Australians could soon be paying up to $7 for a standard cup of coffee, while frustrated coffee shop owners are on the brink of collapse.
The founder of industry group The Coffee Commune, Phillip Di Bella, said small business owners desperately needed a lifeline from the state government to save “hundreds of thousands of jobs” in Queensland alone.
Mr Di Bella predicted that more than 2,000 cafe owners or suppliers would have to close their doors as profit margins continue to shrink.
He said the average coffee shop now provides a profit of just $1 per cup, meaning cafes will need to raise costs just to stay afloat.
“Everyone is having a hard time right now, so of course operators don’t want to charge $7 for a flat white, but that will become the norm,” he said. Courier mail.
“Our members also have families, so it is not a sustainable income.”
The average cost of a flat white in Queensland is between $4.30 and $6.50, one of the most expensive in Australia according to Friendly Finance.
Mr Di Bella said the industry desperately needed government intervention, whether Labor or the Coalition, ahead of the October state election.
Australians have been warned that the cost of living crisis could soon lead to a standard latte costing $7, while cafe owners are on the brink of economic failure.
The industry boss criticised both main parties for failing to consult small businesses in the coffee industry just weeks before voters go to the polls.
“The cost of living is crushing operators who generate tens of millions of dollars in revenue for the government,” Di Bella said.
Mr. Di Bella called on both parties to raise the payroll tax threshold (currently at $25,000 a week) and reform labor relations laws.
Last November, financial broker Friendly Finance’s report found Queensland had seen a surge in coffee consumption, driving variable costs.
He highlighted the “diverse” nature of the state’s coffee culture, which means a flat white costs between $4.60 and $8 in Indooroopilly, southwest of Brisbane.
The warning comes after credit reporting agency CreditorWatch reported that food and beverage businesses were closing their doors at the highest rate of any industry.
The average cost of a flat white in Queensland is between $4.30 and $6.50, one of the most expensive in Australia according to Friendly Finance.
In August, companies in the sector were failing at a rate of 8.2 percent.
Hospitality businesses are particularly vulnerable to rising interest rates as consumers cut back on discretionary or “unnecessary” spending.
CreditorWatch chief economist Anneke Thompson said conditions had deteriorated rapidly for the sector after a strong run following the Covid lockdowns when people were not spending money on going out or on holiday.
But since then, sharply higher mortgage and rent payments have begun to weigh heavily on consumer spending, making it difficult to raise menu prices to cover higher business costs.
Rising rents have also affected food and beverage outlets which are often located in retail areas with high foot traffic, and relocation often results in reduced trade.