$7 Espresso Plunges Cafes Out Of Business

CreditorWatch warned that almost one out of every six (16.2%) hospitality firms is at risk of failing due to high interest rates, rising rents, cost-of-living pressures, and the pandemic hangover.

CreditorWatch forecast that roughly one in eleven (8.9%) food and beverage enterprises would close in 2025.

The latest insolvency data from the Australian Securities and Investments Commission (ASIC) shows that the accommodation and food industry experienced the sharpest increase in corporate insolvencies.

There have been 2194 insolvencies throughout the lodging and meals trade within the monetary 12 months to 2 March 2025, up 79% from the identical time a 12 months earlier (1226) and 182% on 2023 ranges (779).

World espresso costs have greater than doubled over the previous 12 months, presently sitting at $US391 a pound.

Rising lease, power, and labour prices are additionally pressuring the margins of cafes.

Consequently, the CEO of unbiased espresso firm Single O, Mike Brabant, suggestions that the worth of a cup of espresso from an Australian cafe will quickly hit $7.

“We predict between $6 to $7 for a daily espresso is the place it’s going to be”, Brabant instructed The Australian’s World Meals Discussion board in Melbourne final week.

“And I feel you’ll see that costs enhance shortly over the following six months“.

“We actually consider shoppers will proceed to pay for well-sourced, well-made espresso,” he mentioned. “We don’t see for the time being that slowing down. We see continued development”.

Brabant added that $7 coffees would nonetheless “symbolize good worth”.

A poll by The Australian steered that solely 44% of readers would pay $7 or extra for a espresso.

In Melbourne, paying $5.50 for a daily espresso is common. That is already past what many shoppers can afford, as indicated by the decline in demand and the rising variety of cafe insolvencies.

If espresso costs had been to common $7 over the following six months, it could inevitably result in decrease demand, fewer gross sales, and extra cafes going beneath.

Why would shoppers pay $7 when an honest espresso from Coles Categorical prices solely $2?

Most Australians can’t afford to pay $7 for a latte or $20 for a primary avocado on toast.

The variety of cafes in Australia has skyrocketed over the past 15 years to unsustainable ranges. There was by no means enough demand to assist so many cafes.

Hovering espresso bean costs, rents, and power prices have created an ideal storm for the trade.

This can end in additional closures till the availability of cafes realigns with buyer demand.

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