Higher rentals push up prices at some coffee joints

At least three coffee joints here have recently raised prices, citing rising operational costs, especially rentals.

The move comes as the chain operator of S11 coffeeshops increased its drink prices by 10 cents across all 15 outlets at the start of June.

Ya Kun raised prices by 10 to 20 cents starting July 27, citing escalating operating costs leading to a “juncture whereby a price revision is inevitable”, said a notice posted at storefronts dated June 26.

A cup of coffee at Ya Kun now costs S$1.60 instead of S$1.50.

The coffee chain’s rising operational costs came from “a bit of everything”, said Mr Adrin Loi, Executive Chairman of Ya Kun. Rental accounts for the bulk of costs at the chain’s 44 Ya Kun outlets, followed by raw material and manpower.

Mr Loi said labour costs have gone up as workers working more than 44 hours a week are paid an overtime rate of 1.5 times their hourly rate, and the Foreign Worker Levy has also increased.

The chain also had to pay its staff higher salaries to remain competitive in a tight labour market. It had previously said it plans to hire more retirees and housewives to fuel its expansion to 100 outlets by 2015.

“Sometimes, we bear the costs … we control the price. But at the end of the day, the worker will be affected. We cannot give them better rewards, and we want to reward our staff who perform well,” Mr Loi said.

Old Town White Coffee, which has eight outlets here, is in the middle of a revamp involving renovations and menu changes. TODAY understands that this will translate to an increase in prices, of not more than 50 cents, at four outlets — City Square Mall, JCube, Orchard Cineleisure and Square 2 — that have been upgraded in recent months.

The upgrading for a “fresher and more contemporary ambience” is part of the company’s strategy to retain customers and, hence, manage rising costs, said Ms Dawn Liew, General Manager of Kopitiam Asia Pacific, which manages the Old Town outlets in Singapore.

“Rising costs are part and parcel of doing business and this spreads across an array of items. In saying that, rentals are becoming a lot steeper,” she said.

The Coffee Bean and Tea Leaf also raised its prices,by 10 or 20 cents, two months ago, but only for food items.

Prices at Starbucks, Wang Cafe, Spinelli Coffee Company and Toast Box remain the same.

Source – Today – 6 Aug 2013

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