty program provider Belly when they first launched was the notion of restaurants and others offering “a smart and custom loyalty program that reflects the unique personality and culture of each store.”
Advantages like naming a menu item after a guest. Or gaining access to secret menu items. Or enjoying all-you-can-eat cupcakes for 10 minutes.
Belly has since nudged their marketing message to encourage the more traditional style of rewards — you know, 10 visits = 10 stamps = a discount, just to make sure people succeed with them and don’t get bogged down thinking through creative rewards.
But aren’t you tired of offering the same old discounts and promos? While it may well generate additional visits, it doesn’t foster true brand loyalty. There’s a difference.
What if you partnered with area event destinations to incentivize your customers who paid to become members? Theaters. Cinemas. Art galleries. Sports teams. Other restaurant concepts.
Let’s brainstorm some creative benefits you could offer paid members. We’ve mixed in ideas for various concepts (casual dining, sports bar, fine dining, etc.):
- Extended happy hour times
- Lessons on mixology
- Access to tickets to special community events
- Group dinner with the mayor
- Hands-on cooking lessons from your top chef
- Access to a more secluded, romantic dining room
- A separate line for counter orders
- Group dinner with a local celebrity
- Seconds! Could you offer seconds?
- Free soft drinks with every two-person order
- An annual members club dinner with special menu items
How would your restaurant benefit from paid memberships?
Yes, customers tell their friends about their bad experiences. They tell the world, too. They don’t always tell their friends about good experiences.
But they will absolutely tell their friends about extraordinary, VIP-like experiences. That social proof is huge.
And how about the money? If you could amass just 250 paid memberships at just $49 per year, that’s $12,250 to work with in creating those memorable experiences.
Depending on your restaurant’s demographics, your average check, and your profit margin, you might be able to get away with a much higher membership rate. $149? $249?
Clearly you need to make it worth your while financially to create this unique sort of loyalty club.
What would be the risks of setting up a membership club?
Over-promising tremendous rewards, access, or events, only to not promise them will undermine your club.
You’d want to be mindful of not building in so much value that you burn through all of the profit (not to mention goodwill) you generated in singing up the early adopters.
There’s also the risk of delivering poor experiences that were supposed to have been special, elite, or privileged — and were definitely paid for.
If you’re going the special events route, I would recommend one special event per quarter. But the point is, your biggest risk is that you’ve taken in money from people expecting to be treated like a VIP — so you’ve got to deliver that VIP-like experience.
How do you mitigate the risk? You ask customers. You ask what kind of rewards THEY think would be most fun, exclusive, unique, and exciting. What kind of events would they absolutely attend?
This isn’t for everyone
Obviously not every restaurant can pull this off. In fact, most can’t. But maybe yours can. Maybe you’re just in the right part of town, with the right makeup of guests, with the right brand, with the right kind of space or venue, and with the right kind of management team.
Talk to your partners or managers. See what they think? And if you’ve got an opinion on this, I’d love to hear it — ping me on Twitter with your thoughts!