Coffee and food have always gone hand in hand, and for many café owners, the recipe for success lies in curating a menu that is diverse yet simple.

Just like coffee, food evolves with trends. Customers today expect not only innovative flavour combinations but also the comfort of nostalgia. Pairing modern, trending creations with familiar staples creates a balanced menu that coincides with a focus on high-quality coffee.

Now more than ever, as margins run thin, coffee shop owners need to keep a close eye on their food offerings. Simple, quality ingredients and careful, efficient preparation will be essential to future success.

Peter Dore-Smith of Kaffeine and Zsuzsa Kerekes of Madal Café discuss the food trends that coffee shops can follow in 2026.

You may also like our article on pairing food with specialty coffee around the world.

Coffee shops hike prices, but margins still run thin

Running a coffee shop today is more complicated than ever. Green coffee prices continue to remain high and volatile, operating costs are skyrocketing, and more people are opting to brew their own coffee at home.

“Due to the general unfavourable economic climate and constantly rising prices, people have less available income to spend,” says Zsuzsa, the manager of Madal Café in Budapest, Hungary. “They are more price sensitive, more focused on price-quality ratio, and generally consume less.”

As coffee shops face mounting pressure on their margins, many have raised their prices. However, selling coffee and drinks alone often doesn’t suffice.

“You need to increase your spend per head or transaction, and you can only do this by increasing your food sales and offering a wider range of products,” says Peter, the founder and director of Kaffeine in London, UK.

Coffee is surprisingly unprofitable once rent, operational costs, packaging, and wages are factored in. Drinks may retail at US$5, but the actual cost of coffee per cup is very little compared to labour expenses.

Food, meanwhile, can be marked up substantially. Options like sandwiches and salads are cost-effective, as the ingredients can be purchased in bulk, preparation is straightforward, and customers are willing to pay a premium for grab-and-go options.

“In this climate, a basic selection of baked goods isn’t enough incentive to attract customers and encourage them to spend more,” Zsuzsa says. “They can buy similar quality items from any supermarket or bakery at lower prices.

“Customers want the option not only to get a coffee but also to enjoy breakfast or a light lunch,” she adds. “Having a creative menu may result in a larger average consumer spend and more frequent visits.”

Dishes like breakfast toasts, homemade ferments, smoked salmon bagels, and poached eggs are classic menu items that customers will always gravitate towards. 

“We have always had a weekly changing lunch menu where we change the salads, quiche, and filled brioche each week,” Peter explains. “Our customers are coming for food as well as coffee.”

Remaining cautious when following trends

Since the rise of Instagram and TikTok, many popular food trends have captured the attention of consumers worldwide, prompting coffee shops to incorporate some of them into their menu offerings.

Dubai chocolate, dubbed by the Wall Street Journal as the “next pumpkin spice”, is the most obvious example. The pistachio, tahini, and kataifi (or kadayif) pastry-filled chocolate bar became a viral global sensation in late 2023. Its sweet-slightly savoury flavour combination, palpable crunch, and paint-splattered appearance tap into the explosive demand for multi-sensory food experiences.

Coffee shops are jumping on the trend, crafting Dubai chocolate lattes, matcha drinks, and croissants that appeal to customers seeking indulgence and luxury.

However, following food trends that appear on social media, which often last only a few months before fading into obscurity, isn’t a wise business strategy. Already causing global supply shortages of pistachios, the Dubai chocolate trend is quickly becoming overpopularised, and interest is likely to start waning as more products flood the market.

“For the most part, social media trends are transient, and it is more important that a business develops its own set of values and follows them,” Zsuzsa says. 

Flat whites and cappuccinos served in croissants, once a popular social media trend, are a case in point. Although visually appealing, these trending menu items lack practicality, rendering them mere marketing gimmicks once customers have them in hand.

“Jumping on a viral trend isn’t a good idea for a business, as it will soon fade away and leave you with nothing,” Peter says. 

If coffee shops fail to deliver on their promise of high-quality products, they risk undermining their authenticity – a critical aspect of specialty coffee.

“The most important thing is to be incredibly consistent in your offerings, the quality of your product, and with a fair and reasonable pricing structure so that people keep coming back,” Peter adds.

Which food trends should coffee shops look out for in 2026?

The ability to keep up with food trends can set one coffee shop apart from another; however, blindly following them won’t lead to lasting success. Instead, café operators and baristas need to understand which ones will work for their business and customers.

Looking more broadly at how consumer preferences are shifting is a useful starting point.

“Consumers are becoming more and more conscious regarding their health and the impact they have on the environment,” says Zsuzsa. “They also put more emphasis on good quality, fair trade, and quality ingredients.”

The US$4.5 trillion global wellness economy is growing twice as fast as the global economy. According to Ogilvy, 73% of global consumers considered wellness an essential element of a brand’s strategy in 2020 – including food and beverage products.

While this growing demand has given way to the functional coffee market, there has also been a rising interest in high-protein, gut-friendly, and minimally processed ingredients. Foods like cottage cheese, fat-free Greek yoghurt, and kimchi are now commonly seen on “FitTok” – a corner of TikTok that features workout plans, recipes, and other fitness-related content, which has garnered more than 64 billion views.

But at the same time, indulgence and familiarity haven’t disappeared. Comforting, rich, and decadent food items – such as banana pudding (popularised by Magnolia Bakery in New York City), cereal milk, and birthday cake – continue to draw in customers, often with a nostalgic or innovative twist.

Umami-forward and spicy-sweet flavour combinations are gaining popularity, drawing inspiration from diverse Asian and Middle Eastern cuisines. Miso caramel, hot honey, tahini, and black sesame are increasingly found in baked goods or incorporated into savoury dishes, offering more complex flavour notes and tapping into globalised food trends.

How coffee shops can develop their food menus and make a profit

Developing a food menu that is both attractive and cost-efficient, while maintaining a balanced approach, can be challenging – especially one that sets you apart from competitors.

“To develop an interesting food menu, first you need the vision from the owners and senior management, then employ the right people to be able to execute that vision and bring it to reality, and continue to support them as they continue to develop it,” Peter explains. 

“Simplicity is key across all menus, so you should start there and work your way up,” he adds. 

This means focusing on simple yet high-quality ingredients, tapping into seasonal flavours. Offering a straightforward toast menu, including both sweet and savory options, can be one of the most profitable ways to follow food trends. 

Sourcing bread from local suppliers and including menu items like whipped ricotta and hot honey, almond butter and raspberry jam, and miso-braised mushrooms allows café operators to use simple, minimal ingredients – keeping costs down while also elevating menus.

“Simplicity is often undervalued,” says Zsuzsa. “A high-quality, simple toast menu is better than having something too elaborate that you can’t execute correctly and consistently.

“You might not satisfy every demand, but well-curated and good-quality food selections are enough to get your customers to spend more and frequent your coffee shop more often.”

Japanese sandos – made using milk bread (or shokupan) and a variety of simple ingredients – have become a recent viral social media trend, also appearing on more supermarket shelves.

Fillings traditionally include tamago (a mixture of mashed hard-boiled eggs and Japanese mayonnaise), katsu (breaded pork or chicken cutlets, usually served with a slaw), and strawberry and sweetened whipped cream. The use of minimal ingredients enables coffee shops to quickly batch prepare food in advance, while also offering consistently visually appealing options that appeal to consumers seeking variety.

Following food trends should enhance the coffee experience, not detract from it. Simple, high-quality menu items that tap into popular flavour combinations ensure that café operators can manage costs, draw intrigue, and offer consistency.

Ultimately, the goal is to encourage customers to add “just one more thing” to their order, helping coffee shops manage their bottom lines and diversify revenue.

Enjoyed this? Then read our article on how to choose food and snacks for your coffee shop.

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Today’s challenging economic climate is driving more specialty coffee roasters and shops towards crowdfunding, especially as banks tighten access to loans. 

Rising costs across the industry, from record green coffee prices to higher utility bills and wages, have made launching or scaling a coffee business an uphill battle. To avoid the constraints of traditional funding sources, such as high interest rates, operators are looking to alternatives – and crowdfunding has emerged as one of the most effective solutions.

It’s becoming a popular way to connect with consumers and other interested parties, leveraging the power of individual backers to build community and invest in sustainable growth.

Whether it’s to scale up operations or expand into new markets, crowdfunding is opening up new paths in an industry that thrives on connection and innovation, but there are still clear risks to consider.

I spoke with Carlos Eduardo Bitencourt, the founder and CEO of Cafezal, to learn more.

You may also like our article on why more roasters are rebranding than ever before.

Why crowdfunding is becoming more popular in specialty coffee 

Traditionally used by coffee equipment brands to fund and drum up interest in new product launches, roasters and coffee shops are also increasingly turning to crowdfunding. This is when companies create funding campaigns on online platforms, such as Kickstarter, Crowd Cube, and Indiegogo, where individuals contribute money to support projects or business ventures.

But why is this shift happening now?

Already, opening a coffee shop or roastery often requires significant upfront investment. The Specialty Coffee Association’s financial benchmark study found that launching a roaster wholesaler and retailer operation requires an average of US$120,000 in startup capital.

However, as the coffee industry faces a record year on the cost front, launching or running a roastery or café is becoming increasingly expensive.

Green coffee prices reached an all-time high in February 2025 and have remained high and volatile since then. US President Donald Trump’s decision to roll out sweeping tariffs – including a staggering 50% on Brazil – is also adding complexity and reshaping well-established trade dynamics.

Global inflation rates are also rising, particularly in the UK and the US, as the costs of goods, services, and labour continue to increase.

All of these factors mean margins are tighter than ever. Passion alone is no longer sufficient to sustain a roastery or café, as economic hurdles create a more formidable landscape for coffee business operators.

Simultaneously, obtaining loans through banks has become more challenging, as financial institutions tighten their lending criteria – especially for younger and smaller businesses. If they are able to secure a loan, the rigorous collateral requirements pose further obstacles and create additional pressure.

For many coffee companies, crowdfunding has become a viable alternative to traditional financing models. The model operates in several ways:

• Donation-based funding, so there is no return on investment
• Rewards-based campaigns, offering products or perks in exchange for funding
• Equity crowdfunding, where investors gain a stake in the business

Instead of receiving a large sum from a single investor, brands collect smaller amounts from multiple contributors – building a sense of community that supports sustainable growth.

