Last month Burger King announced that it would start a coffee subscription program. The short version of this story is that for just $5 each month, you can come in every day for a cup of coffee. That comes out to about 17 cents per cup. This promotion supports Burger King’s launch of the new BK Café lineup of fresh brewed and premium coffee drinks. One of the Burger King ads included the tagline, “Enjoy BK Café for a month for the price of a large cappuccino from Starbucks.”
The subscription works through the Burger King app that can be downloaded onto a customer’s smartphone. It’s a good move for Burger King, as it not only potentially gets customers into its restaurants more often, it also promotes the use of the app. Anytime you can get a customer to engage with your app on a regular basis, you’re building up some level of loyalty.
This is more than a clever way to get people into the restaurant. It’s a full-on attack against the competition, which leads to the big question: is it enough to get new customers to come in – and get more customers to come back?
This is not about selling a cup of coffee. The true goal is to get more customers to come into the restaurant and order something else off the menu. Burger King is capitalizing on an opportune moment, as reports indicate that breakfast is today’s fastest growing and most profitable opportunity in the QSR (Quick Service Restaurant) industry. McDonald’s, Dunkin’ Donuts and Starbucks have promoted breakfast specials for years. For example, McDonald’s offers some items for “a limited time,” such as McCafé Donut Sticks and McCafé Bagels with Nutella.
What intrigues me more than anything is that a restaurant has come up with a way to compete using a subscription model. This model is becoming a normal and accepted way of doing business in many areas beyond the traditional newspapers and magazines. Subscriptions have expanded to software, known as SaaS (Subscription as a Service). This has been working well for the past few years. Now you can subscribe to just about anything, from dog food to razor blades to cars and much more. Companies that offer subscription models recognize the added value to their bottom lines with recurring revenue. They also recognize the value to their customers in the form of convenience.
For this to work, the customer must first buy the subscription, which I don’t think will be an issue. Price isn’t an issue either; it’s so low that it won’t be a barrier to entry. The key is for the customer to use it. A subscription that doesn’t offer value means that the customer won’t subscribe or, even worse, that they might be left with a negative feeling about ever subscribing, to begin with. By using an app, Burger King can track a customer’s usage. So, if they see the customer hasn’t been in for a while, they can push out a personalized message through the app directly to the customer.
Burger King’s $5 subscription for a cup of coffee is a brilliant strategy. It’s “CaaS” … Coffee as a Service. At worst, it’s a loss leader. At best, it’s a brilliant marketing strategy. So, what’s next? A hamburger and french fries subscription? If so, sign me up!