PEORIA, Ill. (WMBD) — Prices are going up all around, but the industry that serves as a “pick-me-up” to many has seen a unique strain.
Coffee shops locally are struggling to keep their prices down while dealing with inflation, shipping issues, stock issues, and the market price of caffeinated commodities.
“We’ve seen a lot of price increases from all aspects of our business, including transportation and with our plastic and disposable goods,” said Mitchell Popadziuk, CEO of CXT Roasting Company in Peoria’s Keller Station.
Popadziuk is responsible for purchasing the coffee and all inventory for CXT. According to him, coffee importers are saying the state of things is unprecedented.
“What we saw was a lot of shipping issues with trying to get coffee out of certain countries, a lot of the inflationary pressures on both sides of the country affect the lending from the supplier, and also the importers. So they’re unable to import as much because their dollar buys less. And the other thing is, we’ve seen some climate stuff that’s been related to that as well,” he said.
One way Popadziuk is dealing with the financial strain is making larger orders to increase stock and savings. They rented extra storage space to keep their surplus inventory. He also said they are working to increase efficiency, and waste less product.
He said they are pushing for customers to go back to using the shop’s reusable ceramic mugs. When the COVID-19 pandemic hit, the use of disposable products like plastic cups skyrocketed.
“As far as coffee, we’ve seen some really large increases on the actual green coffee side of things,” he said, referring to buying coffee that is not yet roasted, sometimes called green coffee. “We’ve seen increases basically double or even 40% in most cases of all that coffee.”
The prices were going up for about a year now, but Popadziuk said they see a lag in those price hikes since he contracts coffee purchases at fixed prices.
So far, he said, CXT has not had to raise the price of its beverages.
Across Knoxville Avenue, at the Junction City shopping center, one café owner said the problem is everything but the coffee.
“We produce the coffee, and we can control the cost,” said Heber Vidal, owner of Café Santa Rosa.
The Colombian coffee served comes directly from a farm that Vidal owns with his wife.
“We are one of three probably three only businesses with the same business model, where we own the farm, and we control the coffee from the farm to the cup,” he said.
Unlike at CXT and many other coffee sellers, Vidal does not work with brokers to contract coffee at a fixed price, because his own employees are the ones producing the coffee.
But like Popadziuk said, so many other factors are putting coffee sellers under pressure.
“The problem has been with everything that is here in the shop besides coffee,” he said. “From the milks, labor, to all the glasses… anything we use here,” Vidal said.
His family farm, Finca Santa Rosa, gives Vidal an advantage when it comes to supply and inventory. However, he still must follow the market.
“Coffee is a commodity and the base price is determined by the market. So that is going to be a big jump right there. At this point, we are 100% higher than we were one year ago.”
The baseline price for a pound of Colombian coffee has doubled, Vidal said.
He might have to raise prices, but said they are in good shape, at least for three months; it all depends on the market. He said the utility bill is going up from electricity, also adding to the financial strain.
“For next year, we’re going to see an increase in our production costs because of labor, because of fertilizers. The price is going up again.”
Vidal has also kept prices normal, but said they have entertained the idea of minor price hikes.
Regardless, both coffee providers said buying local is the best way to help not only the shops themselves but also to help stabilize the market.
“The money is going to stay local,” Vidal said. “Peoria has a great advantage with us because we are offering specialty coffee at a better price than most of these big chains are selling.”
“We are constantly providing employment to people who are in this area and spending their dollars here,” Popadziuk said. “That’s important for us and for Peoria.”