“In any sort of business, leaders have options to access cash, like IPO or bonds. But in specialty coffee, we are particularly close to customers, which allows us to access capital from them, as well as professional investors,” says Carlos, the founder and CEO of Cafezal, the first specialty coffee roaster in Milan, Italy, which has also utlilised crowdfunding to scale.

“Crowdfunding has emerged as a relevant alternative for coffee companies; it can generate a huge marketing effect during and after the campaign and a network of smaller shareholders who can speak about the company to others,” he adds.

More coffee roasters are seeking alternative funding

Research indicates that approximately 60% of small, independent coffee shops fail within the first five years of operation. With market saturation, soaring overheads, and volatile coffee prices, it’s harder than ever to establish a successful coffee business.

“The marketplace of specialty coffee keeps growing, and therefore, the fastest and business-driven companies will have more chances to thrive,” Carlos says. “At the same time, consumers are becoming more educated about coffee, which opens up new opportunities.”

In turn, both prospective and established roasters are turning to their communities for support. For some, these methods are more than just financial lifelines; they double as marketing tools, fostering early customer loyalty and creating a sense of shared ownership. Individual backers – whether they have a stake in the business or donated funds – are invested in its success and will remain loyal, long-term customers.

One of the most recent examples is Proud Mary, a prominent Australian specialty coffee roaster that expanded into the US in the late 2010s with locations in Portland, Oregon, and Austin, Texas. After raising US$1.23mn from over 230 investors, the roaster will use funds to open new coffee shops in Oregon and Texas, as well as launch a small-format on-the-go concept. 

The UK’s WatchHouse also had a similarly successful crowdfunding campaign, leveraging its brand name and reputation to attract alternative investment. The roaster raised 700% of its target, allowing it to open a shop in the Chrysler Building in New York City.

In an industry built on community, alternative funding in specialty coffee taps into the inherent consumer “connection” with the product. This enables brands to remain agile, grow rapidly, and quickly establish a foothold in the marketplace.

“Besides the equity given to the new shareholders, coffee companies offer subscription promotions, coffee experiences packages (like coffee courses, or even origin trips for larger investors), as well as merchandising and coffee accessories,” Carlos explains, which helps fuel the sense of ownership and rewards.

Is crowdfunding the future of specialty coffee?

As operational challenges persist, the specialty coffee sector and its advocates must adapt. Crowdfunding could well become more prominent, particularly in terms of scalability and expanding existing operations. 

“The future of specialty coffee is getting companies set for business, not only on passion,” Carlos says. “It’s about more than the quality of coffee and pastries or the hard work that companies need to put in creating a great team and brand, but it’s also about facts and business-driven decisions. Crowdfunding is a valid, but it’s just another way for companies to raise capital.”

Alternative funding has several valuable benefits; it helps create a more profound sense of community. Specialty coffee thrives on loyal, engaged customers who value craftsmanship, transparency, and a compelling story. Crowdfunding taps directly into that, turning customers into early supporters and advocates.

“You have much more visibility through a robust marketing campaign, and the potential increase in sales through your network of investors,” says Carlos. “Companies also tend not to lose much control of their administration when doing crowdfunding.”

However, there are significant risks associated with this approach. Individual funders are deeply invested in the business, which means regular updates are critical to maintain their support.

“You need to have a very strong reporting system towards the shareholders and a more complex communication structure in the company,” Carlos explains.

This means a robust marketing strategy and active engagement throughout the entire campaign duration are essential – and many companies underestimate the level of activity needed to drive success.

Moreover, the risk of failure is notable. Roughly 9% of Kickstarter campaigns never fulfil their promised rewards, which means coffee businesses need to accurately calculate the cost of their reward tiers so they can deliver on every commitment.

The capital raised is also at stake; most crowdfunding campaigns are based on an all-or-nothing scheme. If the campaign fails to reach its target, the revenue raised will be returned to investors, leaving the business with essentially nothing. 

“As with any investment, the person must believe in the business and the wider industry,” Carlos says. “Specialty coffee is experiencing strong growth, but as an investor, you must be patient for cashing out your investment, perhaps four years or longer. The prospects, however, are very positive for those who understand that the specialty coffee and modern F&B markets are growing.” 

Crowdfunding is not a silver bullet, but it has become a powerful tool in the specialty coffee playbook, particularly for brand storytelling, community building, and lowering the barrier to entry. 

It’s likely to grow in relevance, but most successful coffee businesses will still need to blend it with more traditional financing to ensure stability.

Enjoyed this? Then read our article on how to build a brand as a coffee roaster.

Photo credits: Cafezal

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Gen Z consumers, in particular, are reshaping the coffee landscape with their willingness to spend more on personalised, premium beverages that reflect both their tastes and values.

With the rise of mobile ordering apps and digital menus, customers now expect the ability to tailor their drinks with a wide variety of options. These range from different flavour combinations and textures to health-conscious add-ons. 

This shift has prompted coffee shops to innovate and adapt, introducing everything from cold foam to house-made syrups that enhance or transform the flavour profiles of coffee drinks.

With this in mind, it begs the question: Are highly customised drinks pushing us too far away from specialty coffee?

Luke Wang of CAYE Technology, Nefeli Bouti of Latte Art Factory, and Patrick O’Malley of Infusion Coffee and Tea Crafters share their perspectives.

You may also like our article on why coffee shops need to stand out with customised beverages.

Why Gen Z is driving the trend of beverage customisation

Specialty coffee has long prioritised the “pure” expression of terroir and processing. But café operators and roasters can’t afford to ignore the growing trend towards customised coffee.

A recent study from the UK roaster Lincoln and York shows that 75% of coffee consumers aged between 18 and 34 – who have the highest spending power in the industry – want to customise their to-go coffee drinks. 

“Competition within the beverage industry is intensifying, and brands must focus on the trend of customisation to keep up,” says Luke Wang, the Chief Technology Officer at coffee equipment manufacturer CAYE Technology. “With Gen Z redefining consumption habits, beverages are increasingly seen as an extension of personal values.”

While millennials still largely embrace filter coffee and flat whites, Gen Z is boldly reshaping how coffee is marketed, experienced, and enjoyed.

“​The trend of coffee customisation can be attributed to the fact that younger people have started to drink coffee earlier than older generations,” says Nefeli Bouti, the senior marketing and brand manager at automated beverage dispensing solution Latte Art Factory. “Social media is another key factor, which is primarily used by the younger generations.”

With social media driving visibility and influence, beverages have become the ideal canvas for creativity and flavour exploration. The days when the height of beverage personalisation meant a few pumps of caramel syrup or swapping cow’s milk for a plant-based alternative have seemingly disappeared.

Indeed, the more extravagant or leftfield beverage customised coffee is, the more traction it will likely receive. The viral scallion latte, made popular by Chinese coffee shops in summer 2024, is a case in point. The drink amassed 20 million views on platforms like TikTok, proving how personalised drinks can be clever marketing tools for coffee businesses.

A shift away from black coffee

Beverage customisation is undeniably reshaping how consumers experience coffee globally. 

The factors that once defined the third wave and specialty coffee movements – meticulous brewing, single origin micro lots, and supply chain transparency – have arguably less influence than in previous years.

Instead, there’s a new wave of high customisation, driven by creativity, personal expression, and the demand for experiences, rather than “just a beverage”. For younger consumers, in particular, black filter coffee, or even traditional milk-based drinks, simply don’t make the cut.

“Customers want more variety and exciting components and colours. Younger people follow trends led by national and regional chains, and specialty coffee is trying to capture those clients,” says Patrick O’Malley, the owner of Infusion Coffee and Tea Crafters and the International Barista & Coffee Academy in Arizona, US. 

Large coffee chains typically allow extensive modification to any drink, sometimes to the point where the final beverage barely resembles its original format.

Starbucks is the leading example. Drink customisation is a core component of its business, driving sales and reinforcing consumer loyalty. But in recent years, extensive add-ons have clearly taken their toll on profitability and store performance.

Endless beverage customisation options and disorganised mobile ordering pick-up systems have caused chaos, prolonging wait times and harming customer service. Sales in key markets like the US and China dropped sharply, prompting shares to fall by a record 16% in May 2024.

As part of the Back to Starbucks plan, a return to its “coffeehouse” roots, CEO Brian Niccol has curbed customisation options for mobile ordering in a bid to contain an influx of extra ingredients and add-ons that slow down workflow.

Indeed, the reality of customised drinks can have a negative impact on coffee shop operations. Limited storage space, cost control, workflow efficiency, and the need for consistency can all suffer if proper systems and safeguards aren’t in place. 

Baristas can easily be overwhelmed with long lists of randomised alterations, slowing down workflow and increasing the risk of mistakes.

“It’s a tricky situation to manage and balance, but with creativity and attention to detail, it’s possible,” Patrick adds.

Cafés need creative constraint

Like the generations before them, Gen Z is redefining what coffee can be. Specialty coffee shops, once the advocates of flavour purity, now face a new challenge: staying creative and adapting to new trends without losing their values.

“Specialty coffee shops can keep quality at the forefront by offering a core menu that focuses on the craft and flavour of high-quality beans,” Nefeli says. “It’s all about finding the balance between creativity and quality. Customisation doesn’t have to mean compromising on quality. 

“When we use great ingredients and lean on smart tools that take pressure off our workflow, we can keep the focus on what matters: making good coffee. It’s about elevating the experience, not just adding options,” she adds.

In the context of specialty coffee, customisation options should focus on additions or swap-outs that enhance and redefine the quality of an already excellent coffee experience. 

“Customisation can be curated by adjusting brew strength, choosing alternative milks, or adding flavours and ingredients that complement rather than overpower the coffee, making it easier to enjoy something personal without compromising on the integrity of the main ingredient,” Nefeli tells me.

As with the coffee they serve, cafés should be intentional and careful with their additional ingredients. Buying from trusted suppliers or making syrups, add-ons, and extra ingredients in-house can maintain quality standards and prioritise the use of seasonal, or even local, produce.

Reinventing classic or viral drinks can also work in their favour. GAIL’s in the UK recently launched an iced muscovado latte – a different take on the wildly popular brown sugar latte – while Blue Bottle in the US serves a saffron vanilla latte. 

