A trip to a green and white logoed chain cafe (strictly in the name of research) got me thinking about pricing and resulted in the following thoughts which I wonder if anyone else has had:
With a bit of Christmas branding, syrup, steamed milk and 1 shot of coffee this chain charge £3 for a drink. With some basic maths I put the cost of ingredients including takeaway cup at <25p. For an independent to make the same profit on a flat white (22g at £12/kilo, great kit/baristas) they would have to charge >£3.30. That's outrageous you say...the most I'd pay for a flat white is £2.50.
So, if every chain store closed tomorrow we couldn't all move into the vacant properties and sell wonderfully crafted £2.50 flat whites. Even if you confidently assume a 25% higher volume of drink sales you can't maintain good enough margins to pay the rent.
If Starbucks created a coffee model that can pay prime location rents do we have to condede that our model can't? You can steal Starbucks customers but you'll never have their prime corner shop.