As Pret faces the backlash from axing its “too good to be true” subscription service, Retail Week looks at how far is too far when it comes to building customer loyalty and offering value for money
Food-to-go specialist Pret a Manger has been forced into firefighting mode after making the decision to axe its subscription scheme this week.
Launched as part of its bid for survival during the Covid pandemic, the subscription service is evidently eating into the chain’s bottom line and has turned from life preserver into cost-of-living millstone for Pret in just a few years.
While Pret deals with the public relations backlash, the brand may face more existential questions as the fallout clears. Were its customers loyal to the brand or just the subscription scheme?
The perception of value
The Club Pret subscription scheme, which offered customers five drinks a day and a 20% discount on food, was launched in 2020 to generate daily repeat custom from a greatly reduced cohort of office workers.
Fast-forward four years and two price increases and the subscription model has fallen from favour.
Pret contacted subscribers at the end of last week to confirm it would be switching to a new model, which will offer Club Pret members 50% off up to five barista-made drinks a day for a lower fee of £10 but with no further discount on food.
Pret UK managing director Clare Clough said the new scheme will balance a commitment to shoppers with an offer that provides “better value to all customers”.
Many customers, however, disagree, having taken to social media to express their anger at the end of the ‘free coffee’ days.
Pret’s shift to offering “better value” has translated to dropping its classic filter coffee price to 99p and its all-butter croissant to £1.99.
While the chain is attempting to entice shoppers with lower prices on core menu staples, it remains to be seen whether this will be enough to salvage the situation.
Will Trump, founder of behavioural science consultancy Unconventional Wisdom, says that what made Pret’s original offer so successful was how simple and easy it was to understand.
“I think customers need things that are very simple to wrap their heads around,” he says. “Pret has now moved to something that is more complicated and you almost need a spreadsheet to figure it out. That’s not how people work.
”I predict this will fail because their new model goes against the grain of human nature. With the new subscription model, I’d feel I’m paying twice – once for the subscription and then again for the coffee.
“Funnily enough, I think I would have accepted a significantly higher monthly cost, such as £60 a month, because I think I’d be getting good value for £2 a day.”
So with customers now feeling like they’re not getting the same value for money, Pret is in danger of losing a large share of the market as coffee seekers go elsewhere.
Subscription vs loyalty
Looking at the coffee market more broadly, Pret is the odd one out when it comes to its loyalty approach.
While the chain is continuing to opt for a subscription model, many of its competitors have gone down the loyalty route instead.
Taking a different approach, Costa, Caffè Nero and Starbucks all offer a loyalty scheme in which customers receive a free coffee after building up enough stamps.
One retail payments expert says that, regardless of the model, loyalty and subscription schemes are essential as prices continue to increase.
They add that, without schemes where savings can be made in some sense, customers are unlikely to remain loyal to the brand.
But are subscription services loyalty builders at all? Shore Capital director Clive Black predicts that Pret customers may fade away now the Club Pret days have ended.
“It’s a pretty signature moment for Pret because it made a lot of noise when it brought it in,” says Black. “Giving people something is one thing; taking it away from them is quite another.
“Loyalty can often be rewarding people who are going to be loyal anyhow and it doesn’t always attract the marginal customer in the way that one wants.
“It also has an element of novelty, which means that over time folks understandably become tired of the loyalty mechanism and it needs to be thought about in terms of the product.
”Scale and meaning are very important. We found this with Waitrose when it used to offer the free newspaper and coffee, but that proposition just became too expensive and uneconomic.
“If you give someone a pound for 50p, they tend to take it. It’s painful for the Pret brand at this time and I’d imagine there are a few competitors that are looking at things as an opportunity.”
How far is too far?
In what seems to be a full-circle moment for Pret, what was once its greatest strength seems to have become its greatest weakness.
So, while it’s essential to entice shoppers in a difficult environment and increasingly competitive market, there comes a point where a business decision becomes uneconomical – something Pret has now experienced firsthand.
Trump says all is not lost for Pret, arguing that it will continue to benefit from the location and convenience of its vast store estate, with its focus on key locations such as major city centres, stations and airports.
However, while Pret shouldn’t have too much to worry about if it continues to target the right locations, offer good service and get its pricing and product mix right, Black says the uproar and damage to its profitability are two big problems for the chain moving forward.
He says: “They undoubtedly went too far and probably caused a lot of heart damage to the people who drank far too much coffee on the cheap. If they were making money out of it, they wouldn’t be scrapping it.”
The lesson here is that anything that seems to be too good to be true probably is. As the fallout from Pret’s decision clears over the coming days and weeks, it will soon learn just how many of its customers were loyal to it as a brand and how many were just loyal to free coffee and cheaper food.
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