"How much does it cost to make a cup of coffee?"
We get asked this question a lot, and it is a good question, so let’s take a look at what it costs to make a cup of coffee using a small (8oz) regular flat white as an example.
Let’s say we sell that flat white for $5.50
- We allocate 12.5 grams of coffee for a single shot, which gives us a coffee cost of around 45 cents.
- If we use 200 mls of milk in our drink at $4.50 for a two-litre milk, that maths out at 45 cents per cup.
- The cup itself is 11 cents, and the lid 6 cents.
- Allocate some extras for sugar, stirrers etc and you are at about $1 of costs for the $5.50 we are selling for, fantastic profit margin right?
Well, yes, but….we have a silent partner in our business called the Australian government and they want 10% of GST on every transaction. So our selling price of $5.50 is actually $5 dollars.
We take our dollar worth of costs off our five-dollar selling price, which still leaves us with a gross profit margin of $4
But we haven’t paid anyone to make our coffee yet, and this is where it gets interesting.
An average barista earns between $30 and $35 dollars per hour (more on weekends), so let's work off 35 per hour. We need to add Superannuation at 12% and workers' compensation at 3% to that rate, which gets us to $40 per hour cost to the café.
If that Barista makes 10 coffees an hour, averaged over an 8-hour shift, then the wages cost alone for each cup is $4.00. This completely erases our gross profit for the café. What we have actually done is discovered our breakeven point.
But here is the magic, if that barista makes 20 coffees an hour, then the wages cost to the café is $2 per cup, and we have made a profit of $2 per cup.
Now we have enough profit to help pay for rent, insurance, electricity and still leave some profit for the café at the end.
So what do we learn from this?
That labour is the highest cost in making a cup of coffee, and that for a café to run, the number of cups it sells is critical.
How do you sell more coffee?
- You need consistently high-quality coffee, and
- Well-trained staff on well-maintained coffee equipment.
That’s what we aim to give you at Fish River Roasters.
