Every Starbucks is exactly the same. Or at least, that’s the promise. Customers will encounter the same sickly green logo, the same soothing interior decoration, and the same slightly-burnt-though-passable coffee at every location they stop in, whether it’s off a turnpike in New England or in the middle of Beijing. This is a built-in advantage: Chains can ensure a monotony of quality throughout their locations.
Such commercial scale—there are over 20,000 Starbucks locations worldwide—has other benefits, too. Chains are omnipresent, so customers can depend on being able to reach an outlet in a pinch without having to consider a local alternative of dubious repute. Marketing budgets are huge. And the coffee company has also quietly become one of the largest digital banks in the world: Its Starbucks Cards, gift- and loyalty-cards that get loaded with money and used at any location, hold over half a billion dollars in passive cash at any given moment—accounting for 15 percent of Starbucks revenue. The card system, in conjunction with a smartphone app, makes Starbucks the purveyor of the world’s first truly successful mobile wallet, much to Apple’s chagrin.
That physical and financial infrastructure is a lot for any indie coffee operation to compete with. But a new app is here to help your favorite cafes compete at scale with Starbucks—and to make it easier for you to get your coffee along the way.
“Curation” is a popular claim of value for technology companies that often do little more that put another layer between businesses and consumers. Yet what Cups is doing is actually organizing small businesses into more powerful groups, almost like a union.
Cups is an attempt to create a “network of independent coffee shops,” providing them with the “power of large chains,” says co-founder Gilad Rotem in a phone call from Tel Aviv, where the company was founded in 2013.
How Cups works is refreshingly simple, unlike most financial technology. Download the app, then you get one cup of coffee for free at any of Cups’ 100 coffee shops around New York City. Then, sign up for a subscription plan the same way you’d sign up for Netflix or an Internet connection. (Coffee, in this case, seems like a similar necessity.) “The question is, what kind of coffee do you drink?” Rotem says. “Either you drink basic coffee, classic American, or you prefer the slightly more expensive, fancier drinks, like cappuccinos and lattes.”
After that, “choose one of the plans that suits your consumption needs,” Rotem says. Twenty dollars will get a pre-paid account worth 10 classic cups of coffee, while $60 a month will buy one of any kind of drink once a day. For complete obsessives, $120 pays for unlimited coffees of any kind for 30 days. Even that’s not a bad deal, considering at many of the shops Cups works with, a latte will easily run you in excess of $3.
It’s easy to see why buyers like it. “Users save between 20 and 30 percent on coffee,” Rotem says. Convenience is also a factor: “You prepay for coffee once a month then that’s it,” the founder says, “just like any mobile payment app.” Instead of a bulky Square station or wireless check-out device, Cups has the barista punch a numerical code into a user’s smartphone to confirm the exchange.
For participating coffee shops, the big selling point is “discovery,” the marketing buzzword for customers coming across a new business. By building a network of cafes, Cups markets all of them on a large scale. An app user is more likely to try out a new Cups-affiliated coffee shop both because it has been vetted by the app and because it’s easier and cheaper to spend money there. That advantage of discovery and potential added audience is part of the reason why coffee shops are willing to sacrifice a small amount of revenue to join Cups.
One benefit of the Starbucks Card is that it encourages loyalty in the company’s customers, reinforcing their already established brand habits. Cups does something similar for independent coffee shops, which certainly have an edge over Starbucks as far as creating unique customer experiences goes. Starbucks may please you, but it’s never going to surprise you. “We’re giving users a different, unique experience every time … by curating the coffee shops that work with us,” Rotem says.
Call it the Yelp problem—despite the proliferation of tools that crowd-source advice for what restaurants and bars to frequent, we always seem to need more expert advice. Perhaps a cacophony of reviews can be worse than none at all? Cups solves the problem by creating a closed network of quality shops that customers can trust without going to an international chain.
This “curation” is a popular claim of value for technology companies that often do little more that put another layer between businesses and consumers. Yet what Cups is doing is actually organizing small businesses into more powerful groups, almost like a union. The net effect is something like the “Disloyalty Cards” that were popular among a handful of London and Washington, D.C., coffee shops. By encouraging customers to check out a bunch of independent cafes, they all benefit.
While Square and PayPal provide small businesses with more advanced technological infrastructure than a cash drawer, those systems don’t replicate the profitable aspects of the Starbucks Card because they can’t hope to maintain the same scale with the niche-market approach. So far, Cups is all about coffee, and coffee only. Soon, Rotem says, they plan to introduce the “ability to buy additional products like pastries and muffins.”
While start-ups like Uber break apart taxi unions and labor platforms like Fiverr encourage the atomization of the traditional salary structure, Cups is doing something profoundly positive for coffee shops by bringing them together instead of apart. It’s as good as a shot of espresso for a very tired technological landscape more focused on big businesses and venture capitalists than start-ups that will never be the next Facebook—like your neighborhood coffee shop.
