How much more Aussies are really paying for coffee after the surcharge ban
Updated . First published
One in 10 cafés have increased their coffee prices by up to 35 cents since credit card surcharges were banned on October 1, according to new data. This is despite Prime Minister Anthony Albanese claiming that banning credit and debit card surcharges would make “your morning coffee and other items cheaper”.
Fresh data from ordering app Hey You and Westpac DataX reveals that although the card surcharge ban nudged the average price of a coffee up by about 3 cents to 4 cents, many have hiked prices much further.
One in ten cafés have since increase prices up by around 35 cents. iStockphoto
Across the thousands of venue listings on Hey You, the average list price of a regular latte, flat white, or cappuccino rose from $5.02 to $5.05, a 0.7 per cent increase, after the ban took effect.
Coffee prices had already been steadily increasing ahead of the surcharge ban, with the biggest spikes happening in late 2021 to 2022, and continuing into 2026.
Exactly 10 per cent of cafés lifted the price of at least one of these core coffee orders. iStock
Geographically, New South Wales venue owners led the market adjustments, with 11.5 per cent of the state’s cafés increasing their coffee prices, compared to 8 per cent in Victoria.
“For most Australians, the morning coffee costs exactly what it did before the surcharge ban. Nine in ten cafés on Hey You haven’t changed their prices,” Hey You chief executive Asheesh Chacko said.
“The cafés that have moved went further than the surcharge alone, which tells us many were already under pressure from rising milk, bean and wage costs.
“The ban gave them a moment to reset their menu prices. The average customer will notice a few cents, not a few dollars.”
Nine in 10 cafés hold baseline prices
Despite the noticeable price hikes, nine in 10 Australian cafés held the line and have not changed their coffee prices since the regulation began.
In a standard trading month, roughly 4 per cent of cafés raise the price of standard milk coffees by an average of 0.3 per cent. Since October 1, that share has more than doubled to more than 10 per cent, directly tying the menu adjustments to the new rules.
When venues decided to adjust their figures, they overwhelmingly rounded up: 39 per cent of adjusting cafés raised prices by 50 cents or more, 21 per cent increased prices by 30 to 45 cents, 24 per cent moved up by 20 to 25 cents, and 16 per cent opted for a 10 to 15 cent shift.
Nine in 10 Australian cafés held the line and have not changed their coffee prices since the regulation began. Getty
Further market movements are anticipated as venue owners conduct quarterly reviews or wait on point-of-sale software updates, with the proportion of venue price rises expected to build through October and November.
Global bean shocks drive up baseline costs
Long before the credit card surcharge ban kicked in, the price of your morning flat white was already creeping higher. Running a café in Australia has become significantly more expensive over the past couple of years, with venue owners getting squeezed by rising costs at almost every stage of making a single cup of coffee.
On the international stage, wholesale coffee bean prices shot up due to severe weather events in major growing nations. Droughts and frosts in Brazil alongside heavy rainfall in Vietnam knocked out huge crops of both Arabica and Robusta beans, pushing global commodity prices to multi-year highs.
By the time those green beans were shipped across the ocean, local roasters were paying premium rates and had no choice but to pass those higher costs onto local Australian cafés.
Wholesale coffee bean prices shot up due to severe weather events in major growing nations. Getty
Rising local ingredients and operational pressures
At home, the everyday ingredients and supplies needed to run a coffee machine also became much pricier. Australian dairy farmers and milk processors faced their own cost hikes, which pushed up the price of fresh milk and alternative milks across the country. On top of that, the cost of paper takeaway cups, lids, and tray packaging jumped, while local delivery and freight charges kept climbing.
Running a café in Australia has become significantly more expensive over the past couple of years. iStock
Back inside the café, labour and general bills took the biggest bite out of margins. Annual increases to the hospitality award rate, higher superannuation guarantee contributions, and skyrocketing commercial electricity and gas bills meant running an espresso machine each morning cost far more than it used to.
Industry surveys show that the average Australian café operates on a razor-thin profit margin of just three to five per cent, meaning even small increases in milk, bean, or energy costs quickly force venue owners to raise their menu prices just to keep the doors open.
