Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/528948
2002, when, soon after buying his first Mercedes, he stopped at a highway rest stop for coffee and pastry and had to go back to his car to get more money. "An elevator technician was parked next to me and laughed, saying, 'You also had to go back for more change?' I said to myself, 'If I have a new Mer- cedes with 40 stores and this hurts me, how does he feel?' " The idea got put on hold while Katz pursued other business interests. What lit the fire once again was the so-called 2011 cottage-cheese protests, a grass- roots movement that saw middle-class, mostly young Israelis pitch tents in the middle of Tel Aviv and demonstrate po- litically for weeks against the high cost of living. That movement, named after the exorbitant prices being charged for even the barest daily necessities, such as this basic Israeli staple, made headlines for months and forced the government to impose regulations and to change certain polices that eventually did lower some costs. Katz realized that the time was ripe not only to make a difference and help society, but also to launch a vi- able business model. "It only takes one person to say: 'Why does a cup of cof- fee cost so much money? Why does a cheese Danish cost so much?' " When Katz rolled out that first shop, he waited to see if the model would succeed before he reached out to franchisees. A branch must sell at least 1,000 items daily to make a profit, he says. The cost for a franchise is about $150,000, with franchisees putting down an initial investment of $40,000. Almost all the Cofix shops are located in busy urban areas with lots of foot traffic, and most are small by café stan- dards — smaller than 30 square meters — offering minimal seating for an oth- erwise predominantly takeaway crowd. "I'd love to get into the malls, but there's resistance — they prefer to have the expensive chains that take up more space with seating and charge higher prices," said Katz. The Cofix shops maximize every inch of space, and unlike the larger cafés, do not bake their pastries on- site. Instead a supplier provides Co- fix with some 60,000 baked items daily that arrive frozen and are then thawed and served. With a waiting list of about 1,000 aspiring Cofix owners, Katz is in an en- viable position. But in a country the size of Israel — geographically about as big as New Jersey, with a population some- where around 7 million — the satura- tion point is easy to hit. Katz says the solution is in those soon-to-open Super Cofix supermarkets. "I can't open a Cofix on its own in Beit Shemesh, for example," said Katz, referring to the city of 80,000 between Jerusalem and Tel Aviv, "because there's not one place that has enough foot traffic. But I can open one inside a Super Cofix, because that traffic will come. And instead of having to sell 1,000 items a day, the break-even point can be much less, because the overhead is much less." Katz says he is willing to look at how the concept may work abroad, espe- cially in the U.S. "If I found a suitable partner in the U.S., I would consider it," he said. "It's important to have a local partner. I don't believe in going into someplace as an outsider — you need to know the market and know the people." SCT r e T a i l i n g T o d a y J u l y 2 0 1 5 / S C T 27