Subscriptions Set for Success in South Africa
In keeping with the Hawaiian island it’s named after, the entire menu of healthy food created by South African chain Kauai is extraordinarily colourful – a reflection of the natural beauty that earned it the title of the “garden island”.
The popular fast casual restaurant chain is one of the leading brands within the Real Foods Group portfolio, and was the first company to bring healthy juice drinks, smoothies and nourishing fast food to the South African market in 1996. Twenty-five years later, Kauai is now the largest healthy food chain in the country, with 150 stores across South Africa, and shows no sign of slowing down with its ambitious goals!
Kauai uses soft colours to allow its healthy colourful food to capture attention
I recently had the chance to interview Ros Netto, who is the CRM and Loyalty specialist for the Real Foods Group, and who has led the introduction of another ambitious concept in the group – a subscription model for loyal customers. Today’s article showcases some of the superb insights she shared with me in that discussion.
Keeping Kauai Customers Loyal
Alongside its innovative concept to offer healthy drinks and meals to South African customers, Kauai has also always believed in the value of loyal, repeat customers. In the early years before digital solutions were readily available for the industry, they used good old-fashioned paper stamp cards to track transactions in the same way many retailers had to do for many years! The brand prides itself on its global perspective, and has consistently improved its digital connections with customers, launching a mobile app in 2014 that has since been upgraded to support, pre-ordering and pre-payment, gifting, and of course launching a digital loyalty solution to maximise the lifetime value of its customers.
The Kauai App is the Cornerstone of the brand’s relationships with its customers.
The Kauai loyalty programme boasts three tiers – Green on joining, Gold for customers who spend over R4,000 ($270 USD) in a calendar year, and Black status for members who spend over R10 000 ($675) within a calendar year. All tiers enjoy 2% cash back on their spend, as well as coupons and birthday treats.
What’s new – and incredibly exciting – is this innovation with the chain becoming the FIRST fast casual restaurant in South Africa to offer a paid subscription option to their loyalty programme members, inspired by global trends from leading restaurant retailers such as Panera Bread in the US and Pret a Manger in the UK.
Subscription Strategy
Ros shared with us the key rationale that led CEO Dean Kowarski to realise the potential for the model, with their goal to offer “exceptional value” to lovers of their organic coffees and smoothies. These two products were the focus when the programme was launched in January this year, with the subscription option for one small daily smoothie for 15 days costing R199 (approx $13), while a 30-day coffee package costs R375 ($25 approx). The unlimited coffee subscription allows customers to claim any short hot drink every two hours during the membership month for a subscription of just R299 ($20), with savings of “up to 70%” for members who subscribe.
With so many unknown variables to consider, Ros shared that their approach to subscriptions is understandably “conservative”, to ensure the benefits of more frequent visits and the increased share of wallet are balanced against the risk of over-redemption. This may be why Kauai (for now) are not auto-renewing their subscription packages – allowing the firm the protection of 30 day packages that expire in order to allow them to assess the programmes performance on a monthly basis. It is also interesting to note that customers do not earn the 2% cash-back on the purchase of subscriptions, however tier points are still awarded.
From an operational perspective, all smoothies and coffees that are being claimed from a subscription programme are simply scanned at the time of delivery or collection as proof of eligibility.
Early Success
Just eight weeks since launch, Ros shared that all of the key objectives of the approach have been achieved and that the model has already been extended to allow the option to now buy a subscription meal plan.
The team have high hopes that they will acquire new customers, tempted by the great value, and of course they are closely monitoring customer before and after they subscribed to understand the effect that the programmes have on basket size and frequency.
We’ll be watching and waiting as this innovative subscription story unfolds, and we wish the Real Foods Group every success with it.
