Home Service company Taco Bell just announced a really strange idea. Should your business copy it? (Answer these 5 questions to decide)

Taco Bell just announced a really strange idea. Should your business copy it? (Answer these 5 questions to decide)

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Let’s talk about the weird new deal Taco Bell just announced and how it might inspire you to do something just as weird (but smart) in your business.

We’re talking about the $10 monthly subscription service here that allows subscribers to get a taco every day for 30 days.

It all sounded like a joke to me at first. Then the wheels turned and I realized it was kind of a brilliant experience.

You’ve probably heard the phrase “software as a service” or SaaS, about a million times over the past decade. I guess we can call it TaaS, or “tacos as a service”.

So if you’re not already doing so, should you consider offering a subscription-based model for everything you create and sell?

  • For example, hardware upgrades as a subscription service.
  • Or, ice cream or flowers as a subscription service.
  • Or, oil changes or haircuts or tax disputes or whatever as a subscription service.

Whatever your business does, only as a subscription service.

I’m aware, of course, that a lot of industries already have a subscription model or something like that. But we’re talking about things here that we don’t normally think about.

Like tacos. Or almost any fast food joint, for that matter.

Panera offers a subscription service that allows customers to pay $8.99 per month for unlimited coffee or tea. Sweetgreen has a new $10 monthly rebate program. But, this is still a rarity for the industry.

Taco Bell says it already experimented with this model last year in Tucson.

The company didn’t say how many customers actually signed up, but they said 20% were new to the Taco Bell Rewards program and 20% of those who signed up renewed for a second month.

Apparently, those results were good enough to convince them to take the whole thing national.

And while obviously we can’t say for sure if it will turn out to be a success, I think we can break down several factors that make the model a no-brainer for Taco Bell. If you can answer “yes” to these five questions, then it might make sense for you to think about it in your business.

Question #1: Would you be a first comer?

Fast food could be fertile ground simply because most competitors aren’t doing it yet. The first mover with a subscription model has at least two big advantages:

  • the total addressable market arguably shrinks with each new player, since most customers will not subscribe to multiple competitors, and
  • once you have a client, inertia will be a factor that keeps them from moving on to someone else.

Question #2: Can you sell?

Industry reviews of the Taco Bell program point out that while $10 a month is only about 30 cents per taco, most people aren’t eating just one taco.

While they’re visiting, chances are they’ll buy more tacos or other side dishes or drinks.

So do the math. Can you use a subscription to provide legitimate value, but also find ways to attract other revenue?

Question #3: Does margin work?

The Taco Lover’s Pass, as the program is called, allows subscribers to choose from seven varieties. The cheapest, according to TacoBell.com, would be the $1.49 soft taco or the crunchy taco (in fact, the black bean soft taco is $1.39); on the high end, the Doritos Locos Tacos Supreme is $2.69.

Again: it’s all about math. I don’t know what it costs to make a taco, but ask yourself: can a subscription model work, without cannibalizing other sales, while offsetting your cost of goods sold, but also adding any other longer term benefits you can get from having customer subscriptions.

Question #4: Are there any other bonuses to consider?

Speaking of longer-term benefits, Taco Bell gets at least two that I can immediately think of, beyond just selling tacos at a discount:

  • First, there’s the breakdown – whatever the percentage of subscribers, just sign up and forget. This includes the significant number of people who probably don’t show up to get their taco every day, but also those who sign up and then completely forget they have a membership and never cancel it.
  • Second, there’s the fact that to subscribe you need to download the Taco Bell app and sign up for the company’s rewards program. Many companies pay a lot of money for each download on average, and app downloads mean you can get a lot more customer data too.

Question #5: Is it weird enough to matter?

I admit: I thought of this story at first because tacos as a subscription service seemed so weird to me. That’s not to say it’s a bad idea, but it does get attention.

In fact, you could argue convincingly that the weirder it would be for your business to try to sell itself as a service, the better – at least in terms of getting free, earned, or social media in result.

Of course, not every business should embark on a subscription model. There may be downsides; as someone who writes a daily newsletter and has built quite a large following, i think a lot about subscriptions and signups and the pros and cons of the model.

But, if you think back to these five questions and find yourself answering “yes” or at least “maybe,” it’s at least worth considering. If you go ahead and do it, let me know how it works – especially if it’s weird enough to make question #5 a self-fulfilling prophecy.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.