Pret A Manger's Coffee Subscription Model: An In-Depth Investigation

Pret A Manger's Coffee Subscription Model: An In-Depth Investigation

Introduction: Brewing Profits Amidst Adversity

In a world reshaped by the trials of the COVID-19 pandemic, few businesses felt the sting of disruption as acutely as the food and beverage industry. Among these, the once-thriving Pret A Manger, renowned for its coffee and delectable bakery items, stood at the forefront of those struggling to survive. Yet, as the dust of lockdowns and uncertainty began to settle, an unexpected saviour emerged - the subscription model.

Pret, a beloved fixture of bustling city life, had experienced a tumultuous few years leading up to 2023. The chain faced its first recorded profit dip in 2018, a trend that persisted until it was exacerbated by the pandemic.

However, its fortunes began to change when it ventured into the subscription service territory. In this investigative report, we will delve deep into the inner workings of Pret A Manger's subscription model, explore its implications for consumers, and analyze the broader trends shaping the food and beverage industry in an era of subscription services.

The Genesis of Pret's Subscription Service

The subscription service's inception was a strategic response to the woes brought upon the chain by the pandemic. When office workers retreated to their homes, Pret's bustling outlets were left desolate, and its revenue streams dwindled. The subscription model was conceived as a lifeline, designed to not only revive the brand but also adapt to the new normal of remote work and socially-distanced coffee breaks.

Club Pret: The Subscription's Second Coming

Initially launched in September 2020, Pret's subscription service, aptly rebranded as "Club Pret," marked a significant evolution from its nascent version. The price was upped by a fifth, setting subscribers back £30 per month. However, this increase was accompanied by a tantalizing offer - a 10% discount on food and snacks, in addition to the promise of up to five hot beverages daily.

A Global Phenomenon: Pret's Surprising Redemption

Club Pret's impact was felt globally, with 57.9 million redemptions recorded in 2022. This figure was nothing short of remarkable, signifying a two-thirds surge compared to the previous year. While this subscription service undoubtedly breathed new life into Pret A Manger, it also sparked divergent opinions among its patrons.

Consumers Speak: The Love-Hate Relationship with Club Pret

The United Kingdom, where Pret A Manger is a household name, witnessed mixed reactions to Club Pret's subscription plan. Many consumers found themselves grappling with a fundamental question - is it worth the £30/month price tag? Personal experiences offered a variety of perspectives.

A Personal Journey: From Tea Lover to Coffee Addict

One former subscriber shared their journey, testifying to the transformative power of Pret's subscription model. Their story began with a preference for tea, but the allure of a month of free coffee gradually converted them into an ardent coffee enthusiast. In their words, "How brew-tiful!" Yet, the fundamental question remained - was the subscription worth its monthly cost?

Is Club Pret Worth the Price?

Unpacking the value proposition of Club Pret requires some mathematical scrutiny. The crucial factor for determining its worth is the frequency of visits and consumption.

The Math Behind Savings: 10 Coffees a Month

For those who frequent Pret A Manger at least ten times a month, Club Pret becomes a cost-effective choice. Common orders, such as lattes, mochas, cappuccinos, or flat whites, priced at £2.50 each, quickly accumulate savings. This subscription essentially becomes a steal, allowing subscribers to enjoy up to 140 coffees for just £20 per month.

The Catch: More Visits, More Expenses

However, the allure of savings is tempered by the realities of consumer behavior. Subscribers soon find themselves enticed by the array of sandwiches, baguettes, salads, and wraps that Pret offers. These additional purchases can significantly inflate monthly expenses. Moreover, the strict limit of one drink every 30 minutes necessitates more frequent visits to maximize the subscription's value.


Pret's Path to Profitability: Unraveling the Business Model

To comprehend the true financial implications of Club Pret, we must scrutinize Pret A Manger's profit strategy.

Subscriptions vs. Average Purchases

While Club Pret allows subscribers to access up to 35 coffees a week, the average Pret customer only buys approximately five coffees weekly. This stark contrast raises questions about the sustainability of such a model, particularly within the commoditized coffee-chain industry.

