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Cofix

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Cofix
קופיקס
Company typePublic
TASE: CFX
IndustryCoffee shops
Founded2013
FounderAvi Katz
Benny Farkas
HeadquartersTel Aviv
Number of locations
Israel: 167 (2017)[1]
Russia: 43 (2017)[1]
Key people
Haim Aharon (CEO)
NIS 74.7 million (quarterly)[2] (2018)
OwnersAvi Katz
Rami Levy
Benny Farkas
Gil Unger
Hagit Shinover
Hanan Shemesh
Websitecofix.co.il/en

Cofix (Hebrew: קופיקס, a portmanteau of coffee and fix) is an Israeli coffee shop, bar and supermarket chain established in 2013 by Avner "Avi" Katz. Most of the Cofix branches are in city centers, and other popular areas, but some are located in or next to educational institutions, such as the Haifa University[3] As of July 2018, it is controlled by Rami Levi Hashikma Marketing.[4]

The chain has 148 branches,[5] most of which are regular branches selling coffee, food products, and occasionally a small selection of other products. The Cofix Bar part of the chain also includes alcoholic beverages,[6] and Super Cofix is a Cofix-based supermarket. The chain originally offered all of its products at a fixed price of NIS 5 ($1.55),[7] including in the bar and supermarket branches,[6][8] but for a short time in 2017 raised the price to NIS 6, before reverting to NIS 5 while offering larger sizes for NIS 8.[9] The entire chain is kosher,[10] but in some Haredi population centers the products are additionally glatt kosher, and the branches have no seating areas. These are under the auspices the subsidiary Urban Cofix, and are branded Cofix in the City (Hebrew: קופיקס בעיר, Cofix BaIr).[11]

Cofix is listed at the Tel Aviv Stock Exchange under AGRI. Upon its entrance into the stock market, it was valued at NIS 90 million (~$28 million).[12] As such, Cofix became the first coffee shop chain to be listed at TASE.[13]

Business and impact

Cofix in Moscow

Cofix's entrance into the market caused a significant reduction in take-away coffee prices in Israel, notably in the Aroma Espresso Bar chain, which was forced to reduce take-away coffee prices.[14] Some stores and chains reduced prices on coffee, sandwiches, and other products similar to Cofix's to NIS 5 to compete.[15] This has been termed the Cofix Effect in major mass media outlets.[14][15] Cofix's entry into the market has been compared to the "cellular revolution" which took place in Israel a few years prior and saw massive reductions in cellular communication prices.[16]

Cofix's business model has led to a number of competitors, but as of 2015, only the Cofizz chain has remained as a major competitive force in the same market segment.[citation needed] The major coffee and fast casual restaurant chains, such as Aroma Espresso Bar, Café Café and others, also compete with Cofix. In late 2013, the Israel Antitrust Authority investigated claims that these chains coordinated prices in order to hurt Cofix's position.[16][17]

Cofix operates both directly and through franchisees. Its first franchise was granted in March 2015 for the King George Street branch in Tel Aviv.[18] In 2015, it entered the Tel Aviv Stock Exchange through the shelf corporation AGRI. The public owns 15.5% of the company.[19] In January 2016, Cofix partnered with Israeli burger chain Burgeranch that would see Cofix products sold next to Burgeranch ones.[20]

In June 2015, Cofix opened a supermarket chain, called Super Cofix, that contains a relatively small number of common items sold at competing chains, in smaller packages so they can be sold for a fixed price of NIS 5.[21] The business model calls for a gross profit of 22–23%.[22] Some major manufacturers, such as Tnuva, created new packaging lines to be able to supply Super Cofix.[22]

In February 2017, Cofix raised its fixed price to NIS 6 per item,[23] and in December 2017 the scheme was changed yet again to a variation of prices, mostly either NIS 5 for smaller items and NIS 8 for larger items.[24]

In January 2018, 20% of Cofix was purchased by Rami Levi Hashikma Marketing.[25] In June 2018, Cofix announced a streamlining plan, following a Q1 2018 loss of NIS 5.4 million.[2] In July 2018, Rami Levi's share of the company increased to 50.01%, making him the owner.[4]

