St Ali boss says Melbourne’s coffee is too cheap, cafes must increase prices

It’s rated among the world’s best, but this coffee giant says Melburnians aren’t paying enough for their morning brew— and the cafe is already hiking prices and hoping the industry follows.

Would you pay $6.50 for a dine-in flat white? St Ali chief executive Lachlan Ward says coffee should cost at least $5.50. Picture: Jason Edwards

• Call to raise coffee price slammed as ‘idiotic’

Melbourne coffee is too cheap and cafes need to “be brave and adjust up” or risk closure in a few years’ time, according to an industry leader.

St Ali boss Lachlan Ward says Australians should pay $5.50 minimum for a regular flat white, with his South Melbourne cafe already leading the charge by pricing its dine-in flat whites at $6.50.

“The way we are pricing coffee in Australia is not sustainable,” Ward said.

“Unless Australian cafes start adjusting prices up and charging a fair price for what we are making, the independent cafe won’t exist in the future.”

“Evidence from around the world suggests that’s not the case. We have incredible operators and beautiful cafes closing down weekly, we can’t look at cutting prices.

Cutting isn’t good for any business.”

Wards call comes days after a Melbourne chef gave diners an ultimatum: pay $50 for a main meal or risk seeing more of their favourite venues close forever.

Teage Ezard, owner of beloved modern Asian stalwart Gingerboy, was forced to close his restaurant of 18 years after a “perfect storm” of pressures.

You’ll pay $6.50 for a dine-in flat white at St Ali. Picture: Jason Edwards

Ezard told the Herald Sun these included rising produce prices, wages and rents, coupled with a downturn in diners eating out due to cost of living woes.

“We have to raise our prices, but the public don’t want us to raise our prices. We need to and there needs to be a conversation around that,” he said.

“Restaurants will not survive charging what they are charging.”

“That perception (of not spending $50 on mains) needs to change. We should be charging $50 or more on mains,” he said.

New data exclusively obtained by the Herald Sun shows southsiders and city residents were paying on average less for lattes, with those in the northern suburbs forking out as much as 40 cents more for their morning brew.

Latte sipping northsiders spent an average of $4.78 for any size of the drink in 2023 — up almost ten per cent from the previous year.

Coffee lovers paid $4.48 for a latte in the city, those in the east and west coughed up $4.52 and $4.73 respectively, while southsiders paid only $4.34.

The analysis by restaurant ordering platform Hey You also found between 2022 and 2023:

— Latte prices rose only 4 cents for southsiders living in suburbs such as Mount Waverley, Cheltenham, Brighton, Dandenong and Frankston.

— Hot chocolates and long blacks cost the same in the city’s south.

— Westies in Footscray, Williamstown and Werribee paid 21 cents more for

lattes, flat whites and cappuccinos.

Hey You chief executive Asheesh Chacko said the data was sourced from more than 30 million orders over three years made via restaurants that used the ordering platform.

“We have at least 300 cafes and restaurants that use our platform across Melbourne, with more of a spread in the city,” he said.

Mr Chacko said the cheaper latte prices in Melbourne’s south were a snapshot of what was happening nationally.

Residents in Melbourne’s south are paying as little as $4.34. Picture: Linda Higginson

“Across more staple coffees, such as your lattes and flat whites, they went up in price less than on average across the country,” he said.

“However the price of iced lattes and tea, saw much bigger price jumps. So while cafe operators aren’t increasing the prices on common coffees, they are making more of a margin on the specialty items and that’s makes sense for what we are seeing in the south.”

Nationally the average cost of a latte has climbed 10 cents in two years, while the price of a mocha has jumped from $4.63 to $5.04 (up 9 per cent) and iced lattes from $5.94 to $6.27 (up 5 per cent).

The cappuccino is officially Australia’s most popular cafe order, followed by flat white, latte, long blacks and piccolo.

The data also found cows milk reigned supreme, followed by skim, despite a rising interest in plant-based alternatives, such as almond, oat and soy.