Panera Bread is expanding its unlimited drink offerings in an effort to increase existing and new customers' visit frequency and spending.
Last year, the company launched its $8.99 Coffee Club subscription for MyPanera members, which has successfully driven strong transaction momentum during breakfast. The subscription offers unlimited refills of hot coffee, iced coffee, or hot tea. As of the end of 2021, Panera has approximately 600,000 Coffee Club subscribers, with new customers accounting for about 43% of the total. Compared to non-My Panera members, coffee subscribers spent up to 11 times more annually in fiscal 2021.
"Existing customers are coming in eight times more every month," Panera Bread CEO Chaudhary told FOX Business. "[They are] also attaching other food at least 30% of the time when they're coming in."
Now, MyPanera customers can sign up for the new $10.99 per month Unlimited Sip Club subscription, which offers up to 26 drinks including drip hot coffee and iced coffee, hot tea, iced tea and lemonade, fountain soda and the company's new Fuji apple cranberry, mango citrus yuzu, and strawberry lemon mint charged lemonades.
Subscribers can select one self-serve beverage of any size every two hours during regular bakery-cafe hours, including free refills at participating U.S. Panera Bread bakery-cafes.
"We think this expanded beverage range will drive the momentum for lunch and for dinner, and therefore the attachments will be on a higher ticket," Chaudhary said. "So it should replicate the success that we had with the coffee program as we go forward."
Customers who sign up between now and May 6 will receive a free subscription through July 4.
In addition to its Unlimited Sip Club and Coffee Club subscriptions, Panera's new food offerings launched in the past year include an Asian citrus chicken salad, a Thai chicken soup, a Mexican corn chowder soup, and its chef's chicken sandwich.
"We wanted to bring more adventurous flavors of the world to our consumers," Chaudhary noted. "These are some examples of innovation that we have done to bring the proposition and the promise of craveability underpinned by high-quality food ingredients to our consumers."
Panera's latest offerings come as food prices are soaring due to record-high inflation.
The consumer price index — which measures a bevy of goods including gasoline, health care, groceries and rents — rose 8.5% in March from a year ago, the fastest pace since December 1981, when inflation hit 8.9%. Prices jumped 1.2% in the one-month period from February, the largest month-to-month jump since 2005. Food prices climbed 8.8% higher over the year and 1% over the month, with the largest increases in cereal and bakery products (10%), poultry, fish and meat (13.8%), fresh fruits and vegetables (8.1%), and eggs (11.2%).
"I think it's a very fast-changing environment," Chaudhary replied when asked about the impact of inflation on Panera's business. "We're watching that very, very carefully and taking whatever pricing actions we need to take to ensure that we're able to protect our margins and our business whilst at the same time ensuring supply chain continuity."
Though Panera struggled with labor disruptions last year, Chaudhary emphasized that Panera's cafés and bakeries are fully staffed with all channels open and ready for business.
The moves also come as the company has announced plans to return to the public markets through a merger with Danny Meyer’s special purpose acquisition company, USHG Acquisition Corp. (HUGS).
Under the merger agreement, HUGS will become a wholly owned subsidiary of Panera Brands. Each issued and outstanding share of HUGS’s Class A and Class B common stock will be exchanged for a number of shares of Panera Brands’ common stock at an exchange ratio of $10 divided by the public offering's price per share.
|HUGS||USHG ACQUISITION CORP||9.81||0.00||0.00%|
Meyer, who will also invest directly in Panera Brands at the time of its offering and become a lead independent director of the company's board upon the deal's completion, is behind a host of successful restaurants including Shake Shack.
Panera Bread previously traded publicly on the Nasdaq before JAB Holding Co. acquired the company for $315 per share, or about $7.5 billion, in 2017.