There are many reasons throughout the life of a business that a coffee shop may need to increase its prices. Costs of goods continue to rise over time, and so do the costs of labor, rent, utilities and other overhead. Economic factors like inflation, global supply and demand, and natural disasters can affect the costs of staple goods for months or even years.
Coffee is a global commodity subject to many economic and geopolitical forces outside of a cafe owner’s control. For this and many other reasons, it’s a good idea to have some tools for knowing how, when, and by how much to increase prices in your cafe when the time comes.
Read on to learn the industry’s best practices for meeting a cost increase head on, messaging the changes to your customers, and securing sustainable, long term growth for your business.
Knowing when to raise your prices.
The first step in approaching a price increase is understanding that this is going to happen from time to time. You’ve noticed the cost of goods rising or maybe your customers are feeling the effects of an economic shift and are just as anxious as you are. It may seem scary, but it doesn’t need to be if you have a plan for how you’ll manage price changes ahead of time. Here are some thoughtful tools and approaches that can help you decide how and when and how much to change your prices.
1. Decide how often you want to make price changes and stick to that cadence.
It’s up to you to decide if you want to make smaller, incremental changes more often or whether you’d prefer to make larger, more significant changes but much less frequently.
Smaller changes can seem tempting because they appear less impactful to your customers. While this can work in the short term, it can be awkward to be overly communicative about a small, less noticeable change. Those silent changes added up over time, however, can erode customer trust if they aren’t sure what to expect of your menu.
The cafes we’ve seen most successfully change their prices while maintaining customer loyalty are those who decide to make fewer, larger changes and message them proactively to help their customers understand how the price change fits into the value of their product. Customers trust a business who is up front about their pricing, own the change and treat the customer as a participant in the process.
2. Do you announce or do you do it quietly? ‑ Depends which route you take.
If you’ve chosen to make only small changes, announcing them can seem alarming and out of proportion. They may feel uneasy that you’ve made a big deal about something that doesn’t seem like a big deal to them. However, if you decide that smaller changes over time feels more comfortable to you, you can choose one time a year to message the cumulative impact and justification for the overall increase. This will help customers feel clued‑in to your decision without drawing unnecessary attention before the impact has even been felt.
If you prefer to make larger changes less frequently, you should consider announcing the difference to your customers – explaining your reasoning, setting expectations, and promoting all the value your business brings them for the price they pay at the register (see below under differentiation).
Common delivery methods for this communication can be a discrete sign at the register, on the customer‑facing side of the espresso machine, or a short note printed directly on paper menus. Signs at the door, on tabletops, or on an overhead menu are probably too extreme and risk alarming or overwhelming guests rather than speaking directly to them.
3. Lean into your differentiation.
When you're raising prices is a really good time to communicate the value of your product to your customers. Your differentiation is the reason they visit you, and it will be the reason they continue to value the unique attributes you bring to the market even if you have to charge a little more.
A 2022 Specialty Coffee Association report
on National Coffee Data Trends found that in 2021, the percentage of specialty coffee cups sold in the market rose from 56% to 62%, despite rising inflation. The report demonstrates that consumers are consistently willing to pay higher prices for products they find more valuable.
The attributes consumers find valuable may also be of interest to you. Aside from a specified roast level which ranks number one (customers love knowing what flavor to expect and roast level is still an accurate measure of what they’ll find in the cup), the same SCA report notes strong purchase intent correlated with the following traits ‑
Fair prices paid to the farmer
Good labor practices
Support for coffee communities
We have seen that many of the values of roasting with Bellwether are these same traits that consumers find worth paying for, such as environmental sustainability, farmer equity, accessibility and social impact. Many of our customers also have social impact work that they achieve through their roasting program. This further increases their unique value to customers who care about which businesses they support.
What makes your business unique, whether that’s your commitment to sustainability, the hospitality of your staff, or the excellence you bring to your ingredients, should be the focal point of your communication to customers when it comes time to raise the price on the products they value.
Let your customers know that when they pay more at the register, they are paying to allow you to continue to provide the high quality products they love, instead of cutting the quality of your products but keeping prices the same. Customers understand that great products are worth more, and it’s up to you to help them see how much you’re doing that goes into the price of every cup.
4. Educating staff
Your staff are the front line of any price change and you'll want to make sure they're prepared to answer questions. Encourage them to be proud of your decision to continue offering high quality products that reflect your values and the values of your customers. Everyone on staff will need to own and embrace the change, so having messaging for them to rely on will prepare them for whatever customer comments or questions may come up. Draft some brief talking points to keep on hand and make sure everyone understands what they mean.
Keep these messages focused on you core themes of value and differentiation ‑
We had to make this change because of xyz factors outside our control and we want to continue to offer the exceptional products you seek us out for.
We don't want to charge customers the same price for a lesser product which we would be forced to do if we didn’t initiate the price change.
We’ve decided instead to incrementally increase prices to continue offering the great, high quality product you’ve come to love.
We know your loyalty is earned and we hope to continue impressing you with our quality, hospitality and unique offerings.
5. Don't play the blame game
People want transparency and can handle the truth if you tell it to them. It doesn’t serve you to dance around the issue or refuse to take ownership of the price change. While it may be true that the forces requiring you to raise your prices are outside your control, you want your guests to feel like you’re in charge of your business, and that includes their experience in your cafe and the care you give to the products you serve. They want to feel like you’re on top of the issue, you’re handling it to the best of your ability, and you respect them enough to include them in the discussion.
Price is about value, not just cost.
You should be proud of your prices. They should reflect the actual value of your product, not just what it cost you to make. They should reflect everything important about your business from how you're operating, to how you act in the local community, to how you source and roast your coffee, and everything else that goes into the final price seen by the customer. You opened your dream cafe because you had a unique vision to share with the world, and your customers return over and over because they see and appreciate what you offer them. The need to someday raise prices is universal, but how you handle it is what keeps your business special.