It was inevitable. You can get pretty much Anything-as-a-Service thanks to the cloud. That includes payments, banking, insurance, investment advice, cloud storage, clothing, groceries, and now coffee.
That’s right. Coffee-as-a-Service, for just $8.99 a month, courtesy of Panera Bread.
Right now, millions of impoverished students are dancing in the dorms at campuses across the country at the prospect of fueling up on caffeine to get through studying all night for final exams. Forget cocaine man. We’ve got caffeine.
Entrepreneur or shift worker? This is caffeine, straight to the heart and brain wake up, stay up, keep-going-all-night inspiration!
In fact, more than 15% of Americans have signed up for online subscription services of one kind or another according to McKinsey and Panera is hoping millions of consumers will grab a cup of this coffee subscription service.
What’s the Panera coffee-as-a-service deal?
The bakery café offers unlimited coffee at nearly 2,200 locations for those who sign up for the company’s free loyalty program and pay a modest $8.99 monthly subscription fee.
The new program provides one cup of coffee, hot tea or iced coffee every two hours during regular Panera hours, as well as free refills of the same drink at other locations. Specialty cold coffees, espresso drinks, iced tea, and other higher-end beverages are not included in the subscription and customers are limited to orders of one beverage, once every two hours during normal store opening hours.
Panera claims it is the first national restaurant company to offer an unlimited in-store coffee subscription program, although we note Burger King did try a five-dollar monthly coffee subscription last year but quickly discontinued it.
Panera CEO Niren Chaudhary said a test in 150 US stores showed visit frequency increased over 200%. Nearly 70% of customers included food items and over 90% of subscriptions were subsequently renewed.
The company is hoping itsCoffee-as-a-Service loss leader translates into increased store traffic, bigger overall food sales, and stronger customer loyalty.
So far it’s much bigger competitors have remained silent to this coffee subscription challenge.
How big is the US coffee industry?
To get an idea of just how big coffee is as an industry, we sat down with our favorite Caramel Macchiato to review Allegra World Coffee Portal’s 2019 annual report on the US market. It estimated sales at US coffee shops of $47.5 billion (+4.3%) at 37,274 (+3.3%) coffee shop locations across the country.
Consider the number of US stores for each of the following sellers where coffee is big on their menu and sales: Starbucks (15,000+ stores), McDonald’s (14,100), Dunkin’ Donuts (9,570), 7-Eleven (7,800), Burger King (7,200), JAB Holdings including Panera Bread, Peet’s Coffee and Caribou Coffee (4,739), and Tim Horton’s (646). Not to mention tens of thousands of other restaurants selling coffee.
The latest research shows coffee is indeed a BIG, busy, and profitable, industry in the US:
- Americans drink 400 million cups of coffee daily, 146 billion cups a year, the biggest coffee market in the world (Booyah!)
- 64% of us drink a cup daily, an average of 3.1 cups each, and 35% prefer their coffee black (Yowza)
- the US imports more than $4 billion worth of coffee annually (big biz)
- more than 20% of Americans drink at least one cup of coffee at a coffee shop daily (addicted)
- the average cost of a cup of your caffeine fix is $1.38 (bargain?)
- 31% brew a cuppa before doing anything else in the morning (certainly the case with my Significant Other)
- 52% would go without a shower rather than give up their daily jolt of Joe (ditto)
- 49% would give up their cell phone for a month before giving up their daily caffeine fix (truth!)
- 9% order coffee with an app (click)
- Starbucks has more than 40% of the US coffee shop market, including most new openings (no surprise)
- US cities with the largest number of coffee shops per capita according to Matador Network: Berkley, CA (2,073), Vancouver, WA (2.224), San Francisco (2,297), Seattle (2,308), Portland (2,332), Salt Lake City (2,387), Minneapolis (2,427), Pittsburgh (2,607), Everett, WA (2,752), and Ann Arbor (2,825). Seattle, I’m shocked.
For coffee addicts, Panera’s new coffee subscription doesn’t get much better. It’s also an interesting application of the subscription payments model for a daily staple for millions of consumers. Over to you Starbucks!
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