“We create meaningful signature drinks by using local and seasonal ingredients and thinking outside the box,” Patrick says. “Putting a twist on traditional drinks and making them relevant in today’s market is an effective way to stand out. Think like a high-end cocktail lounge, creating signature mocktails with exciting flavours and names.

“Our menu includes the Lush, a house-made pistachio latte, the Drift, a house-made hibiscus and coconut sparkling americano, the Verdant, a ceremonial-grade macha latte with pistachio and orange blossom, and the Sol, a double shot of espresso, over orange blossom, honey, and a splash of orange juice,” he adds.

Leaning on automation & equipment

Offering customisation is key to meeting modern consumer expectations, but giving customers too much freedom to alter or replace ingredients in drinks can become counterproductive. 

Baristas also need to be able to keep up with new menu additions. Not only are drinks evolving at a rapid pace, but the machinery used to produce them is also changing. Automation in bar setups has become increasingly important, especially in high-volume cafés with extended menus.

“Offering a wide variety of customised drinks can make the process more complicated and time-consuming for baristas,” Nefeli says. “Automation can help make tasks that take the most time or require more attention faster and easier.”

Automated coffee machines, tampers, distribution tools, and milk foaming and dispensing equipment can help businesses adapt to evolving times.

“Coffee shop operators can leverage automation and data-driven strategies to turn personalised demands into scalable business models, while enhancing operational efficiency and user experience,” Luke says.

Beverage customisation doesn’t have to mean a loss of coffee quality and brand identity. When done with intention, it can enhance customer satisfaction and experience.

Specialty coffee shops must respond to the trends being shaped by younger consumers, or risk losing a vital customer base in an already competitive and evolving market. Striking the right balance between staying true to core values and adapting to the shifting landscape of coffee consumption is becoming increasingly essential. 

“Regardless of how the market changes, one thing remains clear: truly successful specialty coffee shops always have a stable core menu,” Luke concludes. “Even as stores frequently introduce trendy new beverages, it’s the consistently high-quality coffee that ultimately brings customers back.”

Enjoyed this? Then read our article on why customised drinks are set to become more popular.

Photo credits: CAYE Technology, Latte Art Factory

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But as global specialty coffee consumption has grown, the market has become fiercely competitive. Businesses need a point of differentiation, often found through forward-thinking marketing strategies, creative signature and customised drinks, or the latest brewing technology.

In a bid to stand out, it can be all too easy to overlook or overthink the “basics” of core coffee offerings and hospitality. However, cafés that don’t invest in these essentials risk losing loyal and potential customers.

Chris Deferio of Keys to the Shop, Darleen Scherer of Black Sheep Coffee Collab, and Jack Pawlik of Dripos share their thoughts.

You may also like our article on why customer service will always be the most important thing in specialty coffee.

Great coffee & customer service have long been the backbone of specialty coffee

Third wave coffee culture was built on the premise of excellent coffee and hospitality. These two components have been central to the industry since the late 1990s and early 2000s.

During this time, passionate and aspirational café and roastery operators built their brands on craftsmanship, artisanry, quality, and transparency. Countering the convenience and “soullessness” of larger chains, third wave coffee shops offered spaces for consumers to connect with coffee in new ways, creating a sense of community that helped these businesses thrive.

Baristas emphasised the influence of origin, processing, variety, and altitude on flavour, advocating for a higher culinary appreciation of coffee. Transparency took centre stage as consumers demanded to know more about the “story” behind their beans. 

Roasting and brewing skills also gained more respect, encouraging consumers to appreciate the human-driven expertise and efforts invested in the supply chain. This helped create a sense of connection with high-quality coffee products, aligning them with self-expression, identity, and values.

As specialty coffee proliferated in the mid-2000s, it drove coffee quality and customer service to new heights. First defined by Erna Knutsen in the early 1970s (effectively predating the third wave) to describe more unique and higher-quality coffees grown in microclimates, specialty coffee also encompasses more holistic characterising factors, such as traceability and sustainability, as consumers have expressed a growing interest in learning about the wider supply chain.

Over the last two decades, the industry has continued to mature and evolve, shifting its hands-on approach towards automation and consistency – the latter of which still remains a key factor in “traditional” customer service. These changes, however, appear to reflect a more scientific approach to coffee preparation, as baristas strive for excellence and precision in their craft, often relying on automated equipment and gadgets to assist the process.

While some believe that automation frees up baristas’ time to focus on service, others argue that it undermines human-driven skills and expertise, ultimately altering the specialty coffee customer experience. 

Market maturation has changed the industry’s priorities

Despite its young age, the specialty coffee industry has grown at a remarkable rate. Specialty coffee consumption recently reached a 14-year high in the US, signalling further maturation of the market. 

However, this presents a double-edged sword. As market competitiveness increases, brands need to stand out even more. The rising costs across the coffee industry, namely record-high C prices and increasing expenses for nearly every essential, from milk to equipment, present more barriers to growth.

These economic pressures add another layer of complexity for those striving to build a unique brand identity in an already oversaturated market.

“Most coffee shop owners aren’t overthinking their core objective; serving high-quality drinks is inherently difficult and always top of mind. What we’re seeing instead is owners working hard to adapt and grow in a competitive landscape,” says Jack Pawlik, the co-founder of Dripos, a software development company focused on the specialty coffee industry. 

“Delivering a great product is just one part of running a successful business. Many are experimenting with ways to differentiate themselves, create more value for their customers, and build a more sustainable operation.”

In a market like specialty coffee, brand differentiation takes many forms. Some cafés and roasters focus on high-end micro lots and competition coffees to cater to niche markets, while others tap into trends like customised drinks to attract a wider audience.

“The reason this is changing is that customer expectations have fundamentally shifted,” says Darleen Scherer, the founder of Black Sheep Coffee Collab consultancy. “What they’re seeking is a distinctive experience that aligns with their identity and values. 

“Successful coffee businesses now must create meaningful connections through their brand story, physical space, community involvement, and overall experience,” she adds. “This evolution reflects a broader consumer desire for authenticity and connection in an increasingly digital world.”

Larger coffee chains are reshaping the customer experience

Specialty coffee shops, once outliers, have become increasingly mainstream in many countries. Brands like Japan’s % Arabica and California’s Reborn Coffee have recently secured millions in investment to fuel international expansion, including in emerging markets.

As these investment-backed specialty coffee chains proliferate, more customers are exposed to higher-quality coffee options, further evolving their demands and preferences. Expectations for coffee quality and customer service have been raised, and coffee shops must meet them.

While smaller, independent specialty coffee brands benefit from this exposure, it also intensifies market competition. Not only do these companies have to stand out from one another, but they also have to contend with the influence of larger chains, which have stronger branding and marketing power while offering comparable products.

To keep up with ever-changing consumer needs, some specialty coffee shops are embracing the growing trend of beverage customisation. Following in the footsteps of notable brands like Blank Street, Blue Bottle, and Black Sheep, smaller-scale cafés are expanding their menu options to include non-coffee drinks, such as matcha and lemonades, while still maintaining a focus on high-quality coffee offerings. This enables them to retain their core consumer base while attracting new customers, particularly Gen Z, who these drinks appeal to.

“It seems an overwhelming majority of shops are trying to catch as many customers as possible, so they add these menu items in a bid to hedge their bets and, in their mind, increase the chance of success,” says Chris Deferio, the founder of podcast and coffee shop consultancy Keys to the Shop. 

“The ability for owners and operators to look at other cafés via social media and the internet, or through travel, is also why we see a lot of changing concepts that often don’t work to bring the desired success,” he adds. “The one thing we have seen little of is a well-thought-out menu meant to serve the customer in the community the shop is operating in.”

The influence of larger chains and trends is also reflected in customer service. Connection, storytelling, and traditional hospitality are increasingly being replaced by QR codes and mobile ordering to expedite the coffee shop experience, catering to increasingly fast-paced lifestyles. But on the flip side, they create “faceless” businesses that fundamentally reshape how baristas interact with customers.

A shift toward “hyper-specialty”

Conversely, as part of efforts to differentiate from “mainstream” specialty coffee, some high-end coffee shops are adopting a more scientific and precise approach to brewing, influenced by competitions like the World Barista Championship.

Having a meticulous focus on serving ultra-rare coffees and tightly controlling extraction variables helps elevate quality standards at these establishments, and also influences broader industry trends.

These cafés serve an important purpose in specialty coffee, bringing consumers closer to excellence and prestige that’s often reserved for competition stages only. But simultaneously, they can easily escalate into pretentiousness and hauteur if hospitality isn’t a constant priority and help to the same standards as the coffee served.

The constant push for excellence and insatiable appetite for exclusivity can quickly obscure the underlying need for consistently great customer service.

“Market saturation isn’t merely the presence of a physical coffee house, but in terms of excellent experiences. The experience is the substance, not the building or the brand,” Chris says. “By that standard, we are far away from market saturation.

“Excellent branding, nice equipment, champion baristas, award-winning roasters, and clever marketing are fine, but not when you can’t deliver in daily business operations, and when baristas disappoint the expectations of the customer.”

Focusing on the essentials: serving people

With a more diverse range of specialty coffee businesses than ever before, it’s clear that different types of coffee shops have distinct needs. Ultimately, however, the true tipping point between success and failure in the coffee industry comes down to one constant: the customer. 

“After seeing thousands of shops operate, one thing is clear: it’s the simple, human moments that matter most,” Jack says. “A friendly barista, a warm welcome at the register – these small interactions instantly shape how someone feels in a space. Coffee shops are, at their core, social environments. Every customer touchpoint is a chance to create a connection and brighten someone’s day, even in a small way.”

Consumer loyalty, choices, and daily habits dictate whether a business thrives or fades away. Building a base of returning customers is one of the most powerful drivers of long-term success for any coffee business, no matter its brand identity.

“Simply serving exceptional coffee is no longer enough to attract loyal customers and scale successfully,” Darleen says. “The most successful coffee businesses understand that standing out requires creating a distinctive brand experience around their coffee service.

“The coffee industry is full of imitators, so breaking from the herd with a clear strategic vision is essential. Remember that exceptional coffee is your foundation, but your distinctive approach to serving it and your commitment to evolving alongside your customers become your competitive advantage,” Darleen adds.

