Panera Enhances Coffee Subscription Offer

Already 40 million beverage lovers have joined the loyalty program.

August 06, 2020

ST. LOUIS, Mo.—In February, shortly before the COVID pandemic, Panera Bread unveiled one of the most generous offers in foodservice—a coffee subscription that gave participants unlimited coffee or tea, iced or hot, and in any size for $8.99 a month. But when COVID-19 shut down the chain’s 2,200 dining rooms in March, the deal faded away.

Now, the offer is being jolted back to life, reports QSR Magazine. In May, Panera brought in Eduardo Luz, former marketing officer at Kraft Heinz, as chief brand and concept officer, and he relaunched the program with an offer no one could refuse. Anyone who signed up for the subscription—and the offer includes customers currently enrolled—were instantly eligible for unlimited coffee and tea until Labor Day at no charge.

Panera picked up 700,000 sign-ups in just three weeks and now has some 40 million members in its loyalty program, roughly double that of Starbucks. More than 50% of its transactions come from loyalty members, and users represent, on average, five times the value of customers outside the platform.

That success spawned yet another phase of the program called “The Fellowship of Unlimited Coffee,” which launches nationally this week. The Fellowship is a refer-a-friend program. Those already in the program who sign up five or more people will receive free, unlimited coffee through the end of October. And the new subscribers get free coffee, too.

Already, Luz is hinting at another development that could shake up the quick-service value proposition—coffee might just be the beginning for Panera. The fast-casual chain is “cooking those plans as we speak,” in terms of additional subscription models, Luz said. Customers and competitors should expect more versions of the program.

In a test prior to the coffee program’s early 2020 launch, Panera management found that frequency jumped more than 200% for customers after they signed up compared to before, generating a significant bump in store traffic. Plus, Panera witnessed a 70% increase in food attachment for subscribers.

According to recent data from Clarus Commerce, nearly three out of four consumers (73%) said they were likely to invest in a premium loyalty program or subscription if they’ve already tried the free version.

Luz says the most recent freebie accomplished other essential aims for Panera in a coronavirus world. For one, it provides a mental break he believes customers need amid dire news stories and quarantine gloom. “A ray of sunshine on a very dark stretch coming into the summer,” he said. “People need something good. It’s as simple as that.”

The sheer number of sign-ups can’t be undervalued. It’s helped stack what Luz said is “probably the largest loyalty database in the country.” Even if people aren’t paying Panera, they’re sharing detailed information about themselves and their purchasing habits.

“And we believe those people have a relationship with us based on a lot of trust over the years,” Luz said. “And we believe we can take that trust to a next level of engagement where people who subscribe to certain categories will trust us to execute that need.”

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