Will Subscription Coffee Carry The Breakfast Wars?

Will Subscription Coffee Carry Breakfast Wars?

Breakfast, we have been told since time immemorial, is the most important meal of the day. But it’s not because medical science has told us so. There have been dueling studies over the last several decades about whether breakfast is good, bad or indifferent for consumer health – and the jury is mostly still out.

A piece of fruit at the start of the day definitely won’t hurt anyone, and a three-course meal of bacon, Lucky Charms and donuts is definitely not a good way to start the day – but between those two extremes is a lot of grey area.

The reason breakfast is widely considered the most important meal of the day, however, is instructive to modern commerce. The phrase first appeared in a radio advertising campaign run in the 1940s by Grape Nuts cereal maker General Foods.

“Nutrition experts say breakfast is the most important meal of the day,” said the ad, and the mnemonic power of the phrase stuck in the American consciousness.

Stuck so hard, in fact, that these days the war for breakfast is among the bigger races in the food business. Americans are wired to eat at least something in the morning – every weekday, 135 million people in the U.S. get behind the wheel and drive 51 minutes, round trip, to and from work. Those commuters, according to the PYMNTS Digital Drive Report, spend about $230 billion a year in commuter-inspired purchases.

It’s a big market capture, and the rapid proliferation of ordering food online and picking it up at the drive thru/counter is a testament to how committed merchants – particularly QSR merchants – are to capturing that consumer spend as it drives by each morning.

But last week, Burger King upped the ante on the war of breakfast dominance, and added an additional sweetener. Instead of paying a dollar or two a day for coffee on the ride to work – netting out $20 a month – Burger King wants customers to get their morning Java on subscription for $5 a month. The consumer then has a reason to see everything else on the BK breakfast menu.

Restaurant Brands International CEO Jose Cil noted Burger King has recently overhauled and expanded its breakfast offerings, and has been looking for a good way to get people in the door.

"We thought the coffee subscription would be a good way to bring people in, raise some excitement at Burger King," he said on CNBC's "Squawk on the Street."

Whether it is working is up in the air. During a poll of a few Burger King customers last weekend outside a Northwestern Washington, D.C. location, most were a bit dubious about getting their daily caffeine fix from BK, a brand not otherwise known for having notable coffee.

“I come here for burgers, and I think their coffee is probably fine, but to be honest I’m not sure I’ve ever had it,” government worker Thomas Adams told PYMNTS.

Adams noted he has “never made coffee” in his own home, and admitted to being somewhat unsure as to how to use a coffee pot. He buys his coffee, but said he’s not sure he wants to get it at Burger King every day.

Others, like management consultant Ali Levy, however, were warmer to the idea.

“Hey, man, D.C. is an expensive place to live, and $5 basically buys you one coffee at  Starbucks,” he said. “This is clearly the better deal, as long as the coffee is okay.”

But Levy, like Adams, wasn’t sure about the coffee, noting she also has never actually had it, though she did resolve to go in and order some.

The move comes as Burger King is attempting to turn a difficult corner in its corporate history. Cil took over as CEO in January after having served as the company’s president since 2014. Last week’s move to roll out a subscription service is the first of its kind among American retailers, though Burger King has been working to upgrade and update its coffee offering, launching its Burger King Café brand as a response to rival McDonald's McCafé.

Across its brand portfolio, Restaurant Brands International has also been expanding its coffee game. Canadian chain Tim Hortons recently rolled out a new loyalty program to capture more of Canada’s coffee spend. The chain currently sells seven out of every 10 Canadians’ cups of coffee, and would like to boost that to eight out of 10.

It seems unlikely that Burger King is shooting for the same level of java dominance, though hooking customers on a very low-cost subscription on a high-margin item could be a way to get more consumers through the doors or to the drive-thru, where they could order other things.

But the first step is to get more consumers excited about – or even aware of – their coffee.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.