At the core of lasting success is an unwavering focus on customer experience, understanding their evolving needs and consistently delivering solutions that exceed expectations.

“Simple drinks and kind service done well in a clean, comfortable space consistently at all hours of operation over the years. Study people more than coffee, serve them well, and they will support you,” explains Chris. “Fail to serve, and you will find yourself relying on the mechanisms we often use to divert the blame away from us and pretend it is a matter of unravelling the mysterious world of branding, marketing, novelty, and gimmicks.”

The best-performing shops treat customer service as a craft in itself. They’re not just focused on speed or efficiency; they prioritise true hospitality. Consistency, attentiveness, and genuine friendliness remain the pillars of great service. No matter how much the industry evolves, those fundamentals remain timeless.

“Customer preferences are not as mysterious as they’re made out to be. Local taste is what should concern most operators, but they instead choose national trend data and overlook their own backyard,” Chris tells me. “Customers want simple and excellent quality menus, a reasonable and well-thought-out level of menu variety that can be executed well, and options for customisation, but also a level of constraint, curation, and confidence from a café.”

Hospitality has always been, and will continue to be, a cornerstone of speciality coffee. As it faces one of the most challenging times in its recent history, specialty coffee needs to ensure that consistently excellent customer service remains at the forefront of daily operations.

“The future belongs to coffee businesses that can articulate not just what they do, but why it matters and how it’s different in ways that are relevant to consumers,” Darleen concludes. “Those who master this will not just survive the current competitive landscape but thrive within it, building loyal customers who become vocal brand ambassadors.”

Enjoyed this? Then read our article on the future of hospitality and customer service in specialty coffee.

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The coffee industry is resilient and has weathered numerous storms throughout its history, but the challenges that coffee businesses are facing in 2025 are unlikely to subside anytime soon, especially as the effects of US tariffs are felt in all corners of the world.

While this can create a sense of trepidation and scepticism, business operators who prioritise effective cash flow management will be best prepared to navigate the months ahead.

I spoke with Zach Dowse, operations manager at Landgon Coffee Merchants, and Jake Leonti, director of coffee at Gregory’s Coffee, to find out more.

You may also like our article on how much coffee shops need to raise their prices.

How new challenges are reshaping the industry

As the C price continues to hover around US $4/lb for the first time in decades, roasters, in particular, are facing unprecedented challenges that are reshaping their green coffee buying strategies.

When coffee prices are low, specialty coffee roasters can source high-quality lots while still maintaining healthy profit margins, positioning them well for future business growth. But as arabica futures remain consistently high, many roasters are switching to offer more cost-effective blends or diversifying to include lower-cost origins like Brazil to manage tighter margins.

Inevitably, this leads to knock-on effects along the supply chain. Traders, also feeling the impact of price volatility, have to adjust their buying behaviour to cater to changing roaster demand.

“We’ll see some short-term changes in green coffee buying habits to accommodate the rapid surge in prices,” says Zach Dowse, the operations manager at Langdon Coffee Merchants, a specialty green coffee importer that operates in the UK, Australia, and New Zealand. “Importers will likely steer clear of heavy spot positions as stakeholders adjust.”

Spot buying happens in “real-time”, whereas forward buying is when sellers and buyers agree to future transactions at a fixed rate. With coffee prices remaining high and volatile, locking in set prices offers a level of certainty that roasters, traders, and producers are currently seeking.

Simultaneously, however, securing the capital to purchase large volumes of coffee upfront has become more challenging. Many roasters rely on short-term loans to cover the costs of large coffee purchases, but because the risks associated with lending have also increased, banks and financial institutions are tightening credit lines and enforcing stricter conditions.

“Cash flow is the most significant issue in the coffee industry worldwide today,” says Jake Leonti, the director of coffee at Gregory’s Coffee in New York City, US. “Exporters at origin don’t have access to enough cash to purchase cherry, and importers don’t have enough to purchase green in large volumes. 

“Roasters don’t have cash to purchase long-term green coffee supplies – the list goes on,” he adds. “This is why we’re seeing a lot of coffee companies seeking investors and selling parts or all of their companies to bring cash into the business.”

Industry dynamics are shifting

Price volatility in the coffee industry isn’t new, but the current period of sustained high prices is creating unforeseen challenges, compounded by rising inflation, climate-driven supply shortages, and increasing interest rates.

US President Donald Trump’s recent global trade tariffs have exacerbated these issues, introducing additional complexity and costs to an already strained supply chain. Trump announced universal import taxes in early April, which initially included levies between 10% and 104% on imports from the majority of the world’s top 20 coffee-producing countries. This caused coffee prices to fall sharply as speculators bet on price depreciation.

Since Trump reduced the levies to between 10% and 25%, the C price has steadily increased to near-record levels again. With coffee prices not expected to retreat until late 2025 – and the ripple effects likely to be felt for at least four years – the industry is grappling with a structural shift rather than a passing trend.

Many point out that this shift is a long overdue change in the industry, as coffee has historically been an undervalued product. But for producers, high prices aren’t necessarily a be-all-end-all solution. The costs of labour, fertilisers, and other inputs have risen alongside coffee prices, meaning their margins remain tight. Producers also face cash flow constraints to cover the rising costs of production, putting them in a similar position to roasters and traders.

In turn, all supply chain actors are exercising a new level of caution and operational awareness. Roasters are seeking to mitigate risks by diversifying their offerings, while producers are focusing on efficiency and exploring ways to add value to their coffee.

Collaboration, communication, and shared risk management have become increasingly essential to support these industry-wide shifts.

“Relationships are incredibly important in the current economic climate,” says Jake. “If roasters have maintained a solid relationship with their importer, then they should want to help their clients succeed as well. If you work with direct trade, you can often purchase at a fixed price rather than being held to the whims of the market.”

Managing costs is the most effective way forward

The entire coffee supply chain is currently navigating uncharted territory, not only with higher coffee prices but also political turbulence and a worsening climate crisis. For roasters, who historically have been in a more advantageous position than most supply chain actors, the situation is particularly challenging.

At the same time, the current volatile landscape creates opportunities to become more innovative and creative, building resilience that businesses can sustain in the long term. Ultimately, the main goal is to manage cash flow while preserving, or ideally improving, coffee quality.

“Don’t wait for a specific C price to make your purchases. Buy and fix when the market is trending down, but if you wait too long, the market will jump right back up again,” Jake says. “If you don’t have a substantial volume to leverage, you can reach out to other roasters to try and combine your volume with an importer to create more purchase power and favourable rates.

“Alternatively, rather than relying primarily on the consistency of your blends, change to a rotating menu of seasonal blends and single origins,” he adds. “Reduce waste as much as possible, too. If you have cafés, make sure your brewing equipment is well kept so you’re not wasting coffee to dial-in more frequently than needed due to dull burrs, for example. 

“Little things along every step of the way; we’re in the period of tightening up every aspect of a business.”

Roasters need to play to their strengths

There is, however, a fine line between balancing new, creative strategies and tried and tested systems. The ongoing market turbulence and uncertainty can cause some roasters to pivot away from “business as usual” in the hope that alternatives will result in more success.

“Too many roasters see mounting pressure within the industry, and all of a sudden, believe they need to change the foundation of what they do to compensate,” Zach says. “Step back and go to the basics of booking coffee as it’s harvested seasonally with importers or producers; this removes massive unknown risk as a business owner.

“Once you know the pricing of your core offerings, then you can start to plan and work around them,” he adds. “Order small and often, maintain reasonable credit terms with clients and work on how to best translate the narrative of the value in your product and service to your clients, maintaining your unique voice in the industry and refraining from compromising. 

“This shows respect for your clients and customers, and underscores why they are supportive of you as a brand, leading to a stronger and better long-term relationship.”

As the specialty coffee industry transitions into a new era, the ability to manage costs is no longer a competitive advantage; it’s a prerequisite for navigating the foreseeable future.

Passion and craftsmanship will always be central to the industry’s values, but effective cash flow management has never been more crucial.

“If you are confident in the value you provide for clients and consumers, then feel empowered to price your coffee in line with what makes sense for your business,” Zach concludes. “Focus on the details, big and small, fine-tune your customer service, and your clients will continue to support you.”

Enjoyed this? Then read our article on how smaller roasters can mitigate risk.

Photo credits: Langdon Coffee Merchants

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Some who anticipated the spike have already increased their prices, positioning themselves for a difficult year. However, as conversations continue about how high coffee futures could go in 2025, it’s clear that business operators need to remain agile and adaptable to navigate the challenges ahead.

According to a recent UN FAO report, up to 80% of coffee price rises will trickle down to EU consumers over 11 months, while 80% of them will feed through to US consumers over the next eight months. The report also found that the residual impacts of price rises will last for four years, indicating that further hikes could be on the horizon.

I spoke to Robi Lambie, founder of Cairngorm Coffee, Dafne Spadavecchia, co-founder of Faro – Caffè Specialty, and Paul Ashby, director of Bogota Coffee Company, to find out how much coffee shop prices could go up.

You may also like our article on why roasters need to compete on more than just price.

The impact of higher green coffee prices is global 

The C price – the global benchmark for coffee prices – has been consistently high for the last two years, leading to a fundamental shift in industry dynamics. Roasters are pushed to source more cost-effectively or seek alternative funding. At the same time, producers are dealing with a growing number of interconnected challenges, such as the rising costs of labour and fertilisers, that underscore how “higher” market prices don’t necessarily mean a more equitable supply chain.

“Global politics, which has a direct influence on the C market, is currently so fractured and unpredictable,” says Robi Lambie, the founder of Cairngorm Coffee in Edinburgh, Scotland.

Although market volatility is an inevitable part of the trade of coffee, the ongoing Russia-Ukraine and Israel-Gaza conflicts have driven up global food and energy prices to record highs and caused unprecedented logistical backlogs and delays.

US President Trump’s decision to impose tariffs on several countries, including Mexico, has slashed economic growth rates – and effectively started a global trade war that shows no signs of slowing down.

“The situation is also exacerbated by the climate crisis and commodity traders pushing up prices. These are factors out of our hands,” says Paul Ashby, the director at Bogota Coffee Company in Milton Keynes, UK. “People think the C price could peak around US $5/lb, and that even if it does hit this number by the end of the year, it will eventually settle around U$3/lb.”

