Panera Bread is hoping to attract more customers with its new unlimited coffee and tea subscription.
For $8.99 a month, subscribers can get one cup of hot drip coffee, iced coffee, or hot tea every two hours during regular bakery-cafe hours, including unlimited refills of the same beverage at participating Panera bakery-cafes across the country. The chain’s recently revamped coffee offerings, including light-roast, dark-roast, decaf, and hazelnut blends, will also be available to subscribers, but cold brew iced coffee as well as espresso and cappuccino beverages are excluded from the subscription.
A regular cup of Panera’s coffee costs around $2.20, so subscribers will start saving money after their fourth cup of coffee for the month.
To access the unlimited coffee and tea subscription, customers must sign up for Panera’s loyalty program at www.panerabread.com/mypaneracoffee or through Panera’s app starting on Thursday. In-store sign-ups using a QR code will also be available at nearly 2,200 Panera locations beginning March 2nd.
After signing up, customers can now use their subscription by placing their order at café’s register or kiosks, online, or through the Panera app. With the app, they can order ahead for “Rapid Pick-Up.” Orders can be placed up to two weeks in advance.
Though Panera is promoting the subscription as a way for customers to save money on their coffee, Panera’s 150 test locations in four markets – Nashville, Tennessee; Raleigh, North Carolina; and Cleveland and Columbus, Ohio – over the last three months saw subscribers purchase 70% more in add-on items than the average customer.
“This was a win clearly for the customers because they saw unbeatable value,” Panera CEO Niren Chaudhary told Business Insider. “And it was a win for us as a business in terms of driving incremental traffic, incremental food purchases, and therefore incremental profit dollars.”
The subscription also brought in new customers to Panera. Test markets saw a 25% increase in sign-ups to Panera’s loyalty program, and almost all of those sign-ups were new customers.
More importantly, Panera’s tests in all four markets showed an over-90% retention rate, and this has pushed the company to roll out the subscription nationwide.
If the subscription model does well, Chaudhary said that it could expand to include more than just coffee, noting that company could use different subscription price points or bundle propositions to add more versatility to the subscription model.
“We have started the journey off with coffee, but we are going to be watching very carefully what kinds of food attachments are happening. What are customers buying this coffee with?” he said.