R14 Coffee. A R1.35 Million Franchise. How Does That Work?

By Sean Goldsmith

Xpresso Café sells everything for R14. With 80+ stores and millions of monthly sales, its volume model is proving its appeal.

Xpresso Café has grown beyond 80 stores by selling everything on its menu for R14 and now wants another 100 locations. Sean looks at how a South African franchise has made low prices work at scale.

Walk into Xpresso Café and there is very little chance of getting a shock when the bill arrives. A cappuccino is R14, as is a pie, a doughnut and everything else on the menu. The more surprising number is the size of the business that has been built around those prices.

Xpresso has grown from a single Durbanville store opened in 2016 into a national franchise network of more than 80 locations, selling around three million items a month. It now plans to add another 100 stores over the next five years, making this considerably more than an experiment in cheap coffee. Xpresso has spent a decade showing that a franchise can build meaningful scale around prices many conventional coffee operators would struggle to match.

The Price Has Always Been the Point

Xpresso opened with everything priced at R10 and held that price for five years before increasing it to R12 in 2021 and R14 in October 2024. That history matters because affordable pricing was part of the business from the beginning rather than a promotion introduced when consumers came under pressure.

The purchasing, menu, staffing and store model therefore had to work around the price customers were being promised. For customers, the proposition is remarkably easy to understand because there are no vouchers, complicated offers or membership schemes required to get the advertised price.

Making that simplicity work behind the counter requires considerably more discipline. Coffee, milk, packaging, wages, electricity and rent continue to move regardless of what is printed on the menu, so franchisees have to control waste, portions, staffing and property costs carefully. More than 80 stores operating under the same proposition suggests Xpresso has found a way to manage those pressures at meaningful scale.

Then There Is the R1.35 Million

Xpresso currently puts the investment required for a franchise at R1.35 million excluding VAT, including R150,000 in working capital. Its franchise material also presents an 18-month return-on-investment proposition and includes illustrations based on monthly turnover of R250,000.

Prospective owners still need to test those figures against the location they are considering because rent, customer traffic and operating costs can vary considerably between sites. The turnover illustration does, however, give us a useful indication of how the business needs to operate.

At R14 an item, R250,000 in monthly sales represents roughly 17,850 items, or around 595 a day over a 30-day month. Xpresso has previously reported typical customer counts of between 500 and 1,000 a day per store, which helps explain why takeaway trade and speed of service are so important to the format.

For a prospective franchisee, those transaction numbers deserve as much attention as the headline price. Selling inexpensive coffee can produce a substantial business when enough customers come through the door, but the location has to be capable of producing that volume consistently.

Three Million Items Change the Buying Equation

Scale also gives Xpresso an advantage that would be difficult for an independent café to reproduce. A single coffee shop buying for one location does not have the purchasing volume of a network selling around three million items every month.

Xpresso has additional control over parts of its supply chain, including coffee supplied through Jackass Coffee Roastery and dedicated food production. That matters when relatively small differences in the cost of ingredients, packaging and distribution are repeated across millions of transactions.

As the network grows, those purchasing economics become increasingly important. Another successful store does more than generate additional sales and royalties; it adds volume to a buying operation whose ability to control costs helps support the price customers see on the menu.

Cheap Does Not Mean Unsophisticated

Putting R14 on a sign is easy. Building more than 80 stores around that price while continuing to attract franchise investment requires considerably more work.

The proposition is particularly relevant in South Africa, where household budgets have been under pressure and consumers remain sensitive to the cost of everyday purchases. Xpresso does not have to reposition itself to appeal to value-conscious customers because affordability has been part of the business since the first store opened.

That does not mean every Xpresso location will automatically work. Prospective franchisees still need to examine customer counts, rent, gross margin, labour and the sales level required at their proposed site. The national network provides useful evidence that the format can work, while the return for an individual owner will still depend heavily on the economics of the location they choose.

The Next 100 Stores Matter

Xpresso no longer needs to prove that South Africans will buy coffee and food at R14. More than 80 stores and millions of monthly transactions have already provided a fairly convincing answer.

The next stage is about whether the same economics can be reproduced across another 100 locations. That means finding sites with enough customer traffic while maintaining the purchasing, staffing and operating discipline that has allowed the brand to keep its prices low.

If Xpresso can do that, its pricing becomes difficult for higher-cost coffee businesses to challenge permanently. A competitor can discount a cappuccino for a promotion, but rebuilding an existing store model around substantially lower everyday prices is a much more difficult exercise.

That is why the store count is ultimately more interesting than the R14 cappuccino. The price attracts attention, but a network of more than 80 locations shows that Xpresso has built an operating business around it. Another 100 successful stores would make the case considerably stronger.

What We Can Learn From This

Xpresso shows that low prices can support a franchise when the operation has been designed around volume from the beginning. Prospective franchisees should pay particular attention to daily transactions, rent and gross margin because those figures will determine whether the economics work at their proposed location. Franchisors pursuing a value strategy also need purchasing, staffing and property decisions that support the price promised to customers rather than leaving franchisees to absorb the difference. If Xpresso can reproduce its model across another 100 stores, it could become one of South Africa's more significant home-grown value franchises.