Israel's revolutionary low-cost coffee franchise is in trouble.
In 2013, entrepreneur Avi Katz opened Cofix, a cafe which offered a variety of coffees, sandwiches, and other Israeli staples for the price of just five shekels ($1.29) - at a time when the price of a small latte averaged 7-9 shekel ($1.81-2.33). He single-handedly began a revolution in coffee prices nationwide as multiple competing chains opened, also adding competition to his franchise.
However, recent numbers released by Cofix shows the franchise struggling. Cofix had an abysmal fourth economic quarter of 2017, suffering a NIS 3.5 million loss, more than double than the NIS 1.6 million loss it suffered during the fourth quarter of 2016.
Cofix also recorded a 21% decline in revenues from its 129 coffee shops, which bottomed out at NIS 22 million, while revenues from its SuperCofix convenience store line grew by 24% to NIS 52 million.
Cofix blames the increased minimum wage and government regulation for the sinking revenue.
The chain had tried to counteract its sliding fortunes by raising the base price from 5 to 6 shekels in February before returning it to 5 shekels in December. Cofix also introduced larger portions of coffee and salads for 8 and 12 shekels.