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supergooduser t1_jaem253 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

Good description, but to add:

I have a business degree.

You're asking a good question. But generally there's less money to be made in cheaper products.

Compare a Dollar General to an Apple Store, it's pretty obvious which company is more successful.

Krispy Kreme and Five Guys come to mind as businesses that were focused initially on one singular product. But they weren't necessarily focused on being cheaper. They used the savings of focusing on singular products to increase their overall growth.

Also... when it comes to coffee the cost savings you're describing aren't necessarily enough to motivate a consumer.

A small cup of coffee at starbucks is $1.55, at McDonalds $1... at this point it's kind of like driving out of your way to save a few cents on gas. Some people do, but not necessarily enough to motivate an entire new business model.

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SpaceAngel2001 t1_jaeyhj0 wrote

>generally there's less money to be made in cheaper products. Compare a Dollar General to an Apple Store, it's pretty obvious which company is more successful.

Ummm...Dollar Gen will open more stores this year than Apple has in total. You used a Really bad example. See Walmart. There's lots of money to be made in high volume low markup sales.

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weinerpretzel t1_jaf0uhm wrote

Dollar General has a Market Cap of 48.36 Billion, Apple’s is 2.33 Trillion, roughly 48 times more. Safe to say Apple is a bit more successful

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Mayor__Defacto t1_jaf06oe wrote

Apple has billions and billions in net profit running a ~24% margin on their flagship products. Dollar General nets about $29k per store per year. Apple makes that selling 100 phones.

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SpaceAngel2001 t1_jaf0mhq wrote

You moved the goal posts. It was about comparing stores. DG is one of USA's most successful retailers.

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XsNR t1_jaenr1b wrote

McD's have some free coffee offers in some markets too, to try and incentivise people to come buy McBreakfast. That's probably more like what u/Educational_Sir3783 was thinking.

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virgilreality t1_jaen3s8 wrote

The better model would be to attract a lot of customers with cheaper coffee, but also offer premium options.

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SpaceAngel2001 t1_jaexqzm wrote

>The better model would be to attract a lot of customers with cheaper coffee, but also offer premium options.

So you’re smarter about running a coffee biz than Starbucks? Any advice you want to give to astrophysicists about figuring out that whole big bang thingy?

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LastChristian t1_jaetl5l wrote

People who have a marketing degree commonly say they have a “business degree” so people assume they’re educated in something smart, like finance or economics, rather than marketing.

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