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Wednesday, October 2, 2013

Tel Aviv - New kosher chain offers cup of coffee for NIS 5

A new Israeli café chain is offering its entire menu for a fixed price of NIS 5 (about $1.40).

The chain, Cofix, launched its first branch this week on 92 Ibn Gvirol Street in Tel Aviv. Two additional stores will open on the city's King George and Ha'arbaa streets in the coming month, and a total of 300 branches are planned within three years.

Some NIS 200,000-300,000 ($57,000-85,000) were invested in the first branch, and the cost of the entire move is estimated at NIS 5 million ($1.4 million).

The kosher chain's menu includes coffee, fresh sandwiches, toasts, pastries (which are not baked on the premises), sliced fruit and vegetables, cakes and cookies, focaccia bread, soft drinks, freshly squeezed juice and ice cream – each item offered for NIS 5. In addition, the chain does not charge extra for soy milk.

Cofix is basically a combination between a café and a convenience store – only cheap.

Suppliers seem reluctant to be associated with the chain. Apart from the snacks (Nature Valley granola bars and Orbit gum), the only company identified in the small 30-square-meter (323-square-foot) branch is Coca Cola. The coffee company, Segafredo, and the cookie manufacturer, Lachmi, refused to have their logos displayed.

"The companies are afraid to say that we are selling their products for this price. There was a barista importer who finalized a deal with us, got threats from café chains and changed his mind. We finalized deals with three fruit suppliers and they all had a change of heart," Avi Katz, one of the chain's owners, told Ynet.

'Prices are high because of cartels'

Katz, who sees the new chain as an opportunity to make money, but also as a social initiative, is the former owner of the Hakol BeDollar ("all for $1"), Kfar Hashashuim (toy store), Sheshet, Naaman (home goods stores) and Dr. Baby chains, and the president and founder of the Keren Hagshama group investment fund.

His partners in the new imitative are entrepreneur Benny Farkash, Attorney Hanan Shemesh and businesswoman Hagit Shinover, Katz's daughter who serves as the chain's chief buyer. The concept, according to Katz, was duplicated from overseas.
"I don't sell for a cheap price, I sell for a fixed price. If you want – buy it, if you don't want – don't buy it," Katz told Ynet. "And I make money, even though charging another NIS 4 ($1.10) for a sandwich means a fourth apartment for one of my children in Tel Aviv.

"When the store measures 30 square meters in size and there are two-three workers, that already limits expenses. The electricity bill is lower, the property tax is lower, and we don't lose on any product. Why could people walk into Dr. Baby and buy a stroller for half the price, and the same thing doesn't happen with food?

"I keep hearing about the cost of living. Why do you buy a sofa for half the price compared to 10 years ago, a piece of clothing for half the price, a TV screen for half the price, but not food? There is not a single product in your life that you don’t buy for half the price compared to 10 years ago – a toy, a pencil, a pot, and only with food it's impossible.

"Why is food what became more expensive? Why? It's not right. It's because of the cartels, property owners and franchise owners."

Benny Farkash, the chain's CEO, added: "There is not a single product we lose money on here. We are here to make money."

'McDonald's meals are expensive'

According to Katz, the first branch was designed by interior designer Alona Eliasi, "who designs for oligarchs, so people will be even more shocked: Judging from the branch's design people think should pay NIS 20 ($5.60) for the coffee, not NIS 5."

McDonald's also sells coffee for NIS 5, even less.

"I told you, I don't sell cheap, I sell for a fixed price. McDonald's sells a children's meal for NIS 48 ($13.5). I don't buy in places which sell meals for an expensive price. Let's talk when I open a burger chain for NIS 10 ($2.80)."

What kind of profit can such a store generate as far as you are concerned?

"NIS 500,000 ($141,300) a year."

Will you open stores in shopping malls?

"No. The mall groups take NIS 5 for each coffee. So I won't open in malls if I can open at the entrance to malls."

Value for money?

A source in one of Israel's other café chains told Ynet, "You can't sell coffee for that price, unless it's not the main product they are selling. This means they'll be making most of their profit from the small items where consumers won't feel they are being robbed."

So is it possible for each product to cost just NIS 5? Are we being fooled? Ynet conducted a small inquiry. A small cappuccino (250 ml according to the chain), which is priced at NIS 10-16 ($2.80-4.50) in other chains, costs NIS 5 here. The coffee supplier is one of the most famous Italian companies in the industry, and it tastes just as good as the coffee in other chains. A cup of tea is also sold for NIS 5.

Cofix sells triangular sandwiches which look like the tramezzini sold in local supermarket chains. In other chains, similar sandwiches are priced at NIS 12-15 ($3.40-4.20), but in Cofix you are basically getting half a sandwich – one triangular sliced into two small triangular. Nonetheless, two sandwiches will cost you NIS 10, which is still a relatively low price.

In the vegetable box you'll get a cucumber and three cherry tomatoes for NIS 5 – quite expensive for 100-150 grams (3.5-5.3 ounces) of vegetables. In a local supermarket, for example, you can buy 1 kilogram (2.2 pounds) of cucumbers for even less than NIS 5.

The fruit box contains 150 grams of sliced apple and 10 grapes. Is that worth NIS 5? Not necessarily, considering the fact that you can buy 1 kilogram of grapes in the supermarket for NIS 10-15. In any event, both the fruits and vegetables are fresh and crunchy.

"For me, it's the most expensive product in the chain," Katz explained to Ynet. "Each of these packs costs us NIS 4, while a cup of coffee costs us about NIS 2. It's important to stress that we have not opened a supermarket. These are not supermarket prices."

The cookie sets sold in the chain are small, weighing approximately 50 grams (1.7 ounces). Nonetheless, in nearby cafés one can find similar cookies for higher prices, NIS 7 ($2) or NIS 10 ($2.80). The chain also sells soft ice cream from a machine and muesli in 330 ml containers (including Tara yogurt and granola). The Coca Cola cans are 330 ml.

To sum things up, the chain does offer expensive products like sliced fruits and vegetables, but it is still cheaper than convenience stores, and some of the products – like the different types of coffee – are undoubtedly cheap.

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