Data from The Australian Bureau of Statistics shows profit margins across the food services sector at 5% and falling, with only slightly more than half of businesses still open after four years.
Needless to say, it’s tough out there.
We surveyed 1,000 coffee drinkers from all states and territories across Australia about their attitudes and expectations when it comes to the price, quality and experience of ordering a takeaway coffee.
Key coffee trends in 2019:
- Almost 80% of people believe coffee should be sold at different price points based on quality and origin, but only 37% will pay more than $5.00 for a speciality cup.
- Australians have come to expect a very high-quality product, and value coffee taste and quality ahead of customer service and speed of delivery.
- Consumers believe take-away coffee prices have increased more than reality over the last 5 years, and aren’t willing to pay much more for high-quality coffee.
- Loyalty programs remain a strong drawcard for coffee drinkers in Australia. 64% would return to a Café if it offered a loyalty program or rewards, and 28% would consider returning.
- Despite 40% still using a disposable cup each time they order a take-away coffee, 60% either use a reusable cup every time or try to as much as possible.
- Cafes trying to manage rising business costs and margin squeeze are turning to disruptive technologies to help balance quality, service and price with profits.
Australian coffee drinkers believe prices have gone up more than reality
Our research revealed the price coffee drinkers pay for their takeaway coffee across Australia, and how much they believe that price has increased over the last 5 years. The perceived price increase turned out to be much higher than reality.
Most people (48%) currently pay $3.50 – $4.50 for their coffee, with 38% paying more than $4.50 and 15% paying less than $3.50. Prices were slightly higher on average in regional areas, with the majority of people (49%) in metro cities paying $3.50 – $4-50, and those outside of metro centres (44%) paying $4.00 – $5.00.
When you buy your take-away cup of coffee, how much do you usually pay?
20% of people believe this price has increased by up to 5% over the last 5 years, 23% believe it has increased by 5 – 10% and 34% believe it has increased by more than 10%. According to Kounta data, based on thousands of Cafés nationwide, the price has only increased by 2.6% based on an average of all states except WA, where the price actually decreased by 7.4%.
State by state, prices in the ACT increased by 1.6%, NSW increased by 2.9%, QLD increased by 4.4%, TAS increased by 3.2%, VIC increased by 0.5%, and WA decreased by 7.4%.
Overall, most Australians believe current coffee prices are about right (53%), or too expensive (47%). This was the case in most states aside from WA and NT, where most people believed it was too expensive.
Nawar Adra, Founder and Director at Stitch Coffee & Collective Roasting Solutions, commented on market trends in price and called for more education on the complexity of the coffee value chain.
“It is alarming to me that nobody thinks coffee is too cheap, even though it has gone up by such a small amount in recent years. The price of a speciality cup should really be above $5.50 to sustain an economic business model, which will also support socially and environmentally responsible farming practices,” he said.
“There needs to be more education on the complexity of the coffee value chain. It’s quite a complex supply chain by comparison to an industry like beer, where growing, manufacturing and packaging is done within the same borders.”
Customer service and personalisation matter, especially in regional areas
It’s true that coffee taste and quality were overwhelmingly the most important factors for Australians in creating a great customer experience, but there were some trends in customer service that varied state by state. In NT, we saw an equal split between taste and customer service in terms of importance, and consumers in regional areas tended to value customer service slightly higher (6%) than in metro cities (3%) when ordering their coffee.
Similarly, more personalised service like knowing a customer’s name and order was more important to consumers in Darwin and regional WA.
What are the most important factors to creating a great customer experience when you buy coffee from a cafe or restaurant?
Strong trend towards loyalty programs to entice returning customers
Unsurprisingly, the biggest thing stopping Australians from returning to a Café was low-quality coffee (26%), closely followed by bad customer service (22%), coffee that was too expensive (20%) and delivery that was too slow (16%).
Most people were willing to wait for 2-4 minutes (39%) or 4-6 minutes (38%) for their take-away coffee, and only 18% would wait longer than 6 minutes.
Loyalty programs, however, were a big draw-card to entice returning customers. 64% of consumers would return to a Café if it offered a loyalty program or rewards, and 28% would consider returning. Most people (41%) would prefer to be rewarded with a buy X coffees get 1 coffee free system, 30% would prefer to receive points to redeem, and 29% were easy either way.