The Loyalty Factor

Pret's subscription model relies on fostering customer loyalty. The £20 upfront cost encourages subscribers to remain committed to the brand, even when alternatives are available. The sunk-cost effect becomes a powerful driver, effectively locking subscribers into the Pret ecosystem.

Expanding Revenue Streams: The Unforeseen Impact

Subscribers visiting Pret more frequently inevitably result in increased revenue for the chain. As customers become more loyal, they also introduce other potential customers who pay full price. This ripple effect bolsters Pret's bottom line.


Pret's Subscription Model: A Borrowed Blueprint?

The uncanny resemblance between Pret's subscription model and the strategies employed by software giants like Netflix and Spotify begs the question: can a coffee chain truly emulate a SaaS (Software as a Service) business model?

Comparing Apples and Oranges: Coffee vs. Software

Coffee, unlike software services, is a commodity. Customers struggle to discern significant differences between one coffee chain's offerings and another's. Thus, brand loyalty and location play pivotal roles in consumer choices.

The Sunk-Cost Play: Pret's Unique Approach

Pret's subscription model hinges on the concept of sunk costs - what subscribers have paid in advance and how many coffees they need to consume to make the subscription worthwhile. In this scenario, price sensitivity becomes a critical factor.

The Tech-Savvy Infrastructure

Pret's subscription model boasts a seamless user experience powered by advanced subscription management software, including ChargeBee and EagleEye. These technologies enable Pret to streamline operations and retain customers efficiently. However, questions loom about the scalability of such a model within the coffee industry.


Pret's Subscription Model: Room for Improvement

While Pret's subscription model demonstrates promise, there remain opportunities for refinement.

1. Transparent Savings Presentation

Pret's pricing strategy effectively balances cost and consumer value. However, the price-sensitive nature of its customers necessitates clear communication of potential savings, right from the homepage.

2. Leveraging Customer Data

Pret's Point of Sale system collects valuable customer data. Leveraging this information for personalized recommendations, location-based promotions, and improved queuing management could enhance the subscription experience.

3. Bundling for Recurring Revenue

Exploring bundled offerings, akin to Amazon Prime, could transform Pret's subscription model into a Recurring Revenue Bundle (RRB), further increasing customer retention and revenue.


Alternatives to Club Pret: The Leon Challenge

While Pret A Manger dominates the subscription coffee scene, a new contender has entered the ring.

Leon's Coffee Subscription War

Leon, a rising star in the food and beverage industry, introduced its own coffee subscription model. Priced at just £15 per month, Leon's subscription offers 75 coffees over 30 days. Unlike Pret, there are no single-serve limits, allowing subscribers to order as many as they can carry in a single day.

The Catch: Limitations and Location

Leon's subscription comes with limitations - it doesn't extend to teas, hot chocolate, or other beverages. Additionally, Leon's subscription process is less tech-savvy than Pret's, requiring pre-planning and online ordering. Moreover, Leon's stores are primarily concentrated in London.


Key Takeaways: A Brewing Revolution

As we conclude this investigative report, we distill the essential lessons from the rise of the subscription model within the food and beverage industry.

Consumer Guidance: To Subscribe or Not to Subscribe

For consumers, the decision to subscribe to Pret's or Leon's offerings hinges on their coffee consumption habits. Subscriptions are cost-effective for those who indulge frequently, but less so for occasional coffee drinkers.

The Shifting Landscape: Lessons for Investors

The subscription model is rapidly gaining ground across various industries. Investors must recognize the sweeping changes it heralds, shaping consumer behavior and transforming businesses.

The Future of Coffee: A Tale of Subscriptions

Pret A Manger's foray into the subscription model exemplifies the evolving nature of commerce. In the quest for profitability, companies tread uncharted waters, employing strategies that blur the lines between traditional and subscription-based business models.

The Unanswered Question: What Lies Ahead?

One lingering question remains - could giants like McDonald's be contemplating their own subscription services? In the ever-changing landscape of the food and beverage industry, surprises may be lurking just around the corner.

- - - 

In the age of subscriptions, Pret A Manger's story serves as a microcosm of the broader shifts in consumer behavior and business strategies. As we raise our cups to toast the coffee industry's ongoing transformation, one thing is clear - the brewing revolution is far from over, and the aroma of change continues to waft through our lives.