Member-only story
Panera-as-a-Service
There’s no such thing as a free lunch, but what about free coffee?
In February, fast casual cafe Panera Bread launched an unlimited coffee subscription. For $8.99 a month, subscribers get a free cup of coffee or tea every two hours. The company notes that:
The monthly coffee subscription cost of $8.99 plus tax works out to about 30¢ per cup per day for the average 30-day month. This total monthly cost is equivalent to the regular price of about four 12oz cups of Panera coffee-but with the monthly subscription, you can choose any size cup you like!
Thirty cups — any size you like! -for the cost of four. Sounds like a steal for the coffee drinker. So what’s in it for Panera?
Unit Economics
On the surface, the subscription isn’t a big moneymaker. Panera likely loses roughly $3.00 on someone who uses the program daily and breaks-even around 20 cups of coffee per month. The more coffee a subscriber drinks, the more money Panera stands to lose.
Here’s a back of the envelope analysis of the program’s economics:
