If it is so expensive -why do you still drink it?
by chee Leng (on coffee makers)
Is this coffee expensive?
We, human is an interesting breed. We complained about a situation but we still go head on into it! Take cafe coffee for instance, the whole world is shouting about how expensive it is -but sales grew year on year!
From Global brands like Starbucks to local India brand CCD (cafe Coffee Day), they are all expanding. So, is cafe coffee really more expensive, or are consumers just making it up?
Take Starbucks as an example, a cup of coffee on average cost about $3.00. If you would to make a single serve coffee say, Keurig per serve, it is about $0.50-$0.60, depending on your discounts.
Even if you factor in the machine cost, and assuming that you only use it for a year, cost of Keurig is about $100/365 days, per day depreciation works out to be about $0.27.
So, per cup of coffee would cost you no more than $1.00. And, later part of this year, when Starbucks start offering their coffee in k-cups, you would get to drink what you are paying for in the cafe.
Although, the cost is only 30% of what it would cost in cafe, and even if you can drink the same thing at home, the sales of cafe is unlikely to dwindle.
It is the experience or a habit we have that once on it, it is difficult to shake off.
Can you imagine not clutching a cup of coffee on the subway to work. Or, not going to the cafe round the corner for a coffee break?
Or, what about a day off and relaxation in the cafe and flipping a book.
Cafe offers much more than a coffee and the experience is what consumers is looking forward to.
If you are a cafe owner, take note of two things and your coffee sales should do very well.
1. Ensure that your interior is well done up so that the experience for the walk in customer is good.
2. Put in place a loyalty program so that customers that buys from you frequently can enjoy lower pricing and thus buy even more frequently from you
3. Give back to the community off and on, in the form of free sandwich, free coffee, even some free candy bars.
In the end, wherever you are based, you want to be part of the community, you want to be part of the daily lives of the folks there.
In my opinion, cafe coffee is not really that expensive, in fact if you consider the effort in making it, the set up cost, the variables just to deliver that experience to you -it is quite reasonable.