Retail price increases have become inevitable for roasters & cafés

Roasters, which tend to thrive on lower coffee futures, everywhere then face the difficult decision of balancing price hikes with retaining customers. Operators have to quickly adapt to find new ways of managing cash flow and tight profit margins while maintaining and improving the quality and diversity of their offerings. 

Many have increased their menu prices over the last year to cover the higher costs of green coffee, energy, food, and labour. The cost of living crisis has exposed consumers to rising prices for essential goods and services that outpace wage growth, straining their pockets. In Greece, food prices have increased by almost 40% in the last 15 years, while the Japanese food and beverage industry is grappling with record inflation rates that are pushing business owners to focus more on export markets.

Inevitably, consumers around the world will adapt their purchasing habits as they feel the impact of higher coffee shop prices. At-home consumption could increase, while café visits are likely to become a “treat” rather than a daily occurrence. 

“We expect prices to rise, but in some ways, this may be the shift that has been needed for some time: to break through the artificial ceiling that has kept coffee undervalued as a luxury product,” Robi says.

For coffee drinkers in mature specialty coffee markets like Australia, Scandinavia, Japan, and the US, there may be less resistance to retail price increases, as people are accustomed to paying more for quality coffee. The situation for café operators in more “traditional” markets, however, may not be as straightforward.

“Italy, as well as some other Mediterranean countries, are facing issues related to the rising C price which are slightly different from, for example, the UK, Germany, France or Scandinavia,” says Dafne Spadavecchia, a co-founder of Faro – Caffè Specialty, the first specialty coffee shop in Rome, Italy. “Ten years ago, the Italian market knew very little about different ways to extract and drink coffee.”

How much should coffee shops raise their prices?

It’s never an easy decision to increase menu prices, but it has quickly become unavoidable. The mounting costs of green coffee, food, energy, labour, and packaging mean coffee shop operators and owners need to adjust accordingly to keep profit margins healthy. Otherwise, they risk huge hits to their business and losing out to competitors.

“We won’t feel the full impact of an industry-wide price increase for another couple of months, but when we do, the key for us is to be open and transparent, explaining that these increases aren’t solely about profiteering but about sustaining an industry that supports farmers, importers, roasters, and baristas,” Robi says.

“The key is to ensure that as costs rise, so does the overall value of what you offer. The real opportunity here is to encourage a customer base that understands the true cost of coffee and appreciates it for more than just affordability,” he adds. “The long-term impact will depend on whether businesses embrace this as a moment to reinforce the real value of specialty coffee rather than just absorb rising costs in silence.”

Maintaining quality and investing in customer service and hospitality then becomes paramount to warrant price hikes, ensuring increasingly price-conscious consumers feel valued.

“I think the most important thing that coffee shops can do, more important now than ever before, is consistency,” Paul says. “If customers are paying a higher price and they’re not getting the same drink every day, or the quality’s not there, then it’ll be a long time before they come back.”

However, for many coffee shop owners, the question of how much they should raise prices remains. In a recent newsletter, specialty coffee importer Royal Coffee suggested a US 25 to 50 cent increase per cup to cover higher green coffee costs, but these are just one piece of the puzzle. Business costs are rising across the board, and operators need to factor all of them in when managing menu prices.

“Nearly every aspect of running a coffee shop is becoming more expensive; milk prices continue to rise, labour costs are increasing, and energy bills are at an all-time high. These realities shape pricing decisions just as much as the cost of green coffee,” Robi says.

Finding ways to manage costs also isn’t strictly related to price increases.

“We have shifted our retail coffee bags from 250g to 200g. While the cost per gram remains the same, this keeps the total purchase price more manageable for customers,” Robi adds. “We’re also considering a similar approach in the coffee shop, potentially reducing our espresso dose slightly from 18g to 15g.”

An opportunity to engage more deeply with consumers

Higher retail prices are driving shifts in consumer behaviour that coffee businesses will need to adapt to. The expected rise in at-home consumption will likely push roasters to refocus on e-commerce and subscription channels, much like during the pandemic, bolstering their resilience as the industry undergoes fundamental changes.

These shifts, however, are set against the backdrop of mainstream media reports about rising prices, with claims of US $10 lattes undoubtedly causing concern and uncertainty among coffee drinkers.

“When media outlets sensationalise price increases, it can create unnecessary panic,” Robi tells me. “The reality is far more nuanced. While costs are rising, much of that increase is long overdue and reflects a fairer value for coffee producers.”

This presents roasters, café operators, and baristas with opportunities to engage more deeply with consumers about the perceived value of coffee.

“Television and radio talk shows in Italy keep talking about high coffee prices, especially with reference to the conventional market,” Dafne says. “The biggest challenge is to substitute and replace the word ‘high’ with ‘fair’. Coffee has been underpriced for years, so you can’t blame consumers for their lack of knowledge because it’s not their job to be informed.

“Although we belong to a niche market, we have to bring quality coffee to everyone and keep informing and educating people.”

But coffee businesses need to be mindful of consumer needs

There’s a notion in specialty coffee that consumers want to be more educated about roasting, brewing, and the wider supply chain, demanding better transparency and traceability. While this is certainly true, higher prices are likely to disrupt this trend as consumers’ priorities change.

“Education has always been a tricky word in specialty coffee shops, but explaining the value of what we do is essential, and it has to be done with a soft approach – one rooted in context rather than entitlement,” Robi says. “The key is making any shared information engaging and relevant. Rather than over-explaining, I believe we should focus on making sure our quality, service, and overall experience always justify the cost.

“So while education has its place, our priority should be ensuring that when people walk into a coffee shop and pay a little more, they feel like they’re getting something that’s worth every penny,” he adds. “Coffee shops have to do more than just pass on the cost; we have to focus on what makes us worth it. Rising prices should push coffee shops to double down on the value they provide beyond just the cup. That means investing in education, service, and storytelling – helping people understand what they’re paying for and why it’s worth it. In my opinion, this is an opportunity for coffee shops to raise the standard, not just the price.”

For some consumers, the knowledge gap is much wider, meaning coffee shops and roasters need to share information in more creative and inventive ways.

“We draw a parallelism with wine; learning about specialty coffee is like finding out that different types of wine exist,” Dafne says. “They’re both so similar in terms of altitude, fruit, and flavour.

“The gap between specialty and commodity has never been so narrow. The price of supermarket coffee will increase massively, and less so for specialty coffee, so coffee businesses have an opportunity to get their message across,” she adds. “Conventional coffee has been underpriced for decades, but I think we’re at a point where rising prices will encourage more people to drink with more awareness.”

It’s a turbulent time for the coffee industry, presenting new challenges and hurdles to navigate. But Dafne, Robi, and Paul agree that there is a silver lining: a chance to communicate the value of coffee.

“As coffee professionals, we should be amplifying these insights, helping both businesses and consumers grasp the realities of specialty coffee pricing. The larger trends – climate change, increasing production costs, and logistical challenges – aren’t going away, so while fluctuations will always happen, the days of artificially low coffee prices are likely behind us,” Robi says. “The real question isn’t whether prices will drop, but whether we, as an industry, can adjust to this new reality.”

Paul concludes with: “It’s an unpredictable situation, but the coffee business has been around for centuries, and we always adapt.”

Enjoyed this? Then read our article on how high coffee prices could go.

Photo credits: Cairngorm Coffee

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In an industry once defined by its passion and enthusiasm, roasters are increasingly forced to adopt a pragmatic approach to compete, differentiating themselves from other quality-driven brands to offer something new.

Only two months into 2025, the industry seems poised to enter a new era. As arabica futures consistently hover around US $4.3/lb, the market becomes less predictable for roasters and traders.

I spoke to Rachel Apple, a coffee consultant, and Marcus Goucher, the production manager at Bridge Coffee Roasters, to learn more about the industry’s challenges and opportunities this year.

You may also like our article on what will change for roasters in 2025.

Roasters face an increasingly challenging market

The beginning of the specialty coffee movement was marked by passion-driven entrepreneurs who focused on leaner supply chains, higher-quality lots, and consumer education. But key events over the last five or so years have created new challenges, reshifting this focus onto operational efficiency.

Covid-19 had a huge impact at every level of the supply chain, forcing roasters to adapt to a rapidly changing environment. Many invested in their e-commerce sales, offering subscription services and equipment distribution to cater to the sharp spike in at-home consumption.

Political instability also contributed to rising global inflation and business costs. The Russia-Ukraine conflict drove global energy and food prices to record highs. Meanwhile, the Israel-Gaza conflict disrupted key international shipping routes, exacerbating the already volatile arabica and robusta futures markets. 

By May 2025, robusta prices had reached a 45-year high and have been increasing ever since, reaching a new record in January 2025. Simultaneously, arabica futures hit an all-time high of over US $4.4/lb in early February.

Once anchored by low coffee prices and interest rates, specialty coffee roasters, importers, and exporters now face a more challenging environment. Many small traders have been absorbed by larger players to remain in operation, while roasters shift their buying and pricing strategies to maintain already slim margins. 

“I’ve already seen people’s buying decisions impacted by the futures market and logistics; coffee is landing later and later or getting stuck,” says Rachel Apple, a coffee consultant in the US with almost two decades of industry experience. “I’ve seen people completely stop sourcing from Ethiopia, which breaks my heart, because of the logistical challenges related to traceability and export, as well as the Ethiopian government’s firm control over the pricing.”

In addition to increasing their retail prices, roasters are opting for more affordable lots and origins like Brazil, offering more blends, and diversifying into ready-to-drink market segments.

“This shift, however, isn’t as simple as turning to robusta or cheaper blends. The narrowing price gap between high-quality robusta and good arabica means cost-saving requires a more nuanced approach,” says Marcus Goucher, the production manager at Bridge Coffee Roasters in Cardiff and London, UK. 

“Blends will rise in popularity, not just to cut costs but to balance flavours, address availability challenges, and introduce new sensory profiles while maintaining quality.”

How might the industry adapt in 2025?

Unprecedented arabica prices are reshaping the specialty coffee market, causing panic and uncertainty among buyers who have less oversight of their supply chains. Until Brazil and Vietnam, the world’s two biggest growers, produce good harvests or global demand drops significantly, prices are likely to keep rising.

