Earlier this year, Panera Bread debuted a new program that it says showed significant promise in boosting guest frequency as well as check averages: a monthly coffee subscription program.
The $8.99-per-month subscription—which diners can purchase through the chain’s app, website or in-store kiosks—offers customers unlimited hot coffee, iced coffee or hot tea in any sized cup. Coffee is available in light or dark roast, with no upcharge for almond milk.
The program was tested for about three months in roughly 150 Panera locations in Cleveland; Columbus, Ohio; and Raleigh, N.C. It performed so well during the trial that the company sped up its rollout, according to chain executives.
Guest frequency growth was “staggering,” Panera Bread CEO Niren Chaudhary says, jumping by more than 200% during the subscription program’s testing phase. Coffee subscribers visited Panera almost every other day, about 3 times as often as average customers. In addition, food attachment to coffee orders grew by 70%.
“Consumers are increasingly getting used to and liking the idea of subscriptions,” he says. “You just pay for it once and you don’t have to think about it.” The test also showed that about 75% of the redemptions were for off-premise coffee consumption, including drive-thru orders and delivery, he said, adding that retention in the subscription program from month to month was about 90%.
Last fall, the chain introduced new brewing and bean-grinding equipment to ensure it would be able to keep up with coffee demand, and Panera is offering incentives for employees to encourage subscription signups, Chaudhary says.
Panera’s loyalty rewards program currently has about 38 million members, with about half of the chain's transactions coming from the loyalty program, he says.
Last spring, Burger King launched its own app-based coffee subscription. The $5-per-month program entitles users to one small hot brewed coffee per day, and the burger chain’s other coffee offerings are not included in the subscription.
Noncom connection:
A coffee subscription program at the University of Montana dubbed the Dollar Coffee Club helped contribute to a boost in overall coffee sales on campus and allowed the dining team to avoid lowering drink prices.