What explains our recent infatuation with pricey coffee?
On the surface, it makes no sense.
At around $4 a cup, the average American spends over $1,100 a year on coffee. However, it only costs about 27 cents to brew a cup at home, which means we’re paying a whopping 1,500% premium for fancy made-to-order coffee.
That’s just absurd.
After all, most people would balk at paying $75 for a plate of chicken alfredo that costs less than $5 to make. Or $150 for a medium cheese pizza? Forget it.
Yet, millions are willing to pay that kind of premium to enjoy a frothy cup of espresso from a hip coffee joint.
What could be causing this widespread extravagance?
It’s not just convenience
A modern luxury, convenience seems like the logical reason people are willing to drop $4 or more for their daily dose of caffeine. However, the lines at Starbucks are notoriously long. Waiting 5 minutes or more for a specialty drink eats into precious morning commute time.
If convenience was the sole driver of coffee shops’ success, gas stations and supermarkets would get similar traffic for morning coffee. But they’re not.
Instead, customers young and old crowd the counters of trendy cafes, watching busy baristas sling portafilters into whirring machines while they wait for their usual. The spectacle barely lulls before picking back up after lunch.
Indeed, convenience alone doesn’t fully explain our wild obsession with expensive coffee.
Have your brew and experience it too
The main driver of coffee shop traffic is not the product, it’s the experience. Beyond disposable cups toting liquid brain fuel, we’re paying for an intangible experience that fill us–at least momentarily–with quiet delight.The main driver of coffee shop traffic is not the product, it's the experience. Beyond disposable cups toting liquid brain fuel, we're paying for an intangible experience that fill us--at least momentarily--with quiet delight. Click To Tweet
As Josephine Pine writes in The Experience Economy, experiences are “a series of memorable events that a company stages–as in a theatrical play–to engage [the customer] in an inherently personal way.”
From the moment we enter a coffee house, the stage is set. Indie music. Dimmed lighting. Chirpy baristas playing their role. A comfortable seat. A chance to be both actor and spectator.
That’s the reason we’re lured back again and again: to experience a bustling theater that produces more than caffeinated beverages. Coffee shops provide additional value by satisfying the following needs.
1. Ritual
Daily rituals like getting the same venti double-shot latte every morning breed a certain familiarity that many of us rely on and cherish. In an age of disruption, erratic weather, volatile stock markets, and cheese that moves, we value the comfort of predictability.
Rituals also help us cope with anxiety according to this research study. With unprecedented levels of worry and stress, it’s no wonder we prefer to ‘rinse and repeat‘.
Not surprisingly, companies feed ritualism to strengthen their branding. From an iconic logo to perfectly designed floor plans, Starbucks delivers a consistent experience every time. That consistency and familiarity fuels repeat business and brand loyalty.
In essence, making habitual purchases from familiar brands is a way for us to maintain stability in a world of uncertainty.
2. Refuge
Over the last few decades, coffee shops have assumed the role of society’s public meeting space/hang out spot/study zone. With stylish decor, chill music, and (once again) dimmed lighting, cafes have engineered a laid back vibe that instantly appeases harried souls upon arrival.
Ironically, coffee houses are open late–well past any time of day that warrants caffeine for most people.
This begs the question: Why do people congregate at a coffee shop when they don’t need coffee?
Often times, it’s to escape the tedium of life. That sounds morose but most of us practice some form of escapism. From social media to video games, arts to entertainment, we immerse ourselves in alternate realities as a reprieve from everyday life.
An informal space to connect and take refuge is what Starbucks refers to as the ‘third place‘.
3. Reward
Our culture’s propensity to splurge is evidenced by the popularity of self-care mantras like ‘Treat yo’ self‘ from the show “Parks and Recreation”.
With self-gifting on the rise, there’s little need for permission or excuse to reward ourselves, especially if the treat is small. ‘Just because’ is reason enough to indulge in a pumpkin spice latte.
When we do seek justification, we engage in self-licensing by allowing ourselves to indulge in something ‘bad’ once we’ve done something ‘good’. As this article explains, “Doing–or wanting to do well–provides a much-deserved boost to our self-concept. Since indulgent [items] often come with a host of negative tags, this positive boost helps us offset the negative connotations associated with such products.”
Whatever the motivation, treating ourselves to fancy coffee tastes a lot like retail therapy.
4. Regard
If Starbucks was cool, Instagram made it cooler.
The advent of social media propelled many brands to glory and as such, Starbucks’ aura in the selfie-sphere is unrivaled.
But even offline, there is an implied sense of status that comes with each shot of branded espresso. Lavish prices signal a certain degree of affluence while other factors like style and taste affirm liberty of choice.
According to Bryant Simon, author of Everything but the Coffee: Learning About America from Starbucks, “The bulk of our spending…is devoted to things that we don’t really need to survive. We want happiness, connections, and the respect and admiration of our peers. While some have turned to faith or the hope for change or the security of family to satisfy these wants, most of us almost without thinking still opt for the market to fulfill our most pressing needs.”
As social creatures, we seek every opportunity to gain approval from our peers, including our refined taste for upscale coffee.
Consciously overpaying
Do these benefits warrant such inflated prices for something as ordinary as coffee?
From a purely utilitarian standpoint, no. We’re definitely overpaying for coffee and it’s hurting us long term. And when budgets fail, too many lattes are usually to blame–that’s why they’re so hotly contested in the personal finance realm.
However, ‘overpriced’ is subjective and given the consumer trend towards experience over commodities, one could argue that $4 for a cup of joe is well worth it.
It's hard to ignore the coffee craze as it is undoubtedly one of the most cogent illustrations of our modern day zeitgeist. Click To TweetWhatever your take, it’s hard to ignore the coffee craze as it is undoubtedly one of the most cogent illustrations of our modern day zeitgeist.
