Good coffee doesn't need to be expensive

[dsc]

Hi guys,

James I said it once and will say it again, the chances of selling a £5 cup of coffee are slim to none. I understand you would pay that price for an awesome cup, a few other coffee hobbyist might do the same, but your average customer won't (and that includes even people who are pretty crazy about coffee). Heck I probably would only do it once or wouldn't at all. Raising prices is a bit of a risky territory as it might make the whole speciality coffee thing posh and snobbish.

I agree that greens are too cheap and I agree with the 'I'd pay more money for coffee if it was actually worth it' approach, although good doesn't necessarily mean expensive.

Regards,
dsc.

[JulieJayne]

I agree that greens are too cheap and I agree with the 'I'd pay more money for coffee if it was actually worth it' approach, although good doesn't necessarily mean expensive.

... and expensive often doesn't mean good. Just expensive.

[SlowRain]

However as a business we have principles. We don't overcharge.

That puts you in the minority, not only in the coffee industry, but in the business world as well. A consumer can't help but respect a business like that. A consumer's respect equals repeat business.

I'll also say that prices for green beans are, on average, too low (most agricultural produce is, but I don't hear anyone beating a drum to get a better price for wheat or rice farmers). However, let's not forget there are a few greens that get bid up crazy expensive (I use the word crazy to mean 'senseless', not 'very'). I think that hurts the industry more than it helps it.

I'll also say that coffee in shops is about as high as it can reasonably go, although some is already overpriced. The fat must be trimmed out of the middle.

[Jasonscheltus]

Oh geez, my head started to spin when I read this.

I'm surprised the word "value" has been kicking around so much in this thread, especially since everyone here seems to be under the impression that £3 lattes are bad value.

I'd like to highlight the price increases from green broker to cost of a espresso... (in Australian dollars, local prices)

Bought from green broker:
Blend X - bought by roaster X at $2.50 /kilo
Blend Y - bought by roaster Y at $12/kilo


Blend X sold to cafes at $20 / kilo
- Gross Profit for roaster (Price-Cost as percent of Price) = 93.7%

Blend Y sold to cafes at $40 / kilo
-Gross Profit for roaster = 70%

Blend X Sold in Cafes - espresso $3
-Gross Profit (at 12 grams per espresso) = 92%
Blend Y Sold in Cafes - espresso --- $3.30
-Gross Profit = 85%


These are actual working examples (except for the gram/espresso which I made up). Who still thinks coffee X is better value?

The other weird thing is, is that some of you are saying you'll "never pay XX for a coffee", except every year the price of everything goes up and people whine about it, but importantly EVERYONE PAYS. Are you kidding??

Inflation won't all of a sudden just stop because you stomp your feet a little and pout.

And yeah, rant over..

[SlowRain]

I think, regarding the value example you use, that everyone here is in agreement. It seems to support bruceb's original post quite nicely. Also, I think we're all using 2009 dollars/pounds/euros when we reference money. Carry that forward at whatever the inflation rate is in the future. I don't think anyone is being confused by or neglecting inflation.

...but importantly EVERYONE PAYS.

I know you used this with regards to inflation, and that's fine. My general feeling is that this idea of 'everyone pays' is starting to be used in a non-inflation sense within the coffee industry. Outside the coffee industry, the greatest villain using this strategy is the oil industry. Look at how people view oil producing nations, oil companies, oil traders, and manufactureres of gas-guzzling automobiles. People are complaining. There is a backlash going on. More importantly, people are, for the first time, seriously looking for alternatives. The coffee industry will go the same route if they pursue an 'everyone pays' strategy when pricing a cup of coffee. (Again, I realize you were using it as an inflation example.)

[dsc]

Hi guys,

if I'm not mistaken we are looking here at a price of £3-£5 for a cup of freshly brewed black coffee. Not latte, not cappuccino, not anything fancy with cherries on top/whipped cream/ice cream or similar. Most people will think 'where's the value for money?' 'what, no milk?' and simply won't buy it.

