At the time of writing, we sell 6oz Flat Whites for £3.30. They cost us 67p to make which gives us a gross profit of 80%.
Sounds pretty healthy, right?

Well, if only things were so simple! The global coffee market is changing hugely at the moment, and with a lot of our other costs going up and up, the slow march towards a £5 flat white is gathering pace.
Global Instability
Arabica beans are traded as a commodity globally, with the US Coffee C Futures setting the benchmark for pricing. Coffee is the sixth most traded commodity in the world, and is only behind Oil, Gas, Gold and Silver in that list.

Since 2020, this price has risen from $102 to $328, an increase of 221%. This hits our suppliers, who pay more to farmers for the beans, and then pass the cost onto us. (Specific rates between buyers and sellers of coffee are agreed outside of this market, but the price is indicative of the market as a whole).
There's several factors driving this, but the most worrying is Climate Change. The annual World Coffee Research report states that 47% of global coffee production comes from countries which could lose 60% of suitable coffee growing land by 2050. Coffee can only be grown in subtropical climates between 2000-6500ft, and with temperatures rising, this narrow belt gets smaller and smaller. In the last 2 years, droughts in Brazil & Vietnam have driven the price increases that we have seen.

Closer To Home
Whilst the global price of coffee feels quite detached from our little cafe, there's a lot more which hits us in a tangible and immediate way.
Firstly, it's worth remembering that the first 55p of the £3.30 flat white goes straight to HMRC in the form of VAT.
We spend around 30% of turnover on staff wages, which is fairly standard for the industry, and the best money we spend without a doubt.
So once you've taken the 15p cup, 12p of milk and 40p of coffee from the £3.30, and then removed VAT & Wages, we're left with £1.37 which then goes towards our remaining net costs which include Waste, Utilities, Rent, Internet, Maintenance, Equipment, Signage and lots more. Each of those has gone up over the past year. And before you know it, there's not a lot, if anything, left at the end.
The £5 Coffee
We're not quite at the stage yet where the £5 flat white will be hitting our menu, but it's definitely on the horizon.
“We’re two to three years away from £5 being routine for a standard coffee,”
Jeffrey Young, the CEO and founder of the Allegra Group, which analyses the sector.
Support your local cafes!
You will see prices going up across the board at your local coffee shops, hopefully this helps to show some of the reasons why this needs to happen, and remember whenever you can to support local independent cafes rather than the big chains, it makes a huge difference to us!
So interesting Charlie. Fascinating to learn about how big commodity trading is for coffee. Thank you for being so transparent. Super useful from a business perspective and as a consumer.