Escalating Crisis in Cafe Industry
In a stunning turn of events, local cafes are grappling with an alarming rise in bankruptcies due to the skyrocketing prices of coffee beans.
The city’s coffee scene, once a vibrant hub for caffeine enthusiasts, is now witnessing a rapid decline as the financial strain becomes too much for many establishments to bear.
Record High Bankruptcies in 2023
As of July 2023, a staggering 44 cafes have succumbed to bankruptcy, surpassing the entire count of 34 cases in the entirety of 2022. This unsettling trend has even outstripped the tumultuous times of the COVID-19 pandemic when demand plummeted due to lockdowns and remote work.
If this trajectory persists, the ominous possibility of exceeding the record-breaking 68 cases in 2020 looms.
Gradual Recovery Amidst Challenges
While cafes are witnessing a gradual resurgence in demand, the path to stability remains fraught with challenges. With restrictions on outings easing and face-to-face meetings resuming, office workers have sought refuge in cafes for breaks and business discussions.
The burgeoning popularity of delivery services and takeout has further redefined the cafe experience.
When analyzing the “monthly cup consumption” per household, recent surveys indicate an average of 1.6 cups in 2023, effectively aligning with pre-pandemic levels of 2019.
Despite this glimmer of hope, the perilous path ahead is marked by a significant obstacle – the staggering surge in the price of raw materials, particularly coffee beans.
The Coffee Bean Predicament
The cost of Arabica beans, a staple in Japan, has surged to an average of over 700 yen per kilogram in 2022, nearly double the pre-pandemic price.
While other overheads like food costs, energy bills, and labor expenses continue to rise, cafes find themselves grappling with a conundrum – the delay in passing on the increased cost to consumers while preserving profit margins.
Steep Competition and the Struggle for Survival
The prevailing dilemma is exacerbated by a challenging competitive landscape. Faced with rivalry from large chains and neighboring cafes, the ability to significantly hike prices is curtailed, resulting in slim profit margins.
The economic strain has particularly hit cafes in towns characterized by smaller enterprises, as their limited financial resilience leaves them vulnerable to the surging costs.
Major chains are intensifying their strategies by offering value-added menus and revitalizing their spaces, heightening the pressure on smaller counterparts.
The repercussions of this intensifying business environment are dire, as small and medium-sized cafes find themselves teetering on the brink in the face of fierce competition and mounting financial pressures.