Why Whole Foods Is Selling Coffee for 25¢

Without much fanfare, Whole Foods recently launched a special discount aimed at energizing customers—and sales, of course. The deal, valid through the end of September, offers 12-ounce cups of brewed coffee at Whole Foods for just 25¢ apiece. The price is good all day long, and customers are welcomed to as many 25¢ cups of java as they can handle.

Coffee, you may have heard, is a great profit maker for restaurants and other businesses, as the price it normally commands at the counter is far less than the cost incurred to make it. So why would Whole Foods cut into the profits of such a popular high-margin item? Because people are more inclined nowadays to crave coffee at all hours of the day, an extraordinary deal on coffee is a terrific way to boost traffic in stores during mornings, afternoons, and evenings alike.

The goal, of course, isn't merely to sell coffee at little or no profit. The hope is that the folks who come in for cheap coffee stick around to browse and wind up being tempted into buying a sandwich, organic granola bars, overpriced spices, or some other goods in the store. It's essentially a "loss leader" strategy, in which a restaurant or store loses money on promotions like $1 milk shakes and 1¢ notebooks, while making money in the grand scheme because customers drawn in by the cheap stuff also tend to purchase full-price items during visits.

Coffee is an especially good tool to use for these purposes, because, as mentioned, it's inexpensive to produce and many people want to drink it every day, at any hour of the day. No wonder, then, that fast food establishments like McDonald's and Dunkin' Donuts have been known to give away coffee free from time to time: It's all about increasing customer visits.

In the case of Whole Foods, the purpose of 25¢ coffee may also be to appease shoppers who feel the supermarket is just too expensive, especially in light of the recent scandal in which the chain was caught overcharging customers. Give folks coffee for a quarter, on the other hand, and it's easier to stomach paying top dollar for grass-fed beef.

In addition to the 25¢ coffee offer, Whole Foods' fall promotion includes special weekly discounts that sometimes knock prices down 50% on select items, and each store will host a giveaways that award one lucky shopper per week with a $500 gift card.

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