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About pricing and our menu

2011 February 2
by Ryan

Well, this is the post we have been hesitating to write, but our backs are figuratively against the wall here.

Those of you who visit R&R regularly know that our menu prices have not moved much over the last three years. Yeah, there’s been a bump here and a bump there, but nothing more than a quarter at a time.

However, times are changing–quickly.

On the food side…

We kid you not, our price of flour has gone up 40¢/pound in the last few months. The costs of all the other goods, while not as extreme as the flour, have risen dramatically as well. If we look at the cost of our Tiny’s Burrito, for example, we have seen any type of margin shrink from a little to nothing. In all honestly, we are losing money with the Tiny’s as it stands on our menu right now. That’s not how we stay in business for long.

If you’ve noticed, our pastry prices have been edging up recently, too. That’s simply in response to the rising dry goods prices.

So as much as we don’t want to, we have no choice but to raise menu prices. However, we want to be firm on one thing: while our pricing has to go up, the size and quality of the entrees will stay the same. We WILL NOT raise prices and skimp on the food. If you feel any way different about that, please talk to Ryan or Carla so we can fix it immediately.

On the coffee side…

Okay, this is getting serious in the coffee world. The commodity market (“C” Market) for coffees has been–quite frankly– insane. In the last year, the C prices for Arabica coffee (and “specialty coffee” is only the top tier of the Arabica coffee) has risen a whopping 84%!

We get our coffee delivered in 150-lb burlap bags. Our last order was 4 bags and it cost the same amount as the previous 5 bag order!

Many industry experts have many different explanations for this…

  • Damaging weather patterns in the coffee producing areas have severely limited the harvests
  • Brazil, always the #1 exporter of coffee, is about to become the #1 consumer of coffee, too. Less for the world
  • The instability in the Middle East is causing gas prices to fluctuate
  • The general public can now bid on the commodity market. While that can work in the market’s favor, it can also work against it, as we’re seeing now.
  • Plus, plus, plus…..

Some industry experts are predicting that the C market base price for pounds of coffee will approach $5/lb! Before the last year, coffee prices were hovering in the $1.20/lb for commodity coffees.

Now, you’re probably saying “Well, if your price is only $5/lb, why does this change the prices? Were you making a screaming profit at $1.20/lb?”

We wish.

  • First, that price is for the commodity coffees. The stuff you find in the cans on the supermarket shelves, not in a true coffee shop. Our prices for green coffee ranged from $2.80 to 5.90/lb
  • Then there’s shipping, which will range anywhere from $0.25 to 0.45/lb
  • When you roast coffee you lose 18% of the mass to water loss. That puts our price per pound with shipping at $3.55 to 7.41 per pound.
  • Then, add in the cost of the electricity and gas to make the coffee, the rent for somewhere to have the roasters, the labor dollar to roast, bag, and sell the coffee, the cost of the snazzy coffee bags, labels and ink, and all the other whatnot and we are darn lucky to make a buck, buck and a half off of every pound.

And that’s the prices as they stood 6 months back.

With coffee prices doing nothing but going up, we are also forced to look at pricing for the coffee side, too. With no end in sight with the increases, we need to be a little proactive here.

Starting Monday, all bulk coffee prices will be increasing by $1/pound. Don’t be surprised if that’s not the last jump you’ll see. Individual drink pricing will also be changing.

See, I figured it this way: I’d rather see incremental price raises over the course of a year than a large increase all at once, and I’m hoping you see it that way, too.

As with the food side, we promise to keep the quality levels high, if not even a little higher. If you don’t feel we are, let us know!

In short: yes, menu prices are heading northwards. We have no choice. With the way the world’s commodity markets are going, it won’t be our last price increase. But we promise to keep the same quality and quantity you know and love with both the food and the coffee.

Thank you for your understanding,

The R&R Gang

Jane says:

Hi Ryan — thanks for the clear, honest update. Times are tough all around, and it’s natural that the cost of doing business is taking its toll on R&R, too.

While I don’t get in very often (I live about 25 miles away), the R&R is the first stop I make when I’m at Black Forest. It is a treat for me each time, and the service, welcoming atmosphere, and the great coffee and food keep me coming back.

Here’s wishing you many more years!

Mike Callies says:

Thanks for the Update Ryan.
We enjoy the R & R Cafe very much.
You have explained your cost issue very clearly.
We do NOT wnat to loose R & R cafe – so we understand that a proce increase is inevitable in these times.
Thanks for explaining the latest changes.
We support you whole heartedly.
Do NOT Sacrafuce Quality!
If the price must go up — then it must.
Maui Mke and Kathy

Hank & Gail Simons says:

Hi Ryan, Carla and the rest of the gang
The increase in the cost of living has caused us to cut back on eating out, that’s why you haven’t seen us as much. We love being there to eat the great food and sipp the fantastic coffee. Ryan, I know you weigh things out before you do anything that would effect your business, and are open to “positive” ideas, so I will throw my 2 cents worth in. 1 cut down on your menu, what does’t sell don’t offer. Stick to the basics for breakfast and lunch. 2 .Charge more for the coffee and charge for the refills, I have my cup there and you charge .60 and I get a refill, charge a $1 I would pay it! Thanks for “listening”, Gail and I will pray the best for you, you know I advertise all the time for R&R. Hank

Joe Fox says:

I have never been to your shop, but a friend of mine is a regular; this is the most honest, clear and brilliant post I’ve read in a long time. It’s much better to be honest with your customers than to take other approaches. Some customers won’t be able to afford the changes, but at least they’ll know why it’s occuring instead of being left in the dark. Others will be able to afford the change and will hopefully bring friends because of your honesty and straight-forward approach.

In any event, next time I’m in town, I’m stopping by to say hello and taste some goodies myself. With good people like you running small businesses these days, we’re in good hands for the future!