That is what Panera is offering these days.
3 months of free coffee and then $8.99 per month there after.
Seems to good to be true, right?
First, let’s consider the wholesale price of the commodity called coffee.
- Right now, a pound of coffee costs about $1.34, including roasting and packaging.
- One pound makes 48 cups
- Average price of coffee: $3.52 (Average between quick serve, gas stations and gourmet coffee houses)
- Taking into account waste, theft and brewing, that comes to $148 in revenue for every pound of coffee, for a Cost of Goods of 0.009%!
Someone would have to drink over 321 cups of coffee in a month to reach the $8.99 subscription price.
And let’s say that you get a free coffee a day. At 30 cups, you are still drinking less than $1.34 worth of coffee.
This is a fantastic business model!
Then add in the fact that you have to actually “order” your coffee every time. Noooo… you can’t just walk in a grab a cup. You have to place your order in person, online or through the app.
Of course, once you are in their app, you are now tempted by Danish’s, pastries, smoothies and bacon. Que the upsell!
At last count, Panera has about 875,000 monthly coffee subscribers equaling 7.8 million dollars a month in subscription revenue.
7.8 million in the bank, and they have not even sold anything yet.
Now, what do you think about the subscription business model?
That’s what I thought.
What other industries can use this model?
Pretty much all of them.
- Carpet Cleaner? Yep, I have a membership, The Always Clean Club.
- Dentist? Sure. 12.99 a month for a new toothbrush and toothpaste.
- Mosquito Spraying? yep
- PT or Chiro? $xx.xx per month for special scheduling privilege’s (Kinda like a Disney FastPass)
- Shampoo retailer: Shampoo of the month on auto pay and auto delivery.
Look, the only way for you to be tremendously profitable is through repeat clients.
But clients can be flighty and unpredictable. It is not their job to remember you, it is your job to remind them of your existence.
You need, what author John Warrillow calls Automatic Customers.
Do you have a subscription business? Do you have a membership?
If so, I would like to hear about it for an upcoming Mouster Class. Just reply to this email.
If not? Hop to it and create one. You are losing dollars faster than a speeding bullet.
