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CreativeGPX t1_jaehfjq wrote

Reply to comment by stairway2evan in ELI5- Given the average cost of a cup of coffee is marked up about ~80%, why hasn’t a company come in and charge significantly less to take a greater share of the market? by Educational_Sir3783

Also worth noting that because of everything you said, you actually DO see companies coming in and dramatically undercutting if they have a different business model.

  • Dunkin and Starbucks have a similar business model so they have (roughly) the same markup which is relatively high.
  • If you go to a diner, you'll find that not only is their coffee cheaper, but it often has free refills which makes it much cheaper. This is because their business model is even more skewed toward higher priced meals being where the money is made rather than coffee.
  • Even farther along the spectrum, if you go to a car dealership to get your car serviced, you'll often find they'll give you free coffee because their business model is so heavily skewed toward the service fees for the car.
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True_to_you t1_jaeioep wrote

My old car dealership used to have a masseuse and snacks!

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imakenosensetopeople t1_jaf4ya5 wrote

For me that would be worth getting another car from them lol. Or at least returning there for service.

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Joaquin_Portland t1_jaez47a wrote

My first job was across the street from a hospital (early 1990s). The cafeteria coffee was 29 cents if you brought your own mug (any size)

I brought a quart mug and stayed buzzed on high test health care worker coffee all day.

Many good reasons why the hospital offered that deal.

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True_to_you t1_jaeipvg wrote

My old car dealership used to have a masseuse and snacks!

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New_Acanthaceae709 t1_jaerbtu wrote

Diners use cheaper ingredients, and don't throw any coffee out, while paying their staff much less than minimum wage.

Diners make their money on turnover; more customers across more of the day.

Car dealerships use the same cheaper ingredients as the diners, but yeah, the coffee is subsidized entirely as a perk, not a for-sale-item.

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