How to Launch a Successful Cafe Membership in 2023

From daily coffee for regulars to exclusive cupping experiences for coffee geeks. Cafe memberships or subscriptions are a canvas for creating incredible customer experiences that drive loyalty while generating recurring revenue for your business. 

But how can you be sure that a cafe membership is right for your business? How do you build membership tiers that appeal to different types of customers? What's the best way to get started?

There's a lot to unpack so we organized this guide around the foundational questions you’re likely to be asking yourself as you consider a membership program:

1. How does membership or subscription fit into my cafe’s business model? 
2. What motivates customers to become members?
3. What makes a great cafe membership experience?
4. What business impact can subscriptions drive?
5. What does it take to launch and operate a membership program? 

Let’s dive into all those questions and more… 

How does membership or subscription fit into my cafe’s business model? 

Whether you operate one unit or twenty, your business is about getting new customers through the door and making sure they come back as often as possible. That’s a universal truth for almost any type of business, but moving the needle on customer acquisition and retention is anything but simple. So what can you do proactively to extend your brand’s reach and retain customers? 

Membership programs are a unique tool because they can impact both sides of the acquisition and retention equation. By offering membership as one way to experience your cafe you’re putting a differentiated offer out in the market. We’ll get into all the reasons why customers subscribe below, but the bottom line is that you’re offering a unique customer experience and potentially amazing value without resorting to direct discounting. 

When it comes to retention, membership programs really shine. Unlikely loyalty programs, they come with a direct, financial commitment that encourages customers to visit more frequently. This deeper level of commitment aligns your customers with your brand like never before. 

Memberships for local businesses may be new, but the early results from brands like Pret-a-Manger are incredible. Pret saw a 4x increase in spending by subscribers vs. non-subscribing clients. Membership drives visit frequency and visit frequency drives spending. We’ll go much deeper into the economics of membership, but let’s take a step back and look at the consumer behavior that drives the unique dynamics of membership business models.

What motivates customers to become members?

Memberships and subscriptions have been around for over 400 years, so we have a lot of history to tap into to help us understand consumer behavior. What nobody could have predicted is the explosion in subscription models during the pandemic.

Thousands of direct to consumer and retail subscriptions launched between 2020-2022. In fact, the e-commerce subscription box market is now valued at $23 billion and is projected to grow to $42b in 20271. The total value of the subscription economy is expected to grow 65% annually to over $900 billion by 2026! Those are stunning numbers, but they're not surprising.

Technology has empowered any businesses to build direct relationships with consumers and subscriptions are a powerful way to cement those relationships.  Subscription focused brands have become so strategic, that they're simultaneously addressing the three key reasons for consumers to subscribe:

1. Convenience - making it easy for customers to buy your products while making sure they never run out.
2. Access - giving customers access to unique, member-only products and experiences.
3. Community - consumers are increasingly purpose-driven and buy from brands that they feel a deep sense of connection to.

Delivering on all three subscription triggers is part art and part science, but it can yield powerful results. Let's see how convenience, access and community can come together in a local, cafe subscription.

What makes a great cafe subscription?

There's no one-size fits all answer to this question, but that's the beauty of it. How your business can adapt to a membership model is entirely up to you and there's plenty of room to experiment. In fact, you may choose to have several subscription tiers to serve different customer types.

As you start to brainstorm, try jotting down a few customer types or profiles that make sense to you. Here's a simple example:

1. New Customers - people just starting to get familiar with your brand. They may have visited a location a few times, but don't visit regularly. Can a subscription change that?
2. Regulars - what can you do to increase lifetime value of your regulars?  How can you take your competition out of the equation entirely?
3. Coffee Geeks - for people who are passionate about coffee, how can you engage them with a unique experience that will make them true fans.

Your approach to segmentation is likely to be different, and that's great. The key to creating a great subscription experience overlaying the segments on the reasons consumers subscribe. Let's break that down…

Convenience

Cafe subscriptions can enable any of your customers to enjoy their coffee in a frictionless way. Accessing coffee without ever pulling out a credit card makes for a more personal experience.  Convenience is, in almost all cases, going to be the foundation upon which your subscription experience is built. In fact, without offering convenience it may be difficult to frame how the subscription fits into your customers day-to-day.

A few simple benefits that establish convenience in your customers' minds are:

1. Unlimited Coffee - unlimited hot or iced brewed coffee is a powerful incentive. and offers ultimate convenience. You can still set reasonable limits, like redemptions every 2 hours.
2. Daily Coffee - offer daily or weekly specialty or espresso drinks with any limitations you see fit.
3. Discounts - offer a discount that only members have access to. Discounting can be sensitive, but we've seen 10% be an effective number that's meaningful without diluting the value.

In addition to thinking through the benefits, also consider the ease of managing your program. Is it just as easy for customers to cancel as it is to subscribe? Will this add operational overhead, or is the program easy to manage? It's shocking how many organizations still make it difficult for subscribers to cancel. While the business incentives suggest that you can earn a few extra months of revenue, it's never worth it.  

