UK-based Sandwich Empire Pret a Manger (or simply Pret) has rolled-out a new monthly coffee subscription service. This coffee subscription, from a sandwich shop, allows members to get cups of coffee everyday (capped at a certain number per day) by just paying an upfront amount once every month. American Sandwich shop, Panera bread, also came up with something like this only difference was that it was rolled out before the pandemic we are currently going through. Heck, now even Leon (healthy food shop also based in the UK) has also rolled out a coffee subscription service – reportedly even cheaper than Pret’s.
To make that coffee subscription business model more relatable, compare it to video on-demand services like Netflix and Amazon Prime Video. You pay a fixed amount once every month mostly to watch major shows and movies and you get to watch them whenever you want. I have been bingeing Brooklyn Nine-Nine for three weeks now, sprinkled with some episodes of How I Met Your Mother and a few movies.
Taking out the fact that there is a global pandemic on-going, which limits the number of people physically visiting stores, this is actually a good strategy. See they aren’t actually coffee shops that built their business around the quality of their coffee. The coffee that they do serve, are ordered to go with their main product: Food. Coffee attracts a lot of people, now make that free coffee every day (though it only seems like it’s free) then that will attract more traffic into your stores. The people who will buy coffee from sandwich shops are not coffee connoisseurs, they see coffee as something functional. Now when you look at it, it may seem that they’ll lose money through the coffee subscription but that’s not necessarily true. Not everyone will max out their daily coffee order cap and there will a small percentage of members who would not even be visiting the store every day. From coffee sales alone, they can still either break-even or even earn a small profit.
But what’s really genius about this are two things I’ve briefly mentioned in the previous paragraphs: Pret is a Sandwich shop and people who get coffee from Pret are not fussy about their coffee. The main thing you get in a Pret is food, specifically sandwiches for a quick meal. This means as long as they can still sell sandwiches, coffee sales are only a sub-plot. In fact, more often than not, if you like Pret’s coffee it’s because you decided to order it after buying a sandwich (or a wrap, salad, whatever).
The coffee subscription is them exploiting the reverence we have with coffee and banking on the fact that they can sell their main products along with those “free” cups of coffee. As you’re entering the shop to get your cup of joe, you see this wall of sandwiches and you think it’s only proper to grab one as well. This is actually why they explored the coffee subscription idea. It’s a flip on where coffee shops serve food that seem like they were an afterthought, just to satiate some demand from casual customers who look for something to eat along with their great cups of coffee.
Now compare that to your Netflix Subscription: The prospect of watching network shows or major films whenever you want is good, but they really want you to pick up on their Netflix Originals because that’s where they will get profit that will actually sustain them. The more popular they are, the better their bargaining power in terms of budgets and for some they can get more advertisers. Now in normal times, this would be great because they can increase their customer base outside of the loyal clientele. The prospect of being able to pick up a cup whenever you want (kind of) can be enticing because it sort of makes you feel like an insider of some sort? So if majority of these subscribers also get to pick up a sandwich every visit, then Pret increases their sales. Now, during a pandemic, I believe they want to use it to draw people back to the stores again. I don’t know, it’s more a gamble now but let’s see how it pans out. A similar thing in the Philippines? Don’t think it will happen any time soon.
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