Cofix Owner: I Had No Choice But to Raise Prices

YERUSHALAYIM -
Cofix owner Avi Katz in one of his 152 Israeli coffee shops. (Flash90)

After his “bombshell” announcement Thursday that he was raising prices by 20 percent, Cofix chairman Avi Katz made the round of the weekend newspapers in Israel to explain why he was raising the cost of a cup of coffee from NIS 5 to NIS 6. “It’s very simple,” he told Channel Two. “Either I raise prices 20 percent, or I go out of business. But let’s keep things in proportion – we are talking about a shekel here, and we are still the cheapest place around.”

Cofix appeared on the Israeli scene nearly four years ago, after the protests in the summer of 2011 over the high cost of living in Israel. One of the few lasting results of those protests, Cofix revolutionized fast food in Israel by offering coffee, snacks and even a whole selection of a la carte meals where each item cost NIS 5 ($1.35). To put this in perspective, competing cafés were charging three times or more for their products. The idea caught on, spawning imitators, and Cofix itself expanded into the supermarket business, selling household products, grocery items, frozen food and much more for NIS 5 per item as well. Katz noted that the price increase applied to Cofix coffee and food products, but that the Super Cofix markets would continue selling its hundreds of products at the old NIS 5 price.

The culprits in the price increase, said Katz, were the usual: Increases in the cost of raw materials, labor, rents, taxes and other costs. “These increases in expenses were not sudden,” he said. “Stores that renewed leases over the past three years have all had to pay rent increases, and the cost of raw materials is constantly rising,” said Katz. “We have been absorbing the increases until now so that we could hold onto the NIS 5 concept, but that is no longer possible.”

Katz said he was concerned that customers might be upset, but was pleasantly surprised to find that they were very understanding. “In polls we conducted, 98 percent of customers said they would continue buying from us despite the price increase. My message to Israelis is that yes, I have to raise prices now, but keep in mind that over the last three and a half years we have saved you NIS 1 billion on what you would have spent on these items otherwise. Without this increase, there will not be a Cofix a year from now.”