A Madison startup making a “coffee app for coffee goers” says its product could help drum up business for independent coffee houses around the U.S.
The app, Cortado, is a coffee house subscription company. Users pay a monthly fee that entitles them to a predetermined number of coffees, specialty drinks and food items per month from a network of coffee shops in the area. (A cortado is an espresso drink from Spain made with roughly equal parts espresso and milk.)
Jazz Technologies, the company developing and doing business as Cortado, has been aggressively marketing the service in Madison, Milwaukee and Berkeley, California, the cities where it will tentatively launch in April. Five coffee shops, the names of which the company declined to disclose, have apparently agreed to be part of the Madison Cortado network so far.
Max Bogost, a co-founder of Jazz Technologies, said it's not certain what the specific price points for subscriptions will be yet. Packages will range from about $10 a month for one coffee a week, to $100 for unlimited drinks. At any level of subscription, the per-coffee cost will be lower than it would be for a non-Cortado user.
Bogost said the per-unit savings is at the crux of the business model, and is a win-win for customers and coffee houses alike. Consumers will sign up to get coffee at a discount, and while coffee houses make less money per sale, they get a reliable stream of customers.
“For the coffee shop side, it’s tapping into a very loyal user base. You’re probably only going to got to that coffee shop, because that’s where you’re going to buy your coffee,” said Bogost.
Cortado contends that the app's network provides a visibility benefit and will be a boon for local, independent businesses. It excludes chains like Starbucks, Peets and Dunkin’. (Dunkin’ Donuts changed its name last year to reflect an increased focus on coffee).
Bogost said he's a prime example of someone the app might win over.
“I go to Starbucks almost every single day,” he said, “and I’ve struggled to find an incentive to change out my routine. This would solve my problem by offering me a financial incentive.”
Convincing chain-loving consumers to change their routine will likely be the most difficult challenge for the company, Bogost said.
“It’s hard to get people to switch up their daily routines,” he said. “We’re trying to change consumer behavior, which is tough.”
The app is part of a broader trend of digital subscription services targeting brick-and-mortar industries. MoviePass, a movie-going subscription service known for its tumultuous flash of popularity in 2018, is one example. The Cortado team points to others in the food and drink space as inspirations for their product, including MealPal, which offers subscription packages for restaurant meals.
Jazz Technologies is a Madison-headquartered LLC, although its team is spread out across the country. Bogost is currently based in Oakland. The rest of the team is dispersed between Madison and Chicago. It currently has no official business headquarters.