Why is Panera selling coffee subscriptions for $9 a month?

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This short article in Fast Company (February 27, 2020) describes a new business model being used by Panera, “Panera debuts $9/month unlimited coffee and tea subscription.” While short, the article offers an interesting example that can be applied across many topics:

  • Customer lifetime value and customer equity (Chapter 2) — Panera found that subscription customers visited the stores 3 times as often and purchased 70% more add-on items.
  • Subscription pricing model (Chapter 17) — Our new edition of Essentials of Marketing delves a bit more deeply into subscription pricing as many products now utilize the business model.
  • Marketing research (Chapter 7) — the article describes some of the findings from a test market Panera used before launching the new subscription pricing model.

Applying the Netflix Business Model to Neckties

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I like to encourage my students to be creative.  I sometimes suggest to my students that one source of innovation is simply looking at other product-markets.  Here is a great example — someone taking the Netflix business model and applying it to “renting” neckties.  You can read more at “TieTry lets subscribers rent ties by mail, like Netflix,” (USAToday, July 19, 2012).

This example could be used when you discuss pricing, product (services), retailing, or creativity.  You could ask students, as we have at Learn the 4 Ps: What other industries might utilize the Netflix business model?