Updated: Oct 16, 2019
In San Francisco, robots are making coffee for people with half price vs. Starbucks. Mission accomplished. CAFE X is disrupting the chain coffee retailer with interesting unique value proposition and credible investors onboard.
Innovation is an interesting concept and got my attention lately. I am keen to explore how innovation and ideation works for successful startups and how things will turn out for them eventually 4-6 years down the line. Here is a great example of a company that see the opportunity in an established industry which is not disrupted for a long time. In fact, cafe industry is pretty much the same for decades. Starbucks lead the way by disrupting the order of its time in 1970s by bringing new concepts to the market place. We all know the story.
The value that CAFE X brings to the table is very similar to what Uber did. Long queues that customers had to stand on their feet, the taste of the coffee was pretty much always different, even considering the fact that the process of making coffee at Starbucks or Gloria Jeans (Australian based) are standardized, crappy customer service, expensive coffee and so on.
CAFE X messaging is very simple: Never wait in line again! Order from our app and pick up your drink in seconds. Clover organic milk and Oatly’s Swedish oat milk are available at all locations. Product Specialists and Coffee Pros provide education on the story of each coffee they serve and offer insights into their advanced automation technology.
At the moment, 3 locations in San Francisco are available which will increase overtime.
Let's look at the value that CAFE X is delivering to their customers.
Lines are for the past
You can order your coffee on app. This is not anything new. But the smart part is that when you walk to the machine and you are 90 seconds away from the machine (Location and Geo services) machine starts making your coffee. By the time that you get to machine, your coffee is ready to go. And indeed, you can always expect that your coffee is hot!
Guaranteed taste and experience
Since the coffee is made by robot, and robot is always running the same recipe, you can make sure that the coffee you order has always have the same taste. There is no element of human error since robot is only following the process.
Location is no limitation
Starbucks have to invest a lot of capital to rent or buy a location that is suitable for the brand and the class and luxury they are offering. It is almost impossible for them to go cheap to save costs since the Starbucks brand stands for luxury. However, CAFE X is not limited to these hurdles. Since the brand is still not established, they can use this to their advantage and go wild with choice of their location. Plus, it is much more cheaper to put one of these machines in a building and still serve lot of people.
These machines can tell you the story of each coffee they serve and offer insights into CAFE X advanced automation technology. So if user decide to wait in front of the robot, they can enjoy bite size educational programs to raise awareness about how coffee has been roasted and what is the origin of each coffee.
And finally cost
Cost saving is still an important value proposition in modern business models. Except luxury goods, reducing costs for end user or even partners will be the primary force of disruption and CAFE X is no exception. The same coffee that you will have at Starbucks for $4.5, you can have at CAFE X at $2. Plus, as an Australian coffee enthusiastic, I do not like the taste of Starbucks coffee at all. It does not worth it!!
Great Angel investor
Let's not forget that this startup has been backed by Jason Calacanis which is one of top 10 angel investors of all time. He invested on Uber and Weblog Inc. His book titled "Angel: How to Invest in Technology Startups—Timeless Advice from an Angel Investor Who Turned $100,000 into $100,000,000" on angel investing is a masterpiece if you want to become Angel investor or to know more on how angel investing works.
This blog post is my personal observation on disruption and how startups can innovate the current status quo. These notes should not be a measure or encouragement for anybody to invest or not invest in this startup as I have no financial stake in this business. This post is only focused on how innovation can impact more people.