Profit on a Cup of Coffee
The overall labor cost of making the coffee along with the cup and lid costs about $1.17. If you sell a cup of coffee for $1.99, you will make about 82 cents profit. Accounting for fixed costs, the overall profit will be about 24 cents per cup.
Profit Calculation
How is the 24 cents per cup profit calculated? You take the selling price of $1.99 and subtract the variable costs of $1.17. This gives 82 cents profit per cup. Then you subtract the fixed costs per cup, leaving 24 cents profit.
Profit Margin on Espresso Drinks
What is the profit margin on espresso drinks? The profit margin varies by drink. For brewed coffee, it’s 70-80%. For espresso drinks like cappuccinos, it’s closer to 70% due to more expensive ingredients like steamed milk.
Pricing Strategy
How much should small, medium, and large cups cost? Price small around $2-3, medium $3-4, and large $4-5. Base it on ingredient costs and desired profit margin.
Suppliers and Cost Analysis
Affordable Wholesale Suppliers for Cups and Lids: Many low-cost yet good quality options exist. Research options online for best pricing. Reduce fixed costs like rent to increase per cup profit.
Profit Tracking and Margin Insights
Calculate profit by tracking costs versus revenue in your sales reports. Separate coffee from food sales. Expect 15-20% margins on brewed coffee. Espresso drinks closer to 12-18% margin.
Specialty Coffee Market Insights
Specialty coffee uses higher quality beans and complex preparation, increasing costs. Independent shops have higher overhead and markups too. But specialty coffee has high demand despite the price.