Executive Summary

At an average takeaway price of $2.37 buying coffee ‘out’ is still 10 times more expensive than using an automatic coffee machine to produce the same quality beverage in an office or home.  The demand for automatic coffee machines can be expected to continue due to the cost savings and convenience of the new generation coffee machines.

The increasing variety of speciality coffee stores in the Brisbane market is placing competitive pressure on the retail price of coffee beverages. 

Brisbane’s CBD is in the midst of a Cappuccino price war with 55% of stores surveyed in January 2003 had decreased their retail coffee price in the past twelve months.

The Cappuccino Price Index in Brisbane fell by 8.1% in 2002. Overall in Brisbane the average price of a coffee decreased by 21 cents during 2002.

Once again, competition appeared to be particularly active in the CBD. This saw the index falling by 9.6%.

There was no change in the average ‘sit down’ price which remained at $2.68.

Gilkatho surveyed 140 sites in 2003 to reveal that the lowest price coffee was $1.20 with the highest priced standard 210 ml coffee being $3.40.

A coffee price can only decrease so far due to significant costs for ‘bought’ coffee being labour and location (rent) costs.  This indicates that at some point café operators need to consider a paradigm shift to lower their over heads.  This could be achieved through automation of the coffee preparation process.

Methodology

Each year, Gilkatho carries out a survey of Brisbane’s Cappuccino prices in order to understand the retail price of cappuccino hot beverages and the implications for Gilkatho’s business planning.  This information is used to compile the Cappuccino Price Index which is published internally in March each year.  Selected cappuccino society areas in Brisbane are survey by walking into each establishment and obtaining the price of three hot beverages, cappuccino, espresso and long black for both takeaway and dine-in consumption.

The areas that have been surveyed are

Brisbane CBD

West End

Milton, Park Road

Bulimba, Oxford St

Ascot, Racecourse Rd (2003 onwards)

Key results -Takeaway

The Cappuccino Price Index in Brisbane fell by 8.1% in 2002.  .

Competition appeared to be particularly active in the CBD. This saw the index falling by 9.6%.

By identifying the results for 77 outlets in the CBD for which results can be compared directly with their response in both years, these establishments averaged a 10.1% decrease in advertised prices of cappuccinos.

Of these 77 outlets, 43 sites decreased retail coffee prices in 2002 by between 10 cents and $1.70 with an average decrease of 54 cents in those 43 sites.

Of theses 77 outlets, 15 sites increased retail coffee prices in 2002 by between 1 cent and 85 cents with an average increase of 27 cents.

The remaining 19 stores which could be identified between surveys did not vary their selling price during the past year.

Key Results – Dine In

Of the 106 outlets surveyed who supplied prices for dine-in cappuccino

8 outlets decreased their price
86 outlet prices were unchanged
12 outlets increased their prices

Overall there was no change in the average dine in price which remained at $2.68.