How to Price Drinks at Your Coffee Shop
You’re on the home stretch! From location to equipment, to cups, you should now be ready to think about the very last thing – what you’ll be serving to your customers. The big question that remains is – how much should I charge for a cup of coffee? There are a few things to consider, but we’re here to help:
All of the calculations in the world mean nothing if you are not considering what’s going on around you. As with everything else in your shop, it pays to see what your neighbours are up to, and how they are pricing their coffees.
You have two options here: first, you could undercut your competitors, and entice people in with a cheaper cup of coffee.
On the other hand, being confident in charging a little more than your competitors might actually benefit you. The sense of having a more premium product could appeal to your target audience, and you can always do what’s called ‘price skimming’ – starting a little high, then potentially reducing your prices a little, until you have a happy medium where you can attract a few more customers.
On average, the cost of a latte (the nation’s favourite drink) is £2.75, which is a good starting point to consider when creating your coffee menu. With all of your pricing, however, it’s important to consider the cost of the coffee itself…
Espresso Cost Calculator:
A good starting point for most espresso recipes is to use 18 grams of ground coffee per double espresso. This means that from a 1kg wholesale bag of coffee that costs £13, you’ll get around 55 shots of coffee from each bag.
Divide that 13 by 55 to give you 0.236 (or 0.24) – this puts the cost of your double espresso at just 24p. Not bad, for a drink that could be sold for up to £2.80, right? Using a different recipe – say 16 grams per double espresso – that brings you down to 21p!
Based on the our recommended sizes of coffee (which you can revisit here), and a coffee at £13/kg, we recommend the following prices for the drinks on your coffee shop menu:
|Americano / Long Black||£2.50|
What About Cheaper Coffee?
As with everything, context is key, and it’s not always about what the numbers tell you at face value.
Sure, you could choose to serve a cheaper coffee – if the kilo of beans you buy costs £8 instead of £13, your espresso becomes 15p per coffee, instead of 24p. But, is that 9p saving always worth it?
If your cheaper coffee doesn’t taste as good, your customers are more likely to not enjoy the experience in your café. At best, you might win them back by remaking their drink. If this happens, you’ve given away a product that undoes that 9p saving, multiple times over.
At worst, the customer might choose to drink their coffee elsewhere, and you’ve lost them for good! Does that 9p saving look so appealing now?
At the end of the day, there’s a great markup on a cup of coffee. This can allow you to spend a little more on the coffee beans themselves, and give your customers a really memorable experience!
Remember too that customers’ attitudes towards coffee have changed a lot in recent years. More than ever, people care about provenance and responsibly sourced coffee, and they will be happy to pay a premium for this. You can offer a coffee that is sustainably sourced, and still sell it for a competitive price. Not only will this attract a wider range of customers, but you are also likely to be making much tastier coffee, too!
How to Save Money
In a coffee shop, waste is your biggest enemy. Although the markup on a cup of coffee is huge, you also need to consider anything that doesn’t make it into the cup of coffee. For example, are your staff using too much milk in their milk jugs?
Milk waste can be really costly to a coffee shop, and there is an easy way to fix it. Not being in control of your waste can slowly but surely eat away at your profits over time. A simple exercise is to have your baristas pour any excess milk back into a container over the course of their shift – measure how much they have collected by the end of it.
If you convert this into how much milk could have been spared, you will quickly start to see how much money you are (literally) pouring down the drain! It could amount to thousands of pounds a year.
By being more mindful of their wastage, your staff will want to make sure that they are only using the amount of milk they need for each drink. Make sure you take the time to standardise your drinks prep – your staff should all know how much of each ingredient to use for each drink, including how far they should fill their milk pitchers.
So that’s that – you’ve gone from finding the perfect location for your shop, all the way through to serving your customers with delicious coffee! If you think you’ve missed any of the steps in the journey, catch up on the full Opening A Coffee Shop series here.
And remember, we’re always here to chat if you need any more help! Just drop us a message for a free consultation on your big coffee shop journey.
The Rounton Coffee Team