This will lead to fundamental shifts across the supply chain. Exporters and importers, already under significant pressure, will expand into less mature specialty coffee markets to diversify and safeguard their revenue. Consumers, meanwhile, are likely to brew more coffee at home to offset an increase in retail prices.

Roasters will implement a number of cost-cutting measures to manage leaner supply chains, including direct trade relationships.

“I believe direct trade will grow as cost pressures and sustainability demands increase,” Marcus says. “Platforms like Algrano have shown how transformative direct connections can be for roasters, producers, and consumers alike. They remove intermediaries, offering transparent pricing and ensuring more value reaches producers while strengthening trust across the supply chain.”

By bypassing traditional intermediaries and operating outside of the C market, producers can set their own prices. Roasters, meanwhile, can monitor their entire supply chains more closely, allowing them to manage partnerships more effectively and identify ways to mitigate risk.

How consumer preferences will reshape specialty coffee

Specialty coffee’s emphasis on single origins and micro lots has always attracted younger consumers, who often value traceability, quality, and “exciting” flavour experiences. The most recent 2024 National Coffee Data Trends Specialty Coffee Breakout Report found that 66% of 25 to 39-year-olds in the US drank specialty coffee in the past week. This was more than any other age group in the country, indicating specialty coffee’s mass appeal among millennials in particular.

However, as Gen Z has gained more spending power over the last few years, their influence has led to noticeable shifts in consumer needs and preferences. Black filter coffee, once the drink of choice of specialty coffee connoisseurs, has lost its appeal among younger consumers, who now demand more experiential and indulgent beverages.

More Gen Z coffee drinkers are opting for espresso-based beverages that offer a plethora of customisation options. Rather than being the main focus, coffee becomes a single component, while add-ons like syrups and cold foams provide different flavours and textures.

This fundamentally opposes the “purist” approach that many millennials and Gen X drinkers take to specialty coffee consumption. Instead of choosing batch brew or pour overs that offer a single flavour profile, Gen Z demands options they can tailor to their own taste preferences.

The trend towards heavy customisation aligns with Gen Z’s growing social media presence. Visually appealing, unique drinks like Dalgona coffee and brown sugar iced lattes often go viral on platforms like Instagram and TikTok, driving their interest in coffee drinks with additional flavours and ingredients.

“Gen Z is coming of age; they’re in the workforce or out of college, and they have their own money to spend,” Rachel says, emphasising how sustainability is an important purchasing factor for this demographic. “Generally speaking, they’re a lot more focused on ethical consumption in ways that previous generations have not been, but not everybody is educated, especially in coffee, about what that really means.

“They’re more reliant on labels. If there’s a Fair Trade sticker or a Rainforest Alliance sticker, that makes the decision easier for Gen Z consumers,” she adds.

Coffee shops need to embrace change

Many specialty coffee shops pride themselves on their rigorous standards for espresso extraction and pour over brewing, which highlights pure coffee flavour. However, as Gen Z gains the highest spending power in the coffee industry, their preferences will force café operators to rethink this more traditional approach.

Interest in wellbeing spiked dramatically after the pandemic, prompting many coffee drinkers to reevaluate their choices. Cold brew and cold coffee drinks emerged as viable options for health-conscious consumers, and they also lend themselves well to customisation.

While the burgeoning customisation trend seems at odds with specialty coffee’s emphasis on “unadulterated” flavour, it presents shop operators with an opportunity to draw in a younger audience with growing disposable income. To keep in line with the industry’s values, quality will need to be the main priority.

“The challenge will be balancing these evolving preferences with the craftsmanship of specialty coffee, ensuring that quality remains at the heart of every cup,” Rachel adds. “This means sourcing high-quality, natural ingredients that complement the coffee’s flavour while meeting new demand for wellness.”

Staying true to their values of transparency and quality allows coffee shops to embrace customisation and wellness trends without losing the brand authenticity that younger consumers are also seeking.

“Marketing specialty coffee to younger audiences in 2025 will focus on dynamic storytelling, sustainability, and engagement through innovation, like short-form social media content showcasing brewing techniques and origin stories,” Marcus says. “Coffee shops will need to capture the attention of younger consumers to expand specialty coffee’s reach and cultural relevance.”

Anticipating the year ahead

For roaster and coffee shops, 2025 will present challenges and opportunities that reflect key industry changes over the last five years. During this time, specialty coffee has matured and scaled, intensifying competition and making it harder to stand out. Many businesses now face the same obstacles to growth, underscoring the need to stay creative and innovative.

“Specialty coffee faces key challenges this year, including the need to differentiate itself as the price gap with conventional coffee narrows,” Marcus tells me. “Focusing on exceptional quality, sustainability, and brand storytelling will be essential to justify its value.

“The roasting process will become more efficient, sustainable, and innovative while preserving the artistry that defines the craft,” he adds. “As an industry, we’ll need to leverage technology to improve efficiency, traceability, and transparency while strengthening the connection between producers and consumers. 

“Specialty coffee has the opportunity to not only survive but thrive by acting as a united, forward-thinking community.”

Looking ahead, roasters and traders will need to balance quality with cost efficiency, retain customers while diversifying their client base, and innovate without losing their core values. By doing so, they will be better equipped to navigate what is likely to be a turbulent year for many.

“I hope that specialty coffee consumption continues to grow in 2025 and that we’re creating a cultural shift that brings more people into the fold,” Rachel concludes. “But if coffee prices continue to go up and people are unwilling to sacrifice their quality, ethics, or sourcing practices, then what does it look like to have a US $10 latte? I don’t know, but certainly there will be pushback.”

Once defined by its passion and idealism, specialty coffee has evolved into a more pragmatic industry. This year is already shaping up as one that will propel the market further in this direction.

Record coffee prices and heightened market competition will force roasters, coffee shops, and traders to rethink the strategies that once underpinned their business success. Ultimately, a willingness to embrace change will allow them to navigate the challenges ahead.

Enjoyed this? Then read our article on why coffee acquisitions will continue in 2025.

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Customised beverages help coffee shops differentiate themselves and elevate their offerings, catering to evolving tastes and the demand for premium menu options. In mature markets like North America, Europe, and Australia, the lineup consists of the familiar pumpkin spice lattes, peppermint mochas, espresso tonics, and cold brew sweet cream cold foam, to name a few.

These drinks certainly have their place on menus, proving popular with consumers seeking more indulgent and “Instagrammable” options. But as the customisation wave continues, it presents an opportunity to draw inspiration from other cultures.

East Asia’s thriving coffee shop market, expected to hit over US $9.5 billion by 2029, has been setting global trends in recent years. Drinks like Dalgona coffee, bubble tea, and even onion-infused lattes have captured the attention of international coffee drinkers. Add-ons like cheese foam, boba, and taro paste have also piqued interest, introducing consumers to new flavours and textures.

I spoke to Andre Chanco, the head of product at Yardstick Coffee in the Phillippines, and Felipe Cabrera, the founder of China’s Ad Astra Coffee Consulting, to explore how East Asian brands are giving renewed impetus to beverage customisation.

You may also like our article on why customised beverages are set to become even more popular.

Customisation is king

Customers around the world are demanding more control over their coffee, making beverage customisation one of the biggest industry trends in recent years. At the same time, baristas are still considered trusted experts, blending creativity with expertise to craft unique flavour and texture combinations.

Coffee shops are tapping into the trend, using seasonal and signature personalised drinks to boost their visibility, attract new customers, and stand out in a saturated market. From innovative flavour pairings to visually stunning creations, customisation has become a powerful tool to not only meet evolving customer preferences but also to set a business apart from competitors.

Thanks to the rise of social media platforms like TikTok and Instagram, vibrant and visually stunning coffee drinks are increasingly in the spotlight, driven by Gen Z users who equally value aesthetics and quality.

Younger consumers are increasingly prioritising convenience, opting for customisable cold and RTD beverages that don’t compromise quality. They want coffee drinks made “their way” at any time of the day, adding flavourings, plant milks, and cold foam infusions.

“Different types of drinks resonate with different target audiences. When the alternative milk movement started, it was because it spoke to an audience with a preference or the need for non-dairy options,” says Andre Chanco, who has worked at Filipino specialty coffee roaster Yardstick for over a decade. “The same goes for the seasonal drinks; looking at our marketing in the Philippines, we attract a younger audience, which is important for us to build on in the long term.”

Gen Z is driving the global trend

We only have to look back a few years to see the huge influence that East Asian coffee trends have on the global market. 

During the Covid-19 pandemic, Dalgona coffee went viral on social media around the world for its unique frothy texture and flavour resembling South Korean sugar candy. Its simple preparation method of whipping equal parts instant coffee, sugar, and hot water and then adding it to cold or hot milk spurred its popularity, as many people became interested in preparing café-style beverages at home with minimal equipment needed.

In the years since the pandemic, the East Asian coffee market has thrived. According to data from Project Café East Asia 2024, the region reached almost 120,000 branded outlets in 2023. Younger consumers are increasing their coffee consumption in traditional tea-drinking cultures, spurring the growth of the region’s market.

“Asian customers, especially Gen Z and millennials, are constantly looking for new things in their F&B consumption and general shopping experiences,” says Felipe Cabrera, a consultant at GourmetPro and the founder of Ad Astra Coffee Consulting in Shanghai, China. “Having a variety of ‘Instagrammable’ menu options and updating them constantly has become essential to bring regular and new customers in.”

Chains and specialty cafés alike in China, South Korea, and Taiwan (as well as further afield in Indonesia, the Philippines, Thailand, and Singapore) offer a range of signature, customised beverages that blend global trends with local flavours. Eye-catching colours, toppings, and finishing touches grab the attention of Gen Z and millennials, who feel like they are experiencing something new and exciting in their daily coffee rituals.

“Offering unique beverages helps coffee businesses to differentiate from one another,” Felipe says. “In fact, many specialty and boutique coffee shops in China have become well-recognised brands due to their seasonal and trendy coffee drinks.”

East Asian coffee trends have become international

Chains and smaller coffee shops in many mature markets have long leveraged beverage customisation to their advantage. Industry heavyweights like Starbucks have built their business around it. The recent success of Sabrina’s Brown Sugar Shakin’ Espresso – a tongue-in-cheek collaboration between Dunkin’ and Espresso pop icon Sabrina Carpenter – is a clear sign that it continues to be a clever marketing move.

