While you may be familiar with the global coffee shop chains Costa Coffee and Starbucks you may not be so familiar with a rapidly growing chain which was first established in Israel, Cofix. The coffee chain operates on a low cost model, where the owner’s visions are:
- “Inexpensive – A real social revolution! Low prices that make it possible for everyone to drink and enjoy more than once a day, with the same constant price.
- Quality – Uncompromising quality, some of the best coffee companies, as well as excellent suppliers in all areas.
- Experience – A coffee shop look with a different feel”. (Cofix, 2017)
Cofix which was established in Israel in 2013 now has over 160 stores in Israel (Khrennikov, 2016), and has recently entered into the Russia (by establishing a subsidiary Urban Cofix). Cofix has become synonymous with low prices as it operates a low cost model by sacrificing space for volume – 5 shekels in Israel and 50 rubles in Russia – which can be as little as a fifth of thee substantially lower costs for drinking coffee out of the home (Dovrat-Mesertiz, 2015). It has been reported that the owner of Cofix, Avi Katz, is trying to lower the cost of living – not only through these coffee shops but other arms of the company too Super Cofix (supermarket), and Cofix Bar (bar), which operate on a similar model. He explained that “in Russia, it costs 20 roubles to make a cup of coffee at home, while most coffee shops are offering it at about 200 rubbles: this is probably the widest difference in the world” (Jerusalem Post, 2016), and that he is bringing in the new market, so that people who used to drink coffee only at home can afford it in a cafe.” (Khrennikov, 2016).
Cofix tends not to have the large spacious coffee shops you would be likely to find with some other competitors, focusing instead its efforts on coffee ‘to go’ with limited seating provided. The company has ambitious expansion plans with a goal of 300 stores in Israel, plans to expand into the UK and Turkey, as well as further expansion in Russia (Khrennikov, 2016).
While the low cost model of coffee shop has clearly been a success in Israel, it has not always been as successful for other companies, while Easy Coffee (coffee house chain established by the same company that runs EasyJet the low cost airline), Caffix which opened in London on a similar model to Cofix, closed down (Micklethwaite, 2016). According to Jeffrey Young from Allegra Strategies the main reason Caffix failed was that people want more than coffee to go ‘“Coffeehouses are places where people talk, relax and take time out of their busy day….They’ve become almost like our sanctuary. For that, people are happy to pay $5 for a cup of coffee” (Khrennikov, 2016).
As the market for coffee shops develops in each of these countries, it will be interesting to see if this model remains popular. Is cost the key deciding factor for where you buy your coffee, or do you want more than just coffee to go?
- Khrennikov, I. (2016) Cofix Enters Russia with Coffee at Fraction of Starbucks Price. Bloomberg. 10/10/2016.
- Dovrat- Meseritz, A. (2015) The Woman behind the 5-shekel cup of coffee. Haaretz, 01/07/2015.
- Jerusalem Post (2016) Isreali coffee chain cofix operns first of 1,000 Russia Stores. Jerusalem Post, 10/10/2016.
- Khrennikov, I. (2016) Cofix Enters Russia with Coffee at Fraction of Starbucks Price. Bloomberg, 10/10/2016.
- Micklethwaite, J. (2016) London café where everything costs £1 shuts up shop after less than one year. Evening Standard 19/04/ 2016.