With its exquisite food and sweeping panoramic views of the Brisbane River, Matt Moran’s ARIA restaurant at Eagle St Pier is undoubtedly superb, but some diners must be shocked at paying $7.50 for a coffee after the meal. Is ARIA simply gouging its customers? Thinking about the basic economics of it, I’d say possibly not.
For a cup of coffee, $7.50 is certainly steep (even if it is a great cup of coffee), when you compare it with the $3.50 Merlo on Mary St charges. Given the coffee market is highly competitive, you’d expect the price of a cup of coffee in different locations to be roughly the same, with some premium for volume of the cup, quality of the coffee and ambience of the establishment.
However, ARIA isn’t in the coffee business, which is a high-volume, low-margin business. Instead, it’s in the fine dining business, which (relative to coffee shops) is a low-volume, high-margin business.
ARIA may not really want you to buy a cup of coffee, because it means you stay at the table longer, and, if you haven’t ordered a dessert, they’re only making a small margin off you having that cup of coffee. By ordering a coffee and staying at the table, you may be denying ARIA the opportunity to turn the table over and make a healthy margin from catering to new diners. This is certainly a possibility on busy Friday or Saturday nights, when some diners will come in at 6 and others won’t come in until 8 or later.
So, in charging $7.50 for a cup of coffee, ARIA could actually be charging you what it costs them to supply that cup of coffee, when the cost is properly calculated to include ARIA’s “opportunity cost” – the loss of the opportunity to turn the table over.
Am I being too sympathetic to ARIA? Perhaps, but you would be, too, if you’d just tasted that perfectly cooked and succulent chicken breast with king brown mushrooms and toasted chestnuts. If you haven’t been yet, do yourself a favour and book now.