price increase due to milk prices - do you announce it?

[susansaddiction]

I'm sure all you coffee shop owners have been hit hard by milk prices. Four months ago, I was getting milk delivered for about $1.65/gallon - and now I pay about $3.44/gallon. I have been open for 3 years and have never raised my prices, but feel like now it the time to do it. I'm looking at adding .25 to most of my drinks - at least those with milk products (not straight coffee). I have compared my prices to about 90% of my competition, and even with the increase, I'll still be one of, if not the best values in town. My question to you all is, should I announce the increase or just do it quietly? About 85% of my customers are regulars....
Thanks for the input.
Susan

 

[ElPugDiablo]

I have been thinking about the same thing. Like you, most of my customers are regulars. My plan is to give them two weeks of notice.

 

[John P]

Raise your prices. It's part of being a successful business. With Cost of Living increases you need to raise ~ 4% yearly just to be the same as last year. And don't tell your customers, it sounds like an apology... Your syrups, milk, soy, shipping costs, paper goods, etc. all raise every year. If you want to stay in business you need to do the same, and don't nickel and dime your customers... make it a decent raise 20-25 cents and then you probably have 18 months before you need to raise again.

 

[AJPRATT]

Even though my store isn't open yet, as a consumer, I think we expect that prices will go up at some point. Gas is a prime example. I think you can in good conscience raise your prices, especially since you haven't done it in years. It is good business practice when you evaluate the cost. I don't know if I would say this to my customers, but I would rather pay an extra 20 cents for a beverage than to have my favorite coffee place go out of business, as we all know good coffee is hard to come by.

 

[dant]

In 5 years we've raised our prices two or three times. A lot of our customers are daily regulars who order the exact same thing every day and even come prepared with the exact change. As such, with each price increase we placed a small sign at the cash register saying something like, "Due to an increase in our costs we have slightly increased some of the prices. Thanks for your understsanding." People seem to appreciate this.

I've heard it said that if 2-3% of your customers don't complain about your prices than you're not charging enough.

 

[AJPRATT]

Dant, I think that sign you display is fair warning.

And, that's an interesting statistic about prices.

 

[consciouscup]

Prices

We just raised prices, in part because of milk, but also because our green bean costs are higher. Our minimum wage went to $7.50 and hour. Our electric rates went up. We posted a simple sign the day we posted new menus on the wall and new prices in the register system. No one complained. We also very studiously price above our competition, mainly SB, which has had two price increases of which I'm aware of just this year.

Price and value are not the same. In a general sense you can try to be low cost or you can be high value. If you're in the middle, you'll get crushed from both directions. We focus our business around high quality: Nordstroms verus Wal-mart. We deserve a higher price. That's ego but also very real. It's rare that your favorite restaurant is the one with the lowest price. People understand this. Don't be shy. You're in business. If you're not profitable you cannot be of service to your customers for too long.

 

[susansaddiction]

thanks all...take a look at my prices

Thanks ftor all your comments - great input from all of you. Just out of curiosity, I'll post a few of my prices and would love to know where I am with others' prices: all of our latte prices are with or without flavor...

16 oz latte $2.75 now - going up to $3.00
16 oz smoothie $2.75 - going to $3.00
16 oz blended coffee shake (Big Train) $3.25 - going to $3.50
16 oz italian soda $2.00 - going to $2.25
16 oz coffee $1.50 (1 free refill)

Would love to see where others are priced...
Thanks
Susan

 

[consciouscup]

Prices

Oh my! We just went to $3.45 for a 16oz straight 2-shot latte. We charge for flavors. a 16 oz coffee is $1.90 and a 16 oz smoothie is $4. 16 oz granitas (no mixes) start at $3.50. We use our own freshly roasted coffee and we price above Starbucks. We don't use a vending machine. Our experienced baristas serve latte art.

Anyone else want to go transparent?

 

[Caffe Latte]

hey guys, looking at the prices you have put out, and talking about pricing above Sbux, why is it that so many people always complain about the Sbux prices, but never stop to compare it to other stores? is it because of the fact that they are so large and prevalent?

 

[kimbica]

pricing and increases

Hi Susan,

I opened my shop about 6 months ago and was worried that my pricing was a little high compared to many other indie shops in my city. But we have not really had any comments on our pricing being high. We serve a 16 oz, 2 shot latte with no flavors for $3.25. Large 20 oz, 4 shot lattes $3.85. Vanilla lattes of the same sizes are $3.55 and $4.15. Fruit smoothies are $3.95 for 16 oz and $4.25 for 20 oz. Our blended mocha drinks are all 2 shot, 20 oz size and range from $3.85 to $4.60, with special drinks of the day (multiple flavors/textures) as high as $4.85. I am also paying a lot for milk and other dairy, as much as $3.60 a gallon for whole milk. It is so costly that I have started to get my milk at the supermarket a couple times a week instead of getting it delivered from my distributor. It saves me 40-60 cents a gallon or more. I get other stuff from them that is much more expensive at the supermarket, like cream and half and half.
I don't think I need to raise my prices yet, but probably within the next 6 months. I'd mention it to my loyal regulars right before you start the increase, but don't be too apologetic. You are not a non-profit organization and you need to have a little bit of a salary to show for all your risk and hard work at the end of it all.

I think Starbucks gets blasted for high prices because people have a sense of its mediocrity. Nobody wants to think they are paying a premium for an average product. The company is beginning to seem greedy and people do not want to spend as much to get a sloppy scalded latte as they would spend in a little shop that pours perfect microfoam and/or art and has baristas who actually time shots, steam milk manually, tamp shots, etc. They more automated and high-volume Sbux gets, the more people will balk at the "gourmet" pricing. Even if the drinks taste OK, there is that lingering mental perception that cannot be ignored.

Just my thoughts. Sorry to ramble on!

 

[ElPugDiablo]

We pay $4.50 a gallon from a local co-op. Great milk, lousy customer service. Really want to drop them, but the milk is the best in the area.

Haven't notice a big hit on the COGS because we sell lots of iced tea during summer months, but that could change in a few months.

 

[susansaddiction]

Raised prices - no complaints

Well, we raised our prices about a week ago, and so far the response has been very positive...everything from "we totally understand - and you're still very reasonable" to - "that's ok - you guys have the best drinks in town" to "just so you don't close down - we love you".....really only one customer at our hospital location walked away when she saw the increase.....and she was back the next day.
This week we saw a definite rise in daily sales - and in customer counts?

Thanks for all of your responses!

Susan

 

[ckileen]

I have owned a coffee house for 11 years we have only raised our prices a few times. But it seems like everything we sell goes up, up up. We usually mention our price raises to our regulars and expect people to not have the right amount when we do raise our prices.

We ring the price up and the person is like ohhh I dont have enough we say thats ok we got it. We usually have a grace period of two weeks and then everyone is on the new program. People dont usually flinch at the new prices. For the most part, it''s part of the game. We love our customers and they love us.

Our prices
Double Latte 3.25 triple 4.00
Mocha 3.50 trip 4.25
Mocha Shake 16 oz 4.85 20 oz 5.40
Double breve 16 oz 3.75 triple 4.25
Coffee 16 oz free refills to stay 1.50

we are going to raise our prices next week--we have over 50 drinks listed on out menu. it will take awhile. our drink prices will go up a quarter and our food will go up 50 cents.

The thing is coffee is a luxury. We also go to great lenghts to provide great coffee.

We live in a mid sized town. Only 28,000 people. We sell fair trade gifts, used books and have music.