In an announcement that caused caffeine addicts everywhere to rejoice, Panera, the U.S.-based bakery-cafΓ© chain, has introduced an unlimited coffee subscription. Called MyPanera+Coffee, the program provides unlimited hot coffee, iced coffee, or hot tea at all Panera restaurants for a monthly fee of $8.99. Customers can get free refills in-store every two hours. It's a great deal, but did you know that Panera also uses psychology - intentionally or not - to make the offer even more appealing?
Before rolling MyPanera+Coffee out to all stores, they tested the program in 150 stores for three months. Although many were skeptical of the pilot, the bottom-line results speak for themselves:
- The frequency of visits jumped by more than 200% for customers who signed up for MyPanera+Coffee.
- There was a 70% increase in food attachment for subscribers, which Panera CEO Niren Chaudhary called βstaggering.β In other words, people who came in to get their subscription coffee also bought food. Before the program, they were more likely to come in and only buy coffee.
- There was a 25% increase in sign-ups to Paneraβs loyalty program, and almost all of those sign-ups came from people new to Panera (Customers have to sign up to the MyPanera loyalty program to use the subscription).
Thereβs no question this program has made an enormous impact, but why? Itβs down to a few behavioral science principles: Loss Aversion, the Cashless Effect, and the Default Effect.

Source: Adobe Stock
The Psychology Behind Panera's Unlimited Coffee Subscription
1. The Cashless Effect
The Cashless Effect is the principle that states the more tangible a payment is, the more painful it is. Thatβs why people on a budget are urged to use cash instead of credit cardsβββbecause the easier it is to pay, the more people will spend.
How Panera Uses Psychology: Cashless Effect
When customers add a +Coffee subscription to their MyPanera rewards, they are paying a small amount, each month, by credit card. So small and regular that theyβll barely notice the cash leaving their account.
By seamlessly adding +Coffee to the rewards process, Panera has removed the βpain of paymentβ when buying a coffee. The experience of scanning an app for a pre-paid cup of coffee is so painless, it almost feels like getting something for nothing (which also explains why Panera is seeing an uptick in βfood attachmentβ rates).
2. Loss Aversion
First identified by Nobel Prize-winner Daniel Kahneman, Loss Aversion is a psychological principle that says people will go to great lengths to avoid a loss. In fact, the psychological pain of losing is twice as powerful as the pleasure of winning.
How Panera Uses Psychology: Loss Aversion
The $8.99 that leaves customersβ bank accounts each month has a powerful effect on their behavior. When deciding where to go for their morning (or afternoon) coffee, people are more likely to choose Panera because theyβre afraid to lose out on the benefits of money theyβve already spent.
Related effect: Itβs also likely that the Sunk Cost Fallacy is coming into play in customersβ decisions to visit Panera over a competitor. Sunk Cost is an economic principle that states people will continue a behavior because theyβve already invested time or money.
Just like Loss Aversion, the Sunk Cost Fallacy is a powerful driver of customer behavior due to the psychological pain of potential loss. Panera uses psychology like Loss Aversion and the Sunk Cost Fallacy to ensure that customers stay engaged as long as they stay subscribed to the program.
3. The Default Effect
Defaults are pre-set choices that take effect if a customer does nothing.
When it comes to thinking, people are lazy. Defaults provide a mental shortcut and signal what weβre βsupposedβ to do in a given situation. Since defaults donβt require people to make any effort, they can be a simple but powerful design tool.
How Panera Uses Psychology: Default Effect
Panera wisely anchors the new behavior to an existing, default behavior for MyPanera users. Itβs the behavior these customers would be doing anyway, with a twist so small itβs easy to overlook.
The Panera website even describes the new behavior in terms of the old, so customers donβt have to think too hard:
βUse it just like a MyPanera reward. Order at the register or kiosks when youβre in the cafe, online or through our app. With a MyPanera+ Coffee subscription, thereβs nothing stopping you from reaching your full coffee potential.β
The brandβs clearly thought about how to make MyPanera+Coffee a seamless addition to an existing default behavior, which will make mass adoption a no-brainer.
Panera: The Bottom Line
Some pundits have asked, with the MyPanera+Coffee offer, βHave we reached peak subscription?β On the surface-level, an βunlimitedβ coffee subscription might seem ridiculous. However, based on Paneraβs impressive results so far this is likely just the beginning of food and beverage subscriptions.
The only question is, which restaurant chain will be next?

Keep learning and connect..
Explore
My Weekly Podcast
Host Jennifer Clinehens explores how the world's biggest brands use psychology and behavioral science, all in around 10 minutes.
My Books
From psychology and behavioral science to solving "impossible problems," my books can help you create more meaningful marketing and customer experiences.