Half Caf, No Cash

Now and then, an American entrepreneur comes up with an idea so profitable he never has to worry about money.

Coffee houses are one such windfall—ever stop and think about the cost of the ingredients in one of those java chip frappucinos that sell for about five bucks? Pennies, at most.

Search engines are another—ever stop and think what it costs to publish information without having to pay for paper or printing? Nothing, at most.

That brings us to Ervin Peretz, a Google programmer who has opened a coffee shop just outside Seattle where customers are encouraged to can pay whatever they like, absolutely nothing if they so choose.

The menu lists no prices.

The staff demands no money.

What should we make of this? I think Peretz is either too nice or has too much money.

When contacted, he astutely pointed out that he doesn't have to pay a cashier, a significant savings. Nor is his office staff pricey, inasmuch as it consists of him.

Peretz says his coffee shop, the Terra Bite Lounge in Kirkland, will break even when he begins to attract 200 customers a day. It's like the old joke about the discount car dealer who claims he's losing $100 on every automobile he sells. Asked how he plans to make a profit, he replies, "Volume."

I have to admit I've always been curious about the economics of the coffee shop business. I notice how people spend afternoons in Starbucks, pounding away on their laptops, buying almost nothing, taking up tables that could be occupied by paying customers. I wonder how the place stays in business.

Now I know. The answer is simple. These days selling coffee is so profitable you don't have to charge people anything in order to get rich.