Another week goes by – and it all changes! It looks like we’re now heading into another lockdown again. I am not too pleased by this. But I trade from home anyway so it also doesn’t matter. 

However, this is likely to impact many sectors – especially the smaller ones. So I’ll be looking into the rules this weekend in order to see whether I should be getting short some companies. One thing I did think that is quite smart is that Pret A Manger have launched a subscription service on coffee. You can claim a maximum of five drinks a day (does anyone here drink five Pret drinks a day? Surely not!) for “just” £20 per month. 

They have launched this service with Eagle Eye (I hold a position in Eagle Eye - it’s worth watching Tamzin’s video with management if you’re curious about the business) and at first I thought this was a silly idea by Pret. Most people will go daily and spend three or four quid on a coffee, and therefore they will lose revenue. The costs on coffee are relatively fixed. And Pret may lose some coffee revenue this way. But what the company ensures is that it drives footfall. Why only go to Pret once a day, if you can get another four drinks?

And since you’re effectively getting the ‘free’ coffee – why not buy a sandwich too?

Given that Pret has decided to roll this out from its initial trial, it’s clear that it finds this profitable and that the company is getting more opportunities to upsell. It’s likely that those who subscribe to Pret’s service thinking they save money end up spending way more than they normally would. 

Another reason I think it’s smart is because there is no moat in coffee. I’m also no coffee connoisseur but the flat white from Starbucks tastes very much like the flat white from Pret A Manger which tastes very much like the flat white from Costa Coffee. At least by offering a subscription and loyalty package there is now an incentive to go to Pret over any other bland coffee shop. It wouldn’t surprise me to see this service taken up by more brands in the future. 

I think this is quite significant for Eagle Eye. It already works with Greggs but not in the subscription model. …

Unlock the rest of this Article in 15 seconds

or Unlock with your email

Already have an account?
Login here