As anyone who read our profile on Tonx a few weeks back will know, mail-order coffee subscription services are all the rage right now.
Consumers are offered the chance to get high quality, freshly ground beans mailed directly to their home for a reasonable monthly subscription cost. What’s more, the coffee comes in a packet that fits through your mailbox, so you don’t need to worry about waiting in. The trend of subscription e-commerce, arguably started by makeup and beauty product sampler, Birchbox, has hit coffee in a big way.
So, what does this mean for small business owners?
It means that as more and more connoisseurs seek out that perfect home brew, coffee shop owners have to start thinking about new ways to get people out of their homes and coming through their doors.
Gilad Rotem and the team at new coffee startup, CUPS think they have a solution – a monthly subscription service that offers consumers discounted coffee at independent coffee shops. It works like this:
Customers choose a subscription package with the CUPS service (currently $45 for unlimited coffee, $85 for espresso based drinks), download the CUPS app, and get access to discounted coffee at a whole roster of participating independent coffee shops. In essence, as a coffee shop owner, you offer discounts on your coffees in exchange for the app bringing in new ‘loyal customers who understand and appreciate quality coffee and the independent coffee shop culture’.
The team originally launched the product in their hometown of Tel Aviv before moving to New York to participate in the Entrepreneurs Round Table Accelerator and to launch the concept in a bigger market. I spoke with Co-founder Gilad Rotem, who claims that participating coffee shops are reporting a significant rise in revenue following signup. Long-time ShopKeep merchant, Ike Escava of The Bean coffee shops in the East Village and Williamsburg neighboorhood is an early adopter and sees a lot of promise in the idea, ‘It’s bringing new people through the door, which is great. We know that once customers try us out, they tend to come back again and again. So CUPS is potentially going to be very valuable for us.’
The CUPS website has a clear (if somewhat epilepsy inducing) visualization of ‘how it works’, if you’d like more info. In many ways, the team at CUPS is bringing the experience of the Starbucks App to the independent coffee shop environment, so it will be interesting to see the traction they can enjoy.
The Counter Culture Opinion:
The Bean is already seeing new customers coming through the door, so there’s clearly some initial traction with customers — and that’s not surprising. People are often worried about spending too much on coffee, so this is an interesting mechanism for the average joe to control monthly java-related outgoings.
From a business perspective, customers paying a flat-fee monthly subscription are almost certainly going to come through your doors more regularly, as they seek to get their ‘money’s worth’. This presents both dangers and opportunity. Of course, you don’t want too high a percentage of your overall coffee sales to be discounted but each time a customer comes through your door, it’s another opportunity to up-sell on baked goods and more. It will be interesting to see the impact this service has on the bottom line of those trying it out.
CUPS could be a fantastic way to make your coffee shop standing out from the crowd and source new customers but you will want to be careful about cannibalizing your own revenue by offering discounts to current customers.
That being said, if you aren’t innovating, you’re dying – so this is definitely a concept to watch.