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COSTA COFFEE; OVERPRICED?
People tend to fall into two broad categories when it comes to Coffee Shops; those that use them (whether infrequently as an occasional treat or regularly as a caffeine fuelling station) and those that never venture into such territory on the grounds (small pun intended) that £2 or more for a 'cup of coffee' is a complete and utter rip off.
So are coffee shops ripping us off by charging us so much for a single hot drink? In my opinion, not at all. I'll explain why. On the face of it, the cost is unjustified; the beans, milk and water used for a single cup simply don't add up anywhere remotely close to 200 British Pennies. But there is more than just this to take into account. If you were to make a coffee at home, for example, you would also have to use electricity to heat up the water in the kettle, you would need to use hot water and a cleaning product to clean the cup and spoon after (all of which cost extra pennies). In a coffee shop, you aren't JUST paying for the overheads either; you're paying for someone else to make your drink with a little expertise and you're paying to sit in a warm and comfortable environment. You're also paying for convenience; to be able to pop in and grab a coffee in the middle of a shopping trip perhaps. If you're out shopping and suddenly could do with a nice rest and a coffee, to trek back home for the trouble just wouldn't cut it. Even if it were desirable, the petrol used to drive home and back and the pure hassle and time taken would have a cost all its own. The key here is to realise you're not just buying a coffee when you hand over two small gold coins and a silver or two in Costa; you're buying the whole package. In short, you're paying for an 'experience'.
COSTA; A HERITAGE OF QUALITY
Having a wife who has extensive experience as a Barrista (I hope I spelt that correctly. If not, I apologise to anyone working in legal services) and being a coffee-lover myself, I have compared several different coffee stores and chains. For me, Costa is probably the most superior coffee chain in the UK. The company was started by two Italian brothers who came to London in 1971, bringing their Italian Coffee expertise with them. Today, the company is far larger than that first store in London but Costa continues to deliver high quality. The time taken for a 'shot' is around 20 seconds; the optimal time to strike a good balance between strength and taste. This rates better than Cafe Nero, for example, who pull their shots far quicker to serve customers more speedily but at the cost of quality and flavour.
Costa also use Monin Organic syrups for flavouring their lattes and Mochas; a high quality brand of syrup. Perhaps the only caveat I have detected in a Costa store is a barrista using a shot to pour into a coffee that had been left sitting a short while; perhaps left over from the previous drink made. This might not seem an issue but if a shot is left sitting for more than about 25 seconds or so, it starts to become very 'bitter' and will make the coffee bitter when it is used. It was hard to tell if this was an individual mistake or a wider training issue but since it seems to have been a one off, I wouldn't hold this against Costa.
COFFEE CLUB; POINTS TO MAKE
Like almost all Coffee Shops in the UK, Costa operate a loyalty scheme for their customers. Whilst most coffee shops offer customers a simple card to be stamped for each drink bought, then offering a free drink after a certain number of stamps are collected, Costa credit their coffee club cards with 5 points for each full £1 spent. 1 point equates to 1p. Initially this seems to offer a 5% discount, but this isn't strictly true because you're actually getting a 5p discount for each £1.05 spent (£1 of your money and 5p for the points credited) which means this equates to a discount of up to 4.76%. Of course you don't get points for any odd pence, so spending £2.80 will credit you an effective discount of 3.57%.
COSTA VS THE COMPETITION
To give you a comparison against some of the main contenders, I haved detailed some of them below and I've used as much mathematical wizardry as I can muster to give a clear "bottom line" comparison:
COSTA COFFEE (3/5)
Earn 5 points for every full £1 spent. Each point equates to 1p. Points collected on all products. Earn 100 bonus points by registering online!
Effective Discount: Up to 4.76% (2.51% Minimum).
CAFE NERO (3/5)
Get 1 Free Coffee or Drink for Every 9 Stamps. 1 Stamp awarded per drink. Crucially, stamps can be collected with cheaper drinks and the free drink can be of ANY value. Stamps ONLY earned on drinks.
Effective Discount: 10.00% Average (Based on all drinks bought being of equal price and no food purchased).
BHS & MCDONALDS (4/5)
Get 1 Free Coffee or Drink for Every 6 Stamps. 1 Stamp awarded per drink. Crucially, stamps can be collected with cheaper drinks and the free drink can be of ANY value. Stamps ONLY earned on drinks.
Effective Discount: 14.29% Average (Based on all drinks bought being of equal price and no food purchased).
