Subscription becomes new trend among major coffee franchises
Starbucks, Gong cha see 'lock-in' effects, rising sales
Major coffee franchises are embracing subscription services as a new trend, offering customers perks such as free drinks for a specified period or exclusive coupons for store benefits.
The service differentiates its subscribers from ordinary customers in terms of cost-effectiveness. It has also boosted the companies’ market competitiveness against low-priced coffee franchise companies that have become increasingly popular amid soaring market prices throughout this year.
Firms have also observed a "lock-in effect" in subscription services, in which customers become dependent on a company for a specific good or service.
Subscription services, a relatively new trend in the country’s coffee market, offer perks such as free, discounted, or size-up coupons for drinks and food, along with free delivery options. Companies report positive consumer feedback, motivating them to continue the services and expand the range of incentives available.
Starbucks Korea, after test-launching its first subscription service Buddy Pass in October, officially launched it earlier this month. For 9,900 won ($7) a month, subscribers can enjoy a 30-percent discount on drinks and foods starting 2 p.m. every day. Free delivery is also included during the same time frame.
The company is satisfied with how Buddy Pass has boosted business. While test-launching it, the company confirmed that visitors to the stores offering the subscription service increased by at least 50 percent on average, compared to prior levels. The company added that Buddy Pass users saved an average of 23,300 won per month.
“The more they use Buddy Pass, the more they can save money,” a Starbucks Korea official said. “We’ll keep advancing the service to differentiate our subscription quality.”
Gong cha Korea has recently finished test-launching its first subscription service at stores in traffic-heavy locations in Seoul, including Gangnam and Yeouido. The service, for 29,000 won, offers an unlimited number of drinks from seven different choices until 11 a.m. for 30 days.
The Coffee Bean in November launched its first subscription service, Aurora. For 30,000 won a year, it offers three free drinks, 10 percent discount coupons for foods and drinks, and a birthday coupon.
“An increasing number of consumers are now seeking low-price coffee shops as high market prices are pressuring them to save money,” an industry official said. “The trend in turn has driven large-sized coffee franchises to also introduce affordable choices for consumers. Subscription services are their answer.”
Subscription services already generated buzz among convenience store consumers earlier this year.
BGF Retail, operator of the country’s largest convenience franchise brand CU, updated its subscription service with new perks in May. It said earlier this month that the renewal boosted its number of subscribers by 60 percent, compared to before May.
The country’s coffee market is highly competitive and in constant demand. Data from 2023 showed that Korea's coffee consumption per person averaged 405 cups, significantly higher than the global average of 152 cups. According to the Korea Agro-Fisheries and Food Trade Corp., the number of coffee shops in Korea reached 99,000 in 2022, doubling in just four years. That same year, the country recorded its highest-ever coffee bean import volume of $1.3 billion, marking a 42.4 percent year-on-year increase.
source: The Korea Times
Major coffee franchises are embracing subscription services as a new trend, offering customers perks such as free drinks for a specified period or exclusive coupons for store benefits.
The service differentiates its subscribers from ordinary customers in terms of cost-effectiveness. It has also boosted the companies’ market competitiveness against low-priced coffee franchise companies that have become increasingly popular amid soaring market prices throughout this year.
Firms have also observed a "lock-in effect" in subscription services, in which customers become dependent on a company for a specific good or service.
Subscription services, a relatively new trend in the country’s coffee market, offer perks such as free, discounted, or size-up coupons for drinks and food, along with free delivery options. Companies report positive consumer feedback, motivating them to continue the services and expand the range of incentives available.
Starbucks Korea, after test-launching its first subscription service Buddy Pass in October, officially launched it earlier this month. For 9,900 won ($7) a month, subscribers can enjoy a 30-percent discount on drinks and foods starting 2 p.m. every day. Free delivery is also included during the same time frame.
The company is satisfied with how Buddy Pass has boosted business. While test-launching it, the company confirmed that visitors to the stores offering the subscription service increased by at least 50 percent on average, compared to prior levels. The company added that Buddy Pass users saved an average of 23,300 won per month.
“The more they use Buddy Pass, the more they can save money,” a Starbucks Korea official said. “We’ll keep advancing the service to differentiate our subscription quality.”
Gong cha Korea has recently finished test-launching its first subscription service at stores in traffic-heavy locations in Seoul, including Gangnam and Yeouido. The service, for 29,000 won, offers an unlimited number of drinks from seven different choices until 11 a.m. for 30 days.
The Coffee Bean in November launched its first subscription service, Aurora. For 30,000 won a year, it offers three free drinks, 10 percent discount coupons for foods and drinks, and a birthday coupon.
“An increasing number of consumers are now seeking low-price coffee shops as high market prices are pressuring them to save money,” an industry official said. “The trend in turn has driven large-sized coffee franchises to also introduce affordable choices for consumers. Subscription services are their answer.”
Subscription services already generated buzz among convenience store consumers earlier this year.
BGF Retail, operator of the country’s largest convenience franchise brand CU, updated its subscription service with new perks in May. It said earlier this month that the renewal boosted its number of subscribers by 60 percent, compared to before May.
The country’s coffee market is highly competitive and in constant demand. Data from 2023 showed that Korea's coffee consumption per person averaged 405 cups, significantly higher than the global average of 152 cups. According to the Korea Agro-Fisheries and Food Trade Corp., the number of coffee shops in Korea reached 99,000 in 2022, doubling in just four years. That same year, the country recorded its highest-ever coffee bean import volume of $1.3 billion, marking a 42.4 percent year-on-year increase.
source: The Korea Times