A busy day took me from one meeting to another in Tel Aviv. Somewhere in the middle of the afternoon I realized I hadn't eaten the who day and I was hungry but i decided to head home to get a little bite to eat.
On my way home stumbled by a Cofix restaurant. Cofix a new company in Israel provides small but acceptable servings for five shekels (a dollar fifty). There was nothing that I could just take out that really interested me and sitting down was not an option after a busy day. I really wanted to get home. I was not expecting much and it was the best of the worst but I was hungry. As I stood in line and saw the lady in front of me choose a fragrant soup and chocolate mousse that looked very appetizing I actually had to take a serious look at the menu. Sandwiches including smokes salmon where neatly presented next to croissants and cinnamon pastries all for a $1.50! This included starters and desserts. Is there anything they can’t do! So I got a few things. Listen they are $1.50 each, in Israel that a great price so I got a few things, a few sandwiches, deserts, a drink. On the way home, bad traffic allowed me a chance to eat. Tasty and fulfilling the experience made an impact.
So after savoring by budget food without an ounce of remorse from my purchasing experience or choice of food outlet I had to think what just happened. I would not call myself a foodie but I liked to think I know what good food is. After giving this a chance and kind of enjoying it I had a strange realization that Cofix may of actually successful touched the holy grail. Cheap food at a level of quality that was very acceptable.
Food has always had its segments. At one end you have fast food then affordable restaurants and then the elite, expensive restaurants with Michelin stars and celebrity chefs at the other. There is an overlap but fast food or the cheap budget sector has never been able or even tried to sit side by side with restaurants. I never rated Cofix food it was a place that I just got a quick coke or water on the go.
While I won’t bore you of the ways that they cut corners in all the food I ate apart from the drink, sandwiches and desert, the careful execution achieved good results. This is not a food critique. This is more about how these experiences affect the segments. When something like Cofix comes along everything gets kicked off balance.
So this is actually a story of segmentation and disruptive innovation. Segments usually stay within their borders. They know that is hard to compete with the advantages of the other segments so they rightfully in their place and choose to develop and promote their strengths in their own segment.
Cofix has not played by the rules and decided to ruffle feathers. They have redefined ‘quick and cheap’ that has stayed restricted to burgers and nuggets or something you know that’s not going to be terribly nutritious. Cofix redefined the space. For five shekels you have a healthy menu that’s not plastic, it’s not injected with food coloring and preservatives (or does not seem like it). So people expect a lot more from fast food because they can go to Cofix and eat real food.
Cofix has also ruffled the feathers of mainstream restaurants with their offerings. This is primarily due to price points and cross over from cheap to mainstream offerings. With these mainstream healthy offerings Cofix highlights the disparity between price and quality in traditional restaurants. People have started to ask if I can get that for $1.50 then surely, shouldn’t something costing four times as much be simply amazing? What is beginning to mystify customers is that what they see in restaurants is really not that much better and their response is — why should I bother! Restaurants in close proximity to Cofix have suffered and some have even closed.
Mainstream establishments need to improve, not complain. I think that restaurants have a lot to offer alongside budget offerings from the likes of Cofix but if they have shutdown unable to compete. This can only be seen as an indication that they sadly did not understand what they were offering and how they could strengthen their position.
I think central to Cofix is that they joined a list of disruptive innovators bringing no frill business gradually to the mainstream. We have seen it in the aviation or air transportation via a number of companies as well as hotel industry thanks to Airbnb and in the food industry in Israel at least, with Cofix. In the case of Cofix and the food or catering industry it’s interesting to see how, with decent food, people want to have food in their tummies and to feel satisfied and they are happy. It’s a gritty way to present the industry but it seems that is what it comes down to. So much so that it can compete with the ceremonial process of being waited on as carefully presented intro, main course and desserts are carefully presented to an ever discerning crowd.
A key point in disruptive innovations is where it makes that switch to gradually grow from low cost solutions into the mainstream. You see this move in industry where disruptive approaches take hold. In the third quarter of ’15 Cofix announced two amazing developments. Firstly an expansion of its menu and secondly a limited launch of its supermarket where everything, will cost five shekels. It’s a wonderful example of disruptive innovation and an interesting stage to showcase how competition reacts to the shift in the market.