The continuing discussion around coffee cup pricing – BeanScene

How much should cafés charge for a coffee? It’s a simple question on the surface, but in reality remains one of the industry’s thorniest issues as cafés balance the sustainability of their business, and the broader coffee industry, against customer expectations.

Abdullah Ramay, CEO of Pablo & Rusty’s Coffee Roasters and a thought-leader on the subject, said cafés are generally charging $5.50 for a small, but the $6 mark isn’t far away.

“There’s a lot of flagships already sitting above that,” he says.

He pointed to his company’s own research showing that if a coffee is priced under $4.50, customers begin to question its quality.

“Once you start going over $6, people start to pay attention. And over $7, you’re potentially going to start losing a lot of people,” he said.

Still, he expects a steady upward movement of around 50 cents to a dollar each year.

While there were questions about how much consumers are engaged with what’s occurring at the farm-level, Abdullah says they do care if their local café disappears.

“We conducted a national survey and found a few things. One is, most Australians think coffee around the world costs about $5.50 – the same as in Australia. When we told them what the price was, willingness to pay increased by 30 per cent because coffee is a core part of people’s daily life,” he said.

Matt Gellert, Founder of Black & White Espresso, a hospitality group with three cafés, overcame the fear factor and raised his prices. His cafés are now “headed close to that $6 mark” – a figure that would have seemed unthinkable not long ago.

“It’s scary and even heartbreaking when you see a valued customer go somewhere cheaper but it’s a lot better to remain profitable and sustainable than it is to keep everybody happy,” he said.

“We didn’t really lose any business, and I think we’re more profitable than we were before.”

Ultimately, Matt said it’s about cafés recognising their self-worth.

“This doesn’t have to be a labour of love. This doesn’t have to be a vocation. This can be a real business, and you can make a life out of this,” he said.

“If you haven’t ever spoken to your biggest competitor… now’s the time. It’s not a race to the bottom. If everyone does it, it’ll be better for everyone.”

Lucy Ward, Green Buyer at ST.ALi Coffee Roasters, said the company’s own coffee shops were already pricing around the $7 mark with confidence.

She said addressing the value gap required “a collective effort from all actors” across the value chain. And while customers may not fully understand what goes into pricing structures, she believed there was room to better communicate the fundamentals – particularly the labour and input costs at farm level.

For more information, visit internationalcoffeeexpo.com