Sweetgreen Expands Its Paid Subscription Program | March 2024

March 18, 2024

OC Ferrell

More and more restaurants are dabbling in subscription pricing models to keep their most loyal guests coming back for more. Panera, Subway, and P.F. Chang’s are just a few of the nationwide restaurants that have introduced subscription programs. Sweetgreen, a chain of salad restaurants with more than 1,000 locations across the United States, has expanded Sweetpass, a multi-tiered loyalty program with a free rewards tier and a paid membership called Sweetpass+.

Inside Subscription Pricing Models

Subscription pricing models offer several benefits for businesses. A subscription model provides a predictable and steady revenue stream, as customers commit to recurring payments over a specified period. This stability facilitates better financial planning and predictability for the company.

Additionally, it enhances customer retention and loyalty by fostering an ongoing relationship with subscribers. The subscription model often includes frequent communication and access to new features and perks. The model encourages a focus on customer satisfaction, as companies strive to maintain high-quality services to retain subscribers, leading to long-term sustainable growth and profitability.

Sweetgreen Takes on Subscription Pricing

Overall, Sweetpass encourages customers to increase order frequency, try new menu items, and eat at off-peak times. With 65 percent of its business occurring during lunch hours, Sweetgreen would like to see more demand during dinner hours.

In the free tier of Sweetpass, users earn rewards for completing challenges, similar to Starbucks’ loyalty program. For example, a user might be challenged to spend $20 in exchange for a $4 credit. In the Sweetpass+ paid membership, users pay $10 monthly in exchange for a daily $2 discount and additional perks, including delivery discounts, merch access, and enhanced customer service. The membership fee pays itself off as long as customers dine at least four times per month.

Recently, Sweetgreen expanded the membership program by adding a third tier. If users want to pay for their membership upfront, they can save $20 per year, making the deal even sweeter. Paid members can also access basic rewards and challenges.

The company’s former reward program was very straightforward: purchase 10 bowls and earn one free bowl. Sweetgreen co-founder Jonathan Neman said the Sweetpass program is the result of customer-driven marketing. He says the company listened to its customers and tested and adjusted the program to create a personalized program. The Sweetpass program is designed to reward loyalty rather than discount-seeking behavior.

PYMNTS, a website that provides news, insights, and research on payments and commerce, conducted a study that found that restaurant subscribers tend to be significantly more loyal to restaurants than non-subscribers. On the flip side, some restaurant industry insiders, such as Noodles and Company’s chief marketing officer, argue that free daily rewards are more effective at building long-term relationships with customers. Only time will tell how subscription pricing models will fare in this ever-changing industry.

In the Classroom

This article can be used to discuss price (Chapter 11: Customer-Driven Marketing).

Discussion Questions

What are the benefits of a subscription pricing model for restaurants?
Why would Sweetpass+ appeal to frequent Sweetgreen patrons?
Would you pay a monthly membership for a daily discount and additional perks at your favorite restaurant? Why or why not?

This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.