This was an especially intriguing target for Panera since the company traditionally pushes 75 percent of its business post-11 a.m. It entered 2020 with a relaunched breakfast lineup intent on capturing one of the sector’s fiercest daypart battlegrounds. The high-margin, generally low-labor segment has long been a golden egg for counter-service chains.
During tests, Sara Burnett, Panera’s VP of wellness and food policy, said attachment value was in the double-digits from a food perspective.
Additionally, close to 75 percent of coffee redemption occurred off-premises—an element critical to a COVID landscape. And Panera witnessed about a 25 percent hike in new MyPanera members asking for the deal, with a vast majority of those fresh to the brand. It succeeded in driving light users into restaurants.
Lastly, a result Chaudhary labeled “perhaps the most important,” Panera enjoyed a 90–95 percent renewal rate each month.
According to recent data from Clarus Commerce, nearly three out of four consumers (73 percent) said they were likely to invest in a premium loyalty program or subscription if they’ve already tried the free version.
The full-picture: Frequency, food attachment, driving off-premises orders, and current and engaged data through loyalty.
Luz says the more recent, free deal accomplished other essential aims for Panera, placed under the microscope 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 says.
“People need something good,” Luz adds. “That’s it. It’s as simple as that.”
On the business side, however, the reason people choose to dine out has adjusted dramatically in recent months. The frequency game isn’t about discovery and variety anymore. Trust and familiarity, safety, ease of ordering, and accessibility have pushed forward. It’s why many consumers report a COVID restaurant rotation of sorts. Brands they understand, are comfortable with, and know how to access safely, and they keep coming back. It’s a choice dynamic fueled by the reality safety is now a top-of-mind factor when picking a place to eat.
A coffee subscription, Luz says, is undoubtedly an interesting way for people to keep Panera in their consideration set. One key: It gets them through the door to see all of the chain’s updated strategies and efforts in action.
Similar to how the original deal courted food attachment, you could say this one brings about “safety attachment.”
But that’s not to say it’s not accomplishing Panera’s original hope, either.
“Every time you increase traffic to our cafes or to our app or virtually or digitally, you increase your chances of cross-selling something,” Luz says. “… We’re not forcing that, just saying it’s available. If you want to take advantage of that, please do.”
On the safety note, Luz says, people need to see an experience with their own eyes to trust it, especially in terms of dining room reopenings. “It’s more what we do versus what we say,” Luz explains.
The sheer number of sign-ups can’t be undervalued. It’s helped stack what Luz says is “probably the largest loyalty database in the country.” While people aren’t paying Panera, they’re providing detailed information about themselves and their purchasing habits. It’s a cost equation Panera is willing to trade coffee sales for—a cup can historically give operators 300–400 percent in profit.
“And we believe those people have a relationship with us based on a lot of trust over the years,” he says. “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.”
Again, subscriptions of products and services other than coffee are coming down the pipe.
In the near-term, though, “The fellowship of Unlimited Coffee,” presents Panera with potential to web its subscription network further. Current subscribers who sign up five or more people instantly unlock free coffee for themselves and everyone they referred through Halloween.
How it works:
- A MyPanera email is sent to each subscriber with a unique link to refer friends. This link and offer will also be available on a guest’s MyPanera+ Coffee subscription page.
- They spread the word to friends and family. When their unique link generates five new coffee subscribers, all six receive free coffee through the end of October.
- The sign-up window for the Fellowship runs through September 7.
Luz believes the platform is going to stir brand noise and give core customers a unique way to interact. “You bring something of value to your personal network,” he says. “It’s super cool.” Panera did a beta test last week to work out IT kinks and make sure systems were synchronized.
But the full platform goes live this week. Luz says its foolhardy to predict social media and the ensuing response, yet he’s hopeful for a splash that also proves useful and lasting to guests navigating the pandemic.
And say just 5 percent of that 800,000 group engages and stops at adding five friends, Panera would onboard another 200,000 loyalty members.
“It’s a way for you as a current subscriber to do something for your close community and friends,” he says.