Key players in the East Asian coffee sector are also finding success with customised signature beverages. Luckin Coffee is a prominent example. Over the last few years, the Chinese coffee giant has launched a number of trendy, unique drink line-ups that have helped it gain dominance over its competitors in the regional market.

Its collaboration with Kweichow Moutai, the producer of Maotai baijiu liquor, featured an alcohol-infused latte, which sold an impressive 5.42 million cups on the first day, according to Luckin. The drink quickly garnered global attention after its launch. International media outlets branded it a “soy sauce-flavoured latte” due to the savoury notes from the baijiu liquor.

Flavour combinations that many Western consumers may consider “unorthodox” are particularly popular in the Asian coffee market, where coffee is often a component or ingredient rather than the singular focus.

“In East Asia, non-dairy cold coffees using raw coconut milk, which is thicker and pairs well with coffee, are very popular, allowing coffee shops to blend seasonal fruits like lychee, mandarins, and plums into those cold drinks,” Felipe says. “In summer, iced americanos with orange or other citrus fruits are commonly ordered, offering a refreshing drink that balances the coffee flavours with fruit acidity.”

“Unconventional” flavour combinations are emerging

Regional and local cuisines have a huge impact on the variety of foods that consumers are exposed to, shaping their flavour preferences. Longan (a tropical fruit), rosella (wild hibiscus flowers), smoked plum (commonly used in East Asian cooking), and jujube (Chinese dates), for instance, aren’t commonly found in Western grocery retailers or restaurants.

This access to a wider range of fruits, vegetables, and spices has influenced East Asian consumers’ palates in different ways, making fruit and tea coffee combinations particularly popular. To celebrate the Lunar New Year, Luckin recently launched the Apple Fizzy Americano, which includes fresh apple juice and sparkling soda, and the Ceylon Yuan-Yang, containing Ceylon black tea, espresso, and milk.

“Matcha is still very popular, and cafés integrate it into their menus with or without coffee,” Andre says. “The typical flavours and syrups, such as caramel, hazelnut, and vanilla, always do well because they are staples and pair easily with coffee.

“But the orange and espresso trend that recently became popular shows that there is room for experimentation. We launched a pineapple slushie that we serve with a shot of espresso, which has been surprisingly popular.”

Fruit-infused coffee drinks work particularly well on East Asian coffee shop menus. Still, the explosive popularity of the bubble (or boba) tea market, predicted to hit over US $4 billion by 2030, indicates that global consumers’ flavour preferences are becoming more inclusive. 

Popular bubble tea combinations include brown sugar, lychee, taro, durian, and mango, with an increasing number of brands also offering coffee as an alternative to tea. The endless add-on options, such as popping boba, grass jelly, and cheese foam, lend bubble tea well to customisation, creating visually appealing drinks that resonate with Gen Z consumers, encouraging them to share their creations on social media, furthering the trend.

Western coffee shops can look East for inspiration

As the beverage customisation wave continues, specialty coffee shops in North American, European, and Australian markets have an opportunity to flex their creative muscle. Borrowing from East Asian coffee trends opens up new possibilities for signature and seasonal drinks, pivoting away from popular yet predictable options like pumpkin spice lattes and cold brew cold foams.

At the same time, cafés need to balance tradition with innovation. Offering seemingly “left-field” flavours that customers aren’t familiar with or accustomed to risks alienating their consumer base. 

“Every market has some sort of tradition of how coffee was consumed historically, and this has been changing recently,” Andre says. “I believe that innovation is always good; it just has to be implemented at a pace that fits with the market while at the same time respecting the local traditions and preferences.

“There are different levels of beverage customisation because coffee is such a personal and subjective experience. It can be as simple as small upgrades to offering a rotating seasonal beverage menu.”

A useful starting point could be introducing flavours and textures that are already familiar to most Western palates. The sweetness and creaminess of chestnut – a popular option on Chinese and South Korean coffee shop menus and commonly found in European cuisine – is one option that could prove effective, tapping into the growing trend of indulgent flavours.

But customisation won’t offer a one-size-fits-all solution

As seen by Starbucks’ recent turnaround strategy, beverage customisation isn’t a guaranteed path to success. Long wait times and disorganised mobile ordering resulted in a significant sales slump for the chain in key markets like the US and China, prompting it to cut 30% of its menu in US stores. 

The olive oil-infused Oleato range, positioned as a premium offering, was the first to go – a sign that “unconventional” flavour pairings may not always resonate well with consumers who seek familiarity and tradition. Instead of leaning on heavily customised beverages, Starbucks added the cortado, signalling a shift towards simplicity and efficiency.

“Understanding the market and what customers are currently looking for is an important task for coffee shop owners or managers,” Felipe says. “Look around your local area to gauge how you can craft a well-balanced, innovative menu, as well as engaging with social media posts.”

While the cortado is unlikely to prove popular among US coffee drinkers, who are known for their affinity for larger and sweeter drinks, it shows that brands are prioritising cost-effective solutions that cater to changing tastes.

“You need to set the recipes and cost ingredients out, but there should be a philosophy behind your customised beverages, too, similar to how cocktail bars have evolving menus,” Andre says. “There should be enough to suit a variety of palates.”

Customisation has turned coffee into something far more than a beverage; it’s now an immersive experience. East Asian brands have emerged as leaders in creativity and innovation, showcasing the full potential of flavour and texture combinations that local and regional consumers gravitate towards – and Western coffee shops should take note if they want to stand out.

But that’s not to say that all East Asian beverage trends will translate and prove effective in other markets. Coffee shops can draw plenty of inspiration from the wide range of seasonal and signature drinks on offer, but they still need to cater to the preferences of their core consumer base.

Enjoyed this? Then read our article on how signature drinks help drive innovation in specialty coffee.

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The most common approach is to blend different origins, including different countries, regions, and farms. Through this technique, roasters can also combine coffees which have been processed in different ways or mix multiple varieties together to create flavours that appeal to a more diverse range of consumers.

Similar to processing method, roasters need to account for each variety’s unique impact on a blend. Bean density and size, solubility level, and flavour profile are key factors that influence the roasting process and overall results. To achieve balance and consistency, roasters need to find the “sweet spot” that accommodates all varieties included in a blend.

Carina Esteves and Ishwor Maharjan, the director of operations and head roaster at Baobá Café, Marc-Alexandre Emond-Boisjoly, the founder of 94 Celcius, and Ashlee Eastwood-Quinn, head of coffee at Rave Coffee, provide their insight.

You may also like our article on whether multi-processed blends dilute or enhance flavour.

Understanding the key differences between varieties

There are thousands of coffee varieties, all of which vary in cup quality and characteristics. For example, Bourbon, one of the most genetically important varieties, is renowned for its sweet and complex flavour profile, while SL28 (a common variety in Africa) typically has distinctive fruity tasting notes.

Pairing and layering complementary flavours in blends is, of course, a priority for any roaster. Whether a blend offers familiarity or a differentiated experience, the flavours of the different components should be balanced and synergetic.

But when creating multi-variety blends, roasters need to consider other factors than flavour profile alone.

“While no two varieties are inherently incompatible, achieving a balanced roast for a blend can be challenging due to differences in bean density and size,” says Marc-Alexandre, the founder of 94 Celcius in Montreal, Canada. “Different varieties, such as Bourbon, Typica, Caturra, or Pacamara, have unique traits related to size, density, sugar content, and chemical composition.

“For example, Pacamara, known for its large size, can be more difficult to roast evenly alongside smaller varieties,” he adds. “Bourbon and Typica, often prized for their sweetness and clarity, may behave differently in the roaster compared to more robust, earthy varieties like Catimor or Sarchimor.”

Why is bean density so important?

Bean density is one of the key metrics for sorting and grading coffee. It’s essentially the weight of a coffee bean proportional to its volume, which is typically influenced by the altitude at which it’s grown. Higher altitudes allow coffee to ripen more slowly, resulting in denser beans with a higher sugar content – making them more desirable to many buyers.

Density also varies between different varieties, too. Bourbon, Gesha, and Wush Wush, for instance, are generally dense beans, while robusta varieties grown at lower altitudes are less dense.

In addition to exhibiting more complex, sweet flavours, denser beans also require a different approach to roasting.

“Although it depends on roast profile, batch size, and origin, a higher density variety requires a higher start (or charge) temperature, while the opposite is true for lower density beans,” say Carina Esteves and Ishwor Maharjan, the director of operations and head roaster at Baobá Café in Lisbon, Portugal. The roaster also has locations in Brazil, where it operates a farm that it sources coffee from.

“Our blends are developed on-farm, and our team chooses varieties with similar sizes and densities to facilitate the roasting process,” they add. Significant variances in size and density will leave bigger and denser beans underdeveloped, while less dense and smaller varieties will be tipped or scorched.

“Dense coffees often have more nuanced flavour profiles at a wider range of roast levels. However, they can be easier to under-roast as they require more time and heat in the machine,” Ashlee Eastwood-Quinn, head of coffee at Rave Coffee. “The dense beans will also be less brittle when roasted and therefore produce fewer fines when grinding. Fewer fines result in even extraction of and a well-balanced flavour profile.”

Prioritising consistency with multi-variety blends

Combining similar-sized and equally dense varieties seems like a logical approach to bypass the challenges of blending beans of different sizes and densities. However, it’s not always so straightforward.

“Achieving the best results when roasting blends is often a process of trial and error. While using varieties with similar sizes and densities can, in theory, lead to a more uniform roast, the outcome depends on several factors, including the specific characteristics of the varieties and processing method,” Marc-Alexandre says. “In practice, blending varieties with similar sizes and densities makes it easier to achieve a uniform roast. Beans of comparable physical characteristics absorb and retain heat more evenly, reducing the risk of over or under-roasting some components of the blend. 

“However, uniformity in size and density doesn’t guarantee compatibility in terms of flavour,” he adds. “That’s why trial and error is so important; roasters need to experiment with how the blend components behave in the machine and ensure that the resulting flavours are harmonious.”

Regularly cupping combinations of different varieties using various ratios is the best way to ensure the flavours match and complement one another.

However, the technique used to blend different varieties also plays an important role.

