Cheap isn’t enough: How a startup coffee franchise keeps customers loyal

MANILA — Coffee shops are facing a tougher business equation: higher coffee costs, inflation and rising operating expenses can squeeze margins just as customers become more careful about what they spend. For a café, selling more cups does not automatically mean keeping more money.

That challenge is playing out against a difficult backdrop for the Philippine coffee industry. The Philippine Statistics Authority reported that the national wholesale price of roasted Arabica coffee reached P977.08 per kilogram in March 2026, up from P817.08 a year earlier. Meanwhile, headline inflation accelerated to 7.2 percent in September from 6.1 percent in August, while inflation for restaurants and accommodation services reached 7 percent.

These figures show the pressure on prices and the wider food-service sector; they do not establish But First, Coffee’s actual procurement costs or profit margins.

For Anna Isabelle Magalona-Go, president of But First, Coffee Inc., the answer to a crowded coffee market is not simply to offer a cheaper cup. It is to give customers a reason to return.

The business began during the pandemic as a side project and a backup plan. After moving from Bacolod to Manila, Magalona-Go said she knew what it was like to live paycheck to paycheck and want good coffee without treating it as a payday-only indulgence.

She saw an opportunity to make quality coffee more accessible to students and young professionals. What started with limited resources eventually grew into a franchise business.

But making coffee accessible is only the beginning. With more players entering the market, including larger companies able to scale quickly, price alone is a difficult advantage to defend.

“It’s not just about a coffee shop anymore. It’s a community that engages to and involves the customers on their preferences,” Magalona-Go said in an interview on Startup with Ron Cruz.

She said the company seeks to keep customers involved through promotions, collaborations and feedback on product launches and even store posters. The idea is to build a relationship beyond the transaction.

“No matter how cheap or how good your coffee is, if you don’t have that sense of relationship or that sense of passion with your customers, it defeats the purpose of running a whole business,” she said.

That emphasis on customers does not mean ignoring the numbers. Magalona-Go said the company focuses on what it can control as it works to sustain profitability.

“Businesses may have really high top line sales but what matters at the end of the day are the bottom line, like the net income,” she said.

The distinction matters for a franchise operation: sales can grow while costs, staffing requirements and day-to-day operating challenges also increase. A larger footprint is not, by itself, proof of a healthier business.

Magalona-Go said the company learned some of those lessons while expanding. As franchising accelerated, maintaining consistency across locations became more challenging. The operations team struggled to keep pace, and the business had to strengthen its systems, audits, team structure and use of data.

“What worked before won’t work now and as we continue to scale,” she said.

The lesson, she added, is that the systems that work for a small operation may not be enough for a larger one. Growth requires more structure and discipline—not just more branches.

The same caution applies to prospective franchisees. Magalona-Go said buying into an established brand does not make a business automatically profitable or passive. Owners still need to understand their numbers, monitor performance and step in when sales weaken or people-management problems arise.

During the interview, the business was described as having more than 230 stores, including 30 company-owned locations. That figure was cited in the program and should not be read as an independently audited store count.

Magalona-Go also discussed plans to broaden the customer experience through technology, automation and different store formats, including an all-day brunch concept paired with specialty coffee and a limited steak offering.

For But First, Coffee, the challenge is to keep the business relevant without losing sight of what brings people through the door in the first place. Competitive prices may draw customers in, but the company’s longer-term test is whether the experience, the relationship and the operation are strong enough to make them come back, and leave the business profitable.