Flat whites should cost $10.50 – but if customers would rather drink banana bread lattes, then cafes must evolve to survive, says an outspoken Wellington coffee roaster.

Richard Corney, managing director of Flight Coffee, says while coffee commodity prices have dropped from historic highs, that decrease would not be reflected at the counter.

“Rational economics” meant any cafe charging less than $7 was subsidising that cup, says Corney.

“We are seeing the coffee market soften,” says Corney.

“[But] For roasters, the pain does disappear the moment the market turns ... Most roasters the world over do not buy on a spot or ad hoc basis. We contract ahead, hold inventory via third parties and work through stock purchased at those contracted levels. Margins remain compressed for many months after the coffee market moves.”

Other costs, including labour, rent and milk, continued to rise, says Corney who last year infamously warned New Zealanders $10 coffees were coming.

And in 2026?

“The reality is, that for a cup of coffee in the cafe, we should be charging $10.50 for a regular flat white. That’s what rational economics says. But we’re obviously not ... we’re not there yet.”

The Flight Coffee Hangar cafe currently charges $6.80 for a “have here” flat white. Corney says that would increase to $7 from May 1 as he anticipated absorbing costs associated with Government policy changes around payWave charges.

“If you’re not paying $7 a cup, then the maths, all the numbers over the last 20 years in terms of all other input costs increasing, means it is being subsidised. That’s the cold, hard truth, whether you like it or not.”

There had been an industry “reckoning” says Corney, as cafe owners baulk at high rents (often driven by “skyrocketing” insurance premiums), more customers choose to buy home coffee machines and younger customers shun the traditional.

At The Flight Coffee Hangar, younger customers are increasingly choosing expensive specialty drinks like the banana bread latte (left) and Mont Blanc coffees. Photo / Mark Mitchell

Sales of drinks made from matcha (a finely ground green tea) are “through the roof”. Specialty coffees like Hangar’s $14 Mont Blanc – vanilla and hazelnut cold drip with a crown of cream, nutmeg and lime zest – and a banana bread-flavoured latte are increasingly popular.

“People are discovering what they want to pay – and what they don’t want to pay,” says Corney.

“Gen Z and Gen Alpha will pay $10 for a matcha and not bat an eyelid, whereas I can’t grind fresh coffee, steam, fresh milk, pay someone a living wage, and charge $10 without someone having an absolute conniption.

“We sell more banana bread lattes at $8 than we do cappuccinos for $6.80.”

But Corney says operators have to find ways to relate to these emerging markets.

“Gone are the days of the latte bowls. This isn’t 2003.”

Cafe owners are fearful of price increases because they believe they could lose business but, according to Corney, “that’s an irrational argument – even if you put your prices up 50%, and you lose 10% of your customers, you would still be more profitable”.

Corney says the price of a flat white in his own cafes has increased by 100% (from $3.50) over the past 20 years. Meanwhile, the minimum wage has increased 134%, and Hangar (where the base salary is the $28.95 per hour Living Wage) lease costs have doubled since opening.

“A flat white is not just beans and milk. It is the wages of skilled staff, training and retention, equipment and maintenance, rent and fit-out amortisation, compliance, insurance and utilities, and the time and space to serve customers quickly and well.

“When people say coffee is too expensive at $6, what they are actually saying is that coffee has been underpriced for so long that $6 feels expensive. Those feelings do not match economic reality.”