Serious warning: Your coffee could soon cost $7 as cafe owners teeter on the brink of bankruptcy

Australians could soon be paying up to $7 for a standard cup of coffee as frustrated cafe owners teeter on the brink of bankruptcy.

Phillip Di Bella, founder of industry body The Coffee Commune, said small businesses urgently needed a lifeline from the state government to save “hundreds of thousands of jobs” in Queensland alone.

Mr Di Bella predicted that more than 2,000 cafe owners and suppliers would have to close their doors as profit margins tightened.

According to him, an average cup of coffee now only yields a profit of $1 per cup, meaning that cafes have to increase their costs to stay afloat.

“Everyone is struggling right now so of course operators don’t want to charge $7 for a flat white but that’s becoming the norm,” he told the Courier post.

“Our members also have families, so that is not a sustainable income.”

The average cost of a flat white is between $4.30 and $6.50 in Queensland – one of the most expensive in Australia according to Friendly finances.

Mr Di Bella said the sector was in urgent need of government intervention from the Labor Party or the Coalition before the state election in October.

Australians have been warned that the cost of living could soon see a standard flat white cost $7 as cafe owners are pushed to the brink of economic ruin

The industry boss criticised both major parties for failing to consult small businesses in the coffee sector, just weeks before voters go to the polls.

“The cost of living is enormous for operators who generate tens of millions of dollars in government revenue,” Di Bella said.

Mr Di Bella called on both parties to raise the payroll tax threshold – currently $25,000 a week – and reform industrial relations laws.

Financial adviser Friendly Finance’s report from November last year found that there had been an increase in coffee consumption in Queensland, leading to fluctuating costs.

The “diverse” nature of the state’s coffee culture was noted, leading to a flat white in Indooroopilly in Brisbane’s south-west costing between $4.60 and $8.

The warning comes after credit reporting agency CreditorWatch reported that food and beverage businesses were the most likely to close their doors of any sector.

The average cost of a flat white is between $4.30 and $6.50 in Queensland – one of the most expensive in Australia according to Friendly Finance

In August, 8.2 percent of companies in the sector went bankrupt.

Hospitality businesses in particular are vulnerable to higher interest rates as consumers pull back from discretionary or “unnecessary” spending.

Anneke Thompson, chief economist at CreditorWatch, said conditions for the sector had deteriorated rapidly after a good period following Covid lockdowns, when people were not spending money on going out or holidays.

But much higher mortgages and rents have since begun to put a strain on consumer spending, making it difficult to raise menu prices to cover higher operating costs.

The rising rents have also affected hospitality establishments that are usually located in busy shopping centres. Relocations to other locations usually lead to lower turnover.