Much fuss has been made about the rising cost of coffee in New Zealand due to global supply issues of coffee beans.
The average price of coffee had risen from $3.65 a decade ago to $4.84 at the end of 2024, according to Stats NZ. But Kiwis with a discerning taste for quality coffee - or the need for non-dairy options - are reporting paying $6 and up for a quality flat white. By quality we mean a double shot of good beans and a barista who doesn't burn the milk and regularly gets that nice fern or tulip pattern on top.
Then, how the heck are Raglan Roast and Coffix still selling quality flat whites for $3.33 (Raglan Roast) and $4 (Coffix)? That's a big price difference from the norm. Interestingly, their strategies are similar, focusing on quality, a simple menu, scale from numerous locations and rewarding loyalty.
Who, what and where are these coffee places?
Coffix opened its first location on Karangahape Road - K Road - in Central Auckland in 2014. It now has 12 coffee bars throughout the North Island, including Wellington and Tauranga. While Coffix isn't a roaster, it sells coffee beans to customers through its website and stores. A new location at the University of Auckland will likely open within weeks.
The origins of Raglan Roast goes back to the early 2000s, not surprisingly in Raglan when a bunch of surfers started roasting their own coffee with a blow torch. The business has grown to 12 locations including Wellington, Nelson and Hamilton. Along with its stores, the company still roasts beans - although they have moved on from the blow torch method.
What are their prices?
Without trying to sound too much like an infomercial for these two coffee companies, Raglan Roast goes as low as $3.33 for a flat white, a price offered only to those who buy into its prepaid loyalty program. Otherwise, a single flat white costs $3.50. Non-dairy milk will cost you an extra 60 cents and there is no decaf.
The original Raglan Roast location. Photo: Supplied
Over at Coffix, the best price for a flat white is $4, a special price you get from its loyalty program when you pre-pay for ten coffees at a time. The beans are also organic, fair trade arabica beans from Papua New Guinea, basically the best you can get.
If you come in for a one-off coffee at Coffix, a flat white will cost $4.50, still far below what many would expect these days.
So, what's their strategy?
Coffix was founded on five pillars, according to Ilya Pyzhanov, the company's general manager:
- A strategic location.
- Taking care of your staff and training them well.
- Atmosphere at your locations.
- Quality coffee.
- A low price.
A major factor in the low price is the loyalty program at Coffix called "Mates Rates." About 80 percent of coffee sales are "Mates Rates" prices.
"When you sell at mates rates, it guarantees they will come back. They've already bought it," says Pyzhanov, adding that it's a very different loyalty program to the old pay-as-you-go stamp card.
"They buy it and it doesn't expire, so you can use it any time for months, two or three years."
A flat white at Coffix is made with organic, fair trade coffee. Photo: Serena Solomon/RNZ
The programme creates good business cash flow and some very loyal customers. Baristas are able to build rapport with regular customers which in turn contributes to the location's atmosphere.
On a Monday morning at Coffix's original K Road location, each customer lingers for at least a few minutes to chat with the baristas. The location is tiny - enough room for a coffee machine, sink and two baristas - and only takeaway coffees are available.
Pyzhanov added smoothies to the menu, but overall the menu is slim, with cakes and scones the only food options.
A simple menu is core to Raglan Roast's business model as is vertical integration with the roastery.
"We can reach that level of affordability with that simplicity but also with scale," said Bruce, from Raglan Roast.
The lack of complicated food on the menu at the majority of Raglan Roast locations means no kitchen, no big plates to wash and no mess to clean up. It's just caffeinated efficiency.
The company's prepaid loyalty program is called "The Book Deal," with $20 getting you six flat whites. That is $3.33 each.
The original Coffix location on K Road. Photo: Serena Solomon/RNZ
While Coffix doesn't own its locations, Raglan Roast is building a significant real estate portfolio. It owns the buildings where its cafes are located and is also a landlord to other tenants.
"Owning our spaces means no surprise rent hikes, no uncertainty, so we can dig deep and grow roots in the communities we serve and build volume from loyalty," Bruce says.
Will Coffix and Raglan Roast be increasing their prices?
Both companies acknowledge that the ever-increasing price of coffee beans from growers has affected their prices in the past and will impact their prices in the future.
However, when you see a price increase at Coffix, Pyzhanov promises that "everything to keep that price down has been done."
"We jump through loops and hoops to make sure that the price is affordable compared to anyone else."