I'm not even sure how high the coffee (beverage) prices went up since last year, but I don't think it's too much. Yeah sure people still buy it but I think more and more are trying to look for alternatives or are simply looking for something quite cheap which has quite a lot of volume. If you rise the prices of coffee by 50%-100% most people will probably switch to something cheaper, even if the coffee is really nice. That's of course only my opinion but I seriously think it would happen, especially seeing how low the client coffee education is (which is a tricky thing as well and is sort of like telling people why their taste is shit and why they should like something they don't). I'm pretty sure most clients couldn't tell the difference between an average coffee and a very good one and if there's no difference why pay more? Remember that very nice coffees often don't taste like coffee and people might not like it.

Regards,
dsc.

[kingseven]

Can I make it clear that I am not remotely suggesting that every coffee should be £3 a cup, but that that raw coffees out there, combined with a great business could create a menu item where this is great value for money.

I'm all for accessibility and inclusivitiy - I just want more people to drink better coffee, and a pricing balance is of course essential to this.

[dsc]

Hi James,

I fully understand that not all coffees should be £3 per cup, but I think the tricky bit is this:

could create a menu item where this is great value for money

If you want to sell a cup of black coffee, even great one, for £3 I doubt a lot of people will see it as good value for money.

Regards,
dsc.

[kingseven]

I think a lot of it is in the presentation. Out of context many a restaurant meal is horrifically over priced, however it can still be an experience worthy of the price.

I don't doubt that it would appeal to the vast minority but I am fairly confident that if I could control the environment (i.e. in my own shop) I could serve one or two coffees by the cup at that price per cup. That said I am not saying every shop can and should be like that - and I'd struggle to charge a great deal for espresso because I think it is the most difficult method to use to really get value for money.

[SlowRain]

Aren't we already at around £3 in some shops for some coffees?

I don't find a lot of value in presentation, but others do. However, that would be value outside the cup, not inside. I'd really hate to see coffee get too lost down that path. We already have more than enough restaurants in North America attempting to chase that bone.

[ubo]

Have to say that I am with James - we can get to these prices with menu's that work linguistically, barista's that engage, on the same menu cross-selling whole bean coffee at the same time to convey the value point (you wouldn't expect as a consumer to see whole bean coffee all at the same price) and brewing methods that make the most of the coffee while ensuring the customer knows it was brewed just for them.

Not that hard then,

[dsc]

Hi guys,

I think restaurants have it easier as food isn't treated like coffee, it's not just something you do to stop yourself being hungry. A lot of people still drink coffee simply to keep them awake, to have something bitter to accompany their cake/cookie/sweet pastry or to have something to hold while chatting. Sure that coffee hobbyist won't have too much problems paying £3 for a very nice cup of black coffee (I wouldn't mind, although £5 would be stretching it), but your ordinary Joe would probably say pass and buy something cheaper. It's a bit like trying to force espresso into customers, most of them simply won't like it, will get annoyed and/or will leave and never come back.

Regards,
dsc.

[SlowRain]

Yes.

Coffee is where it is today chiefly because it has always been a cheap pick-me-up. Take away the cheap and you'll have people cutting back and looking for alternatives. Food is a necessity; it is nourishing. Coffee just keeps people awake.

As a coffee hobbyist, I would not pay £3 for a cup of coffee on any kind of a regular basis. Maybe once a year.

However, having said all of this, I wouldn't be opposed to coffee shops taking a bit of a hit or zero profit just to offer their valued customers a really unique coffee. It's one way to test the genuineness of the shop, to see if it is about the coffee or the profit. I don't expect that on any kind of a regular basis, and not for all customers. But, I don't imagine such a coffee-centered, farmer-friendly, consumer-oriented idea would really fly.

[CakeBoy]

Indeed, we are not far off £3 for some cups already. Non-hobbyists with none of the kit or know-how required to produce the coffee they desire would probably find £3 most acceptable for an occasional to fairly regular indulgence with none of the hassle of production. Certainly before I got into coffee properly as a hobby it was the ambience of the coffee shop that attracted me as much as the beverage, with the codicil that said beverage did have to be in my perception (at the time) of high quality.

[Eschatologist]

Out of context many a restaurant meal is horrifically over priced

This caught my attention, as those same 'keenly priced' restaurants frequently charge £5 or so for coffee (with a few salt caramel truffles thrown in), and it's so rarely drinkable I stopped ordering coffee after my (regular) meals out.