Maybe I’m being paranoid, but why does it seem that cafes in particular shoulder most of the blame for the public’s financial woes?
There are countless articles about how cutting your morning coffee purchase or skipping that avocado toast will somehow make you able to afford to buy a home. The news rarely suggests you forego your gym membership for home workouts or shop second-hand with the same sort of vigour.
A recent piece I came across was titled “We Greeks know coffee and I’m telling you, servo coffee is the best”. Being a cafe owner of Greek heritage working with one of Melbourne’s most respected specialty coffee roasters, that one hurt. I’ve written previously about our journey to finding a coffee roaster and the ethical, moral and financial choices behind it.
Apart from opinion pieces celebrating the joys of a 7-11 $2 coffee, if you’ve had your eyes on the news, you may have noticed that the current market has been quite difficult for cafe businesses in particular. Not only are coffee bean prices at all-time highs, we’ve also seen wage rises, and the cost of eggs skyrocket over the winter.
It’s a perfect storm of catastrophes, and cafes seem to be right in the eye.
There’s only so much a small business can shoulder and ultimately you are left with two choices: continue to keep bringing in the same quality of produce and products and keep consistency for your customers or sacrifice quality and bring in cheaper items to keep costs down.
For our cafe, Two Franks, lowering our quality is not an option. We take pride in our offering and our philosophy is “simple done well”. I want to be serving the coffee I want to drink, with the milk I think tastes the best, and sourdough bread that toasts to the perfect crunch.
As the new financial year began, the emails from our suppliers started rolling in, each of them profusely apologising that we would see a price increase on our orders. So we sat down, redid our costings and realised that we would have to implement a significant price rise. As a small business owner, it’s never a good feeling. There’s no greedy, gleeful, rubbing together of hands at all the extra money you’ll have coming in.
Rather, you’re desperately treading water and this is what you need to do to survive.
We started by posting a long-form note on our Instagram as a carousel post, giving our customers a lengthy explanation that price increases were coming, and why.
Whenever you change the customer experience, it has to be justified. We explained our supplier costs were increasing due to the changing price of goods, that we wanted to be able to keep the same quality and consistency in our offering, and that ultimately we are a small, family-run business with no choice but to raise our prices or we would likely have to shut our doors.
We shared this note across our Instagram stories and kept a physical print-out beside our cafe door and by the register for two weeks to communicate these changes to as many customers as possible.
My background in public relations has taught me many valuable lessons I bring into my business but none more so than this: be clear, honest and communicative and the battle is already halfway won.
For the last year, we’ve offered two sizes for our coffee – regular or large. Having to put our coffee prices up, we were worried about customers who have a set budget for how much they spend on their daily coffee. To combat this, when we implemented a coffee price increase, we added a new small size to our range.
The small was now priced at what our regular size used to be and our regular (now medium) and large coffees increased in price.
How did this help? It meant that a customer who had a $5 budget for their daily coffee could still come to their local cafe and get a coffee from us for the same price they were used to – it would be smaller than what they were previously getting, but we still had an option available at the existing price point as a compromise.
The increase in cost of living is hitting everyone hard and for some customers, having their daily coffee price change can be the last straw. Even with the clearest communication strategy in the world, you will have customers who fall through the gaps or don’t realise anything has changed until they are standing at the till.
Some are disappointed. Some are frustrated. Some are downright rude. It’s important to be sympathetic and understanding in these moments. Take the time to talk to the customer about the realities of your business and humanise the experience. Most importantly, stay calm.
We are a small, family-run business. We support a team who have rent to pay. We support our families, put dinner on our table and pay our bills with our shop earnings. This is our livelihood.
When you are putting your prices up to a level that customers may feel a little uncomfortable paying, you have to back it up. You can’t ask customers to pay more for a cup of coffee and serve up anything less than perfection. Every coffee has to be on point.
We are really clear when taking orders about the strength, size, temperature and sweetness of each customer’s order. The more tailored a customer’s order is, the more the cost feels justified. In general, customers don’t mind paying $5 for a really good coffee. The price becomes a problem when the product doesn’t match the expectation.
When implementing a price rise, use that time as an opportunity to tighten up your processes, and make sure your team’s skillset is up to scratch and your standards are high. It will help you weather the customer’s adjustment period that little bit better.
Ultimately, as a consumer, it is nearly impossible to understand the challenges of the small businesses around us, unless we’re in them. We all have situations engaging with other businesses where we may baulk at the price we have to pay. Are some businesses taking advantage of us? Possibly. But this is the exception, not the norm.
The truth is, everything seems expensive and we’re all feeling the pinch. So move with kindness and clarity and take pride in your offering – the customers who are meant for you will find you and stick by you through it all.
Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on LinkedIn.
Chryssie Swarbrick is a writer, small-business-juggler and mum of two. She is currently documenting her adventures in opening a cafe, Two Franks, opposite her childhood home.
