business news in context, analysis with attitude

Fast Company reports that Panera is launching a new subscription coffee program for $8.99/month, "Subscribers can get one cup of hot drip coffee, hot tea or iced coffee every two hours, unlimited."

Panera has an ulterior motive:  "Though Panera is pitching the subscription as a way for you to save money on coffee, Panera’s 150 test locations over the last three months saw subscribers visit three times more frequently and purchase 70% more in add-on items than the average customer. In other words, watch your wallet. These metrics, in addition to a surge of new customers, are inspiring Panera’s quick nationwide rollout."

Fast Company notes that Panera is perfectly positioned to make the program work:  "Unlike most coffee chains, their current coffee business is small and able to accommodate a quick expansion. Panera locations are also suburban and mostly accessible only by car—therefore not at risk of the foot-traffic deluge that overwhelms urban coffee chains. The company hopes to expand its customer traffic, and particularly its breakfast business, which is a growth area throughout the industry."

KC's View:

Longtime MNB readers know that I am a big fan of subscription and replenishment programs - I think the more that a retailer can do to create habits and reduce friction in its relationship with a shopper, the better.  I'm not surprised that subscribers buy more other stuff when at Panera - that's sort of the point.  You save money on coffee, but you can use the money to buy food.

My only problem with it is the one-coffee-every-two-hours limit.  I often will drinks three cups of coffee in an hour, so this would be totally inadequate to my needs.