RAISING PRICES - 2018

After 5 years of trading, we have decided to raise prices on April 1st by 10p for all Filter and Espresso based drinks , our new pricing will now be;

Espresso - £2.70

Milk Drinks (all sizes) - £3.00

Filter Brews - £3.00

These are, as always, floor prices for a ceiling cost per KG of £22. If the coffee costs more than £22, then we will raise the price accordingly.

Although many of the factors considered have remained the same from our last price rise, some have warranted a complete rethink. For some context here is what we've considered;

Cost of goods.

Usually this is the catch-all reason used to explain away any price rise, and yes, rising costs usually lead to a rise in selling price. I feel it's a lazy way out to follow this tack so lets look at our costs;

Price rises - Surprisingly, very little has risen in price this year, with consumables and milk holding price well.

So what about our biggest expense, Coffee?

Whilst we have endeavoured to bring in a wider range of coffees from across Europe this year, enhancing our offer to you, the customer. Prices have been remarkably similar across Europe , we have noticed no significant difference is cost due to where the coffee is roasted. It is worth noting though that green coffee prices saw an immediate rise in the aftermath of Brexit, something that may have affected roasted prices across the continent. But how has this affected our costs?

Allegra, the group behind the London Coffee Festival and the European Coffee Symposium, compile a yearly survey of costs and trends within the coffee sector. The 2014 survey found that the average coffee cost per cup was 8p, lets compare that to our cost per cup;

For the first 2 quarters of trading this financial year (April 2017 - Sept 2017) we spent £15,152.54 on coffee. Over 26 weeks and an average of 24kg per week this gives us a per/Kg cost of £24.28 , a £1.42 per kg rise on last year. The past three years all show comparable takings, yet our Coffee costs for the over the same period have risen by 16% ( from 13021.21 for Apr-Sept 2015), a reflection of rising wholesale costs.

Our average coffee dose is 15g, we then allow 2g for wastage, giving us an average cost per cup of 41p.  I was unable to find if the 8p quoted was for single or double shots, but even if we assume singles and then adjust by the same 16% increase to give us 18.5p , our costs are still more than twice that of the national average.

Viewing it this way we have always charged too little, and this is part of a wider problem affecting the Speciality coffee industry, In order to facilitate increasing prices paid to farmers, how can we raise the value of a cup of coffee? Whilst we are endeavouring to achieve this through our approach to both brewing and service, it was also our intention to address this issue head-on last year by exploring the option of donating a to a charity providing support in growing countries for every cup sold, unfortunately as we made a loss for the year this was untenable.

The cost of quality.

The easiest solution, and one that have have had mentioned to me on numerous occasions, is to drop our multi-roaster model and benefit from a link to a single roaster as this often goes hand in hand with a cheaper coffee prices. Likewise we could also look to spend less on our coffee, but to do this would compromise what we are as a shop. We aim to brew excellent coffees, to live at the very top of the quality spectrum and provide a unique taste and service experience to our customers. Its self evident then that paying less for our coffee will reduce the quality of what we serve. Put simply, quality costs.

Its also very easy to find articles on how the price of green coffee has been rising and falling in recent years. On the whole they will be referring to the "C" price, which is that for commodity or exchange grade arabica traded on the major stock exchanges. For this price you get little traceability and diminished quality.

We buy from a trusted group of roasters who deal, on the whole, in Speciality Grade coffee. This has increased traceability, usually to farm level, but often to individual plots. It is also, on the whole,of higher quality costs and more due to this and a variety of factors. Read this for a good breakdown of the hidden costs.

As I mentioned above, we are committed to this quality, which means our pricing ranges from £17-30 per kg, although recently we have seen an increase in the number of coffees costing above £22 per kg.

The cost of service.

Great coffee is nothing without great service and in my view the best service is always provided by committed professionals.

We also have a unique style of menu, that relies heavily on the staff to provide clear and concise information allowing the customer to make a more informed choice, as situation where a degree of professionalism comes to the fore.

To foster this professionalism, FCP only hires staff to salaried contracts with all the appropriate benefits (pensions, Sick Pay etc..), rather than casual or Zero Hour contracts as is common. This means that for the staff we hire, coffee is a career, not just a job.

With the advent of the National Living Wage, this is where the biggest new cost will be felt. We already pay our staff above the minimum wage, but with that due to rise by 33p per hour, it would be wrong for me not to pass this on to my staff. Why? Simply put the premium they were being paid for their professionalism would be wiped away in an instant. 

Whilst a common perception is that cafes are a "licence to print money" as a business we hover on the line between break even and making a small profit, a significant cost increase of this kind to a payroll that already runs at 31% of turnover could be potentially crippling. In a similar vein, its often noted that the shop looks busy, so I must be doing well. But as a business owner It behoves me to ensure that the business remains viable, this is a fine balancing act of paying myself a wage suitable to help sustain a family of 4 and one that allows the business to function. As such my personal salary is less than the current average for a Cafe Manager of £22,000 (per Indeed.co.uk ).