How Much Does a Cup of Coffee Actually Cost? How Coffee Shops Price Their Products - Calculation Formulas

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Recently, a friend of mine shared a bill with me looking quite shocked, exclaiming they'd been ripped off! My response at that moment was... (rather loud!). Upon learning that a double espresso cost 23 yuan, I immediately felt my face burning with embarrassment!

Besides this friend, many netizens have also shared on social platforms that pricing in coffee shops has become increasingly unclear. Some shops only list product names without prices, while others don't even have Chinese menus - all products are listed entirely in English. Customers often find themselves shocked when it's time to pay!

Other netizens have expressed that even when products are clearly priced, seeing the prices still gives them a feeling of being ripped off... "An Americano for 30 yuan, a latte for 35 yuan, and specialty drinks with just some flavored syrup and fruit starting at over 40 yuan... I feel like I can barely afford coffee anymore! The key issue is that nothing was particularly impressive - I felt like such a sucker"

The Cost Behind Coffee Pricing

Given the significant price disparities in coffee products, many people are eager to know exactly how much a cup of coffee actually costs.

First, it's important to clarify something: every coffee shop has different costs for rent, labor, utilities, renovation, and equipment investment, so price differences are normal. Therefore, we won't directly discuss the cost of a cup of coffee, but rather how coffee shops set their prices and how they should price their products.

The Strategic Approach to Coffee Pricing

"Determine coffee positioning - Determine menu - Determine costs and pricing"

Based on observations, many coffee shops price their products highly due to rent and labor costs, as well as unreasonable menu product settings. Without clear positioning for their own stores and without investigating the consumption habits of customer groups around their locations, their menus become too cluttered, increasing material costs and waste.

Therefore, before customizing a menu, coffee shops must first define their positioning (whether targeting mass consumers/influencer打卡/niche coffee consumers, etc.). Objectively speaking, the main content of a menu basically consists of the products that the shop primarily promotes and that customers accept.

Coffee products on the menu should match the store's location and style, which means the store address and decor are also selling points. Therefore, menus should be adjusted according to these factors. For example: if a store is located in a community/small town, but its products and pricing are oriented toward bustling streets/big cities, both the menu and prices will make people hesitate.

Therefore, coffee menus should be crafted as products that can become signature items attracting customers from afar, while comprehensively considering costs and pricing. Only with clear positioning can one better select materials, control costs, and price more reasonably.

How to Price Menu Products

Many coffee shops actually buy materials first and then decide on products, so their high pricing isn't necessarily intentional - it's because material costs are too high! They need to factor in various costs while also considering how much profit they can make.

So you absolutely must! Determine the primary customer base for the coffee shop, set an approximate selling price range, and then select materials for production.

If pricing based on raw material costs, you should reference the raw material cost ratio. This refers to the proportion of raw material costs in the product price.

"Raw material cost = Material cost × (1 + wastage rate)" The wastage rate is calculated at approximately 5%, such as losses from defective coffee beans

"Raw material cost ratio = Raw material cost ÷ Selling price × 100%"

For example (just an example): if an Americano sells for 10 yuan, its raw material cost should be around 3 yuan, making the raw material cost ratio 30%. Generally, the raw material cost ratio should not exceed 30% of the selling price, but this needs to be adjusted based on different shop situations, adding rent and labor costs.

How to Control Material Costs

Coffee equipment: Choose appropriate, not expensive. We don't recommend blindly investing in expensive equipment when opening a shop. You really don't need to throw all your capital into equipment when starting! When equipment is expensive, product pricing naturally becomes very high.

Coffee materials: Whether it's coffee beans or other materials, always choose suppliers, manufacturers, and brands with legitimate production qualifications! This is very important!!! Generally, hot-selling products in coffee shops离不开espresso-based coffee, so espresso coffee needs to be highly cost-effective, which is key to whether customers will make repeat purchases.

Espresso coffee bean prices vary widely. Looking at per pound prices: ordinary tasting espresso beans range from 50-60 yuan; those with more prominent overall flavors range from 70-80 yuan; those with unique flavors/blended with estate coffee beans/SOE coffee beans range from 90-150 yuan.

Generally, one pound of beans is about 454g. (Calculated for double shots) each coffee drink needs about 17-20g of beans, which can produce about 22-26 cups. The cost of espresso in one drink is between 2.2-6.8 yuan.

Milk costs: Regular fresh milk costs 11-13 yuan/L; better fresh milk costs 16-19 yuan/L. Based on the milk needed for one milk coffee plus wastage, approximately 200ml is required, so 1L of milk can make 4-5 drinks, with costs roughly between 2.5-4.5 yuan.

However, this is just the cost of coffee beans and milk. Adding the costs of rent, equipment, materials, and positioning of each shop, it's impossible to compare with chain coffee shops. Therefore, it's normal for independent coffee shops to charge more per drink than chain stores.

Sometimes, consumers go to independent coffee shops hoping to receive services and experiences they can't get at chain stores. Having product prices higher than chain coffee shops is actually something everyone is mentally prepared for. Many consumers feel ripped off more often because the quality of the products doesn't match the pricing, along with lack of service, making them feel it's not worth it.

Image source: Internet

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