We want to make money while you wait to hand over your money

cronutSomeday I will try a Cronut as long as I do not have to stand in line for it and I have not exhausted my empty calories budget for that week. Others however are more forward thinking and trendier (or is it awesome?) than I am. They stand in line, hours before the Cronut store opens,  to get their daily nutritional value from Cronuts.

If you are not one of those standing in lines and needs a primer on Cronuts, here it is

What is the Cronut™ pastry?
The Cronut is the unique pastry creation by Chef Dominique Ansel that many have described to be a croissant-doughnut hybrid. After its launch on May 10, 2013, Cronut fans spanned the world from Berlin to Singapore, making it the most virally talked about dessert item in history.

To this date, Dominique Ansel Bakery in New York is the only place that sells the Cronut, a specific product that is not to be confused with just any other croissant-doughnut hybrid. The Cronutbrand and product that is trademarked by Dominique Ansel Bakery both in the US and internationally. Please beware of imitation items claiming affiliation with the bakery.

So it is the brand and not the product, just like Band-Aid, Kleenex and Google are brands. Legally no other store can sell Cronut unless they have struck a licensing deal with Ansel. So fans line up in front of Ansel’s store so they can eat and enjoy it, Instagram it, Facebook it, etc.

What would most businesses do seeing incredible demand for their product? They increase prices, increase supply, increase reach (more outlets), and go for,  as expert bloggers recommend, market share.  But Ansel bakery steadfastly limits supply and lets the lines build up. On top of that Ansel found another way to monetize those standing in line to handover their cash,

The dastardly puppet master behind all this has even devised a cruelly beautiful scheme to wring yet more gold out of the hypnotized drones who rise at dawn’s break, queuing for hours to swell their cheeks with Cronuts.

Evil genius pastry chef Dominique Ansel recently birthed a gourmet coffee cart that will open before the bakery does, selling pricey hot beverages to those who wait hours in the cold for Cronuts, warming their bodies — if not their sad, dark hearts.

That is indeed genius. Silicon Valley startups give away products to get users in the building and hope to monetize them in the future using some yet to be determined way (Hint: it is Ads or Promoted something). Amazon gives away its Kindle Fire tablets at cost and says, “we want to make money only when our customers use our products”. Even Apple, that charges premium prices for its products and lets lines build up, does not try to monetize those standing in line to hand over their cash. Seeing Ansel selling gourmet  coffee at premium prices (and huge margins) you cannot deny this is genius. Evil? Well I would not go that far.

You might think why Ansel chose not to expand supply, fix pricing or increase reach. That is because he is most likely asking,

“What job  he wants the customers to hire the Cronut(TM) for?”.

If it is a mere sugar fix there are multiple alternatives that do that job at cheaper price. He wants customers to hire Cronuts for higher order jobs – vanity, experience, hedonism, conspicuous consumption etc. Cronut’s suitability for those customer jobs will vanish if he were to increase supply.

So,

He’s made a business decision that hype from Cronut scarcity is worth more than potential additional revenue from increasing Cronut supply. So how to make more money off Cronuts without making more Cronuts? Sell coffee to the frigid folks in line, a cup of which is made for pennies and fetches dollars. Evil. Genius.

3 thoughts on “We want to make money while you wait to hand over your money

  1. The paucity of his product has increased my line sitting business considerably! I offer delivery for those who want to try it but can’t or won’t brave the elements to try them. He’s not the only one benefitting !!! (347)744-WAIT

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