January 28, 2025 (Published: January 28, 2025)
When was the last time you raised prices at your coffee shop? And do you have a plan for adjusting prices in the future?
Without a pricing strategy, it’s easy to find your coffee business struggling to stay afloat. Inflation continues to push costs higher year after year. Even if your coffee shop is thriving, rising expenses for ingredients, labor and utilities can quickly strain your profits.
So, how can you raise prices without losing loyal customers? A thoughtful, strategic approach ensures profitability and strengthens customer loyalty.
Why You Need to Plan for Price Increases
Rising costs are unavoidable, but thoughtful price adjustments can help your coffee shop stay profitable and competitive. Here are a few reasons why:
- Inflation and Rising Costs – Regular price adjustments help you keep up with rising costs of goods, labor and utilities.
- Increased Revenue and Profitability – Higher prices mean more funds to reinvest in your business, whether upgrading equipment, offering better wages or creating a more inviting space for customers.
- Premium Perception – Customers often link higher prices with improved quality. Positioning your coffee shop as a premium destination helps differentiate it from competitors, justifying the increase.
- Focus on Quality – More revenue allows you to maintain the high quality of your products and services without cutting corners.
Global Coffee Pricing Trends and Insights
Coffee prices are at record highs due to weather-related events, supply chain disruptions and financial speculation. Severe weather conditions have strained supply chains and challenged traditional trade models. Brazil, which accounts for roughly 40% of global coffee production, exemplifies the fragility of this balance. In 2024, one of the worst droughts in decades hit the country’s coffee belt, reducing yield by 25%. By December 2024, Arabica beans reached $3.44 per pound, an 80% increase from earlier in the year.
At the same time, coffee consumption continues to rise globally. For example, China’s coffee consumption has doubled over the last decade, contributing to tighter inventories. This increasing consumption trend highlights how supply pressures may continue, causing a commensurate increase in coffee prices.
Rising costs have prompted many coffee businesses to adjust their prices. Even a slight increase at the cup level – like 3 cents for a 12-ounce coffee – can significantly enhance profitability while enabling your shop to maintain quality. Being proactive with pricing helps you remain competitive and tackle rising operational costs effectively.
Factors That Influence Pricing
- Cost of Goods Fluctuating prices for coffee beans, milk, sugar and packaging affect your profit margins. Monitor these trends to plan price adjustments proactively and avoid surprises.
- Labor Costs Paying fair wages to skilled baristas pays off in the long run. Competitive pay helps you attract qualified employees and reduces turnover. However, giving raises to baristas probably means you need to raise the costs of the delicious drinks they prepare.
- Utilities and Rent Operating a brick-and-mortar shop has overhead costs that vary by location. Control costs, when possible, by evaluating these expenses and negotiating with vendors.
- Economic Factors Inflation, global events and supply chain issues can significantly impact costs. Staying informed and building flexibility into your pricing strategy will help you adapt effectively.
Best Practices for Raising Prices
Adjust Prices Gradually
Smaller, more frequent increases – such as 5 to 25 cents per item – are less noticeable to customers. Scheduling reviews every 9 to 14 months ensures your prices align with your costs without overwhelming customers.
Justify the Change
Be transparent about why you’re raising prices. Use signage, social media or newsletters to explain how rising costs or investments in quality have led to the adjustment. For example, you might say, “We’re committed to sourcing the finest coffee beans and paying our baristas a fair wage, and these changes help us continue that commitment.”
Highlight Value
Turn price changes into opportunities to showcase the premium quality of your products and services. Emphasize aspects like sustainability, locally sourced ingredients or your commitment to customer satisfaction to remind customers why your coffee shop is worth the investment.
Train Your Staff
Your team will handle customer questions and concerns about pricing. Equip them with clear, empathetic talking points such as, “We’ve made a small adjustment to ensure we can continue offering the high-quality coffee and service you love.” Confidence and consistency in their responses will go a long way in reassuring customers.
Monitor the Competition
Find out what other coffee shops in your area are charging. While you don’t need to be the cheapest, your prices should align with the quality and experience you offer to ensure you remain competitive.
Giving Customers Reasons to Support Your Price Increase
Raising prices in your coffee shop offers an opportunity to show customers the value you provide and strengthen their loyalty. You can adjust prices and ensure continued success by clearly communicating your reasons, emphasizing quality and preparing your staff.
- Sustainably Sourced Beans: Supporting ethical farming practices.
- Expert Craftsmanship: Premium-quality coffee and other ingredients, skilled baristas and high-end equipment ensure every cup meets high standards.
- Exceptional Ambiance: An inviting space where customers can enjoy coffee and community adds value to your coffee shop.
Need Help With Your Pricing Structure?
Through our 7 Steps to Success program, we support hundreds of coffee shops across 37 states. Over 70% of these independent shops have been in business for five or more years. Pricing is just one of the factors we use to help coffee shop owners run thriving local ventures.
If you’re already a 7 Steps customer, contact Growth Rep Heather Syx, hsyx@crimsoncup.com, for help. And if you’d like to explore the benefits of the 7 Steps to Success for your shop, reach out to Sales Leader Scott Fullerton, sfullerton@Crimsoncup.com.