YOUR usual cup of hot coffee or tea and other beverages at traditional coffee shops will cost up to 60 sen more from next month to help the owners manage rising operating costs, stakeholders said.

Malaysia Singapore Coffee Shop Proprietors’ General Association president Wong Teu Hoon told The Malaysian Insight that the average price hike will be 20-60 sen, depending on the location of the coffee shop.

He said the price will increase 20-30 sen in rural areas and 40-60 sen in urban areas.

“The rent is higher in certain areas so the prices will also higher,” he said.

Wong said industry players across the board are forced to adjust their prices upwards because of rising operating costs.

“Recently, many things have become more expensive – from condensed milk and evaporated milk needed to make coffee or tea, to the salaries of employees, rent and cooking gas,” he said.

“So the increase in prices of beverages is just a subsidy for the industry. It is certainly not to make bigger profits.”

He said when the price of a cup of coffee is increased by 20 sen, the coffee shop only makes an extra RM20 if it manages to sell 100 cups a day.

“That amount is not enough to pay the salaries of foreign workers. At most, it is only a subsidy,” he said.

Wong said some people mistakenly assume that the industry is raising prices due to the higher cost of sugar.

In fact, the prices of all goods have increased, he said.

Wong revealed that the salary of a foreign worker has risen from RM1,200 to RM1,650 and the annual agency fee has shot up to RM9,500 from RM6,000.

“If the coffee shop is understaffed, customers will complain about slow service. So I hope everyone will understand our situation,” he said.

Wong, who is also the president of Malacca Coffee Shop-keepers’ Association, also said most coffee shops in the state have not raised their prices in the past six years.

“We have been maintaining prices even with the increase in rent, utility charges and employees’ salaries,” he said.

“This time, we are really forced to raise prices. Most businesses agree to start adjusting the beverage prices from January 1.”

Economic activities have resumed since the government relaxed the Covid-19 restrictions in October.

However, businesses also faced other problems, including the shortage of raw materials and workers as well as rising transport cost. They said these have led to wave after wave of price hikes.

Fear of losing customers

Penang and Province Wellesley Cafe Association chairman Tan Kar Seong confirmed that beverage prices in traditional coffee shops in northern peninsular states will go up from January 1.

He said coffee shops are small businesses with some renting their premises. Coupled with the increase in workers’ salaries, the operating cost has shot up.

“The price of everything is going up and no one knows what has gone wrong. The situation is really bad,” he said.

Tan said the price of coffee powder will also rise next year, but the quantum is still unclear.

Some industry players would rather choose to cut manpower and run everything by themselves, he said.

These businesses also dared not rush to increase prices for fear of losing consumers, and aimed to obtain small profits with large sales volumes, he said.

Johor Baru Coffee, Restaurant and Bar Operators Association chairman Tiong Kiu Wong said the situation is made worse for the industry as the economy is sluggish.

He said businesses must also consider the customers’ ability to spend before raising prices.

“Although you have to make money in business, small profits through large volumes may keep the customers come,” he said.

Tiong said his association has not discussed price hikes and is still studying the situation.

“As far as I know, only a handful of coffee shops in Johor Baru have raised the prices of their beverages. The increase is small, about 10%,” he said.

“They may have faced rent pressure, so they raised prices.” – December 6, 2021.