Cracking competitive 'kopi' market

Cracking competitive 'kopi' market

I was surprised to see long queues outside a relatively new coffee shop, selling traditional drinks like "kopi-o" and "teh-si", in the Central Business District (CBD).

The reason? A takeaway cup of "teh-si" cost only $1.10, half the price of a similar drink at other coffee shops in the area.

There is a tendency for food and beverage operators to cite rising rental and labour costs as excuses to raise prices. But the newcomer proved that sustainable businesses can be built despite such challenges. It managed to crack the competitive "kopi" market in the CBD by utilising a "high volume, low margin" strategy.

Incumbents should see this as a reminder of basic economics: When you take the easy way out and continually pass costs to customers to maintain your margins, at some point, someone else will offer a more economical proposition and your customers will choose the alternative.

Letter from Ms Michelle Lee

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