The Cost of a Coffee: Latte and Americano Cost Price vs. Selling Price

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Recently, a friend of mine mysteriously shared a bill with me, expressing that they felt completely ripped off! My response at that moment was really... (loud)! Upon learning that a double espresso cost 23 yuan, I instantly felt like I had spoken too soon!

Besides this friend, many netizens have also shared on social media platforms that more and more coffee shops nowadays have very unclear pricing. Some only list product names without prices, while others don't even have Chinese menus—all products are listed entirely in English, and customers often feel ripped off when it's time to pay!

Some netizens also 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 coffees with just some flavored syrups and fruit start at over 40... I feel like I can barely afford coffee anymore! The key point is that it wasn't even that impressive—I feel like such a sucker."

Regarding the current wide price range of coffee products, many people are very curious about the actual cost of a cup of coffee.

Here, we must first clarify one point: every coffee shop has different costs for rent, labor, utilities, renovation, equipment investment, etc., so price differences are normal. Therefore, we won't directly discuss the cost of a cup of coffee this time, but rather how coffee shops should price their products and what their pricing strategy should be.

"Determine Coffee Positioning - Determine Menu - Determine Costs and Pricing"

Based on observation, many coffee shops have high pricing primarily due to high rent and labor costs, as well as unreasonable menu product settings. Many shops lack clear positioning and haven't investigated the consumption habits of customer groups around their location, leading to overly cluttered menus that increase material costs and waste.

Therefore, before customizing a menu, coffee shops must first clarify their positioning (such as targeting general consumers, social media influencers, niche coffee consumers, etc.). Objectively speaking, the main content of the menu basically represents the products that the shop promotes and that customers accept.

The coffee products on the menu should match the shop's location and style, which also means that the shop's address and decoration are selling points. Therefore, the menu should be adjusted according to these factors. For example: if a shop is located in a community/small town but the products and pricing are aimed at bustling streets/big cities, both the menu and prices will deter customers.

Therefore, treat the coffee menu as a product to be crafted, making it a signature that attracts customers to visit specifically. Then comprehensively consider costs and pricing. Only with clear positioning can you 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 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 absolutely, definitely, must! First determine the main customer base of the coffee shop, set an approximate selling price range, and then choose the materials for production.

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

"Raw Material Cost = Material Cost x (1 + Loss Rate)" The loss rate is calculated at approximately 5%, for example, the loss of defective beans in coffee beans.

"Raw Material Cost Ratio = Raw Material Cost ÷ Selling Price x 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 also needs to be adjusted based on different shop situations, adding rent and labor costs.

"How to Control Material Costs"

Coffee Equipment: Choose suitable, not expensive. It's not recommended to blindly invest in expensive equipment when opening a shop. You really don't need to throw all your capital into equipment when starting! Expensive equipment naturally leads to very high product pricing.

Coffee Materials: Whether it's coffee beans or other material procurement, always choose suppliers, manufacturers, and brands with legal production qualifications! This point is very important!!! Generally, the hot-selling products in coffee shops are basically espresso-based drinks, so espresso coffee needs to be very cost-effective, which is also key to whether customers will make repeat purchases.

Espresso coffee bean prices vary from cheap to expensive. Looking at it per pound, regular tasting espresso beans range in price from 50-60 yuan; those with more prominent overall flavors range from 70-80 yuan; those with unique flavors/using estate coffee bean blends/SOE coffee beans range from 90-150 yuan.

Generally, 1 pound of beans is about 454g. (Calculated based on double espresso) 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 Cost: Regular fresh milk prices range from 11-13 yuan/L; better quality fresh milk prices range from 16-19 yuan/L. Based on the milk needed for one milk coffee plus waste, about 200ml is needed, so 1L of milk can make 4-5 drinks, with costs roughly between 2.5-4.5 yuan.

But this is just the cost of coffee beans and milk. Adding the costs of rent, equipment, materials, etc., for each shop, as well as positioning, makes it impossible to compare with chain coffee shops. Therefore, it's normal for independent coffee shops to have higher drink prices than chain stores.

Sometimes, consumers go to independent coffee shops hoping to receive service and experiences they can't get from chain coffee shops. Product prices being somewhat higher than chain coffee shops is actually something everyone is mentally prepared for. Many consumers feel ripped off more because the product quality doesn't match the pricing, and there's a lack of service, making them feel it's not worth it.

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