The new business frontier for chefs: Experience economy and subscription commerce

22 Dec, 2017

Chefs used to be seen as craftsmen who were required to follow strict guidelines in order to be ranked as “high-end”. Today, top chefs are considered artists who use one of mankind's most basic necessities to express themselves: food.

How can chefs adapt and stay relevant in today’s tech-savvy, on-demand society?

At the turn of the century, Pine and Gilmore coined the term “experience economy” to describe the economic value generated by staging experiences that create lasting memories for the consumer. The experiential economy follows the agrarian economy, the industrial economy and the most recent service economy. This new competitive battleground is an important global trend as consumers increasingly desire unique, memorable and immersive experiences when it comes to acquiring services. Companies face the opportunity to revamp their offerings to the next stage of economic value by offering unique service and engagement of customers in a manner that creates memorable experiences.

E-Commerce offers innovative opportunities toward merging experiential economy, haute cuisine and technology. As a business opportunity, it includes various business model innovations, differing levels of organization and many-sided operations. E-innovations are encouraged by allowing chefs wide margins of freedom and flexibility in making decisions about the culinary experiences they want to support.

One such innovative approach is known as subscription commerce. As the name suggests, a subscription business is one that is built on a business model whereby customers pay for a good or service on a subscription basis. Value is generated for the consumer by receiving products or services at a reasonable recurring price that allows customers to feel that they are receiving more than they are paying for.

This form of electronic relationship is gaining popularity and is now being used in various industries from food to retail, cosmetics to software. Noteworthy subscription services such as Dollar Shave Club (Shaving supply company), Birchbox (Beauty sample subscription service) and NatureBox (All-natural snack food subscription service) have combined raised $280 million in venture capital.

Culinary experience economy and subscription commerce

Chefs and culinary artists alike provide a unique product/service that at first glance seems like an excellent match with the subscription commerce and experience economy. There is no doubt that chefs who have earned prestigious Michelin stars deliver exceptional culinary experiences that represent the art of cooking at its highest level. Why is it not possible to simply “deliver” these culinary experiences? Chefs would be able to reach a global audience with their culinary artistry and subscribers would be able to immerse themselves in a new culinary experience each time they receive a subscription box.

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However, there are several challenges that need to be considered:

  • Inseparability of service: This is the key distinction between goods and services where the production of the service occurs at the same time as the consumption. The chef prepares the dish and the guest experiences the meal at the restaurant. To what extent is it possible for chefs to share their culinary artistry with an amateur cook (the subscriber) who is not physically present?
  • Shelf life of food: Many food products have a limited shelf life and need to be consumed shortly after they have been harvested, prepared or cooked. Likewise, certain products are more practical, given that they have to be shipped to reach a global subscriber base. To what extent will chefs be willing to adapt their subscription to include products with long shelf lifes?
  • Slow death of home cooking: In our fast paced world, more people are relying on ready-to-eat foods that require little to no preparation. Cooking requires time and effort that not everyone is willing to invest in. To what extent can chefs play an active role in promoting the benefits of acquiring cooking skills?

Recently, Flave, a subscription box startup of students from the Ecole hôtelière de Lausanne, has leveraged the subscription business model and prioritized experiences as the cornerstone for economic value. The idea is simple: Food experiences, curated by the world’s leading culinary artists, delivered directly to customers. Chefs share a unique selection of products as well as a handy kitchen tool so that the consumer can be fully immersed in the culinary experience. The subscriber then immerses herself in the culinary experience. Unlike other e-commerce initiatives, Flave results in an innovative business idea that overcomes the notion of ‘inseparability of services’ as well as ‘product type challenges’ while promoting the art of cooking.

Changing consumer desires for unique and memorable experiences should not be overlooked. In the experiential economy, subscription services are starting to play a significant role for retailers in various industries. Above all, electronic commerce provides a potential, innovative platform between chefs, who are willing to share their recipes and expertise, and amateur cooks who are eager to learn, develop new skills and celebrate food.

Authors: Chris Bader, EHL Bachelor Student and Dr. Carlos Martin-Rios, EHL Associate Professor

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