Panera Bread recently became the latest big-name restaurant brand to enter one of the hottest segments of the loyalty market: subscriptions. We’re proud to be part of that launch, as the program is built on our loyalty platform.
At $8.99 per month, the MyPanera Coffee subscription gives customers unlimited coffee or hot tea for the price of about four cups of coffee. This program exemplifies how smart, forward-thinking brands are embracing subscription models.
Subscription programs tend to operate in one of these three ways:
- Recurring payments – As with the Panera program, subscribers pay for a given time period. Cancellation can occur at any time.
- Lump-sum payment with time-bound usage – The industry standard is Olive Garden’s Never Ending Pasta Pass, which allows unlimited meals for nine weeks. Limiting the number of passes sold provides customers with a sense of exclusivity.
- Lump-sum payment with limited times or items – An example is the Grill Pass offered by HuHot Mongolian Grill. Last summer, loyalty members could spend $50, $100, or $200 to buy 5, 11, or 25 meals.
Subscriptions enable brands to drive incremental revenue while letting customers prepurchase their favorite items at a discounted rate. Those who already buy four cups of coffee a week at Panera will find that the coffee program pays for itself. But it’ll also drive them back at times that they may not have normally stopped in, providing opportunities for additional sales. Once consumers have invested in a program, the act of buying another item, like a cookie or a snack, seems less of a burden.
Clients that run subscription programs report high attachment rates and upselling. Panera achieved these results by following the three key steps for implementing a subscription program:
- Create a loyal following. With a long-standing loyalty program, Panera has spent years developing its base.
- Pick the right model. By understanding its customers and their habits, Panera had the information it needed to build a program that reached its best and most loyal customers.
- Communicate the value. Since the monthly price is the equivalent of just a few cups of coffee, the value came through loud and clear in Panera’s messaging.
Whether it’s movies from Netflix, pet supplies from BarkBox, or clothes from Stitch Fix, consumers are increasingly receiving goods and services through subscriptions. Restaurants have a great opportunity to capitalize on this trend. To learn more, check out our on-demand webinar, “How Restaurants Can Take Advantage of the Subscription Business Model.”