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Coffee beans and machine rental prices rise
By Craig Howells January 28, 2016 Leave a comment
What are the concerns about coffee bean prices over the past few years? Bean as well as machine rental costs have increased. Costs are now over $20 a kilogram for a 1kg bag of almost any brand and can even go up to around $30 from the 2 big supermarkets.Local online stores appear to start at $35 plus. Are we being gouged or is it a global thing? The cost of green coffee beans has remained stable over the past few months. This means that the wholesale price of roasted coffee beans to each café has probably stayed stable. Coffee beans are just one ingredient in the delivery of the cup of coffee. Other costs which have also risen and will impact every business owner include: shop rents, milk prices, staff wages and furniture.
Retail coffee prices rise over time as a consequence of the many rising costs associated with running a food business.
How many coffee beans is in a cup?
At an average price of $3.50 for a takeaway coffee how much of this is the coffee component?
Consider that the wholesale price of a bag of coffee would be in the range of $20-$25 per kilogram and each kg will produce approx 120 cups of coffee. Each shot of coffee will cost 17 to 21 cents per shot. Based on this, the quoted increases of 25% of the green bean coffee would indicate a 5 cent cost rise per cup.
Contrary to popular belief, opening a coffee shop is not a ticket to success. Due to the competitive nature of the café business, the final profit margin for the café owners is quite slim. An increase in any one of their business inputs has a dramatic affect on their final earnings.
When will I be paying more for machine rental and a coffee?
Over the few years, the financial turmoil has subdued customer spending and restricted the ability of café operators to pass on their increased costs. With some vibrancy in the market, now operators feel that they will be able to pass through a small price rise to the end user. Coffee machine retailers are under pressure from the weaker Australian dollar to increase machine prices.
Our research shows that 50% of cafés have review and usually increase their prices at least once per year. The increases have been between 10 to 50 cents.
What else affects the cost of a cup of coffee?
Other direct costs that need to be considered in delivering that beverage include:
GST at 10% = 34 cents
Takeaway cup & lid = 18 cents
Milk = 16 cents
Sugar & stirrer = 1 cent
Indirect costs of business need to be paid out of the remaining. The indirect costs include rent, wages, bank charges and EFT-POS fees, telephones, websites, business loans, tables, chairs, aprons etc.
How much coffee does Australia consume?
According to international figures Australians will this year consume approximately 2.9kgs per man, woman and child.
Australia’s coffee consumption totals for the current three year period are shown below.
Source: US Food & Agriculture and Australian Bureau of Statistics.
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