Coffee prices are at some of the highest they’ve ever been in Sydney, with industry experts claiming they should be even higher, so why are Lane Cove cafes selling your latte or flat white (or however you order it) selling themselves short by not charging more?
According to a 2024 study by the University of South Australia, the average price for a cup of coffee in Australia is $4.78.
In early February 2025, ITC surveyed 20 cafes in the Lane Cove Village area and found the mean price for a small takeaway coffee to be about $4.50.
It may come as a surprise to many that this is relatively cheap when compared to the global standard.
In London, one can collect a coffee for almost $7, around $8 in some parts of the states and over $10 in Switzerland. Although it’s no secret the Aussie dollar doesn’t exactly hold a candle to these economies’ dollars, it’s suggested we take our coffee for granted.
CEO of the Australian Restaurant & Cafe Association Wes Lambert says cafes must raise their coffee prices to match the market, and consumers should expect it.
“For many coffee shops selling coffee for $4.50 or $4 that are afraid to raise their prices, they’re actually likely selling their coffee at a loss or break,” Wes told ITC.
“We’ve enjoyed coffee in Australia almost every day. But with the costs of doing business so high for cafes around the country, it’s just impossible for them to continue to absorb that in ultra-low prices. In most of the capital cities, that are one plane ride away from Australia, people are already paying $10 to $15 Australian for the same cup of coffee, and I would say in many cases, much lower quality.”
Why Coffee Prices Are on The Rise
There are a myriad of factors contributing to the rise of coffee prices. One globally mutual impact is the cost of coffee beans.
The wholesale price of beans increased by 50 percent in December 2024 due to the unfavourable growing seasons of top producer regions such as Brazil and Vietnam. A similar result is likely in 2025. For reference, Brazil’s Arabica harvest in 2020 was 50 million bags; last year, it barely made 42 million.
Raw Arabica coffee prices have significantly risen to US$3.47 (AU$5.44) per pound, breaking a previous record of US$3.35 per pound in 1977.
But beans aside, there are other economic forces at play dictating Sydney’s price shift in coffee.
“50 years ago, coffee was just 61 cents a cup. Fifty years ago, if you’d have told someone that coffees in CBD areas would be between $6 and $7, ten to 12 times that amount, they would have called you crazy,” Wes shared.
“In just five years, we’ve seen a 15 per cent real increase in the cost of wages. We’ve seen, in some cases, a 30 per cent increase in the cost of rents. We’ve seen 15 per cent a year in the increase in the cost of insurance. We’ve seen a utility spike.”
“Profit margins in cafes are quite low, according to IBIS World, cafes only make 3.3 per cent profit margin.”
Cedric, the manager of Kin Cafe & Wine Bar on Burns Bay Road (in the Harris Farm Markets buildings), says inflation and the cost of living have forced them to raise their coffee prices. (see our cover photo)
“For a very long time, it was $4.50, and due to our rising costs, we had to take it up 30 cents,” Cedric told ITC outside Kin Cafe.
“What people need to understand is that there’s a very, very fine profit margin on coffee. We’re talking about 10 to 30 cents per coffee that actually stays with a shop. The rest goes to paying for beans, milk, labour, electricity, water. We try to be as reasonable as possible with our coffee prices.”
He even gave some insight on the much debated topic of why an ice coffee usually costs more than a regular hot brew.
“There is more milk that goes into it than a normal latte. Plus you need paper packaging because usually they are takeaway. And also ice, usually you either buy ice or you have a machine that makes ice, that costs electricity, and very sadly, ice machines have a tendency to break very often. So notice, a lot of service seems to be taken into consideration as well.”
Barrel One, a cafe chain found throughout Sydney, says it roasts its coffee, so the price of beans is easier on the business. However, it has also recently raised its coffee prices to keep up with other external market factors.
“The price of where we set our coffee here, I’d say we’re probably in the middle ground. There’s definitely places out there more expensive than us, and places that are cheaper,” Manger of the Lane Cove store, Samuel said.