Access

Giving subscribers exclusive access to unique products, services or experiences is a powerful way to build a deeper relationship. Fortunately, specialty coffee businesses have virtually endless opportunities to create member-only access experiences:

1. Events - engage members throughout the year with exclusive events like cupping, at-home barista classes, and more.
2. Swag - create swag that only your members can buy, or give it away on special occasions.
3. Exclusive Roasts - create a blend just for members, or offer exclusive access to a specific region.
4. Secret Menus - drinks, baked goods, food items that are only available to members. This can be done on a rolling or seasonal basis.
5. Skip the Line - allow members to skip the line, or prioritize member orders.

Ideally your member-only experiences feed directly into fostering a sense of community.

Community

Community is arguably the most powerful, but also most difficult value to create. How you go about creating a sense of membership and belonging is personal to your brand, and will require no small amount of experimentation.

The foundation, however, is giving members access to the people that make your business unique. From the owner to the roaster and the baristas, connecting with your brand is about connecting to the people behind it. What you're trying to do is to foster a conversation that gives members another tier of exclusive access, and gives you insights to better understand your customers.

Here are a few specific ideas:

1. AMA's - host Q&A sessions that allow customers to share feedback and get insights into what's next for your brand.
2. Product Ideation - ask customers what they want to see from your cafes and what could make the experience better.
3. Co-Designing - whether you're designing new packaging, choosing furniture or even considering multiple new locations, bring your subscribers in on the decision.
4. Co-Creating - ask customers to vote on new drink recipes and create exclusive tasting events. Make it fun and make it easy to share the outcome.

What business impact can subscriptions drive?

Over the past 10 years subscription businesses have outpaced the growth of the S&P 500 by a whopping 4.6x2. Done right, subscriptions can help you grow faster while generating predictable, recurring revenue.

When you launch your local, cafe subscription you'll want to watch a few key metrics:

1. New Subscriptions - how many subscribers are you signing up every month? Subscribers may be net new, others may be reactivations. Either way, you're looking for new subscriptions to exceed churn, so your subscriber base expands.  
2. Churn - churn is the number of subscribers who cancel their membership. You should always watch your churn numbers like a hawk, especially early on. While some churn is inevitable, and even healthy, if you're seeing more than 5% monthly churn, you need to dig into the underlying reason.
3. Visit Frequency - compared to non-subscribers, are subscribers visiting more often? The answer should be a resounding yes, in fact subscriber visit frequency can increase anywhere between 1.5-8x. At the upper end of that range the impact for your business can be enormous, especially if check sizes also grow.
4. Average Check Size - are subscriber check sizes comparable to those of non-subscribers? Often, subscribers will actually spend more than non-subscribers. When you see that, your subscription growth engine is really humming along.

Subscription analytics run deep, but keeping an eye on these foundational metrics is a great start. If you see steady growth in your subscriber base, an increase in visit frequency, and at least a steady check size, you're generating more revenue per customer. Not only that, but you'll have a steady stream of predictable subscription revenue that you can count on.

Building a Financial Model 

Building a strong business case for launching a membership is always a useful exercise and can be very helpful in designing a profitable program. We put together a simplified financial model that can show you the impact of subscribers vs. non-subscriber by relying on a few key drivers of success:

• Visits Per Month
• Check Size 
• Number of Subscribers

The simple example below shows what happens when visit frequency increase by just 2.5x and the check size stays the same for a program with just 100 subscribers.

With typical visit frequency increases of 3-8x for subscribers, the potential impact is a multiple of what you see above. Even with a small program you can drive significant, predictable revenue to smooth out your cash flow and make your business more predictable. Email hello@anglehq.com and we’ll send you access to the model and can even help you put a more granular version together. 

What does it take to launch and operate a cafe membership? 

Launching a successful cafe membership or subscription starts with a strong business case. At this point you’re armed with a strong foundation in the membership business model as well as a financial template to help you build projections. There’s nothing standing in your way and launching a program is significantly easier than you might imagine, we really mean that. The entire process requires no more than 1-2 hours of your time. 

Software & POS Integration 

We built Angle to make it incredibly easy to launch a membership program. We offer a white glove onboarding process that follows a simple workflow:

1. Membership Design (30 minutes) - we’ll spend 30 minutes talking about different membership tiers and designing a membership program. 
2. POS Integration (10 minutes) - we’ll ask you to connect your POS system through a simple online process which takes just 10 minutes or less and can be done live on the same call. 
3. Launch Plan (15 minutes) - we’ll discuss the entire implementation process and create a simple action plan outlining next steps (all of which are handled by Angle). 
4. Testing & Launch (1 hour) - once the membership experience is ready to test, we’ll jump on a call to demo the entire experience and make final adjustments prior to launch.

There’s literally zero risk or upfront cost in launching with Angle. Start at our free tier and launch your program at one location to see how membership works for your cafe. We know you’re going to have an amazing outcome. 

Getting Started

If you're interested in taking your first steps towards designing a subscription experience, let's chat. We can help you brainstorm around customers segmentation, pricing and benefit design. Reach out at hello@anglehq.com and we'll set up 30 minutes to get the ball rolling, you’ll be surprised how quickly things move from there. We designed every aspect of the experience to be simple, fast and have transformative potential for your business.