While I agree in theory, you have to think about the conditioning of a customer. The guy spending $1.40 is not likely to become a recurring customer of a $5 coffee, but rather look at it like a treat or "reward" that they get for free.
If you're getting new customers in the door that aren't looking to buy a product in your range, is it worth it? Here is an extreme example: If you buy a Kia you get a free BMW test drive... the Kia buyers are likely not going to ultimately buy a BMW unless their socioeconomic status changes, and conversely, the BMW market has no interest in a Kia etc.
Of course there may be caps on it, etc, but perhaps a better option would be buy 4 coffees, get a free donut/bagel (or complimentary product, etc.) This would encourage spending of a normalized product (i.e the coffee), along with bringing the customer through the door with incentives & the intention of buying.
If you're getting new customers in the door that aren't looking to buy a product in your range, is it worth it? Here is an extreme example: If you buy a Kia you get a free BMW test drive... the Kia buyers are likely not going to ultimately buy a BMW unless their socioeconomic status changes, and conversely, the BMW market has no interest in a Kia etc.
Of course there may be caps on it, etc, but perhaps a better option would be buy 4 coffees, get a free donut/bagel (or complimentary product, etc.) This would encourage spending of a normalized product (i.e the coffee), along with bringing the customer through the door with incentives & the intention of buying.