Operations
Panera exec reveals the strategy behind free coffee subscription
Panera's free coffee subscription has been a catalyst driving growth and revenue, said Eduardo Luz, chief brand and concept officer.
July 27, 2020 by Cherryh Cansler — Editor, FastCasual.com
Sometimes it pays off to be the first. Just ask Panera Bread, the first fast casual brand to offer a subscription-based coffee program. The chain — whose loyalty program has eclipsed 40 million members —rolled out its unlimited coffee service for $8.99 per month in February but in June dropped the fee through Labor Day. That decision has been a catalyst driving growth and revenue for the brand in a challenging year for the industry, said Eduardo Luz, chief brand and concept officer, who pointed out that the service has gained more than 800,000 members.
"The coffee subscription model was in our pipeline long before COVID took effect," Luz told FastCasual. "Subscription services are table stakes in many other industries, and coffee was a product we saw fitting into that model to create a more convenient and cost-effective option — making it easier than ever for consumers to access, and providing us a recurring revenue stream."
As customer behavior changed due to the global pandemic, the chain focused on off-premise channels, leveraging its preexisting digital operational competencies and channel access — including delivery, drive-thru and its curbside offering.
"The coffee subscription service model put us in a position to both maintain and grow our customer base with socially distant behaviors in mind by way of both the summer-long free coffee promotion and this refer-a-friend model," said Luz, who decided that dropping the monthly fee was a natural extension to the initial offering.
"The situation that COVID created has increased digital connectivity between restaurants and customers," he said. "And as economies start to cautiously reopen, we know the barrier to reentering physical stores is high for many consumers.
Free coffee reconciles those two things by allowing a digital signup that streamlines the in-store experience, incentivizing guests to come into cafes by way of free coffee and giving Panera the opportunity to show customers firsthand how we are making the in-store experience as safe and accessible as possible."
The Fellowship of Unlimited Coffee
Building on the popularity of the free service, Panera last week debuted its refer-a-friend program — The Fellowship of Unlimited Coffee — which gives coffee subscribers who sign up five or more people, access to unlimited premium coffee through Oct. 31.
"The free service itself is relatively low overhead for us to fulfill and holds a lot of value in terms of high future earning potential," Luz said. "Subscription coffee has driven new customer acquisition and membership growth to our industry-leading 40 million member loyalty program. We are not aware of any other restaurant companies growing their audience during the pandemic."
MyPanera member has a lifetime value approximately five times that of a non-MyPanera member, and coffee subscribers drive an even higher lifetime value to the brand, according to Luz.
"This is truly a no strings attached promotion that allows us to grow our MyPanera membership while giving some (small) reprieve to our customers during this trying time," he said.
Customers certainly seem pleased
Hey so free iced coffee from Panera has been a summer game changer, and they're still offering it if anyone's interested https://t.co/NkIvG6GhDr
— Brennah (@ThisIsBrenn) July 23, 2020
Panera free coffee subscription extended through September 7th! Normally, $8.99 a month, but free for now
— Justin Vacula (@justinvacula) July 27, 2020
You can keep or cancel later before charge hits. I'll keep. It's nice to go once a day on most days, works out to be about $0.30 a day.https://t.co/5vTVHlxL2h
me going to get my free panera coffee tomorrow morning pic.twitter.com/RpxQEWPxYF
— vincent🌾🍂 (@disneybyvincent) July 22, 2020
so this panera coffee subscription is actually pretty awesome because if i combine it with the daily $2 off deal I can get a pastry + coffee for 60 cents,,, i love free things
— natalie (@natamurray) July 25, 2020
About Cherryh Cansler
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