Burger King launches $5-a-month coffee subscription service

Discussion
Sources: Burger King
Mar 18, 2019
Tom Ryan

Burger King last week introduced a $5.00-a-month coffee subscription service. Will it be enough to disrupt the balance of power in the fast food breakfast war?

Available only through Burger King’s app, the subscription provides members one small hot coffee per day. For a 30-day month, the beverage cost would amount to 17 cents a day.

“We continue to leverage technology to enhance our guests experience in our restaurants,” said Chris Finazzo, president, North America, Burger King Corporation, in a statement.

The move supports Burger King’s recent revamp of its coffee offerings with the launch of the BK Café range of freshly brewed premium coffee, specialty iced coffees and frappes made from Arabica beans.

The deal is also expected to encourage subscription members to purchase other items at Burger King on their visits, particularly at breakfast time. For many restaurant chains, breakfast is seen as the fastest-growing and most profitable daypart.

In the breakfast hours, Burger King is seen as way behind McDonald’s, which recently added McCafé Donut Sticks and McCafé Bagels with Nutella as limited-time options to its breakfast menu. The McCafé line-up boasts 25 beverages. Taco Bell has also gained a strong foothold in breakfast since entering the category in 2014. Wendy’s and Subway have faltered.

Dunkin’ and Starbucks also have also been increasingly pushing breakfast options, actions not lost on BK. One ad supporting the new Burger King program carries the tagline, “Enjoy BK Café for a month for the price of a large cappuccino from Starbucks.”

Many QSRs offer limited-time promotions to drive traffic. McDonald’s, for example, periodically offers any size hot or iced coffee for $1.00 with the use of its app. Burger King’s offer, however, is the first subscription in the QSR space.

DISCUSSION QUESTIONS: Does the BK Café Subscription program represent a competitive threat to McDonald’s, Starbucks, Dunkin or others? What do you think about the potential for subscriptions in the QSR space?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Great idea. Absolutely test-worthy. They’ll get some takers and sell a few more bacon/egg sandwiches in the process."
"It is a great test and if it is successful, we may see similar subscription-based marketing campaigns tested by other QSR brands."
"This is ALL about the channel-exclusive redemption policy (read: a huge issue for this QSR segment)."

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18 Comments on "Burger King launches $5-a-month coffee subscription service"


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Ray Riley
BrainTrust

Coffee-as-a-service – who would have thought? It’s a clever concept, but I don’t see it representing a threat to any of the incumbent coffee players, nor do I see it having a significant impact in urban cities or particularly suburbs with Starbucks’ physical location dominance. The difference maker could be the quality of coffee within the BK Café range.

Brandon Rael
BrainTrust

Subscription services are rising as a new revenue stream across many retail segments, so it was inevitable for this to extend to the world of coffee with Burger King entering the fray. While we often talk about the world of experiential and artisanal coffee, there is a middle ground in the coffee wars where consumers remain loyal to the brand they grew up with. In this case, BK is capitalizing on their loyal followers, attracting them to the stores, taking a slight hit with their coffee margins, and ultimately that customer will buy more breakfast products.

With all of that said, there is a limit to the subscription service’s value proposition. Yes, it could extend to the QSR space as well. However, after the initial excitement of signing up, customers will want more engagement and diverse products to keep them coming back for more.

So it’s imperative for retailers and service providers to become more prescriptive with their subscription services, and stay one step ahead of their customers.

Evan Snively
BrainTrust

Very intriguing play by BK! I don’t see this prop swaying any Starbucks loyalists, but it should draw some traffic from the likes of McD’s and Dunkin’ – at least out of curiosity. I think the bigger opportunity might actually be stealing share from habitual c-store locations, but the thing that worries me is the size of the cup. People need their caffeine! Even at the exceptional price of $5 per month, is a small coffee seen as a viable option for the type of people who would be enticed to take advantage of a coffee subscription? A medium is the baseline to move the needle for me, and I don’t drink coffee every day.

Ben Ball
BrainTrust

This service will have the greatest impact with QSR breakfast customers who don’t have a particular brand loyalty. But only if BK already makes it into that consumer’s evoked set of acceptable breakfast choices. For me that would be Bojangles’, Hardee’s and McDonald’s in that order. Free coffee won’t get me to settle for a bad biscuit.

Gene Detroyer
BrainTrust

My first reaction was, what a great idea! People will stop off on their way to work for their cup of coffee and get something else. Then I read further: “the subscription provides members one small hot coffee.”

I don’t know how small, small is, but now the question comes to my mind, is it worth the effort? I think not.

Tom Dougherty
BrainTrust

Smart. Very smart. Loss leaders are nothing new. But it demonstrates a confidence in the chain’s ability to up-sell the core food products. Others need to follow the lead or suffer the consequences.

Jeff Sward
BrainTrust

Great idea. Absolutely test-worthy. They’ll get some takers and sell a few more bacon/egg sandwiches in the process. But it’s not as big a needle mover as donut sticks. Those are a serious incentive for an early AM visit.

