Panera Bread's new coffee subscription program offers unlimited coffee for $8.99 a month

Subscriptions have come to in store restaurants. Now for just $9/month, you can get unlimited Panera coffee, the first nationwide restaurant to offer a coffee subscription. If you subscribe to Panera coffee you can get one cup of hot drip coffee, hot tea or iced coffee every two hours, unlimited (you can sign up here or at in-store kiosks starting on March 2nd).

It's a fascinating strategy and one that makes a lot of sense when you consider what it means for their business because, guess what: when customers buy coffee, they also buy food.

Panera tested its program at 150 locations in four markets – Nashville, Tennessee; Raleigh, North Carolina; and Cleveland and Columbus, Ohio – over three months.
[Panera CEO Niren] Chaudhary said they saw a 200% increase in the frequency of visits and a 70% increase in consumers buying food with the coffee. In the test, Panera saw a 90% to 95% renewal rate.

I expect to see a lot of companies begin to test this model going forward. Driving consumer loyalty through high margin, low effort products like coffee (note: the subscription does not include espresso drinks like lattes and cappuccinos which require more cost and labor) and cross selling other high margin products is an obvious strategy if you can nail it. The struggle will be convincing teams internally to give up short term revenues for long term value.


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