Activity outside Israel

With the help of Russian investors, Cofix opened its first store in Moscow near the Red Square in October 2016.[26] The investment in Russia totaled $2 million as of December 2016.[27] By late 2017 the chain had 39 stores in Moscow, and four in Saint Petersburg.[1]

Future plans

Israel

The chain's founder Avi Katz has set out to open 300 Cofix branches in Israel,[10] with at least 10 Cofix Bar branches.[18] One-hundred eighty of those branches are set to be opened by 2020.[12][13] According to Cofix, it costs NIS 350,000 to open each new branch.[12] Cofix hopes to achieve a 3% market share countrywide, of the Israeli food market.[12] Cofix is set to open a factory in Yavne for supplying the chain with 13,000 sandwiches each day.[5]

International

Internationally, the chain's founder revealed plans to open Cofix branches in Moscow and London.[28] Locations in Turkey are also planned.[27] In Russia, the plan is to open 300 branches in Moscow and 700 elsewhere in the country.[29] The chain also plans to open branches in other European locations—two additional countries in 2018, and eight more in 2019.[30]

Controversy

Cofix has waged a battle against its main Israeli competitor, Cofizz. Cofix claims that the latter plagiarized its logo and exploited the success of its brand, while Cofizz founders claim that they worked for Cofix without a salary and in exchange for unfulfilled franchise promises, which forced them to open a competing chain. The battle has reached the Israeli court system.[31]