A more complex scheme. Earn 1 Star on each purchase (regardless of the number of items being bought in that purchase). Receive 1 Free Tall Drink for 15 Stars on Green Level. Once you collect 50 stars you reach Gold Level. You continue to receive 1 free drink for every 15 stars plus have an extra shot, syrup or soy milk included for FREE with ANY drink (Costa allow soy milk for free as a substitute as standard).
Effective Discount: 6.25% (If you stay on Green Level and purchase 1 drink on each purchase. This rate would decrease if any purchase included more than just 1 drink). Gold Level is hard to calculate as the 'effective discount' increases with each drink bought after 50 stars. However, you would have to purchase at Starbucks at least once a week to reach this status and you only keep it as long as you earn 50 stars within the following year.
Of these competitors, Costa appears to rank lowest yet scores 3/5 (more than Starbucks). This is because the above data is not a completely fair comparison without highlighting the following advantages and disadvantages of Costa against competitors;
> With Costa you earn points on ANYTHING (including food). Most competitors only award points or stamps on drinks only.
> With Costa you can use your points to buy ANYTHING (including food). All known competitors only allow loyalty rewards to be redeemed against drinks.
> Starbucks can work out a lot less attractive than illustrated as a single purchase including anything more than just one drink reduces the effective discount significantly.
> All schemes EXCEPT Costa can be enhanced by collecting points/stars on cheaper drinks and redeeming against more expensive drinks. With Costa, all rewards are directly correlated with money spent.
The Costa Coffee Club Card can ONLY be used at standard Costa stores. It is not accepted at "Proud to Serve Costa" outlets or "Costa Express" concessions. If you don't use your card for 12 months or longer, the card will be wiped clean. This isn't a con to try and claw back some revenue; the fact is that Costa's online sever would just become clogged up with records and data for long lost redundant cards if they didn't put this rule in place. At some point, if a card isn't being used, they just need to clear it from their systems. Also, the card cannot be used against alocohol purchases (although this only applies to a very limited number of stores).
Another point to bear in mind is that points can only be redeemed against the FULL price of one or more items; you cannot use points to make part payment towards any single item. I guess this is in place to make things simpler for Costa and to ensure that you always have left over points to keep incentivising you to collect more (so as not to 'waste' the surplus from your last cash-in). This feature is a little irritating but it doesn't directly affect the overall benefits.
Overall, I'm a Costa fan. I prefer their coffee to other competitors and I think that their Loyalty scheme is generally the fairest for both Costa and the customer. It does, of course, extract a lot more custom from the cardholder than if no such scheme existed and so, like all coffee shops, the benefits to Costa outweigh the costs. Costa's food range is not necessarily superior to any other chain but it is by no means inferior either.
I gave this scheme 4/5 - not the most generous scheme of all and the restriction on not being able to use points as part payment for an item is slightly nagging. That said, the ability to collect on everything is a real bonus and lets be honest; it's a small freebie nonetheless.
If you enjoy coffee and you've always seen coffee shops as a bit of a rip off, give one a go and see if your perspective shifts. If you enjoy a coffee out and about, find a favourite and start building rewards!
Nearly an off topic due to the heavy use of comparisons. Generally misinformed.
Nar2 07.02.2012 12:10
A fair review here, but a little misinformed, judged by the info that you got from a family member where coffee costs are concerned. Having worked in the coffee industry that nearly took over my life and where I nearly bought a business, I don't know where you get the justification of the pricing -- for a start coffee cups - not all are the same - are pretty expensive to buy, with cheaper priced cups that aren't heat insulated and don't allow company names to be printed on them. There are also cups that won't allow the universal sip lids to be closed over them - so the price that Costas and other companies charge is justifiable - universally small, medium, large cups per 500 in a box command a price EACH of £2-50 if you go for the kinds that Costa sell. More so when you take into account that syrups are additionally expensive to buy at wholesale prices, and they differ on quality. Monin syrups are not my favourites - you're quite right that they do go off - others don't and they also tend to turn bitter when using for milk steam drinks or milkshakes. Yet you only reflect on the water (which is free) , milk (which is an option) and the coffee beans. Charging £2 is minimal I'd say with the overhead of the additional supplements that promote the actual bean and its use in the shop. Also, the speed of "shot" has nothing to do with quality. Espresso coffee grind needs lower temperatures at all times - the machines we buy from department stores often burn the grind at higher temperatures destroying the taste and instead giving off a naturally bitter taste with no body. If an espresso blend tastes bitter from the moment it's served in a cup, it's the actual BLEND of the coffee that is being used. I see no difference between Nero & Costas sadly. The coffee isn't a rich blend to begin with and they're all copying each other anyway, with the only exception being Starbucks who offer a lot more filter varieties over "re-designed espresso" styles.