Maine has the cheapest coffee, but the most expensive is not in New York or California
The price of a cup of coffee infographic. Image: CashNetUSA
For those of us old enough to remember, there were the ‘soda wars’ (TV viewers may also recall the ‘late show wars’ a bit later) and currently there are the ‘fast food wars’ as quick serve restaurant (QSR) chains battle to entice consumers back through their doors and drive thrus by returning dollar items and value meals to their menus.
Although we are seeing declining interest rates in the US, Europe and the UK, there are still concerns around the macroeconomic backdrop as inflationary pressures remain and will continue to pose near-term challenges (even plain grocery store coffee beans cost 22% more than three years ago). Hence, consumers are still cautious with their spending, cutting back on foodservice purchases — and even reducing spend on their beloved java from their favourite coffee shops. Declining sales including same-store sales – a result of lower foot traffic – (and a sagging share price) is what led to Starbucks CEO Laxman Narasimhan being forced to step down (Brian Niccol, CEO of Chipotle was named as his successor) as the multinational coffee chain strategizes to turn things around.
Despite the economic uncertainties, consumers – both older and younger consumers – still enjoy purchasing coffee from their favourite coffee shops (some 62% of millennials will still spend up to $7 per day on coffee) because they feel it is a small indulgence, but maybe now not as frequently. Many consumers are no longer purchasing these ‘treats’ daily in efforts to control their spending.
CashNetUSA recently released study identifying the cheapest areas across the United States to buy a cup of coffee. It found the average price of a cup of coffee in local indie cafés and chains and ranked them by state and city and also compared these prices to the average local wage to determine affordability.
Quite surprisingly, Maine has the cheapest coffee while South Dakota – not New York or California – has the most expensive. CashNetUSA revealed that a cup of coffee in South Dakota costs USD $3.79, 45.76% more than in Maine ($2.60), the cheapest state. South Dakota takes over from Washington, which was the most expensive state according to its 2021 report. The cost of coffee in Washington has actually fallen on average. South Dakota’s has jumped by 63.36% from $2.32. Maine is one of 12 states where the average cup costs under $3. These states are mostly towards the Midwest or South of the country.
The study found that at an average of $2.13 per cup, Irving in Texas has the cheapest coffee of any US city. This is also $0.91 cheaper than the average cup across Texas.
The state of Oregon has the fifth-highest average coffee price, at $3.51. Two Oregon cities are the only ones in the US to offer the average coffee cup at a price north of four dollars: Eugene ($4.39) and Salem ($4.16). According to CashNetUSA, these are also two of the least affordable cities when comparing coffee prices with local wages.
Mississippi has the least affordable coffee compared to income. In Mississippi, a cup of coffee costs nearly one-fifth (18.28%) of the average hourly wage. The study found that this is the least affordable coffee of any state, although the average cup in Mississippi is only the 11th most expensive ($3.30). Massachusetts (where a cup of coffee costs 10.31% of the average hourly wage) has the most affordable average coffee, closely followed by Washington (10.85%).
Olympia, WA, has the most affordable coffee; Eugene, OR, has the least — CashNetUSA reported that it costs just 8.11% of the average hourly wage in Olympia, Washington, to pay for the average cup of coffee. Olympia is followed by three California cities: Oakland (8.33%), San Francisco (8.75%) and San Jose (8.76%). A fourth – Torrance (9.51%) – also makes the top ten most affordable cities for coffee. Eugene, Oregon, is where a cup of coffee costs the biggest chunk of the local average hourly wage (19.59
While national and multinational coffee chains have launched many more promotional offerings this year, particularly this spring and summer, to date, I do not believe any have dropped their prices. But as they battle for consumers’ prized discretionary income, I wonder if they will begin engaging in QSR-like price wars?
For the full CashNetUSA report, click here.
- Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
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