Convenience store chain Circle K is launching a beverage subscription program, following in the footsteps of Burger King and Panera Bread.
Starting Wednesday, U.S. customers who pay $5.99 per month can have one tea, coffee, Froster slushy or Polar Pop fountain drink of their choosing every day.
Circle K’s Sip & Save program looks to build loyalty and coax people into its stores again on a regular basis. During the coronavirus pandemic, consumers made fewer trips to convenience stores.
Sales of self-serve beverages took a hit industrywide. Hot dispensed drinks’ sales fell by a third, while cold dispensed drinks shrank by 7.9%, according to the National Association of Convenience Stores.
“We really see this an opportunity to drive traffic at a time that people are just starting to come out of the understandable cocoons that they’ve been in for the last 12-plus months,” said Kevin Lewis, chief marketing officer of Alimentation Couche-Tard, Circle K’s parent company.
Montreal-based Couche-Tard operates more than 7,200 convenience stores across the U.S., including other brands like On the Run and Holiday. The company reported U.S. revenue of $37.8 billion in 2020.
Circle K had plans to roll the program out last year, but the pandemic hit and public health officials were urging consumers to stay at home, Lewis said. Now, the consumer environment is once again changing as Americans are inoculated and states ease restrictions.
It has been testing the Sip & Save program over the last 90 days in more than 100 stores near Augusta, Georgia, and Columbia, South Carolina. Lewis said data from the trial shows that customers are visiting more frequently, surpassing Circle K’s expectations.
Trial customers were also buying food along with their drinks. That’s good news for the convenience store chain, which is upgrading its hot food options. During the crisis, it launched new items in roughly 1,500 locations. Over the next year, it plans to bring the improved food offerings to an additional 3,000 locations. Circle K is tailoring the menu to fit the locality, like offering tacos in Texas.
Wawa, 7-Eleven and Sheetz have also been revamping their fresh-food offerings in recent years to steal market share from fast-food restaurants. The hope is to increase sales among customers who are already buying fuel, pantry staples or prepackaged snacks from their stores. Like the restaurant industry, however, convenience stores’ food-service sales weakened last year due to the pandemic.
Lewis said the low price of the drink subscription program is the chain’s way of thanking its customers and celebrating that the pandemic is ending. Panera Bread launched its coffee subscription last year to attract customers to its restaurants during morning hours in the hopes that they try the chain’s new breakfast items. Restaurant Brands International’s Burger King introduced its version of a coffee subscription in 2019 to persuade consumers to try its revamped java. The burger chain quietly ended its program after a few months.
For now, Circle K is planning on running the Sip & Save program for 90 days.
“But if the feedback we get at the end of the 90 days nationally is the same, I think we’d be hard-pressed to say stop,” Lewis said.
Source: Business - cnbc.com
