Coffee Klatch: Corporates Stir Up Rewards; Indie Shops Face Closure

In September PYMNTS reported on findings that “Patrons of restaurants and bars are more likely to contract COVID-19 … according to a survey by the Centers for Disease Control and Prevention (CDC).” About two weeks later, PYMNTS reported that the restaurant segment “showed some signs of shifting back toward pre-pandemic norms,” citing NPD Group research that digital ordering fell to 17 percent of the market in August, from over 20 percent in April.

Confused? So are a lot of people. We need a drink, collectively, and that drink is coffee.

America’s favorite stimulant in its many flavors and colors is knocking at our front doors these days, as corporate caffeine reemerges from the pandemic more alert than ever about shifting consumption patterns and the need to cater to them. Those shifts have coffee shops worried.

Daily Coffee News reported on a new survey of coffee shop operators showing grave concerns about surviving a winter without walk-ins, saying that “More than half (57%) of coffee shop owners and managers participating in a U.S. nationwide survey expressed worry that they will not be able to maintain enough revenue to survive the upcoming late fall and winter months.”

Concluding, “Retailers’ success in the post-pandemic market may hinge on their ability to understand why consumers choose the digital commerce options they do,” PYMNTS The Great Reopening Report details consumer personae reshaped by COVID, and emerging preferences.

Fortunately for sleepy people, Big Coffee is doing just that to get us through a weird winter.

The Big Coffee War, COVID Edition

Recent news that “Dunkin’ Brands might be taken private in an $8 billion deal with a 20 percent premium suggests that investors could be seeing value in restaurant and retail chains that are reinventing themselves in the post-COVID era,” PYMNTS reported in late October.

Inspire Brands, a private equity-backed company which also controls the Arby's, Buffalo Wild Wings and Sonic quick-service restaurant (QSR) franchises, is the buyer.

The latest Provider Ranking of Mobile Order-Ahead Apps tracks contenders for the coffee crown, among others, where the Dunkin’ app is now at No. 2, with the Starbucks app at No. 3.

Further down that Ranking at No. 8 (for now) is the Panera app, powering the quick-service chain’s coffee subscription service launched early in 2020. Talk about good timing.

“Panera’s highly successful new monthly coffee subscription launched in February,” PYMNTS reported, adding that, “Paytronix CEO Andrew Robbins told Karen Webster that after an ill-timed start, the $8.99-a-month subscriptions are selling like gangbusters, and are generating increased visits and ticket sizes.”

The MyPanera+ Coffee club is offering the first month free, with deals and rewards galore. They’ve even extended their one free coffee offer for sign-ups until Oct. 31. “This is by far the single greatest increase in subscriptions we have seen in the history of Panera,” Chief Brand and Concept Officer Eduardo Luz said this past summer.

Also new from Panera: pizza. The QSR giant announced this week that it’s adding flatbread pizzas to the menu. “[A] likely inspiration behind Panera’s menu addition is booming takeout and delivery sales at Domino’s and other pizza chains. Domino’s and Papa John’s specifically have added tens of thousands of workers since March,” PYMNTS reported.

Stirring subscriptions, new comestibles and coffee together with loyalty rewards seems an unfair advantage, but that’s the definite direction of the nation’s hottest hot-drink purveyors.

Meanwhile, in September, Starbucks made a series of announcements to sweeten rewards and keep the beans grinding. No longer will customers need to use a Starbucks card to accrue rewards, thanks to payments innovation the QSR adopted in response to COVID closures.

The chain had reported a significant drop in “the number of active, card-carrying members in the wake of the coronavirus pandemic. Starbucks reported a 5 percent drop in active Starbucks Rewards members when it reported its third quarter earnings on July 28, with the ranks dropping to 16.3 million,” PYMNTS reported in September.

Starbucks rewards can now be earned using Apple Pay, Google Pay and PayPal, as well as Visa, Mastercard, American Express and Discover credit cards and debit cards.

Caffeine By Any Means

Coffee shops have long been a meeting place, a rendezvous spot, a contemplative zone for doers and dreamers. But the social nature of coffee shops can make them COVID vectors — same with any in-person setting nowadays — which brings their future into question.

Here as elsewhere, eCommerce, subscriptions and in-app discounts are driving the business.

Earlier this year QSR Magazine said, “It could end up being essential for all coffee shops to have an online presence with an easily shoppable website and active social media channels that are consistently engaging new audiences. A growing online presence will lessen the need for coffee shops to rely on the age-old importance of ‘location, location, location’ with their physical storefronts, which could turn into an added benefit in keeping overhead costs down over time.”