Though many of us became upset when prices began to creep up last year, they’ve since largely settled in the range between $4 and $5 for a basic drink.
Our recent survey of Australian capital cities found the average price of a small takeaway flat white at speciality venues is $4.78.
In London, a small flat white costs about $6.96, in Singapore, $8.42, and in Athens, as much as $9.95.
Over the past few decades, coffee prices haven’t kept pace with input costs. In the early 2000s, after wages, food costs, utilities and rent, many cafes earned healthy profit margins as high as 20 per cent.
The most recent data from IBISWorld show that while Australian cafe net profits have recovered from a drop in 2020, at 7.6 per cent, they remain much lower than the Australian average business profit margin of 13.3 per cent.
For an independent owner operating a cafe with the average turnover of $300,000, this would amount to a meagre $22,800 annual net profit after all the bills are paid.
Arabica — the higher quality bean you’re most likely drinking at specialty cafes — is a more expensive raw product. Despite levelling off from post-pandemic highs, its price is still trending up. In 2018, it sold for $US2.93 ($4.50) per kilogram, which is projected to increase to $US4.38 ($6.73) in 2025.
The price of fresh milk has risen by more than 20 per cent over the past two years, and remains at a peak. This has put sustained cost pressure on the production of our most popular drink orders: cappuccinos and flat whites.
Over the past year, Australian wages have grown at their fastest rate since 2009, which is welcome news for cafe staff, but tough on operators in a sector with low margins.
Ranked at least 80 on a quality scale, specialty beans cost significant more than commodity grade, but their production offers better working conditions for farmers and encourages more sustainable growing practices.
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