References

  1. ^ a b c "Израильская сеть Cofix планирует увеличить число кофеен в России до 180 в 18г" [Israeli Chain Cofix Plans to Increase Number of Coffee Shots in Russia to 180 in 2018]. Financial One (in Russian). December 18, 2017.
  2. ^ a b "Cofix switches to Q1 operating loss - Globes". Globes. June 3, 2018. Retrieved June 3, 2018.
  3. ^ Crystal, Meirav (October 12, 2014). "Cofix in the Academia: Will Open Branches in Haifa and Ariel". Ynet (in Hebrew). Retrieved June 19, 2015.
  4. ^ a b Kaneh, Hadar (July 26, 2018). ""אולי יהיו קצת יקרים יותר מקופיקס": אחרי ההשתלטות - רמי לוי מייקר את מוצרי הרשת" ["Might Be a Bit More Expensive than Cofix": After Taking Control, Rami Levi Increases Chain's Prices]. TheMarker. Retrieved July 26, 2018.
  5. ^ a b Azulai, Yuval (August 17, 2016). "Cofix to open Yavne factory". Globes. Retrieved August 18, 2016.
  6. ^ a b Ya'akobi-Hendelsman, Hiali (March 3, 2014). "Lehayim, and Cheap: Cofix Bar Opened". Israel Hayom (in Hebrew). Retrieved June 19, 2015.
  7. ^ of Israel staff, Times (February 16, 2017). "5-shekel coffee chain steams price up to 6". The Times of Israel. Retrieved May 25, 2017.
  8. ^ Hayut, Ilanit (November 10, 2014). "Super Cofix Founder: I Will Lower Your Grocery Basket Price by 30%". Globes (in Hebrew). Retrieved June 20, 2015.
  9. ^ "Cofix reverts to NIS 5 per item formula - Globes English". Globes (in Hebrew). Retrieved 2018-04-25.
  10. ^ a b Crystal, Meirav (September 30, 2013). "New Coffee Chain: Entire Menu for NIS 5". Ynet (in Hebrew). Retrieved June 19, 2015.
  11. ^ Prize, Yifat (August 29, 2016). "Coffee with Badatz Kashrut: Cofix Inaugurates Sub-Chain of Coffee Shots for Haredi Sector". Globes (in Hebrew). Retrieved September 1, 2016.
  12. ^ a b c d Bindman, Racheli; Kadosh, Nurit (May 4, 2015). "Price Tag of Cofix Chain: NIS 90 Million". Calcalist (in Hebrew). Retrieved June 20, 2015.
  13. ^ a b Levy, Aviv (June 15, 2015). "Cofix becomes first cafe chain on TASE". Globes. Retrieved June 20, 2015.
  14. ^ a b Yefet, Orna (October 14, 2013). "Cofix Effect: Aroma Israel Will Lower Take-Away Coffee Prices". Calcalist (in Hebrew). Retrieved June 20, 2015.
  15. ^ a b Crystal, Meirav (October 16, 2013). "Cofix Effect: More Coffee Shops Offering NIS 5 Menu". Ynet (in Hebrew). Retrieved June 20, 2015.
  16. ^ a b Dovrat-Mezrich, Adi (October 10, 2013). "Leading Coffee Chains Coordinate Steps: "No One is Going to Lower Prices"". TheMarker (in Hebrew). Retrieved June 20, 2015.
  17. ^ Levy-Weinriv, Ela; Hayut, Ilanit (October 10, 2013). "The [Antitrust Authority Chief] Investigates: Suspicion of Price Coordination Among Coffee Chains". Globes (in Hebrew). Retrieved June 20, 2015.
  18. ^ a b Yefet, Orna (March 3, 2014). "First Cofix Bar Branch in Tel Aviv Inaugurated; "At Least Ten More Will Be Opened"". Calcalist (in Hebrew). Retrieved June 20, 2015.
  19. ^ Hayut, Ilanit (May 4, 2015). "Cofix on Way to TASE Through AGRI Shelf Corporation". Globes (in Hebrew). Retrieved June 20, 2015.
  20. ^ "Fearing the King, Cofix and Burgeranch Team Up". Globes. January 28, 2016. Retrieved January 28, 2016.
  21. ^ Lukash, Alexander (November 10, 2014). "How Will Cofix Sell for NIS 5? Small Packages". Ynet (in Hebrew). Retrieved June 20, 2015.
  22. ^ a b Hayut, Ilanit (June 2, 2015). "Tnuva Trying to Solve Cost of Living Problem Without Lowering Costs". Globes (in Hebrew). Retrieved June 20, 2015.
  23. ^ "סערה בכוס קפה: קופיקס מעלה את המחיר ל-6 שקלים". כלכליסט - www.calcalist.co.il. 2017-02-16. Retrieved 2017-08-07.
  24. ^ Kadosh, Nurit (December 17, 2017). "קופיקס מחשבת מסלול מחדש: חוזרת למחירים של 5 שקלים" [Cofix Recalculates Itinerary: Returns to NIS 5 Prices]. Ynet (in Hebrew). Retrieved December 31, 2017.
  25. ^ Dovrat-Mazritz, Adi (January 1, 2018). "רמי לוי רוכש חלק מקופיקס - ואלה התוכניות שלו" [Rami Levi Purchases Part of Cofix – Here Are His Plans]. TheMarker (in Hebrew). Retrieved July 26, 2018.
  26. ^ Yeshayahou, Kobi (October 10, 2016). "Cofix Opens First Moscow Cafe". Globes. Retrieved October 10, 2016.
  27. ^ a b Benmeleh, Yaacov; Khrennikov, Ilya (December 14, 2016). "Israel's Coffee King Takes on Starbucks With $1-a-Cup Franchise". Bloomberg News. Retrieved January 9, 2017.{{cite news}}: CS1 maint: multiple names: authors list (link)
  28. ^ "$1 Coffee Chain Taps Into Israeli Anger Over High Cost of Living". Ynetnews. Reuters. July 4, 2015. Retrieved July 6, 2015.
  29. ^ Press, Viva Sarah (May 26, 2016). "Cofix to open 1,000 branches in Russia". Israel21C. Retrieved May 26, 2016.
  30. ^ "Cofix to expand worldwide". Globes. May 24, 2017. Retrieved May 25, 2017.
  31. ^ "Dirt Coffee: The War Between Cheap Coffee Chains Cofix and Cofizz". Globes (in Hebrew). Retrieved June 20, 2015.
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