by Sandy Ikeda
One of my students is writing a paper on the “coffeehouse business model,” looking in particular at how coffeehouses can afford to let their customers sit for hours “nursing a cup of coffee.”
One possibility is that this is an urban legend. For example, while I do sometimes spend several hours at my local coffeehouse, which I even refer to as “the office,” I make sure to put a dollar in the tip cup initially, and then get up every hour or so to buy something else and leave another tip – like renting my seat. I suspect others do something like this as well.
Another possibility is that a crowded store is a form of advertising. Having zero-price seating will fill the store without clogging the line at the counter, creating an ambiance that will attract more people. As staying and sitting down catches on, as it has in New York for some time, such advertising becomes free to the store.
Also, those who buy coffee-to-go may subsidize the relatively few (again in the US) who sit, so that “ paper pays for china.” But I’ve noticed in some places that coffee-to-stay is actually cheaper by the ounce than coffee-to-go because you get more in a paper cup than in a china cup. If there’s a cross-subsidy shouldn’t it be the other way around or at least the same price per ounce? Stores may give less to those who stay because of refills but I haven’t seen this happen much – in restaurants yes, coffeehouses, no. And perhaps there’s no cross-subsidy at all, but only a reflection that the price-elasticity of demand for those who want a place to sit is relatively low, while “goers” have more options.
As noted in my earlier “Coffeehouse puzzle” post, some stores charge for internet connections, computers gradually displacing books as the work-tool of choice. But not all do. And some coffeehouses ban computers during certain times, but not books, even though some people (like me) typically sit and read for a very long time. Roger Koppl comments on the earlier post that computer users may linger longer – something worth looking into.
Lots of questions for my student to investigate, and many hours to be spent drinking and observing in coffeehouses. Naturally, I can’t expect her to do all the field work herself.