The decline of “free” coffee

Especially in our daily coffee, which in some places these days costs closer to £4 a cup than £3.

And yet, almost four years after launching its popular subscription, Pret A Manger has become the latest coffee chain to ditch it in favour of a less generous plan.

Under the current system, subscribers who pay a monthly fee of £30 get up to five “free” coffees a day.

But from September, Pret will offer up to five half-price coffees a day for £10 a month, which it says will “still be the best deal on the market”.

Pret said it was “never really comfortable” with the dual pricing system for its food products.

Social media site X was awash with criticism following the Pret news.

“If you play with loyalty programs you do so at your own peril,” warned retail expert Catherine Shuttleworth.

“From a commercial point of view, this might make a lot of sense for Pret, but the reaction is that it plays into the hands of its competitors.”

You may not have noticed it, but your wallet probably has.

Costa Coffee currently offers a free loyalty card, the Costa Club, but changed the terms last August.

Customers went from needing eight stamps (or “beans”) on their loyalty cards to qualify for a free drink, to needing 10.

In late 2022, Starbucks announced that more loyalty points would be required to redeem many of its menu items.

Customers who enroll in the chain’s Starbucks Rewards program earn points (or “stars”) when they purchase food or beverages.

Hot coffee, tea, or baked goods now require 100 stars, doubling the previous price of 50 stars.

The cost of Arabica beans has skyrocketed in recent years due to the impact of climate change in countries such as Brazil and Ethiopia.

The industry also continues to grapple with high energy and utility bills.

Richard Lim, chief executive of Retail Economics, told the BBC that subscription models offered value to customers but needed to be mutually beneficial to work.

“They can also be good for businesses because they produce a predictable and stable income that can rely on recurring revenue,” he said.

“But if one party loses out, it won’t work, and the big question is: was it commercially viable for Pret? I suspect not.”

Costa and Starbucks adverts caused outrage among customers at the time, and now it’s Pret’s turn.

“I only have a subscription because I can’t be bothered to bring my own drinks to work and there’s a Pret in my building,” said one user on X.

“With the new deal, it’s cheaper to stop being lazy.”

Another said Pret had “broken its hold on the customer”.

A third customer said: “I already get 25% off coffee from Nero with Compare the Market. Why should I continue to pay Pret for a similar discount scheme? It’s crazy.”

One expert backed the new subscription model in an interview with the BBC this week, saying the old model “alienated” non-subscribers.

“Today’s consumers want immediate value. They shouldn’t need a calculator to know if they’re getting a good deal,” said retail analyst Natalie Berg.

But Ms Shuttleworth said “Pret expects people to be lazy and stuck in their routines” although others might vote with their feet.

“From Pret’s perspective, this subscription increased traffic and the potential for higher spend because people come in for a coffee and pick up breakfast or a sandwich on the way to the counter,” he said.

“They did it to bring customers back after the pandemic, when everyone was going back to their offices, and it worked,” helping Pret return to profit last year for the first time since 2018.

“Now they want to replace it with something that is better for them as a business, but it is a big risk.”