The Blank Street Regulars program, which opened to the public this summer, has attracted about 5,000 paying members — and another 4,000 are on the waiting list to join.
For more than a decade, startups have used subscription models to generate guaranteed revenue that can make their companies more attractive to investors and improve their valuations. More established companies have also turned to monthly subscriptions to attract repeat customers looking for a bargain. For example, members of Panera Bread's Unlimited Sip Club pay $11.99 per month for “free” coffee, tea, caffeinated sodas, and sodas every two hours.
Since launching three and a half years ago as a coffee cart in Williamsburg, Brooklyn, Blank Street has grown to 74 locations in New York City, London, Boston and Washington. The typical Blank Street location is small, with limited seating and a semi-automatic Eversys espresso machine for drink making.
According to PitchBook, the startup has raised around $100 million, receiving backing from companies like General Catalyst, Tiger Global and a co-founder of Warby Parker.
According to PitchBook, the company was valued at $177 million in March, down from its previous valuation of $218 million about a year earlier. Valuations of many startups fell as the Federal Reserve raised interest rates and economists feared a recession.
The chain has its critics. Blank Street's rapid growth — and venture funding — has sparked resentment and skepticism among some coffee drinkers. However, prices have helped attract customers, especially as the cost of coffee beans has skyrocketed in 2021 and $8 lattes have become increasingly popular.
In New York City, ordering an oat milk latte today will set a Blank Street customer back $5 – less than Dunkin''s $5.45 or Starbucks' $6.15 for comparable sizes demand. The chain's lower overhead costs, such as the smaller square footage and fewer employees needed to make cappuccinos, help it achieve cheaper prices for its coffee.
But Blank Street Regulars, as the chain calls its subscription members, can save even more money on coffee. Members pay either $8.99 or $17.99 per week.
The cheaper plan covers basic drinks like tea, hot brew coffee, Americanos and double espresso, while the more expensive option allows members to purchase a wider selection of drinks, including cold brew. To stem losses and avoid the fate of MoviePass, a movie subscription service that offered unlimited tickets before it filed for bankruptcy, Blank Street limits the total number of drinks per week to 14, and customers must wait at least two hours to purchase another drink.
Vinay Menda, CEO and co-founder of Blank Street, estimates that about 30 to 40% of the customer base will become members at some point.
“I don’t think it will ever be the majority of customers,” he told CNBC.
Blank Street has limited the number of patrons for now to ensure its coffee shops and baristas aren't overwhelmed by demand.
“The more we can build capacity and grow our businesses, the more we want to provide access to more people,” said Dan Hill, Blank Street’s chief product officer.
The chain is working to improve capacity at its locations so it can eventually accommodate those on the waitlist. These improvements include installing a second or third espresso machine so baristas can quickly prepare more drinks.
Blank Street also recently launched Regulars across the pond in its London locations. For £12, or about $15, customers can purchase any drink on their menu, with similar restrictions to the US program.
According to Hill, the program already has a few hundred members. In the UK, Blank Street faces stiffer competition from Pret A Manger, the ubiquitous sandwich shop with its own coffee subscription program. But Menda said he believes Blank Street's version will appeal to customers who care more about coffee.
Hill said Blank Street pursued a subscription program instead of a traditional loyalty program because its customers wanted an easy and quick way to benefit from regular visits to its coffee shops. The chain's relative youth gave it flexibility in designing the program.
Hill said Blank Street is already considering ways to expand the program, such as adding family and group plans.
“We don’t have to deal with the way a loyalty program was designed 10 years ago and now has millions of members who are used to the old things,” Hill said.
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