Richard J. George, Ph.D.
BrainTrust

Burger King has forever lagged behind McDonald’s. The company surrendered its potential advantage years ago when it abandoned the “broiling beats frying” campaign. Imagine what would have happened if BK forced McD’s to convert to broiling? In any event, this move will probably not result in seismic shifts in breakfast market share for Burger King but there are some positives. First, it allows customers to sample and develop repeat consumption of its new coffee initiative. Second, it drives visits to pick up the coffee, perhaps in day parts in addition to breakfast.

Subscriptions with flexibility have potential. A lesson should be learned from Blue Apron’s original relatively inflexible subscription program, that generated more churn than repeat subscribers.

Paula Rosenblum
BrainTrust

I think it’s a winner. I am not sure if it’ll prove to be profitable for BK without add-on sales, but I do think it’s kind of brilliant.

Neil Saunders
BrainTrust

This is a great way for BK to push its breakfast offer as it plays catch-up with McDonald’s. The company has already received a mountain of press coverage, which is a win in itself. I don’t suppose everyone will be interested, but BK will definitely secure some new customers from this.

David Naumann
BrainTrust
David Naumann
Vice President, Retail Marketing, enVista
7 months 24 days ago

The $5-a-month coffee subscription service is a very clever strategy. It is a great way to convert occasional Burger King customers to become loyal customers. I doubt it would attract Starbucks or Dunkin’ customers, as most of those consumers are very passionate about the coffee at those brands. It my attract some McDonald’s customers though and new customers that drive by a Burger King restaurant on a daily basis.

It is a great test and if it is successful, we may see similar subscription-based marketing campaigns tested by other QSR brand.

Doug Garnett
BrainTrust

No competitive threat here. McDonald’s is far ahead of BK in coffee (as with everything) and consumers are already quite aware of good coffees at Mickey D’s while unaware of any coffee of note at BK.

Given this, they’ve made a key error: If BK wanted to capture some of the Mickey D coffee loyalists, a subscription for one small drip coffee per day isn’t going to do it.

The point should be to encourage sampling of their other coffee options in order to expand awareness of their offerings.

This subscription transports me back to the 1960s before good coffee arrived in the U.S. That just reinforces my few recent experiences at BK: a chain that just doesn’t quite have it together.

Matt Sebek
BrainTrust

Love it. Make no mistake: this is less about the flat financials and new customer acquisition via competitive differentiation from McDonald’s or Starbucks. This is ALL about the channel-exclusive redemption policy (read: a huge issue for this QSR segment). Running this promotion through mobile will help convert existing cash-paying customers to a form of payment and usage that is trackable – increasing BK intelligence and ability to offer these consumers better (higher margin) deals at the right time in the future.

Shep Hyken
BrainTrust

The subscription model is becoming a norm. Used to be for magazines and newspapers. Subscriptions for software (SAAS model) have worked over the last few years. Companies that offer subscriptions models recognize the value to their customers and their bottom lines. Today you can subscribe to dog food, razor blades, cars and much, much more. The $5.00 subscription for a cup of coffee is a brilliant strategy by Burger King. It’s a loss leader at worst and a brilliant marketing strategy at best.

Georganne Bender
BrainTrust

Rich, my biz partner and fellow BrainTrust panelist, spends $2.00 a day on coffee at Starbucks every morning — that’s over 50 bucks a month and it doesn’t include whatever else he buys.

The only rub I see is that BK tends to launch marketing and abandons it quickly. McDonald’s, on the other hand, gives its programs time to breathe. I’ve had Burger King coffee and it’s good. I love this idea, I hope it takes off.

Craig Sundstrom
Guest

No, this is no competitive threat, unless they’re selling an $8 cup for $.17, in which case the program might be so “successful” it bankrupts them.

I’m not going to say this is a mistake but much like with Target, I imagine many of us are muttering under our breath “distraction … get the fundamentals right.” In this case the fundamental was a better burger, at least vis-à-vis McDonald’s but (arguably) against some other competitors as well. For whatever reason, perhaps the emergence of premium chains like “Five Guys” or ironically, the migration of breakfast chains into the lunch field, this message has been lost. I can’t see any long term success unless they get it back.

Cate Trotter
BrainTrust

It’s a great talking point if nothing else. The price alone might be enough to get some people who would normally choose a rival to give it a try — if the quality doesn’t live up to their standards then they’ve spent the same money; if they like it then they can come back day after day. If Burger King also amps up its breakfast offering then it will also help it with selling other items, not to mention promoting its new coffee options. I wonder if some people might be put off by the small size, but the cost over a month is hard to argue with.

Min-Jee Hwang
Guest

Coffee has become a high-end, expensive product recently, and many chains like Starbucks are at the top of the price range. This offering from BK serves a definite need in the space for a cost-effective, readily available cup of coffee. While it won’t draw away too many Starbucks or Dunkin’ customers, it should help attract people who currently go to McDonald’s for their morning coffee.

wpDiscuz
Braintrust
"Great idea. Absolutely test-worthy. They’ll get some takers and sell a few more bacon/egg sandwiches in the process."
"It is a great test and if it is successful, we may see similar subscription-based marketing campaigns tested by other QSR brands."
"This is ALL about the channel-exclusive redemption policy (read: a huge issue for this QSR segment)."

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