I am currently sipping my macchiato latte at pacific coffee company at Vivo City. Yeah.. they have nice plush sofa there.. and I just kind of like lounging around there with my laptop….
The coffee costs my 14 bucks (got 2 cups.. one for me another for my girlfriend… ) and yes.. I am perfectly happy with the trade. I guess this means that I had derived far greater utility from the trade then the 14 SGD, i.e.
Utility(ambience) + Utility(latte) >> 14 SGD
resulting in a very happy trade.
Then I recalled the times when I would go to the starbucks at fusionopolis (which is really near my office). I would again buy 2 cups of starbucks cafe latte and bring it back to the office. However, somehow, that hurts a little. Paying for coffee to bring back just dun seem to be worth that much. Being a rational consumer, that probably means that the utility from the trade is just slightly higher than 14 SGD.
Utility(latte) > 14 SGD
Ah.. that is because this time round.. I am no longer consuming the ambience of the place… Hmmm.. if I am feeling like that, wouldn’t that mean that a lot of other latte lovers will be feeling the pinch too? I believe a large costs of the latte business lies in the rental of the premises itself. (I did read an article that the raw materials to make a cup of starbucks coffee costs less than 10 cents…) So why not:
Offer a lower price for latte take aways?
The latte take aways will have a much lower costs to produce (as it does not consume retail space) and so it will be feasible to be implemented at a lower price. Consumers will also be happy since they are just paying for what they are consuming, i.e. the latte without the ambience….
The rationale for businesses to bill in the costs of retail space has been around for a long time.
I believe the restaurants charge corkage fees for customers bringing in their wine bottle is because the customers are consuming the valuable retail space while slowly enjoying their wine. Surely, businesses need to see the other side of things, i.e.
providing a lower price for consumers who do not consume your valuable retail space!
Hmmm.. maybe its time for the remaking of some new rules in the cafe industry. 