Coffee shops hiking prices, cutting menu items amid higher supply costs

After about 50 people left Kismet Coffee Co.’s first Pilates class, held in a courtyard behind the Bay Shore shop, they stopped at the counter to get the coffee that was included with their $25 class ticket.

It was a good deal considering how much coffee costs these days, said Babylon resident Amanda Cunningham, 29, who held a banana bread iced latte and her yoga mat after the class July 1.

“I got a sandwich and coffee last week, and it was $27” at another shop, said Cunningham, adding that her iced vanilla latte probably accounted for $12 of that cost.

Since coffee bean prices began soaring last year, Long Island coffee shops are using several strategies to offset higher expenses, such as raising their prices, diversifying suppliers and cutting menu items, owners said.

Kismet has been holding more ticketed events, including its first group Pilates class this month, as a way to generate more revenue, owner Jackson Davis said.

“We’ve just tried to diversify our business and sell breakfast burritos and different things on our menu, as well,” he said.

Some Long Island coffee shop owners say they are absorbing a share of the higher costs they are paying for coffee rather than passing them on to customers, while some coffee drinkers, including Cunningham, say they are making coffee at home more often to save money.

Years of supply shocks stemming from adverse weather in Brazil and Vietnam, the two countries that grow most of the world’s coffee beans, pushed wholesale coffee prices to record highs last year, and prices remain high, said Michael Zdinak, U.S. economics director at S&P Global Market Intelligence, a Manhattan-based financial analysis provider.

Benchmark arabica coffee futures trading on the Intercontinental Exchange closed at a record high of $4.38 per pound in mid-February last year, a 127% increase from the $1.93 a year earlier. Friday's price closed at $3.43 a pound but prices remain volatile over concerns about a delayed harvest in Brazil because of heavy rains.

Even if coffee bean prices trend lower this year as production improves, it can take as many as nine months or more for lower bean costs to work their way onto retail shelves, Zdinak said in an email.

The average price of a pound of ground coffee in U.S. stores soared 29% over the year ending in April, when it hit a record high of $9.72, according to the Federal Reserve Bank of St. Louis. In May, the price fell 2.2% to $9.51.

The median price of a cup of hot coffee at U.S. restaurants in May was $3.74, up 6.9% from $3.50 a year earlier, according to Toast, a Boston-based provider of restaurant management software.

The median price of cold brew at restaurants in May was $5.60, up 3.7% from $5.40 a year earlier.

Rising transportation costs associated with higher fuel prices during the war in Iran have added upward pressure on coffee prices this year, “slowing the pass-through of lower commodity prices to lower consumer prices,” Zdinak said.

The war, which began Feb. 28, has disrupted fuel shipping through the Strait of Hormuz, affecting the coffee industry because it relies on diesel for farm operations, transportation and processing. Coffee producers also use fertilizer, which is made from petroleum byproducts.

‘We need to keep the lights on’

Flux Coffee sells products in its Farmingdale cafe and online, but most of its revenue comes from roasting beans for about 50 coffee shops, bakeries and restaurants across the country, owner Arsalan Pourmand said.

In 2024, Flux was paying $6,500 for a pallet of 10 bags of wholesale green, or unroasted, coffee weighing 130 pounds each, but the same pallet now costs $10,000, he said. Shipping and paper-product costs also have soared, he said.

To help offset its higher expenses, Flux raised its drink prices by 25 cents and its wholesale coffee prices between 8.6% and 12.5% a pound, depending on the variety, in mid-2025, Pourmand said. The company is planning another increase in both categories, he said.

“At the end of the day, when all that gets put on the customer, no one’s happy about it. We try our hardest to not put that on the customer. But at a certain point, we need to keep the lights on,” he said.

Georgio’s Coffee Roasters, which has shops in Farmingdale and Stony Brook, saw its wholesale expenses for coffee beans rise about 50% last year, partly because of tariffs on coffee imports, co-owner Eric Harris said.

The Trump administration’s 10% tariff on coffee imports went into effect in April last year, according to the Tax Foundation, a nonpartisan think-tank in Washington, D.C. By August, U.S. imports of coffee from Brazil and Vietnam were being levied with 50% and 20% tariffs, respectively.

Coffee was exempted from tariffs in November.

Though the cost of beans has fallen, they are still about 25% to 30% more expensive than they were in 2024, Harris said.

Georgio’s Coffee Roasters raised the price of a cup of coffee by 25 cents last year. It also hiked its retail price of a pound of coffee by $1, so bags now sell for $20 and $30 each, he said, adding that the business lost money because the hike should have been at least $3 to break even on his higher costs. The business’ revenue is split evenly between retail and wholesale sales, Harris said.

Kismet, which has three seasonal shops that operate from May to mid-October each year, relocated its year-round coffee shop in Bay Shore to a larger space and added a sit-down restaurant last September.

Profits from the restaurant’s food sales have been a saving grace for the business amid rising costs, Davis said.

In addition to holding more ticketed group events, such as the Pilates class and wine-pairing classes, Kismet also raised its coffee prices at all four locations by less than 10%, Davis said.

It also helped that Kismet’s supplier, Flux Coffee, switched from coffee sourced from a single co-op farm in Mexico to sourcing from different countries, among them Guatemala, Brazil and Peru, which helped better control costs, Davis said.

His business also is promoting more drinks with higher profit margins, such as espresso martinis, he said.

Some coffee shops, including Mokafé, have shied away from raising their prices to avoid driving away customers.

Mokafé has eight coffee shops in New Jersey and New York, including one on Long Island in Melville, and plans to open a Hicksville location Saturday.

The Astoria-based chain, which sources its coffee from Yemen and Guatemala, was paying 30% more for its wholesale coffee last year than in 2024, but Mokafé didn’t raise its retail prices in response, co-owner Youssef Mubarez said.

That was due in part to the chain already charging more for premium coffee — about $1 to $1.50 more than coffee sold by national competitors, he said.

“At the end of the day, we’re already getting hammered by people thinking our coffee was too expensive when you compare it to Dunkin' Donuts and the Starbucks of the world,” he said.