Nick Mills: Would You Pay a Fuel Surcharge on Your Coffee

EDITORIAL: 

Fuel prices are starting to quietly creep into everything… and I mean everything we do. 

We always talk about it when we fill up the car — that’s the obvious one.  

But what we’re starting to see now is the next layer of it… the ripple effect. 

And it’s hitting hospitality, right where you notice it most — in your wallet, when you go out for a coffee or a bite to eat. 

There’s a really interesting story out today from Radio New Zealand about a well-known Wellington spot, Smith the Grocer, down in the Old Bank Arcade. Been there or a long time, very successful, very well run cafe.  

They’re not doing it yet — but they’re seriously considering adding a fuel surcharge to their prices. 

And here’s why. 

Their suppliers are already doing it to them. 

One meat supplier has slapped on a 4 percent increase across the board.  

Another is looking at about 5 percent temporarily. Eggs going up. Delivery costs going up. It all stacks up. 

And when you look at the numbers, you can see why.  

According to the fuel app Gaspy, 91 petrol is sitting around $3.48 a litre, diesel closer to $3.89.  

These are real costs, and the flow is going right through the system — from the truck, to the supplier, to the café, and eventually… to you. 

Now the café owner says they’d rather not do it — margins are already tight — but when everything goes up at once, they’ve got two choices: absorb it… or pass it on. 

So here’s the question I’ve been thinking about. 

If you walked into your local café tomorrow… and there was a 5 percent surcharge on the bill — not hidden, not sneaky, just clearly there because of fuel costs — would you pay it? 

Or would you just walk out and go somewhere else? 

Because I’ll be honest with you — I already do this in my own head. Every time before I start the show I go to 2 places to get my coffee 

There are two coffee spots near me. One’s five bucks. The other one — the one I actually like — is $6.30. And every time I go there, I think, “why am I paying more?”… but I still do it. Why because I like the place and I think it’s better there.  

So are we actually price sensitive… or are we habit sensitive? 

If that surcharge becomes the norm — because let’s be honest, this isn’t going away anytime soon — do we just accept it? 

Or does it start changing where we go, what we buy, and how often we go out? 

That’s where it gets really interesting. 

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Episode Transcript

Speaker 1 (00:07):
You're listening to the Wellington Mornings podcast with Nick Mills
from News Talk SIB.

Speaker 2 (00:13):
All of us are understanding this one.

Speaker 3 (00:15):
Fuel prices are quietly creeping up.

Speaker 2 (00:19):
Well, it's not quietly anymore.

Speaker 3 (00:20):
We're getting hit on the head with it, but it's
quietly creeping down to everything, and I mean everything we do.
We always talk about it when we fill up the car.
That's the obvious one. But what we're starting to see
now is the next layer of it, the ripple effect,
and it's hitting hospitality right where you notice it most

(00:40):
and your wallet when you go out for a coffee
or a bite to eat. There's a really interesting story
out this morning from Radio New Zealand about a well
known Wellington spot smith, the grocer down in the Old
Bank Arcade, been there for a long time, very successful,
very well run caf They're not doing it yet, but
they are seriously considering adding a fuel surcharge to their prices.

(01:05):
And here's why their suppliers are already doing it to them.
One meat supplier has slapped four percent increase across the board.
Another is looking at about a five percent temporary surcharge
to the cafe. Eggs are going up delivery costs are
going up. It all sticks stacks up, and then when

(01:26):
you look at the numbers, you can see why. According
to the fuel app Gasbee, ninety one, petrol is sitting
at around three dollars forty eight a liter diesel closer
to three dollars and eighty nine. These are real costs,
and the flow is going right through the system from
the truck to the supplier to the caf and guess

(01:49):
what eventually to you and me. Now, the cafe owner
says he'd rather not do it. The margins are already tight,
but when everything goes up at once, they've got two choices.

Speaker 2 (02:01):
Absorb it or pass it on.

Speaker 3 (02:04):
So here's the question that I've been thinking about it.
If you walked into your local caf tomorrow and there
was a five percent surcharge on the bill, not sneaky,
just clearly there. It is there because of the fuel costs.
Would you pay it or would you just walk out
and go somewhere else? Because I'll be honest with you,
I already do this in my own head. Every time

(02:26):
I go and get a coffee before I start the show.
There's a place right next to me that sells it
for five bucks. The other one down the road actually
is six dollars thirty six dollars fifty I think, actually,
and every time I go there, I think why am
I paying more? But I still do? Why because I
like the place? Why because I think the coffee is
better there? So are we actually price sensitive or are

(02:48):
we just habit sensitive? Think about that. Do we go
to a place because it's our habit and we don't
care about the price, or do we go to because
of a price. And if a cafe put a surcharge
on because of the fuel costs and all the extra expenses,
would you keep going there or would you say no,
I'm looking for something cheaper because of that surcharge becomes

(03:09):
a norm, because let's be honest, this isn't going away
anytime soon. Do we just accept it? Or do we
start changing where we go and what we buy and
how often we go out.

Speaker 2 (03:22):
That's where it gets really interesting.

Speaker 1 (03:24):
For more from Wellington Mornings with Nick Mills, listen live
to news talks It'd be Wellington from nine am weekdays,
or follow the podcast on iHeartRadio.