Let’s face it; we live in a society where we are all virtually dependent on our morning coffees. However, it’s not always that cheap. In fact, some sources have even blamed premium coffees as one of the chief reasons behind the struggle for millennials to get on the property ladder. While that may be a little off the mark, paying £3 for a standard coffee and even more for a speciality coffee does seem quite extortionate.But is it? Let’s take a look at the true cost of coffee at your favourite shops.
OK, so McDonald’s and fast food restaurants may merely use Nescafe or another popular instant coffee brand. After all, their purpose is to provide a cheap and quick service. Even with the addition of water and the optional milk and sugar/sweeteners, the cost of coffee for these types of businesses amounts to little more than just a few pence.
When looking at a specialist coffee shop, however, the beans come from all over the world. Starbucks, for example, sources their beans from Kenya, Ethiopia, and a host of other countries. The increased quality does come at an increased price, especially when fair trade prices are used. However, the cost of coffee in these instances is still relatively low – especially when you also factor in the different types of milk that could be used.
In fact, given the sheer volume of the ingredients purchased by the major companies, the ingredients alone are unlikely to reach 50p per cup of coffee. And this includes cream and other additions.
So, if you’re paying £3.50, only 1/7th of that cost is actually for the coffee. However, if you think that the £3 is pure profit, you’re sorely mistaken.
Then again, if you’re not happy about paying over the odds or the coffee itself, you can always brew premium coffees at home with the use of quality coffee beans like Firefly, El Capitan, Tromso and Up and At ‘Em.
Baristas need a place to work, and the rent is probably the most significant overhead that coffee shops face. Even a moderately sized store in an excellent location could cost thousands per week, which needs to be covered before even taking ingredients and other aspects into account.
For places like McDonald’s, where coffee isn’t the main seller, this overhead may equate to a few pence per cup. For coffee shops, where 75% of sales are made from beverages, the rental cost per cup could equate to twice the price of the ingredients.
Within the rental overheads, the associated costs such as coffee machines and brewing facilities will need to be factored in. While home alternatives are relatively cheap in today’s market, the industrial goods can cost hundreds or even thousands of pounds. Meanwhile, lighting, heating, and electrical bills need to be taken into consideration too.
In today’s social climate, coffee shops simply cannot survive without providing wi-fi too. Therefore, paying for the bandwidth needed to facilitate this is another cost that coffee shop owners need to factor into their costs. Ultimately, this is reflected in the cost of the coffee. Of course, seating and tables also need to be considered, even if they are a one-off expense that can provide years of service.
Disposable coffee cups are another expense that the consumer will often overlook. While the large quantity of branded cups and plastic lids means that the price is relatively small, the container can work out to be as costly as the coffee itself.
Most coffee places will additionally provide cardboard holders to protect customers against the heat. Furthermore, stirrers and napkins need to be bought. While the individual costs are minimal, those items do add up and contribute to the cost of coffee.
In addition to the packaging and containers, coffee shops will invest in marketing strategies too. While this needn’t directly affect the cost of making your coffee, it’s another expense that will end up hitting your pocket. Frankly, that’s true of any business model.
Service station help-service machines are OK when you’re caught short, but most people would agree that coffee that has been made by a person in front of their eyes will taste better. Guess what? That barista isn’t making your coffee purely out of love. They are there to make money, and your coffee purchase is used to cover their wage too.
The average coffee shop worker doesn’t earn huge amounts, even if they are a store manager. However, this is another cost that needs to be added to the equation. Thankfully, the sheer volume of beverages that most stores sell ensures that you won’t have to pay much money towards their wage.
Baristas aren’t the only employees that work in the coffee shop, though. Cleaners and other staff members need to be paid too, and this will all add up. Do not overlook how this affects the final cost of your coffee because it really does.
While making a coffee at home using supermarket instant coffee and boiled water costs next to nothing, a premium coffee from a coffee shop is a lot more expensive to create. So, while you may assume that the markups are extortionate, you’re actually paying for so much more than just the cost of coffee. If you’re planning to sit down and enjoy the coffee in the shop, you’re also paying for the experience.
The simple equation looks like this:
All in all, the profit margins are probably a lot less significant than you first thought. Still, if you’re not happy with the idea of spending £20 per week on your morning coffee, there are ways to brew barista quality coffee at home. Invest in the right equipment and premium coffee beans for that refreshing taste time and time again.