The Price of Your Fancy Coffee Drink Just Went Up, Again

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The average cost for a cup of coffee is around $6 to $7 after add-ins, tax, and tip. Basic spots like Blank Coffee, Variety, and Abraço now charge around $4.50 to $5.50 for a baseline hot espresso-based drink, while some new spots are charging higher prices, more like $6 or $6.50 for a latte. This year, coffee price hikes are expected to be “inevitable,” according to the point-of-sale Toast report on the state of coffee.

The price of beans has increased, with farm labor costs ticking up for some of the fancier beans. Some buyers are shifting from Guatemala to Mexico for beans, an expansion of regions that we are also seeing with wine. The price of commodity arabica coffee has jumped more than 40% since before the pandemic, and specialty beans sourced for higher-end coffee shops from more diverse growing regions cost even more.

Labor costs have gone up, with the cost of minimum wage in New York City rising to $16 an hour in January. Many shops note that due to the post-pandemic labor shortage, they have long paid more than minimum wage to retain employees. Making peace with higher labor costs is worth it, as happy, well-paid employees have much more incentive to stick around.

Paper goods and insurance have also increased, with the price of insurance paired with the rise in the cost of paper goods putting pressure on businesses. For some shops, there are fewer places around New York to source paper cups than two years ago, which has pushed up the price of their most essential paper product.

Landlords are making up for lost time during the pandemic by opening stores and increasing demand for spaces. Rent for Variety’s original location in Williamsburg’s Graham Avenue has tripled since 2008, and some places like London-based WatchHouse Coffee stay in the $4 to $8.50 range for the more standard offerings.

More expensive coffee isn’t putting a dent in people’s coffee shop habits: the market can bear it. With nearly three percent more coffee shops in the U.S. than there were pre-pandemic, coffee chains have begun to expand their footprint despite the effects of the pandemic and staff shortages.

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Source: Coffee Talk

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