There’s new competition in town for the coffee shops that famously pervade the
streets of Tel Aviv.
Cofix, a new take-away discount coffee chain that
opened its doors Monday, is looking to shake up the Israeli coffee scene by
offering an across-the-board price of NIS 5 for everything on its
Coffee? NIS 5. Put it on ice and substitute soy milk? Still NIS 5.
A pastry, a half sandwich or a small salad? You get the idea. Even tall cans of
Coca- Cola, which retail for NIS 7-10 in kiosks and supermarkets, fit the
“This is a revolution,” said Cofix CEO Avi Katz, whose previous
venture Hakol Bedolar (everything for a dollar) lends some insight to his
approach to business.
Katz says that paying NIS 18 for a large coffee and
another 22 for a piece of cake is absurd.
“Every product, all the raw
materials, are cheaper now than they used to be. Coca-cola used to be 40 agorot
more,” he said.
“Yet everything we buy in the food sector is more
According to the USDA Economic Research Service, Israeli
consumers spent 15.9 percent of their expenditures on food in 2012, more than
many other OECD countries (the United States spent the least of anyone, with
just 6.6% doled out on grub).
In Israel, only housing (25%) and
transportation and communications (20.1%) ate a bigger chunk of people’s monthly
expenditure, according to the Central Bureau of Statistic’s 2011 survey. That
same year, the high cost of living was the main driver of massive social
protests in the streets.
Cofix certainly appeals to Israelis’
bargain-hunting instincts. One passerby photographed the shop’s 5-shekel menu to
prove to his wife it was real. Another wondered out loud how such a business
could be profitable.
“The world is divided into two kinds of people,”
Katz said, “those who sell a lot cheaply, and those that sell a little bit at
high prices. I’ve always been from the first group.”
By his calculation,
once rent, wages, taxes and the costs of the products are accounted for, each
branch can stay afloat by selling about 1,000 products a day. Double that, he
says, and he can pull in NIS 900,000 a year in profit.
While only the Ibn
Gvirol pilot store has opened for business, branches on King George Street and
Haarba Street are scheduled to open in the coming weeks. After that, Bank
Hapoalim is on board to help fund 100 franchises in the months ahead.
course, the regular coffee shops hold one main advantage; they offer people a
place to sit, work, relax and converse.
Cofix caters to the “to-go”
crowd, who want to grab a snack and a drink and take it back to the office,
their homes, or a public space.
Cofix is also not the only new entrant
into the coffee market.
CUPS, a smart-phone app that offers users monthly
subscriptions for unlimited coffee at a chain of participating cafes, also made
waves since it launched last September. CUPS also offers an alternative program
of buying a prepaid coffee card, but each cup costs NIS 7, still more than
One way or another, Katz is convinced that the success of his
chain will force established coffee shops to bring down their
Neither Cafe Landwer nor Aroma returned inquiries from The
on the issue.