How should I set coffee menu prices?
Such an important business question should always be addressed on an individual case basis; however, when setting coffee menus prices, consider surveying local and national chain competition and then position yourself higher not lower.
Specialty coffee is classified as a micro-luxury item: even the best cup of coffee is within financial reach of the average buying consumer. Most coffee drinkers will think little of paying $3.00 or $4.00 for an outstanding cappuccino. It is the experience of an outstanding beverage they value, not the prospect of saving a few pennies. Positioning your prices below your competition may in fact be a deterrent for some customers that are conditioned to expect that cheaper means less valuable and therefore not as good.
In order for this strategy to be successful, you must additionally provide the benefits of your competitors: a clean environment, convenient access and a consistent experience.
You’ll find that by positioning your prices on the high-end of your competition that not only will you earn money per beverage and your overall transaction volumes will increase as a positive reputation grows.
But don’t forget, you’ve got to consistently deliver quality: the proof is always in the cup!