Blank Street Coffee Relied on Low Costs to Grow — Now It’s Betting on Subscriptions

Blank Street Coffee, a coffee chain that has gained popularity in New York City with its cheap lattes and cold brew, is now aiming to attract more consumers who want to slash their coffee budgets through a subscription program. The Blank Street Regulars program, which opened to the public this summer, has drawn around 5,000 paying members and another 4,000 are on the waiting list to join. The startup has raised roughly $100 million, with backing from General Catalyst, Tiger Global, and a co-founder of Warby Parker. As of March, the company was valued at $177 million, down from its prior valuation of $218 million a year earlier.

Despite its rapid growth and venture funding, Blank Street’s prices have helped attract customers, especially as the cost of coffee beans soared in 2021 and $8 lattes became more common. In New York City, ordering an oat milk latte today will set a Blank Street customer back $5, below the $5.45 charged by Dunkin’ or the $6.15 by Starbucks for comparable sizes. The chain’s lower overhead costs, such as the smaller square footage and fewer employees needed to make cappuccinos, help it charge cheaper prices for its coffee.

Blank Street Regulars, as the chain calls its subscription members, can save even more money on their coffee. Members pay either $8.99 or $17.99 a week. The cheaper plan covers basic drinks, such as teas, hot brewed coffee, Americanos, and double espressos, while the more expensive option allows members to buy a wider range of beverages, including cold brew. To curb losses and avoid the fate of MoviePass, Blank Street caps the total number of drinks per week at 14, and customers have to wait at least two hours to buy another drink.

Blank Street co-founder Vinay Menda estimates that about 30% to 40% of its customer base will eventually become members. For now, Blank Street has capped the number of Regulars to ensure its coffee shops and baristas don’t get overwhelmed by demand. The chain is working to improve capacity at its locations so it can accommodate those on the waitlist eventually.

Blank Street also recently launched Regulars across the pond in its London locations. For £12, or roughly $15, customers can buy any drink on their menu, with similar limitations to its U.S. program.

Read More @ CNBC

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