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A normal sized cup of coffee.
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BusinessApril 11, 2018

Mojo Coffee: Why we increased our prices

A normal sized cup of coffee.
A normal sized cup of coffee.

Mojo Coffee NZ general manager Katy Ellis responds to criticism over the company’s decision to raise coffee prices following the minimum wage increase.

First, I’d like to take the opportunity to clear the air. There is talk that we do not pay over the minimum wage; in fact, we pay a large majority of our staff above the minimum wage. We hire many young people who have a passion for hospitality and the coffee industry, but may not have previous experience in the workforce. These people may start on the minimum wage, but we move quickly to invest in developing them through extensive training. We work to develop them as staff so they get skills they didn’t previously have, and as soon as they successfully complete their training they move up in our pay bracket scale. The time it takes to complete varies depending on the person doing the training.

We recently forecast costs over the next 12 months to be 3% higher than before. To accommodate that, we have increased our coffee prices by 2% – which works out to be on average 10c a cup. With the increase to the minimum wage, we took the opportunity to consider the wages of every one our front line people, so we could make sure everyone’s contribution to the company was recognised. It’s important to us that an increase for the lowest wage earner also has the appropriate impact on those people who are in higher pay brackets. Our café staff who are in higher pay brackets have more experience, skill, and responsibility. As the cost of running our business increases, we need to make adjustments so that we can continue investing in our people, continue paying for our product – and yes, continue to make some profit.

In retrospect, the signs at our café caused a misunderstanding. We’re truly sorry that we’ve upset a lot of people by not communicating the full details about how wages affect the price of coffee. It was never our intention to attribute the price increase solely to the increase for minimum wage earners. We hope that we’ve provided some clarity around what we pay our people, and on how an increase for entry-level staff also has an impact on those people who are in higher pay brackets. This, combined with other cost increases, is what ultimately saw us raise our price of coffee by 2%.

We’re one of New Zealand’s largest coffee companies, coming from small beginnings in Wellington in 2003 and we gratefully attribute this success to our people. They are the heart and soul of what we do. We now employ over 300 people around New Zealand and the world and we pride ourselves on being a good employer. We know that success cannot happen without treating people right. We grew only through upholding our values for our people, providing them with opportunity to learn, develop and grow their skills with the hospitality industry. No company can grow and be successful unless it employs good people, and looks after them.

While we don’t claim to get everything right by a long shot, we’re proud of what we do with the people who work with us. Many of our people have been with us for years, and have gone on to compete professionally as baristas, and proudly made it their career.

We welcome the conversation around people’s wages because we think it’s a really important one, and we’re pleased for this opportunity to let our customers know more about our business and our people. People should be as informed as they can when making decisions on where to shop – and where to work.

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