Surge in coffee prices squeeze margins at local shop

A spike in the price of coffee beans driven by poor weather conditions in South America and Asia is thinning the margins for coffee shops in Ozaukee County, Andy and Angela Hill, owners of Java Dock in Port Washington, said last week.

Andy said Java Dock’s coffee distributors recently told them to expect their coffee prices to jump by 9% to 13% — double typical increases.

But the increases are just one of the inflationary pressures making running a coffee shop “unsustainable,” Hill said. 

“It is getting harder and harder in the restaurant business,” he said.

Egg prices, due to an outbreak of bird flu, are through the roof and the cost of other restaurant essentials such as lids, cups and napkins are increasing as well, he said.

“Everything is continuously rising,” he said. “It’s very infrequent that we see prices going down. Since Covid, for the last four years, food prices have been volatile.

“Coffee is really the least of the expenses.”

According to press reports, poorly timed droughts and floods in major coffee bean producing countries Brazil and Vietnam are driving the price jump. 

The price hikes cut into the bottom line, Hill said, but they’ve tried to avoid increasing prices at Java Dock. 

Coffee and pastries are luxury items so customers can easily be priced out, he said.

“We try to minimize prices,” he said. “Often times we will take less of a profit to keep customers coming.”

Java Dock’s biggest expense is labor, Hill said. The shop requires a large roster  of employees to stay open 12 hours a day, 7 days a week.

“We want to make sure the people that work with us are able to pay for their livelihoods,” he said, noting their employees range from people working their first job to career baristas.

Java Dock has had retirees work part time to supplement their income and stay involved in the community, as well as stay-at-home parents who come in after dropping their kids off at school, Hill said.

Hill said Java Dock has great employee retention.

“That’s no joke. We have a great culture,” he said.

Hill said he and his wife try to train and support staff to gain the skills to become a manager, and if they want, to someday start their own shop.

“Showing the importance of having a quick conversation, looking people in the eye,” he said. “Showing that by being a nice person they can turn somebody’s day around.

“All of those little things keep people coming in the door.”

While keeping staff is usually not an issue, getting new employees is a challenge, Hill said.

“Its been hard to have people come through the door and fill out an application,” he said.

Hill said the generosity of the community in tipping Java Dock’s baristas has helped.

”We fully recognize that we cannot survive without the community,” he said.

Hill compared the current inflationary challenges to the Covid-19 pandemic that broke out soon after the Hills purchased Java Dock.

Java Dock was “ahead of the times” during the pandemic, Hill said. Before big box stores started putting six-foot spacers in checkout lines, the Hills had laid out a safely spaced outdoor line in front of the shop.

Hill said their proactive measures helped Java Dock leave the pandemic stronger than it went in.

“That’s what small business owners do, they find a way,” he said.

Hill said that recent inflation is not only concerning for the coffeehouse. 

Java Dock is heavily involved in sponsoring community events and organizations — support that is jeopardized if too much of the bottom line is slashed away, Hill said. 

“If you don’t have the profit, it affects your ability to give back to the community,” he said.