New York- Inflation doesn’t just cost small businesses money. They also cost them customers.
At the Bushwick Grind Cafe in Brooklyn, New York, Kymme Williams-Davis raised prices and switched to different types of products to keep up with rising prices for milk, coffee, paper and plastic items, as well as shortages of items such as paper cups and plastic lids. Haven’t experienced anything like it since it opened in 2015.
Williams-Davis says he has lost nearly half of his regular customers. Some people now buy a dollar of coffee at McDonald’s instead of paying the three they charge. It so happened that one day a regular customer told him that it was better to buy a coffee pot.
“He said he would start making coffee at home because he needed to save, and he wouldn’t come here every day anymore.”Williams Davis said. “I feel like I’m on a farewell tour.”
Inflation in the United States rose at its fastest pace in 40 years, driven by robust consumer spending and rising costs for food, rent, health care and other necessities.
On Tuesday, the government is expected to report a slower price in August than last year, in large part due to the continued decline in the cost of gas. Overall, economists expected consumer prices to rise 8.1% in August, compared to a year earlier, down from 8.5% in July, according to data analysis firm FactSet.
For most of the coronavirus pandemic, small business customers have largely tolerated the price increases and kept spending. But the owners are now saying they are seeing customers turn away.
97% of small business owners say inflation pressure is the same or worse than it was three months ago, according to a Goldman Sachs survey of 10,000 small business votes of more than 1,500 small businesses. 65% raised prices to offset the expense and 38% saw a drop in customer demand due to higher prices.