With news of price hikes at Starbucks, we called around to see what indie shops are charging for their coffee
On Tuesday, the Toronto Star reported that Starbucks had raised its prices for coffee and other beverages across the country by anywhere from 10 to 15 cents for a grande bold (16 ounces). This comes after Tim Hortons raised its prices back in April, which interim CEO Paul House attributed to the increasing cost of coffee thanks to a fungus that destroys coffee plants in Colombia. We decided to survey several local coffee retailers to see how a shift in the market is affecting their business. Check out whose prices went up, whose stayed the same and what innovative measures are being taken to offset costs, after the jump.
First, a little primer on prices (skip down if economics makes your head hurt): coffee is the second-most-traded commodity in the world behind crude oil, with two of the most common types of beans traded in financial markets—Arabica and Robusta. Arabica is traded in the New York Mercantile Exchange, while Robusta is traded on the NYSE Liffe Exchange in London. Because of this, pricing can be affected by the macroeconomic and geopolitical environment, as well as by basic supply and demand and weather conditions. It is also positively correlated with other commodities such as cocoa and sugar. In May, coffee prices hit a 14-year high.
Here’s what the local shops told us:
• I Deal Coffee in Kensington confirmed it has indeed increased prices to offset increasing costs. “Bean prices have shot up, milk prices have shot up, energy, fuel—all those things just started eating away at the bottom line,” says manager Ian Jones. I Deal Coffee increased the price of a 12-ounce coffee from $2 to $2.25, but Jones says margins are still lower than they were a year ago.
• Then there’s Manic Coffee on College Street, where prices were raised in April but have since been dropped back to remain competitive based on neighbourhood pricing. At Manic, a 12-ounce cup of coffee is $2.
• Leslieville’s Te Aro kept the price of its brewed coffee the same, but the shop’s roasted coffee bean prices have increased noticeably in the last six months—a response to the price of C futures. Depending on the type of coffee, current prices range from $16 per pound to $22 per pound, up a dollar from previous costs.
• At Crema Coffee’s Bloor Street location, brewed coffee retail prices stayed the same, but a bag now costs $16 to $22, up from $14 to $21 in the last year.
• Similarly, Dark Horse in Riverside hasn’t increased the cost of its brewed coffee in five years, but the price of bag of coffee has recently increased from $12 to $18.
• At Sam James Coffee Bar on Harbord, prices haven’t risen—yet. Owner Sam James says he expects some sort of price increase to happen, but he notes that coffee futures are unpredictable: “I’ve heard that prices are going up globally but also that prices went down last week because of inconsistencies with oil,” James said. For James, pricing also depends on the roaster he buys his beans from—since those charges haven’t increased, neither have those at his shop.
• Things are noticeably different at The Common in Dufferin Grove. Sure, prices have stayed the same, but owner Ed Lau told us he’s made a few other adjustments to offset costs. “We’re experimenting with not having glassware because the labour [to wash them] is so high,” Lau said. “So we only have to-go cups, and it averages out that a week’s wage is almost 5,000 to-go cups.” This is the first time in its five years that The Common hasn’t had glassware, but rising coffee, milk and rent prices meant making changes in order to keep the cost of a cup of joe down to $2. “I think it’s a good deal and it’s something that’s important,” Lau said.
• Ezra Braves, proprietor of Ezra’s Pound told us it can be difficult for independent coffee shops to raise prices. “Often the perception is that an independent business has less of a right to raise its prices, and because the relationships are more personalized, there’s always a face to engage with in terms of pricing.” Ezra’s Pound increased its prices recently by about 10 cents, with the price of a hand-brewed cup of coffee now costing from $2.85 to $3.85. “Considering the love and labour that goes into making a cup of coffee the price is fairly inexpensive,” he said.