Supplier price increase at your café: absorb it, reprice it or switch, and what it costs you while you decide

When a supplier puts prices up, don’t answer with a menu-wide increase. Recost the dishes that use the product that moved, using prices excluding GST. Then decide dish by dish whether to reprice, rework the recipe or absorb the hit, and ask your supplier for terms. The last step is the one people skip: work out the cash you’ll burn between the new invoice and the new menu.

Here’s the order we’d work in, with a worked example.

Is it just you, or is everyone paying more?

It’s not just you. The Australian Bureau of Statistics reports food and non-alcoholic beverages up 3.2% in the 12 months to September 2026, with meals out and takeaway food up 3.9%, which it ties to “higher operating, ingredient and other input costs” (ABS, Consumer Price Index, September 2026). Headline inflation was 4.3% over the same period (ABS media release).

Two things to take from that:

• Your customers have seen it too. A modest, targeted increase isn’t a shock to them. A 10% jump on every dish is, because it outruns what they’re seeing elsewhere.
• The average hides your real number. Your invoices matter more than the CPI. Dairy, produce, proteins, coffee and packaging all move on their own cycles, and a rise on your biggest line can matter more than a national figure.

So start with your own invoices, not the headlines.

How do you recost after a price rise?

Pull the last four weeks of supplier invoices and list your top ten lines by spend. For each, note the old price, the new price and the percentage change. Then recost only the dishes that use those lines, with ingredient and menu prices both excluding GST. If you haven’t got recipe cards, our menu costing guide walks through building them.

Here’s an illustrative example, with made-up numbers:

	Before	After a 10% rise on the ingredients
Smashed avo and eggs: ingredient cost	$5.40	$5.94
Menu price excluding GST	$20.00	$20.00
Food cost percentage	27%	29.7%
Dollar margin after ingredients	$14.60	$14.06

There are two ways to fix it, and they give different answers:

• Hold the percentage: the price has to reach about $22.00 excluding GST, a 10% rise.
• Hold the dollar margin: add the 54 cents. The price goes to about $20.54 excluding GST, under 3%.

Most venues land in between, and the choice depends on the dish. A cheap, high-volume item can usually absorb a smaller dollar increase because customers barely notice cents. Holding the dollar margin is generally the more honest test, because rent and wages are paid in dollars, not percentages.

Which dishes do you reprice, rework or leave?

Reprice dishes where the rise is meaningful, the item sells well and customers aren’t comparing it directly with a rival. Rework dishes where one expensive ingredient can be swapped or the portion trimmed without the customer noticing. Leave dishes where the price rise is tiny or the item is a draw card. Sorting the menu this way is better than a flat percentage.

A working method:

1. Rank dishes by units sold times dollar hit. A dish that sells 400 a week and costs 30 cents more hurts more than one that sells 20 and costs a dollar more.
2. Reprice your best sellers first, in small steps. Round to a sensible price point, not a mathematically exact one.
3. Rework before you reprice where you can: a different cut, a swapped garnish, a standardised portion. Yield tests help here.
4. Review the specials board and add-ons. Extras, sides and drinks usually carry better margin and tolerate an increase more easily than the hero dish.
5. Check delivered prices on your menu. If you sell through delivery platforms, their commission is a separate cost; see whether the price there needs its own adjustment.

Is a coffee rise on your mind? Coffee is the line most cafés watch, and a few cents on a flat white is easily absorbed or passed on when you’re selling hundreds a week. Do the sums per cup, then compare it with the cost of your bean contract and the machine terms attached to it.

What can you negotiate with the supplier?

You can usually negotiate more than the unit price. Terms, delivery, minimum orders and volume deals all have a dollar value. Ask your supplier for any of these before you accept the increase as final:

• Longer payment terms. Moving from 7 to 30 days is working capital in your pocket.
• A price hold for a set period on your top lines, in exchange for a regular order.
• Fewer, larger deliveries if the delivery fee is baked in.
• Substitutions: a comparable product from the same supplier at a lower price.

Get one comparison quote for your top five lines. You don’t have to switch. A real quote is the best leverage you’ll have, and sometimes the move is worth making. When you compare, include delivery days, minimums and quality, not just the unit price.

How much cash do you lose before new prices catch up?

The cash gap is the extra you pay each week multiplied by the weeks until menu prices, specials and stock have all turned over. Work it out before you decide to absorb anything, because the figure is often larger than people expect, and it lands in the same weeks as other big bills.

A worked example. A venue spends $7,200 a week on food and drink. Suppliers lift prices 10% across the board:

• Extra weekly cost: about $720.
• If it takes three weeks to recost, reprint and agree on changes, and another few weeks for pricing to flow through: call it eight weeks of partial cover.
• Cash gap: somewhere around $3,000 to $5,000 once you allow for the repricing you do manage to make.

That’s illustrative, but it shows the shape. It’s a modest sum on its own. It’s a problem when it lands with a Christmas stock order, a run of public holiday wage weeks or Payday Super leaving your account with every pay run. Our Payday Super cash flow and wage cost percentage guides show how those other pressures stack up.

It’s also the January trap. Takings fall in quiet months while supplier invoices don’t, so look at the café quiet months page and the seasonal trade planner before you decide how much buffer you actually have.

Do you need to tell customers about a price change?

You don’t need to announce a price rise, but the price you display has to be the price you charge. Cafés and restaurants can add a Sunday or public holiday surcharge as a percentage, as long as the wording is shown at least as prominently as the most prominent price on the menu (ACCC, price displays). Our guide to the public holiday surcharge goes through it. Don’t use a surcharge as a back door for a supplier price rise, though. If the cost is permanent, put it in the menu price.

Where does outside funding fit?

Funding fits when the cash gap is bigger than your buffer, or when the gap collides with something you can’t move: a Christmas order, a lease bond, an equipment repair. It doesn’t fix a menu that’s priced too low. Fix the pricing first, then use funding to cover the weeks it takes to land.

For trading venues, cash-flow and line-of-credit options are typically $5,000 to $500,000, sized on turnover and bank statements. Have a look at our café business loans page to see how it works, and keep it as one tool next to the recost and the terms conversation, not a replacement for either.

Want to see where you stand?

Margin squeezes are normal in this trade, and nobody gets through a year without a supplier lifting something. If your numbers show a gap that won’t close on repricing alone, it’s worth a short chat about what could cover it. Check your options on our apply page; it takes about 60 seconds.

Before you start

• Your credit file isn’t touched when you first enquire. Asking costs you nothing but a minute.
• We don’t send your details to a pile of lenders. Your phone won’t start ringing from strangers; one team looks at your venue.
• A real person reads your enquiry and calls you, someone who understands hospitality trading, rosters and suppliers.
• Fill the form in accurately, including turnover and what the money is for, so we can match the right option the first time.

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