Source: Radio New Zealand
On the fuel application Gaspy, 91 fuel was an average of $3.48 a litre and diesel was averaging $3.89 per litre. RNZ / Quin Tauetau
A well-known Wellington Cafe is considering introducing a fuel surcharge in response to its suppliers hiking up their prices.
Smith the Grocer in The Old Bank Arcade on Lambton Quay has had its raw ingredients and services have go up because of rising fuel costs triggered by the war in the Middle East.
The cafe’s owner Kirsten Saunders told Checkpoint they were not “pulling the lever” yet but it was a “watch and see situation” with suppliers raising costs.
She said three out of eight of their suppliers had already added fuel surcharges to their products.
“One which is a meat supplier is applying a 4 percent across the board effective immediately and they’ve also advised that any increases that they get from their suppliers will be passed through to us and they’re expecting there to be some.”
Saunders said another supplier was applying a 5 percent increase temporarily while one supplier is increasing the price of eggs per box by a certain amount.
On the fuel application Gaspy, 91 fuel was an average of $3.48 a litre and diesel was averaging $3.89 per litre.
The impact of these charges on the cafe was yet to be determined as Saunders said they were waiting to see the next set of invoices.
It was also some relief that they cafe’s biggest supplier, Gilmours, hadn’t added a surcharge.
Saunders said they would rather avoid adding a surcharge, but their margins had been modest.
“Most of our costs are fixed, when the cost of ingredients goes up, we either need to absorb those costs which in the long term is not sustainable or we do need to pass it on.”
She said fluctuations in hospitality prices are common, especially with costs going up.
“We normally would make little adjustment to the specific items in the menu that was affected by that increase.
But when we’re getting increases across the board from suppliers it’s sort of a different kettle of fish.”
She said a surcharge would be the fairest way to do it because they can remove it or make it reflect the extra costs the business is actually incurring.
Saunders felt most of their customers were very loyal and understanding and as a result they would not respond too badly to the surcharge.
“No one is going to like it, none of us like it when all the prices go up do we, but it’s just a bit of a rock and a hard place.”
She said while they haven’t thought of exactly how much the surcharge would be, they have sought advice through Hospitality New Zealand who spoken with the commerce commission.
Saunders said according to the fair-trading act, the cafe could have a surcharge if it accurately reflects the genuine cost the business is seeing.
“We also need to comply with the commerce act which is that each business must make its own independent decision about whether to apply a surcharge and make sure there is no perceived coordination or collusion.”
In the three years that Saunders had owned the cafe she said it was doing relatively well but there were many financial obstacles incoming.
“I see a lot of others suffering more around this than we are, but it does feel like there’s a bit of a perfect storm brewing at the moment with lots of things outside of our control.”
Along with fuel costs, she said there were also increases in kiwi saver contributions, minimum wage and having to absorb Eftpos merchant fees.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