“It’s not just coffee on the green bean scale. It’s everything, like rent, electricity, and wages are a big factor. Our wages are like 40 per cent of our costs. Everything has kind of gone up, which has definitely affected the price of coffee.”
Lane Cove Coffee Prices
ITC surveyed coffee prices at 20 cafes around the Lane Cove Plaza area and found the average cup of joe cost about $4.50. Our limited survey found the cheapest coffee at the Garcon Coffee Cart.
Cafe chain and coffee supplier Pablo & Rusty’s says that although Australia has one of the world’s most vibrant coffee cultures, its pricing model needs to be updated. Pablo & Rusty’s supply coffee to The Junction in Lane Cove Plaza.
“We honestly believe it’s the best cafe culture in the world, and we want to make sure it is genuinely sustainable. And that means that all of us are going to have to pay a little bit more for our coffee,” Operations Manager for Pablo & Rusty’s Chris Tate told ITC
“If it remains at that price, they’re [businesses] going to have to compromise on quality… all of us are going to have to pay a little bit more for our coffee. We think that’s a better result and a better outcome for everybody, and ensures that the industry is ultimately sustainable.”
According to a Sydney Morning Herald article, Pablo & Rusty’s chief executive Abdullah Ramay said the average price of coffee should be around $7-plus.
German, the manager at Thimble Cafe (located across from the Go Vita Store near the pedestrian access entry to The Canopy), said he wouldn’t raise the price of coffee to that extreme but believes business would be better if it is raised in smaller increments.
“Cost of living is going up, but the rates, the salary, is not going up. So it’s a bit hard for people,” German said, sitting among his customers outside the cafe.
“Australians, you actually love coffee. You love going out and buying coffee. I have customers that have four coffees a day.
“If we want to make money, $7 is actually good. But if you want to keep your business on track, I think 50 cents price up is fine.”
What’s Next??
Coffee is one of the aspects of society that Australians value the most. We expect high quality and reasonable prices. Industry experts, on the other hand, say the price many expect is no longer reasonable.
Wes explained that although it’s frightening for businesses to ‘test’ their customers’ desire for the product by increasing the price, taking the leap of faith can ultimately prove beneficial.
“[Losing customers] that’s always the fear, but it rarely works out that way… Prices of things do go up. They have to go up because the underlying costs of things go up. And so cafes, because they’re such small business customers, they’re usually quite afraid to put up their prices. However, I recently consulted a cafe in North Sydney that was afraid to put up their prices, and I was able to convince them with facts that they needed to go up by at least 50 cents. Now, one month later, they’re actually busier in units than they were before.”
Pablo & Rusty’s want cafes and consumers to know paying an extra 50 cents on the dollar will help businesses continue to thrive while sourcing their coffee ethically and sustainably.
However, it’s up to businesses to be transparent, and for consumers to take some price hikes on board, as the alternative may be far more catastrophic for not only the stores but the industry.
“Whilst some suppliers may be able to absorb that cost, they’re not going to be able to do that forever. Those costs will have to be passed on to cafes and ultimately, the consumers as well, if they want their venues to survive and continue to thrive,” Chris said.
“Our advice is really just be open and honest with customers and make sure they’re transparent with their community and communicate as to why changes are being made and consumers will ultimately understand because the alternative is far worse. Venues will start to close, and none of us want that.”
For now, it looks like Lane Cove residents are enjoying a reduced coffee-price bubble, which is more than fine in these trying times. But if your local cafe does up the price, it may be worth keeping in mind it’s most likely so they can stay afloat and keep serving your community.
After all, who else is going to speak to you before your morning coffee?
ITC Note: ITC interviewed several cafe owners for this article and reached out to other cafes. Some of the owners we wanted to speak to were not available. We sourced comments from cafes that were not ITC Business Supporters and some who are ITC Business Supporters.
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