Here’s how wholesale coffee price works…
In Australia, coffee from a typical wholesale coffee roaster can range in price from $20/kg (for low quality coffee with no equipment or support) through to $35/kg or more (for high quality coffee with equipment & support), with most cafes paying somewhere between $27-$32/kg.
Why such a big range in price?
Factors that effect the price of wholesale coffee
There are a few factors that will influence the price you pay:
1. The volume of coffee you buy
the more you buy per week, the bigger discount a roaster can offer (up to a point). Business owners are often surprised to find out that volume is typically the single biggest factor that affects wholesale coffee pricing.
2. The quality of the green (unroasted) coffee
Yes, high-quality, specialty grade coffee costs significantly more to buy than commercial or commodity grade coffee.
3. Loan Equipment
If a coffee roaster needs to supply an espresso machine, grinder & other items on loan, then they will need to include the cost of buying, installing & maintaining that equipment into the coffee price.
4. Other services
The costs of barista training, marketing support (like signage) & other accessories also need to be included.
How does loan equipment affect wholesale pricing?
There are really 3 options when it comes to sourcing commercial coffee equipment:
- Buy it yourself The biggest benefit is flexibility: no repayments or agreements. There are some downsides too, apart from having cash tied up in a depreciating asset, you’ll also have to maintain it yourself. This may allow you to negotiate a lower price per kg for your coffee, however your weekly volumes will still play a big part in the final price.
- Lease You can lease equipment through companies like Silverchef or Buddy Kits. This saves you cost up front, and gives some flexibility. The downside is the interest rates are high… and you still have to service & maintain the equipment.
- Loan or rental from a coffee roaster This works a bit like a mobile phone plan. The coffee roaster provides the equipment as part of an agreement – you buy coffee from them, they supply & maintain the equipment. The benefits are the up-front saving, and having someone else service and maintain the equipment. Of course, the cost of the equipment needs to be built in to the price of the coffee.
“On Loan” equipment sometimes gets a bad reputation in the coffee industry. For me, this all comes down to who you choose to partner with and what they can offer. Can I finance this equipment myself at a lower cost? Do they have a good track record of support? What happens if I sell the business? In the end, unless you want to pay more than you have to - you'll need to talk with the roaster to find exactly the right option to suit your business.
Why not just buy cheap coffee?
Clearly, we’re biased…but there’s a reason we don’t sell cheap coffee with no support: because it’s not the way to build a successful café business. When you consider that the difference in profit between cheap & quality coffee usually works out to less than 5c per cup - you start to see the problem. Choosing quality only needs to result in a tiny increase in the number of customers to pay for itself many times over. In the end, everyone is different, and the right choice for you will depend on the specifics of your business.
To find out more about coffee for a cafe or coffee shop business, take a look at our wholesale coffee page