The Economics of Stars & Perks: Are Those Coffee Rewards Worth It?

The Economics of Stars & Perks: Are Those Coffee Rewards Worth It?

Jake Bonneman Jake Bonneman
5 minutes of coffee drinking

Are all those stars and perks you're being rewarded with really worth the trouble—and the extra spending? Let's do the math.

Do you love collecting units of made-up currencies? Hey, who doesn't lately?

If you’re like most of us, you probably enjoy getting rewarded by corporations for making excessive coffee purchases. Hey, some entrepreneurs basically live at these coffee shops—regardless of the quality of the coffee (or the wi-fi).

But are these “rewarding” programs at coffee chains actually worth it?

Yeah, the gamification of coffee buying and feeling like you’re collecting stuff by spending money may be fun, and not hollow-feeling at all.

But unless you’re already spending ridiculous amounts on coffee outside of your home—these rewards programs may not really be worth the effort.

To protect the identities of the two biggest coffee chains on the planet, let's nickname Chain #1 "Throwbucks."

“What's the joke there,” you ask? “Is there a joke there?”

I don't know. I saw it in an issue of Zillions when I was 9. Maybe the joke was supposed to be that you "throw" your "bucks"... away? I don't know what they were going for. It’s their fault. Quit grilling me, man.

Chain #2 we'll call… "Double D." I suspect we'll have no problems with this one.

The problem with Double D's and Throwbucks is that not only are the rewards not that great—they also tend to get less valuable as time goes on.

Currently, you need to collect 150 Throwbucks stars before you can redeem them for a free drink.

But since you earn 1 star per dollar, well, uh—I'll let you do the math to see how much that free drink costs.

Fine, I'll do it. You need to spend $150 to earn that extra drink. You know, the thing made of coffee, milk, ice, sugar, water, and frozen water.

And the rewards get even less valuable as you go up in tier.

For example, to redeem Throwbucks stars for a free food item, you need to collect 400 stars. $400 for a … free bagel? No thanks, I’m good.

"But Jake!" a couple of you are yelling at the screen, "If you preload a Throwbucks card instead of paying with your card directly, you get 2 stars per $1 spent!

I was getting to that. That's still $75 per "free" drink.

Yeah, it's way better, sure, plus you get all the benefits of pre-committing funds to coffee you'll buy from them sometime in the future, as well as dealing with an app that randomly freezes during card reloads and frequently logs you out for no reason. Great for when you remember you need to reload when you're 1 car back from the drive-thru window.

So I’ve heard, anyway.

Throwbucks will also frequently offer opportunities to get bonus stars, which can be (relatively) generous, but more frequently not generous at all. Here's an example of a recent bonus offer someone got a notification for:

"Order these 5 different drinks to earn 100 bonus stars!"

Considering all of them are expensive espresso concoctions, you're going to be talking maybe $6, $7 per drink when all is said and done.

So that’s: Spend $35 to earn… 66% of a free drink.

Or in other words: “Buy 5 Coffees… Get ⅔ of One Free!”

Double D Perks are more generous by a mile, but that doesn't mean they’re necessarily a good deal. There, you need to collect 200 points to get a free drink.

At 5 points per $1 spent, that's $40 for a cup of "free" coffee.

Another problem with Throwbucks stars and Double D Perks is that the rewards expire quickly. For example, stars expire after six months, while perks expire after a year—but Double D Free Beverage reward coupons expire in just 30 days.

This means that you need to be constantly collecting and redeeming rewards in order to get any value out of them. Otherwise, the whole thing is mostly a way to get you to spend a lot more money than you're sav—hey, I think I'm onto something!

This is a good time to call out the increasingly stingy attitude these places have as far as their "free birthday drinks." Double D's at least lets you use your free beverage coupon for a week (why not just 30 days like a regular free drink coupon?).

Meanwhile, Throwbucks changed a while back to only letting you get a free drink ON your actual birthday. Which is just what I want to do on my birthday, get away from my friends and loved ones and spend a little more time out of my special day on coupon redemption.

Overall, coffee chain reward programs are not really worth the effort. They really only work as a (small) bonus for people who are already throwing down bucks at these places daily.

For most coffee drinkers, it’s just not worth it to go out of your way to collect rewards.

There are plenty of better ways to save money on mochas—like, say, making your own better mocha at home.

So ignore the siren call of your nearest Throwbucks and those perky Double D's. They just aren’t worth the trouble.

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