Will people pay for “authentic”?

The answer is, sometimes.

A friend from college, ages ago, married a man who started a coffee shop. The man is a genius at coffee. Designed and built his own roaster, buys shade grown fair trade beans from farmers he’s actually met in Guatemala, he is a serious coffee guy.

He’s also lost money on his passion for over a decade. While his coffee shop is awesome, it isn’t in an affluent city. It’s in a medium small city in a mostly rural county where multiple chain coffee shops are readily available off the freeway, and his store is in the city center.

Almost painfully he shared his doubts about whether or not people will pay for “authenticity” in their coffee. And the answer is, “sometimes, but not for the location you chose.”

Starbucks made the world accustomed to five dollar coffee drinks, but Starbucks also closes unprofitable locations. The business model of creating a comfortable “third space coffeehouse” for people to enjoy is sound. But if you want to make money, place your business in a place where there is more customer traffic, just like the Starbucks and Dutch Bros did by being right off the freeway exit.

Having a great product is only one ingredient in a successful business. In fact you can even specialize in having barely passable products at ultra affordable prices like Harbor Freight, Tractor Supply, or any of the Dollar stores. You can have a high cost, low volume, business model if you can find clients to pay the prices. You can have a low cost, high volume, business model and be much more successful. People who shop at Harbor Freight or Dutch Bros don’t want “authentic” they want a tool that will work for the project they are currently on and a cup of coffee to get them through the afternoon. They don’t care about “Chinese labor exploitation” or “shade grown organic certified rainforest fair trade” crap.

Now I wish my friends well, but he really needs to get into a higher trafficked business location, so he can offer the authentic coffee experience he creates, to a bigger mass of consumers who don’t really care about authenticity.

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2 Responses to Will people pay for “authentic”?

  1. Dick B says:

    Well, Cap’n, there’s serious, stubborn and then there’s stupid. Most Hippies toss in the serape ‘n sandals sooner than ten years. Too bad such a high order of dedication was not complemented with common sense. Even so, no compromise is a losing position most of the time.

    Like

    • rthtgnbs says:

      He’s slightly more “Libertraian” side of Hippie than “Leftist” so there is a strong work ethic there, and I do think his business model is sound, just his location isn’t working. This whole post came about because the Landlord wouldn’t renew their lease on the coffee shop, so now he HAS to move somewhere else.

      Like

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