In Japan: How Restaurants Make Use of Subscription
Food and restaurant subscription on the rise in Japan. The subscription market in Japan is projected to grow constantly over the next few years.
The overall subscription market is projected to grow from 10.9B USD (2019) to 13.6B USD by 2023. Physical product/rental services make up for roughly 18% of the whole market with a volume of 2B USD in 2019 with 27% growth reaching 2.5B USD by 2023. One has to note that those numbers were before the outbreak of the novel coronavirus.
Three different shapes of subscription based food services can be classified:
- Marketed restaurant subscription offerings: normal restaurant with extras and additional offers for its subscribers
- Independent restaurant subscription offerings: self-run subscription as membership restaurant
- Restaurant subscription platform: monthly food subscription with independent restaurants participating on the platform
Subscription as a service by restaurant marketer “Favy”
The Shinjuku based company Favy which is supporting restaurants mainly by providing restaurant websites and marketing services has introduced subscription models in different types of food businesses.
In collaboration with the Izakaya chain Kushikatsu Tanaka they offered a 500 JPY monthly subscription allowing the customer to purchase all drinks for only 199 JPY (as a reference normal prices are around 300–600 JPY). In another partnership with Kirin Beer they offered their subscribers one free craft beer (on weekdays) in every shop which has their craft beer server “Tap Marche” installed for 2800 JPY per month.
Also Favy operate a couple of coffee shops under the brand Coffee Mafia (Nishishinjuku, Iidabashi) as a subscription model. They had a third shop in Ginza in one of the more expensive Tokyo areas, which seems to be already out of business. They offer two basic plans. For 3000 JPY in the basic plan the subscriber gets free large coffees. Other drinks can be purchased for 240 JPY. The extended plan for 6500 JPY gives the subscriber free coffee drinks and premium juices (1 drink per day).
Favy has published some data on their subscription usage. By far the coffee subscription (Coffee Mafia) is used 22 times per month on average. The beer pass (Tap Marche) could generate 7.8 visits for the registered shops.
The subscription service might make the user feel like it is “their shop” and give extra motivation to visit the restaurant more frequently. Favy observed that the customers still consumed normally in addition to their subscription benefit, thus increasing revenues by drawing in additional customers/visits.
Since September they also work together with Odakyu’s MYLORD department store in Shinjuku. For 500 JPY/month the user can get a free drink per dine-out at one of the 15 restaurants and cafes in the department store. The customer has to subscribe to the service via the Favy’s subscription platform.
By this measure the department store operator can possibly drive additional repeating visits into their stores. For the customer it seems to be a good alternative to just one defined place. In the future we might also see one-building subscription services for larger office buildings in Tokyo.
The Favy team also initiated a new Yakiniku (Japanese BBQ) experience with 29ON in late 2016. The membership-only and reservation-only subscription concept has expanded to four different locations by using crowdfunding campaigns to set-off the starting costs. The crowdfunding supporters receive a one year membership right plus one free dinner. After one year the customer has to renew the membership for 15400 JPY in order to dine at the restaurant for the next year.
In collaboration with pokepay, which is a payment provider offering personalized currencies/coins for retail, they have introduced a 29ON coin for its members. The user profits from charging the 29ON coin by getting points depending on the amount charged — for 19,999 JPY 5% points and for 49,999 JPY 8% points. If the user chooses to charge the coin in the form of a subscription plan of up to 30,000 JPY they get even 10% points awarded.
Giving the concept another twist, the team behind 29ON raised money for a sushi membership-only and reservation-only restaurant. Here they try to mix the meat dishes with classical sushi. They have just recently opened up two shops (Omotesando & Iidabashi) which address and telephone number is disclosed and only available for the supporter of the crowdfunding campaign. This time they collected 150k USD from 457 supporters.
Independent subscription-based membership restaurants
Let’s start off with the independent restaurant subscriptions.
Social curry rice: 6curry
6curry started out as a ghost kitchen operation selling curry dishes via Uber Eats. Then one year later issues a crowdfunding campaign via the Japanese crowdfunding site Campfire in order to raise money for a community focused curry shop. The first shop opened up in Ebisu 2018, followed by another shop based in Shibuya 2019.
The concept is the members only curry shop. New members can only enter via a member’s referral. According to their website over 300 members are already registered. Membership benefits are one free curry portion per day, social interaction fostered in the shops with events and lessons, outside club activities between the members and an extra social network chat room for the members. Also the members get advantages when buying curry spice mixtures on the 6curry online shop.
The basic monthly membership costs 3980 JPY and allows the user to enjoy all above listed benefits. For 980 JPY they also provide a low-perk supporter plan enabling access to the social engagement in the shops and the social media room. In addition to their social media presence, 6curry relies on the network effect of their community, word of mouth of their core fans to address their target group of millennials. They also do pop-up stores in the hipper areas of Tokyo to reach new possible customers and raise brand awareness.
Rounding of a well-balanced business model they also provide curry workshops for company’s team building events and so forth. With the recurring revenue stream (membership fees) and the revenue stream of one-time charges (non-member lunch curry and mainly drinks) they also found a way to monetize event hosting and curry spice mixtures as additional revenue streams.
Really focusing on the food experience paired with the community creation allows them to leverage the network effects of their social network. It is somehow a classical neighborhood bar experience with regulars but with the big plus of guaranteed cash flow for the restaurant owner to pay the outstanding bills and to have some certainty planning ahead.
Another point I found intriguing about 6curry is the limited food variety offered, which decreases foremost equipment, inventory and cooking complexity, but maximal variety in the curry dish itself with endless options like Indian, Thai, Japanese curry only to name a few. This helps to make the concept compelling for the end-user to learn more about spices & ingredients and keeps the interest for return visits up.
Private French restaurant: Provision
On the other side of the spectrum another interesting approach is taken by the French high-end restaurant Provision.
The exclusive membership-only restaurant is located in Roppongi, an area known for its night establishments. The restaurant offers two basic subscription plans:
- Unison plan: 30000 JPY before tax for French cuisine dinner with up to 4 people
- Deluxe plan: 50000 JPY before tax for French cuisine (up to 4 people) with high-end ingredients like caviar, truffle and different wines
In the subscription food and drinks are included. The food can be ordered al la carte or in the form of a course menu. When paying the annual amount via bank transfer at once, one gets a free wine bottle as a present. Usage scenes would be mostly business dinners with customers or dates.
More and more restauranteurs make use of subscription models paired with crowdfunding.
Up next: how subscription platforms help small restaurants and cafes to draw new customers and generate revenue.
