It feels years, not months, since Panera Bread unveiled one of 2020’s buzziest deals in late February. The 2,200-unit chain announced customers could subscribe to unlimited coffee and tea, iced or hot. Any size, for $8.99.
It was an effort other restaurant chains pursued in the past, like Burger King and its $5 program, but to uneven results. Panera thought it could break through, however, for two clear reasons: It cut the strings off the promotion, like size and product restraints. And notably, touted an ecommerce platform robust enough to handle demand along with omnichannel outlets for guests to find it, like Rapid Pick-Up, drive thru, delivery, and on-premise.
Also, Panera reports some 40 million members in its loyalty program, roughly double that of Starbucks. More than 50 percent of its transactions come from loyalty members and users represent, on average, five times the value of customers outside the platform.
When COVID-19 shut down dining rooms nationwide in March, Panera shifted course. The deal faded back.
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On May 26, Panera brought on Eduardo Luz, former U.S. chief marketing officer at Kraft Heinz. He took over as chief brand and concept officer, overseeing Panera’s marketing, digital, strategy/insights, and culinary teams.
One of his early tasks was to jolt the coffee subscription back to life. About three weeks in, Panera’s #FREECOFFEE4SUMMER campaign landed. Anybody who signed up (the same was true of guests currently enrolled), were instantly eligible for unlimited coffee and tea until Labor Day at no cost.
There’s a simple and compelling metric to judge how successful the restart was. In the first, late-February phase, Panera picked up roughly 100,000 sign-ups, Luz says in an interview Monday with QSR.
After the latest offer? The fast casual added 700,000 people in a three-week span.
“It is way above what we predicted in our best-case scenario,” says Luz, who most recently worked at nutritional supplement company 8Greens as chief executive. “We’re very excited about that.”
The success spawned yet another phase of the program called “The Fellowship of Unlimited Coffee,” set to launch nationally this week. But before diving in, Luz hinted at another development that could shake up the quick-service value proposition—coffee might just be the beginning for Panera.
Luz says the fast casual is “cooking those plans as we speak,” in terms of additional subscription models. Customers and competitors should expect more versions of recurring revenue models from Panera, he says. “Coffee is great,” Luz says, “but it’s not the only one.”
Why Panera launched a subscription model in the first place—and why it’s investing in future possibilities—boils down to a few goals. CEO Niren Chaudhary shared some 150-store pilot results ahead of February’s coffee launch that pulled the operational curtain back.
Frequency jumped more than 200 percent for customers after they signed up compared to before, generating a significant rise in footfall. Panera witnessed a 70 percent increase in food attachment for subscribers, something Chaudhary called “staggering” at the time.
An elementary concept that carries wide potential: Come in for free coffee, grab a bite to eat you wouldn’t have considered before.
Source: QSR Magazine