Like many small businesses, mine has been feeling the pinch lately. I’m the proud owner of The Travelling Cupcake, a small, independent coffee and cake shop in Andover, Hampshire. For over a decade, we’ve been serving freshly brewed coffee and lovingly baked cakes, all while creating a warm and welcoming space for our community.
But for coffee shops, things are coming to the boil. Jeffrey Young, an analyst and CEO of the Allegra Group, recently told The Telegraph that having to pay £5 for a standard coffee is “between three and five years away”.
A fiver for a coffee might sound steep, but don’t just grumble about the cafe you’re buying from. A blend of a changing climate and government decisions have got us here.
The big change has been the price of coffee itself. In December the price of Arabica beans – the beans which make up most coffee bean production globally – hit an all-time high after jumping by 80 per cent in a year.
There are several reasons behind this. First and foremost, the impact of climate change on coffee-growing regions cannot be ignored. Coffee is a crop that relies on specific conditions to thrive, and unpredictable weather patterns have been wreaking havoc on production.
Brazil, the world’s largest producer of Arabica coffee, has faced severe droughts and frosts in recent years, significantly reducing crop yields. Similarly, Vietnam, a key supplier of robusta beans, has dealt with heavy rains and flooding. These disruptions in supply naturally drive up prices too, and analysts expect them to stay high for some time.
On top of this, global supply chains are under immense strain. Shipping delays, rising fuel costs and increased demand for freight have all made it more expensive to transport coffee beans from origin countries to roasters and suppliers. Even when the beans arrive in the UK, the cost of energy, packaging, and other logistics continues to add up.
Small business owners like me have also been navigating rising operational costs. Energy bills have soared over the past few years, and wages have increased due to rises in the minimum wage. While these changes are necessary and reflect broader economic trends, they do impact the overall cost of running a coffee shop.
The knock-on effects of policy runs through the business and into people’s lives too. We used to give lots of people their first jobs and some experience in the industry, but with the Government putting up the national minimum wage for younger people, we can no longer afford to.
How are we meant to give them experience and the ability to learn, and still be sustainable as a small business? We would rather employ a more experienced person for a couple of pounds more an hour, who will come with skills and life experience.
With business rate relief being reduced from 75 per cent to 40 per cent too, there are going to be many more issues for small business owners. The new Government needs to listen to us and work with us.
We do everything we can to absorb these costs without compromising on quality. We’ve worked closely with our local coffee roasters to ensure we’re sourcing beans as efficiently as possible, and we’ve made adjustments in other areas of the business to keep things running smoothly.
However, there comes a point where some of these costs have to be reflected in the price of a cup of coffee.
We had to up our prices in November, and a regular Americano is now £3.30 – up 10 per cent on when our coffee shop opened in 2021. The big change is on the other side of the ledger, though. Costs have gone up so much that despite sales being up 20 per cent on this time last year, we now make 70 per cent less profit.
Using locally roasted coffee is one way we’ve tried to navigate these challenges while staying true to our values. This way, we reduce the environmental footprint of transporting coffee long distances after it arrives in the UK, and we’re supporting other small businesses in our area.
Our local roasters share our commitment to sustainability and ethical practices, which means they’re paying coffee farmers fairly and prioritising environmental responsibility. While this sometimes comes at a higher cost, it’s a price worth paying to ensure a sustainable future for the coffee industry.
I think the £5 coffee is, sadly, an inevitability, and could be the norm quite soon. Running a sustainable independent business has become a real challenge. But running The Travelling Cupcake has always been about more than just serving coffee and cake. The rising costs of coffee and other expenses have been challenging, but I’m constantly reminded of why we do what we do when I see our regulars walk through the door or hear someone new discover us for the first time.
We’re committed to maintaining the quality of our coffee and cakes while being transparent about any necessary changes to pricing. I firmly believe that honesty and community support will see us through these challenges.
While the current climate may feel uncertain, I’m optimistic about the future. The coffee industry is resilient, and we’re adapting to these changes every day. We’ll continue to support local suppliers, prioritise quality and find ways to stay connected with our community.
Together, we’ll navigate these challenges and ensure that independent businesses like ours can thrive.
