10 rand (50 US cents) coffee idea grows to 65 stores

Interview with Nicolene Elhadad
CO-FOUNDER, XPRESSO CAFÉ

Lives in: Cape Town, South Africa

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In 2016, South African entrepreneurs Nicolene Elhadad and her husband, Tomer, launched Xpresso Café, a takeaway coffee chain with a simple concept: every item on the menu cost 10 South African rand (about 50 US cents at the current exchange rate) – almost a third of what major coffee chains charged. This applied not only to coffee but also to pastries, pies, sandwiches, and other food items.

Today, Xpresso has expanded to 65 stores across South Africa, selling over 50,000 cups of coffee daily. While the price has since increased to 14 rand per item, it remains significantly cheaper than most other coffee chains.

How we made it in Africa editor-in-chief Jaco Maritz spoke to Nicolene about how they built the business.

Topics discussed during the interview include:

• How the idea for a 10 rand coffee came about
• Starting their first business from a garage
• Why everything on the menu is the same price
• Expanding to 65 outlets
• Business lessons learned: hiring slow and firing fast, negotiating with suppliers, and adapting to setbacks
• Trusting their instincts despite early scepticism

Watch the full interview below: (only available on howwemadeitinafrica.com)

Interview summary

The couple, already established entrepreneurs, came up with the idea for Xpresso while sitting in a coffee shop, reflecting on how high coffee shop prices put a daily cup out of reach for many. “For me, coffee is something that you should be able to enjoy every day,” Nicolene says. “It shouldn’t be something you spoil yourself with once a week.”

With no prior experience in the food industry, they spent two years refining the business model. Their goal was to make the pricing a “no-brainer,” ensuring customers could buy something without hesitation. “The vision that we had was for an entire family to come in, and with a 100 rand, five people can each get two things, which was unheard of,” Nicolene explains.

“We wanted people to be able to come back every day. And I think for any small business, if you could have a product that you can sell or a service that requires people to come back all the time, that’s a winning formula, which is not always easy to find,” she adds.

Opening the first store

Xpresso’s first store opened in Durbanville, a suburb outside Cape Town. The night before launch, Nicolene had doubts. “I don’t think this is going to work. No one’s going to come,” she told her husband. But Tomer was confident. “You and I go every day and we buy a coffee for 30, 35, 40 rand,” he told her. “People will come. It’s 10 rand.”

Word spread quickly as customers who bought from the store told their friends about the 10 rand coffee, with many sharing the shop’s pricing on social media. This organic buzz helped draw more attention, and soon, the company was featured on several radio and television programmes.

Because the business relied on low prices, negotiating with suppliers was crucial. The company had to convince them that while Xpresso’s pricing was lower than competitors, the volume of sales would be much higher. “We did negotiate with everybody, saying, ‘Please understand, we’re not gonna buy just … 20 croissants a day, we are gonna buy hundreds and even thousands a month from you,” Nicolene recalls.

“We wanted people that were willing to grow with us. And I couldn’t promise them that we were gonna have 65 stores one day but I did promise them that there was no way I was gonna give up until I find a method that’s gonna make this business model work.”

Growth, pricing, and supply chain adjustments

By the end of its first year, Xpresso had expanded to five stores. As interest grew from individuals wanting to open their own Xpresso locations, the company decided to introduce franchising. This move accelerated its growth, and today, Xpresso has 65 stores, selling over 50,000 cups of coffee daily across its network.

It managed to keep its 10 rand price point for five years before increasing it to 12 rand in 2021, and then to 14 rand at the end of last year.

The company recently opened its own food factory in Cape Town to supply its stores. The decision was driven by several challenges it faces with external suppliers. Sourcing from multiple vendors led to inconsistencies in product quality across its locations, while some suppliers struggle to meet Xpresso’s daily demand. In addition, many suppliers have geographical delivery limits, restricting the company’s ability to expand into new areas.

Business lessons

One of Nicolene’s key business lessons is to “hire slow but fire fast”. She explains: “If someone is not valuable to your business and they’re not helping you – they’re not loving the business like you do, they’re not bringing the money in, they’re not putting the effort in – you need to get rid of them. Because a bad apple can spoil your entire bunch, especially in a coffee shop environment where there’s a small team.”

She and her husband are also not afraid to try new things. “Before we do something, we work out the worst case scenario – if this doesn’t work, what are we going to lose?”

Nicolene recalls one instance where Xpresso stopped accepting cash payments at one of its stores to reduce theft, allowing only card transactions. However, the move proved unpopular with customers, and the company lost hundreds of thousands. While it was a hard lesson, the couple simply reintroduced cash payments and moved forward.

Despite early scepticism, Nicolene says the biggest lesson is to trust your instincts. “If you don’t take a chance on yourself, no one else is. So I always say to my family and friends, if you want to do something, just go for it.”

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