While consumer demand for affordable treats remains solid, pricing pressures continue to mount.
The average price of hot drinks increased by nearly 9% year-on-year in September, surpassing the overall fast-food average increase of 7%. Core items such as Cappuccino and Latte prices rose by about 9%, while specialty drinks have surged even more sharply. Seasonal drinks, such as pumpkin spice or gingerbread lattes, cost on average 22–25% more than standard offerings, representing an 11% increase compared to a year ago.
The price gap between fast-food outlets and coffee specialists remains wide and even within specialists price variation is significant. The spread between fast-food players such as McDonald’s and Popeyes, where a regular latte costs £1.99, major coffee shops around £4 like in leading coffee chains such as Costa Coffee, Starbucks and more premium places such as at Joe & The Juice, Watchhouse and Gails, where regular latter may cost more than £4.30 is more than 100%.
But these days coffee is consumed not only in stores. Delivery is adding another layer to the price equation and makes coffee even more expensive.. The average markup for drinks ordered through apps is 15%, meaning an in-store coffee costing £3.80 can easily reach £4.35 or more when delivered.
It’s also worth noting that delivery prices are growing faster than in-store prices for all products, including coffee. Importantly, delivery prices are rising faster than in-store: if coffee prices in coffee shops increased 10%, delivery equivalents rose 12%. Thus, for top coffee items, the difference in price growth is about two percentage points.
“Coffee is among categories where we see a significant price growth this year” says Maria Vanifatova, CEO of Meaningful Vision. Higher prices in delivery and faster price growth in this channel may impact the sales, especially with such products as coffee that relies heavily on freshness, temperature, and stability, all of which suffer during delivery. That is why the assortment is often limited and the experience is rarely as good as in-store. As competition intensifies and consumers become more selective about when and where they spend, coffee brands must rethink how pricing aligns with competitors and value proposition.”