The average profit margin on a cup of coffee can vary from 10% to 25%, depending on location, costs, and pricing. To calculate profit per cup: total costs ÷ cups sold + desired profit percentage = price per cup. Wholesale companies have affordable, quality cups and lids to reduce costs. Lowering fixed costs like rent increases profit per cup. Prices for small, medium, and large cups depend on sizes and profit goals. Tracking ingredient, labor, and packaging costs for cups of coffee sold calculates profit.
Calculating Profit and Markup
Profit Per Cup
The profit margin formula is: (Selling Price - Cost) x 100 / Selling Price. Understanding costs like wholesale beans, milk, cups, labor, and rent is key. Precisely tracking all costs per cup sold maximizes profits over time.
Markup on Coffee
On average, the markup on cups of coffee sold in a coffee shop is around 80%. This means you’ll take the cost to make the coffee and add 80% on top to set your price per cup. The markup dollar amount is determined by taking the selling price and subtracting the cost to produce the coffee. The markup percentage can be calculated with an equation: [(Sales Price – Unit Cost)/Unit Cost] X 100 = Markup Percentage. In general, expect a markup of 100-400% on coffee. The markup is determined by price elasticity – people will pay more for coffee even if production costs stay the same.
Coffee Prices and Consumption
Starbucks estimates are based on a 16-ounce grande coffee at $2.10 per cup. The average price of a Starbucks drink in the U.S. is $2.75, with New York City being the most expensive at $3.25 for a tall cappuccino.
The average price consumers pay for coffee is $2.99 across restaurants, up 8 cents from last year. At gourmet shops, it’s $4.24, also up 8 cents. On the commodities market, coffee prices started 2021 around $1.25 per pound, down from $1.28 at the end of 2020.
The gross profit margin for coffee is around 70-80% – a great margin. Despite high prices, Australia’s average consumption remains low at 2.1 kg per person annually. Luxembourg has the highest consumption at 11.1 kg per person. A 12 oz bag of coffee can yield 16 cups, but costs vary by region, brew method, and cup size.