A new independent survey in the U.S. found that the price of a cup of coffee – just an ordinary cup of Joe – varies by almost $2.50, with the lowest found on the East Cost and the highest on the west. But this revelation just makes the whole restaurant coffee equation seem even crazier!
Happy coffee drinkers. They’re even happy to pay up to $4.00 a cup…
First, the survey…
The Saving Spot / CashNetUSA reports that the price of a cup of ordinary coffee in the U.S. covers a spectrum from $1.18 in Harrisburg, PA, to $3.92 9n Seattle, WA. But the info-gathering exercise it commissioned from MenuWithPrice.com revealed a lot more about the state of restaurant coffee in America.
For example:
- California is the state with the most coffee shops — 9,615.
- The state with the highest number of coffee shops per 100,000 people is Hawaii — 41.
- The most affordable coffee is on the East Coast or in the Midwest — New Jersey, Iowa, and Rhode Island are places where the average price of coffee is 7 percent or less of the median hourly pay.
- The least affordable coffee is in Louisiana, where the average price of coffee is 17.7 percent of the median hourly pay.
The Resto Coffee Game
I’ve explained it before, but now seems an opportune time to go over it again: Coffee and soft drinks / soda are by far the most profitable menu items sold by any restaurant. As troubling as recent reports of coffee price increases maybe to the average person, resto operators are not quaking in their boots – far from it. They’re already making a huge profit on coffee and fountain-dispensed cold beverages, most of which cost less than $0.05 to pour.
True, the cost to serve is boosted by the cost of a cup to pour the stuff into. But even at $0.10 per cup, which is a couple of cents more than the current most expensive wholesale price for eco-responsible, recycled, recyclable paper cups, plus a deluxe spill-proof, sippable lid, that’s still just $0.28 a cup. Okay. Add in one cream and one sugar: $0.25 + $0.09 = $0.34. Add it all up and that’s still just $0.62 a cup.
Now… What’s the menu price of that cup of caffeinated heaven? Well, we’ve already covered that, at the top of this post. So, let’s look at the difference between the cost and the menu price. Using $2.55 as the median price for a cup of Joe (derived from the high-low chart in the survey we’re looking at today), we get a profit of $193. Out of that comes the cost of server serving it and, presumably, a tiny fraction of the overall cost to maintain the resto’s coffee brewing system. Those costs are below the measurable threshold, as a component of the overall costs of staff pay and equipment maintenance. So let’s round it down to $1.90 for convenience of calculations from here on in.
Amazing numbers emerge…
Industry sources say small, one-off coffee shops sell an average of 250 cups a day. Big chain shops like Starbucks may sell closer to 400. So, let’s say the average number of cups per store, sold by all shops taken together, is 325. multiply by our average profit of $1.90 and you get a daily profit of $617.00. That’s a weekly income of $4,322.00 – or, a monthly haul, free and clear of costs, of $129,660!
“Geeze!” I hear you thinking. “I gotta run out and open a coffee shop right now! Every hour I waste is costing me 50 bucks!”
Of course, it isn’t that simple. If it was, coffee shops wouldn’t bother to serve sandwiches, pastries and other stuff ‘on the side’. There’s that staff wages and benefits an payroll taxes component, electricity, heat, water and sewer charges, rent or mortgage payments, insurance, property taxes, and stuff even I can’t think of at the moment. In fact, the average cost to open a coffee shop is around $200,000. Then, the monthly costs kick in…
My take
A coffee shop is just as risky – or more so – an adventure as taking on any restaurant. And that’s one of the riskiest businesses there is.
But pulling our focus back to coffee, in our closing thoughts, I want to impress upon you the immense profit you are generating for resto operators by buying their coffee. But for some resto owner-operators, the profit on dispensed beverages might just be the difference between them having any kind of retirement or not. And I can’t think of anybody who deserves a peaceful,well-provided-for retirement!
A parting thought: A good quality thermos mug will cost you no more than $20. or so – if you can’t get one gratis from the marketing and promo department of your company. You’ll pay for it in no time by making your own coffee at home every morning, and making good use of that thermos mug!
~ Maggie J.