Coffee price increases inevitable, roasters and experts say

Coffee prices are bound to increase as hospitality businesses suffer under inflation, experts and cafe owners say.

Coffee in Sydney is the cheapest in the country, according to food consultants Hey You, but cafes are feeling the pressure of trying to keep prices down.

"Sydney is far cheaper - about 5 per cent cheaper - than what people pay across the country for coffee," Hey You chief executive Asheesh Chako said.

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"There's a lot of competition in the market cafes and cafe owners know if they increase their prices too much patrons will go somewhere else."

Australia has the third cheapest coffee prices in the world, but it comes at a cost.

Underground Coffee Roasters owner Tim Briggs has managed to keep his doors open through COVID-19, increasing transport prices and a global bean shortage.

He says others haven't been so lucky.

"We're seeing some really good operators, well-known cafes, go under and close their doors," Briggs said.

Those cafes that are still open are doing whatever they can to increase margins.

"At some point, (the price) will have to move," Briggs said.

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CreditorWatch has predicted 1 in 13 hospitality businesses are facing failure over the next 12 months.

"Hospitality is doing it far tougher than any other industry out there at the moment," CreditorWatch chief executive Patrick Coghlan said.

"They just have so much that's against them - in particular, labour costs, inflation and, of course, discretionary spending is way down."