“When blending a high-density washed Ethiopian variety with a low-density natural Brazilian coffee, roasting them together can be problematic,” Marc-Alexandre says. “The Brazilian beans, being less dense and often larger, roast faster, while the Ethiopian beans take longer to develop. This disparity can lead to an imbalanced cup, with the Ethiopian beans potentially under-roasted and the Brazilian beans over-roasted.”

Post-roast blending

“Some coffees might roast to a darker degree than others when exposed to the same roasting conditions,” Carina and Ishwor say. “To overcome this, roasters can blend post-roast, where they roast each variety separately to their optimum level and then mix the batches together.”

This allows for precise control over each blend component, ensuring that roasters can fully develop their unique qualities to create a balanced flavour profile.

Do certain varieties pair well in blends? 

Coffee varieties have their own unique characteristics in terms of flavour, body, mouthfeel, and aftertaste, so understanding which ones complement each other is crucial when creating a multi-variety blend.

“Some varieties naturally pair well together in blends, creating a harmonious and balanced cup that highlights their individual strengths,” Marc-Alexandre explains. “For example, African varieties like 74110, SL28, Ruiru 11, and Konkaka consistently produce exceptional results when blended. Even when sourced from different regions or continents, they blend seamlessly to create a cup with layered complexity and clarity. SL28’s bold acidity can enhance the sweetness and balance of Ruiru 11, while 74110’s floral and citrusy notes can pair wonderfully with Konka’s berry-like sweetness or herbal undertones, for instance.”

Exclusive varieties like Gesha and Sudan Rume have taken specialty coffee by storm over the last decade. Revered for their exceptional and complex cup profiles, they are often sold and marketed as single origin lots to showcase their unique flavours.

But Marc-Alexandre highlights how these varieties can also work well in blends.

“Gesha is often used to add floral notes, delicate acidity, and tea-like qualities to the cup; it pairs wonderfully with varieties that offer complementary sweetness and body,” he says. “For example, combining Gesha with Bourbon highlights Gesha’s floral elegance while adding structure and sweetness from the Bourbon. Similarly, pairing Gesha with Caturra or Catuai can balance its delicate character with enhanced body and depth.”

No variety is an island: Coffee flavour is interconnected

The flavour profiles of different varieties are inherently tied to many other factors, such as origin, processing method, altitude, and terroir. In many cases, it’s difficult to distinguish between the impact of each variable, which means roasters need to account for all of them when developing a multi-variety blend.

“Every element can impact flavour. For example, SL28 is a common variety in Kenya. If you take this coffee and grow it in Colombia, you can get a different flavour profile, even if both coffees are washed,” Ashlee says. “Kenyan washing styles are also very different from Colombia, so the flavours we associate with SL28 are so heavily tied to our associations of Kenyan coffee and processing. Therefore, we can make some assumptions when roasting and blending, but before practical experimentation takes place, we can’t be sure of anything.”

Multi-variety blends can offer roasters a point of differentiation, creating tailored and exciting flavour combinations that suit a range of consumer needs. Bean density and size are key considerations when blending multiple varieties, but factors like origin and processing method are also play an important role.

“The ultimate success of a blend depends on understanding the unique properties of each component and tailoring the roasting approach accordingly,” Marc-Alexandre concludes. “Roasting coffee is as much about science as it is about artistry and experimentation.”

Enjoyed this? Then read our article on how blends can reduce waste.

Photo credits: Rave Coffee

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Shortly after Russia invaded Ukraine in February 2022, prices began to climb higher. Israel’s invasion of Gaza in October 2023 caused further spikes as cargo was rerouted from the Red Sea to avoid conflict.

To add to this interconnected web of logistical issues, coffee prices have also reached near-record highs in recent months. In early September 2024, the main ICE contract for robusta closed at US $5,077/tonne, while ICE arabica December contracts ended at a two-week high of US 249.40 cents/lb.

Faced with price increases across the supply chain, roasters and coffee shops must decide how they can absorb some of the rising costs to avoid passing too many onto consumers.

I spoke to Chris Deferio, founder of Keys to the Shop, to find out how coffee businesses can be strategic with their menu prices.

You may also like our article on why roasters can’t rely on coffee price drops.

Why managing business costs is harder than ever

The pandemic sent shockwaves through many global industries, including coffee. A staggering number of cafés and roasters temporarily closed their doors at the height of lockdown. To adapt to a vastly different market, many focused on their ecommerce and subscription services.

As stay-at-home orders gradually lifted throughout 2021 and 2022, supply and demand increased to pre-pandemic levels. When the economy bounced back, businesses rushed to replenish stock levels, so container space on cargo ships became more competitive and expensive. Shipping delays then became more frequent, which raised roasters’ concerns about how to maintain green coffee quality and manage their inventories.

A number of other complex issues have contributed to shipping delays and price rises in the last two years. The start of the Russia-Ukraine war in early 2022 prompted a significant drop in grain and natural gas exports, which led to a sharp increase in global food and energy prices. More recently, the Israel-Gaza war has disrupted key shipping routes; major carriers like Maersk, Hapag-Lloyd, and MSC halted or rerouted their vessels to avoid attacks in the Red Sea.

Coffee prices have also been climbing over the past few years, adding to an already tumultuous period for cafés and roasters. Following a severe frost that hit some of Brazil’s key growing areas in July 2021, arabica prices reached their highest levels in ten years, and have since continued to remain above the US 240 cents/lb mark. Robusta prices also soared to record levels of over US $5,000/tonne over the last few weeks, as Brazil and Vietnam face supply shortages and unfavourable weather conditions.

All in all, the perfect storm of high coffee prices, interest rates, and energy and food costs is squeezing roasters’ and cafés’ margins more than ever before.

How to manage margins effectively

Coffee shop and roastery operators have to make endless decisions about how to run their businesses, but managing margins (i.e. the difference between the price that a product sells for and the costs associated with making and selling it) is one of the most important. This process involves measuring and increasing profit margins to control cash flow and plan for future growth.

Business owners can manage margins in several ways. Proper inventory management, sales data analysis, staying on top of market trends, and competitive pricing are some of the most effective.

Chris Deferio is the founder of Keys to the Shop – a podcast and coffee consultancy for café owners. He breaks down the basics of developing a profitable coffee business.

“Labour costs should be at 25% to 30%, the average costs of goods sold should be between 15% and 25%, rent needs to be 10% or less than monthly revenue, and you need a steady increase of foot traffic and average ticket totals to amount to at least a 20% increase in annual sales,” he says. “But the path to profitability is not linear and is different for every coffee shop.

“The first year of business requires a lot of investment, and should be seen as an extended opening phase rather than a true indicator of how well the business will succeed,” he adds. “The second year allows you to make educated decisions to adjust your pricing, but if you can net 10% to 15% profit at the end of the year then your business is doing well. A sustainable café is one that pays the owners and the staff, and then has enough left over to refine and respond well to the needs of its customers.”

Key considerations for setting menu prices

When it comes to deciding on menu prices specifically, Chris recommends following a four-step strategy:

1. Account for the cost of every ingredient in a single menu item in ounces or grams
2. Consider the labour costs that go into preparing the menu item
3. Know what the current average market price is for that item
4. Set the price slightly higher than the market average so you can reinvest in your business and staff, as well as to cover expenses

He adds that accounting for labour costs is one of the biggest considerations when setting prices.

“For instance, if you pay a base wage of US $15/hour and it takes two minutes to make a mocha, then your labour cost for that drink is about US 50 cents,” he says. “So once you have factored labour costs in, you can find ways to cut down on that time, but keep the conservative estimate of labour cost in place as a way to derive higher margins for future investment.”

Another often overlooked – but equally important – factor is the cost of waste.

“You should always account for waste, especially with espresso and milk-based beverages,” Chris explains. “Proper training and systems can help to mitigate, but there can be other factors that contribute, such as machine malfunctions, customer ordering errors, and morning dial ins. Your margins need to be large enough to absorb these costs.

“You can have ideal pricing with optimal margins at the edge of what customers are willing to pay and still not be profitable if you don’t control other factors such as waste and labour,” he adds.

Why communicating with customers about price rises is key

Consumers understandably expect coffee shops and roasters to charge “fair” prices for their menu offerings, and put their trust in business owners to adhere to this practice.

Chris points out, however, that consumer awareness of what constitutes a “fair” price is usually limited.

“A fair menu price might seem high until you understand why coffee shops need a large markup,” he adds. “When managed right, strategic menu prices allow for a modest profit that is often reinvested back into the business. There is no right price without considering the present and future needs of your business.”

To account for future growth and unforeseen expenses, there will come a time when coffee shops and roasters need to implement menu price increases. Moreover, given the ongoing market volatility that shows no signs of slowing down anytime soon, price hikes are inevitable if businesses want to stay in operation. 

“Nearly all of my clients end up raising their prices based on increasing cost of goods sold,” Chris says.

But with news outlets like the BBC reporting that £5 or US $7 cups of coffee may soon be a reality, addressing customer concerns is important.

Chris highlights that baristas are often the subject of questions about menu prices, but don’t typically have the knowledge to answer in the best possible way.

“Historically, baristas were kept in the dark about the basic mechanisms of running a coffee shop,” he says. “If you have done your due diligence to understand costs and prices for a healthy margin then you should educate your staff so they are better equipped to respond to customers in an honest and simple way that is centred around the health of your business.”

Knowing what works for your business

Not all coffee shops operate in the same way, so menu prices that help one café stay profitable may not work for another.

“Economic sustainability means different things to different businesses,” Chris tells me. “Some operations reach a certain point of profitability and are fine to remain at that level. You may be a tiny café with five staff and an owner who also operates as a manager, and be very content to sustain that. 

“Profit allows you to choose where you stay and where you go based on what your mission and vision is for the business,” he adds. “Profitability is just as much of a responsibility as hospitality for coffee shops and roasters because it ensures you can continue to meet the needs of your customers.”

In the wake of market volatility, it’s more important than ever for roasters and coffee shops to be strategic with their menu prices. To stay competitive and profitable, businesses will inevitably need to pass some of the additional costs onto consumers.

Many people are prepared – and willing – to pay more, but café and roastery operators must ensure they are transparent about any price hikes to maintain consumer loyalty and trust.

Enjoyed this? Then read our article on whether it will become more acceptable to buy in cherry while coffee prices remain high.

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