PHL coffee shops face cost, supply challenges

PHILIPPINE micro, small and medium enterprises including coffee shops face challenges in keeping prices low amid high inflation, supply disruptions and impending wage increases, according to a startup owner.

“The challenge is [not] increasing prices because we are aiming to be affordable,” Anna Isabelle Magalona-Co, founder and chief executive officer at But First, Coffee, Inc. said in an interview. “Sometimes, it’s challenging to balance our costs and pricing.”

But First, Coffee sells coffee products and coffee drinks made from beans bought from local farmers.

The company often tests suppliers to ensure prices remain affordable, Ms. Co said. “We check for options and if a supplier increases prices, we look for other items we can decrease to compensate for the increase and retain value,” she added.

The Filipino entrepreneur said local coffee supply still can’t keep up with demand amid the growing number of coffee shops.

“There is really higher demand than supply here in the Philippines,” Ms. Co said. “That is why we cannot avoid increasing prices. But our local farmers and producers are catching up based on talks with some suppliers.”

The Philippine Coffee Board, Inc. estimates local coffee production at 30,000 to 33,000 metric tons (MT) a year, which falls short of the 150,000–200,000 MT yearly demand.

Business groups have raised concerns about a proposed legislated wage increase, which they said could hit small businesses. Ms. Co said the increase, though financially challenging for the company, is needed to support their workers.

“It’s challenging financially,” she said. “But at the same time, the wage hike will enable our employees to have more access to their basic needs and support their families.”

“As a business owner, I’m not only focused on revenues,” the entrepreneur said. “I’m also focused on giving back to our people, especially those who are helping us along the way. So while I know it’s quite challenging financially, if that’s the requirement of the government later on, we will comply.”

Meanwhile, But First, Coffee plans to open 150 stores this year, 100 of which will be franchises. It has 150 stores now.

But First, Coffee also expects to double the number of workers from 200 now. The brand as a whole generates 500 to 700 jobs, Ms. Co said. — Justine Irish D. Tabile