How should a cafe price? After all, most users are actually consuming multiple things at a coffeehouse. Yes, they are getting a jolt of caffeine and maybe a muffin, but they are also consuming a meeting space or a workspace. Indeed, that space may be more important to some customers if getting together with a friend or finding a place with WIFI is more the point of the visit than having a coffee.
That gets us to Tsiferblat, a Moscow-based chain of cafes that has a different pricing model than Starbucks and the rest of the industry. Here is how NPR tells it (Rubles For Minutes, Not Mochas, At Russian Cafe Chain, Jan 10):
Welcome to Tsiferblat in Moscow. It’s one of two in the city, and in English, it would be known as the Clockface Cafe.
When you enter, Polina Poliakova leads you to a cabinet filled with defunct alarm clocks. “When you come to Tsiferblat, first what you should do is take the clock,” she says, explaining what she calls “the ritual.”
So you choose a sturdy Soviet model and Poliakova notes your time of arrival. …
Clockface is the brainchild of Ivan Meetin, a 28-year-old who got started in the business by experimenting with a cafe that ran solely on donations.
Clockface is different, he says. “You don’t have to pay for coffee or tea or cookies,” Meetin says. “You should pay for time, and time costs — I hope — [are] not that expensive.” …
You pay two rubles a minute for the first hour — slightly less than $4 an hour — and then one ruble per minute for the time beyond that. Any time after five hours is free — so you can never spend more than about $12 per person.
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It is time for the gratuitous holiday post. Here, courtesy of Businessweek is a timeline of how Starbucks gets ready for the holidays (Starbucks’s 12 Months of Christmas, Dec 8):
And here are some of the things they are managing:
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This summer I added the Starbucks app to my phone and can now pay for lattes with it. This has had the unfortunate consequence of driving home just how much my family can spend on over-priced coffee as I now get multiple emails per week as the card paired with my phone gets reloaded. So far, it has been easier to just pay then take on two kids who are getting out of day camp and want a treat before heading home.
What does this have to do with operations? It all comes back to why Starbucks is so expensive. Frances Frei in her great article “The Four Things a Service Business Must Get Right” (HBR, Apr 2008) gives Starbucks as an example of a firm that has built around a clever funding mechanism. Anyone can sell you a cup of coffee; Starbucks offers you a third place with nice music, WiFi, and leather seats. All that has to be paid for but you can’t price it directly. Therefore, you get overpriced lattes.
But there is a complication: Starbucks cannot regulate consumption of its various amenities. One latte can buy a lot of WiFi, which gets us to this nugget from NPR (Lingering Laptop Users Wear Out Starbucks Welcome, Aug 9):
Starbucks wants its seating back. Some coffee shops in New York have started blocking their electrical outlets. They want to set a time limit on customers with laptops. Starbucks offers WiFi access and some customers complain they can never find a seat because students, freelance workers and others sit there all day.
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