One of our core capabilities at CBX is the development of store offers and advisement of c-store clients on how their coffee program should function. I work on many of these coffee program offers and recently experienced an invigorating “my job applies to the real world” kind of moment.
The short-order restaurant next door to my apartment was recently bought, renamed and redesigned. While the changes were nice, they didn’t change my opinion about the shop. I wasn’t going to order more and was unlikely to sit, much less, sit longer. But good for them for trying something new.
One recent morning, as I picked up my coffee and dropped $1.25 on the counter, the cashier informed me that the coffee was now $2.25.
My jaw hit the floor. ($2.25 for drip coffee? What? When did that happen? It’s drip coffee?! Even $1.25 is too much!)
The cashier tells me they’ve changed their coffee brand and upgraded their coffee machine. (Bewildered look still on my face.)
The cashier (who may have been the new owner’s relative) and the short-order cook (from the old guard) saw my reaction and looked embarrassed. “Yeah, sorry. There have been some changes.” I threw down the extra dollar, muttering, and walked out with coffee in hand.
I know, I know—it’s only a dollar, but an increase to the tune of 80%(!!). Why was I so annoyed? Because I felt that as a loyal customer, the rug shouldn’t have been pulled out from under me.
Here’s what should have happened:
1. Be upfront. A renovation, owner or name change does not necessarily lead to price increases. This surprise made everyone uncomfortable (me, because I was clearly unhappy about the change, and the cashier and the cook, because they saw my reaction). You’re a local business! I see you every day. So let me know what’s going on. I’ll understand if you need to raise prices because rent went up, cost of goods increased – whatever. But I’d appreciate you leveling with me.
2. Even better, step change the increase. Perhaps the new owner should have increased it by $0.25 per quarter or every 6 months. Who knows. But go slowly on this journey of raising prices. It’s a risky one.
3. Sell in the change. Promote the new product! If the coffee is organic, roasted on a Brooklyn rooftop or extracted from monkey poop… these are all good reasons to pay more. Educate me, so that I can make the right decision for myself.
Now, putting on a more strategic cap:
4. Keep an eye on your competitors. The nearby coffee houses and the local Starbucks all charge less than $2.25 for a small drip coffee. Sorry connoisseurs, but drip coffee is a commodity. There is nothing in my bodega’s new offer that will steal market share.
5. Know your audience. The customer base of this greasy spoon is made up of folks who work at the local hospital, construction workers and local residents within a three-block radius. Yes, the redesign includes tables and chairs versus the old counter and stools. But will the locals pay 80% more for coffee that comes in craft paper packaging? Are they going to eat more in a canteen that now boasts a chalkboard wall? What would make those same locals stick with their old digs instead of venturing off?
6. Understand the context. New Yorkers are a unique breed. The limitless choices we have affect our value systems and sensitivities. We love a good deal. We’re loyal and have strong ritualized behaviors. My advice: take advantage of these traits.
So now what? I think that free office coffee is starting to taste a little bit better.