Coffee Wars: Panera Heats Up The Coffee Wars With New Subscription

The announcement, in early March, that Panera had launched a coffee subscription is the latest volley in the multi-year coffee wars. Panera, Starbucks, Dunkin and other brands, like McDonalds, that are less regularly considered for their coffee, have been deploying marketing strategies to drive sales and convince coffee drinkers around the world their product is the best — and worth the cost.

44% of Americans drink two to three cups of coffee a day, and coffee brands are hoping their latest strategies, including subscriptions, loyalty programs, fun flavors and social distancing solutions, will help to win the coffee war and secure devoted coffee fans.

Panera Tries Out A Subscription Plan To Get Ahead In The Coffee War

Panera, which is popular with consumers ages 50-64, launched the MyPanera+ coffee subscription in the hopes guests will come for the great deal on coffee but stay for the food items. “We are the first brand to do it, and we’re super excited about that,” said Panera CEO Niren Chaudhary. “We feel that this is a terrific way to get consumers more interested in not only our coffee platform but also for them to get exposed to the strength of the food that we have in our cafes, particularly around breakfast.”

For $8.99 per month, plus taxes, the Panera subscription offers members unlimited coffee, tea or iced coffee, excluding espresso beverages, which tend to be costlier.

Panera is requiring subscribers to also be members of MyPanera Rewards, which is very popular for the brand. (More than 45% of Panera transactions are processed using MyPanera cards.) According to the Panera press release announcing the subscription program, Panera asserted that, though 160 million American adults drink coffee every day, many are conflicted about the cost. The MyPanera+ unlimited coffee Your Cup Is Always Full™ program hopes to mitigate the cost worries of coffee drinkers, providing that daily buzz for less than $.30 a day.

It’s Going To Take A Latte Effort To Beat Starbucks In The Coffee Wars

Starbucks revenue in 2019 was more than $26 billion worldwide, making it easily the most popular coffee brand, with about 14,800 stores nationwide (counting both company-operated and licensed stores) compared to Dunkin’s 9,600. The Starbucks Rewards program is an intrinsic part of the coffee brand’s relationship with consumers, accounting for 41% of sales in U.S stores in Q2 of 2019, and customers enrolled in the Rewards program are more likely to remain loyal to Starbucks. By understanding early on that consumers want quick, seamless transactions Starbucks was quickly able to get customers on board with their rewards program, and benefits like mobile ordering and promotions only for Rewards members have been successful. According to Kevin Johnson, CEO of Starbucks “The decade-old program counts more than 16.3 million people as active members.”

In addition to Starbucks Rewards, Starbucks is focusing on drinks that “drive brand affinity” like Pumpkin Spice Lattes and the holiday drinks during “red cup season.” Attempts at novelty drinks have met with mixed reviews for the Seattle-based coffee brand.

Starbucks is also taking the lead for coffee shops in the fight against coronavirus, transitioning all of their open stores to offer to-go services only, as of Monday, March 16.

Dunkin Develops Fun Flavors And Tweaks The DD Perks Rewards Program

Dunkin remains a popular choice, with particular regional appeal in New England. (Dunkin stores out number Starbucks stores 10 to one in Massachusetts.) Insiders point to Dunkin’s popularity as a socioeconomic identifier, the “blue collar” coffee alternative to Starbucks — although with recent store renovations, a well-publicized name change and more upscale drink options, Dunkin may be shedding some of that old-school image.

Dunkin tends to be more forward with their marketing, relying less on just brand loyalty, partnering with Waze, Saucony and the New England Patriots. Dunkin’s partnership with the Patriots was in service of the coffee and doughnut brand’s DD Perks Members program, offering fans – and Perks members – living in New England a free coffee if the Pats were victorious in the big game. DD Perks has been an evolving rewards program for Dunkin, recently hewing very closely to the Starbucks system of rewards, points and mobile ordering. In 2019, DD Perks had more than 10 million members, making it a winner for the brand.

Novelty coffees, like the recently released matcha flavor, are hits for Dunkin. Some of the Dunkin flavors include cookie dough, blueberry and Almond Joy, and many of the coffee varieties, including seasonal choices, enjoy cult followings by loyal Dunkin coffee drinkers who try to drink them all.

Coronavirus Adds A Wrinkle To The Coffee Wars

From loyalty programs to limited time flavors, top coffee brands have been competing for years to grow their market share. But the rules have suddenly changed, with drive thrus and deliveries taking center stage while America practices social distancing. Clear communications about cleanliness, availability of services and current hours will likely be key to growing market share in the short term. As we look toward the iced-coffee days of summer, loyalty programs and new product launches should return to center stage.

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