Public Perception and wage increases of 3%.

Okay, wow! It's been awhile since I penned one of these.

Lately I've been reading a few business books and they talk about how all humans have an inability to form a habit to stick with long term. Mainly because our enthusiasm for the new draws us away from activities, particularly when they are perceived as mundane; essentially when they are no longer new.

If there was a single activity in my life I had reneged on that was relevant, it was this blog. That being said: this was never a regurgitation blog. I see a massive amount of TikTokers, Bloggers, Podcasters, YouTubers that are trying to get you plugged into an algorithm, simply regurgitating repurposed information in their chosen area. I never set out to do this. My goal is to add comments too long for Facebook rants, on perspectives I haven't seen, that are relevant IMO.

Alright, lets do this! I want to discuss public perception; that is the collective communities hive mind opinion on something. While I acknowledge our society is diverse, there will always be a collective understanding or a means understanding on a issue or phenomenon. This understanding is often NOT linked to any data, or actual reality. This is the funny thing about public perception. It isn't actually related to unbiased reality.

For example, when Tesla came out, the market saw it as a green option that heralded in a new age of clean, energy efficient vehicles. It was synonymous with new age thinking: environmental protectionism. As they became more popular this bullet proof positive undercurrent of public feeling altered slightly. Due to negative information about the lithium mines in Africa - the batteries power source - becoming more available and circulated.

Does this mean Tesla's are evil? Heck no! It just changed our collective assessment slightly. Our understanding was affected by different data.

Another closer to home example of this was Ivermectin. This drug was approved for human use in the 80's and has seen success in treating a range of antiparasitic applications. It was considered a front runner for developing a COVID-19 Vaccine at some point in 2020. These results were inconclusive but a significant portion of the population believed in its effectiveness and started to try and take various veterinary Ivermectiv applications to assist in COVID immunity. The popular media quickly grabbed this, and as a means of protecting people from incorrect use started to deride Ivermectin as De-worming Drug for Horses, which to be fair, is one of its applications.

My point isn't about Ivermectin. It's about public perception changing while nothing actually changed. In both cases, the Tesla and the Drug remained the same. The only thing that changed was their perception in the public domain.

Okay, sick Cal! WTF does this have to do with coffee?! Get on with it, I hear you decry.
Well, in Australia, we are looking at the end of the financial year. As a reaction to inflation amongst other factors the Federal Government is pursuing a 3.4% wage increase to the Average Wage. Put simply this will bump everyone's pay by a few bucks per hour.

Again, Public perception from the Majority of the population is positive, more money! Fair enough.

But public perception from increases in products is the opposite: Greedy business owners.

To cover this additional cost in products my business will need to, at a minimum, add 0.10c to the price of a cup of coffee. I arrived at this number because this 3.4% is an additional $120 on my wage bill based on my current max total hours to staff my business. This is 0.10c to COVER THIS COST, not cost increases associated with power, cogs, and rent that we have seen go up post COVID. All those cost are being absorbed.

I am not shy in saying that my cafe, One in a Million, is already the most expensive cafe in the complex it is situated in. Conversely it is also still the busiest, because we convey a message of quality and value effectively to our customers.

This year I have seen very, very few fixed costs NOT go up, but I have also seen many, many cafes not change their pricing. In Australia, we are still grossly behind in the average price of coffee compared to international markets. More on that here:Think your $5 flat white costs too much? It's actually too cheap - ABC News

My friends and staff will attest, I often decry with stunned amusement as other businesses absorb every cost under the sun and still sell a medium 12oz milk based drink at $5.50 AUD perhaps even less! This number honestly needs to be closer to $7.00 AUD to be sustainable. This is not a rant about increasing the cost of a cup of coffee, we have a lot of good data on that (see above link).

This is about the public perception about this wage increase. Every cafe, bar none, after July 1st that hasn't increased their cost of a cuppa, I repeat HAS NOT increased, has decided to absorb that cost. They have decided to make -3.4% less in profit. In a game where profit is around 7% average already. In a country wherein the Government takes 11% Gross before for even post net profit (GST). These cafes have giving away another three percent in wages. Wages that, I might add, are sitting at an industry average of 38-41% already.

These cafes are, through their actions, signalling to you they are too frightened to have this difficult conversation with customers.

All this, while the public perception of the price increase from those that did up the coffees price, is that we are greedily snaffling more of the public's hard earned money. Public perception needs to change how we view cost increases*.

Please, if you got this far, reflect, deeply and profoundly on this. If you live in a city like mine, I'd say it's unlikely few, if any, of your local coffee shops put the price up next week. Reflect that the management of that venue has decided its easier for them to take another hit to their bottom line in an already failing retail sector than to do what they need to do. Instead of trading at a level that has equal wages to last year.

Equal wages cost to last years wages cost, not higher, not profit, equal.

Public perception has the ability to change with more information, as highlighted above in the examples. We all have a responsibility to move forward and better understand a bigger picture. But it starts at an individual level.

Please share this with others if you think it's relevant. This is the start of enacting change in public perception.

*LOCAL business. I am not saying all price increases need to be met with enthusiasm, but real, local business needs to be afforded a different perspective from the general populace on this important issue.