Subscription business models are fascinating because of the potential they unleash. Recurring revenue drives predictability, unlocks growth opportunities, and creates deeper relationships between a business and its customers. Local subscriptions are an emerging trend and finding inspiration from other businesses running amazing programs is essential. That’s why we’re starting a new series of subscription reviews that deep dive into the business impact of launching a subscription program. The goal is to learn as much as possible from early adopters and apply those lessons to launching profitable local subscription experiences.
Today we’re exploring Pret-a-Manger’s coffee subscription which launched in 2020 in the midst of the pandemic. For those who don’t know, Pret opened in 1986 and operates 424 shops in the UK and 558 shops internationally. Rolling out a subscription model at this scale is no easy feat, even on a limited basis, but Pret has overcome some early challenges to build an incredibly successful program. Since launching the UK pilot, Pret has rolled out their subscription offering the US and France and exceeded everyone’s expectations for their program.
Pret’s subscription is a story of a rapid launch, early turbulence, and ultimately a significant business impact. Pret took a big risk that’s paying dividends, let’s dive in…
Now that we’re two years removed from the start of the pandemic, it’s easy to forget how devastating it was for retail businesses. Any business operating retail locations had to deal with a completely unprecedented operating environment, and that meant hunkering down, or going back to entrepreneurial roots. The team at Pret chose the latter and launched a broad digitalization strategy with subscription at its core.
Sarah Venning the Chief Digital Officer at Pret spoke to BigHospitality about the rollout, sharing that the company went from idea to live subscription program in just 7 weeks. The team focused on building a great frontend experience, but cobbled together backend services just to make sure the program worked. In other words, they engaged in rapid intrapreneurship and built a Minimum Viable Product (MVP) to gauge the market. So what did they build, exactly?
Pret launched their subscription program in September 2020 focusing on the UK market. They started with a very easy to understand program offering up to 5 barista prepared drinks per day for £20 per month. Initially the company enforced a one hour wait between orders, but then relaxed the restriction to 30 minutes.
Since the initial launch the program has evolved to include several subscription packages priced at $25 and $35 per month in the US with the first month offered as a free trial.
This is a generous offer designed specifically to encourage trial, drive foot traffic back to stores, and prove value quickly. The program did exactly that, but not without some bumps in the road.
The subscription program’s initial rollout was, in some respects, a victim of it’s own instant success. Confusion about program rules, drink availability, participation of different locations, drove customer confusion, frustration and resulted in some bad press.
Being an early mover with an innovative program like this means some challenges are inevitable. To their credit, Pret’s team recognized that subscriptions implied a completely different kind of relationship with the customer. There’s a promise made to subscribers and any gaps (real or perceived) between how a program is advertised and how it actually operates will drive up complaints. Pret’s team made adjustments and the program’s efficient rollout internationally is testament of lessons learned.
So two years in, what has the business impact of Pret’s subscription program been? Let’s look at what Pret has made public:
What stands out to us is subscribers spending 4x as much as non-subscribers. Beyond the revenue growth and expansion of the program, the engagement of subscribers and high level of incremental spend is the strongest indicator of a healthy program. When reporting results Pret’s team highlighted the subscription program as a “Key Driver” of customer loyalty, just as it should be.
With 400+ locations and hundreds of millions in revenue, Pret is not a small local business by any stretch. So are there lessons to be learned for smaller businesses?
We certainly think so. Pret’s success with millions of subscription redemptions proves that there is significant consumer demand and value for local businesses to capture. In fact, the subscription opportunity is even more powerful for smaller local businesses because of the potential to create a sense membership and belonging.
Perhaps small businesses can’t be as generous with a one month free trial, but that’s not what makes the program successful in the long run. Subscription offer value to the customer, but lock in is created by creating a unique consumer experience and finding ways to build meaning and connection. We believe that local businesses can do that better than the big co’s, that’s why Angle is building the technology to make personalized subscription experiences accessible to all.
