While great customer service and delicious coffee can bring you loyal legions of customers, you need to manage the cost of running your business—or you'll still lose money. Take the basic latte. Are you charging enough for it to make a profit?
A profitable food service operation typically has food costs of 30% to 35% of total revenue. If a restaurant does $20,000 per week in sales and the total cost of food and beverages is $7,000 for that week, then the food cost is considered 35 percent.
To calculate the cost of a latte and other drinks, add up everything that goes into making it. For example, for a 16 ounce flavored latte, you have a cup, a lid, milk, flavoring and espresso.
To find the cost of a latte:
Take the cost of a case of cups (say, $145) and divide by the amount of cups per case (1000). This is your cost per cup:
$145 (per case of cups) ÷ 1,000 (cups in a case) = 15 cents per cup (rounding up)
Do the same calculation for the lid:
$76 (per case of lids)÷ 1,000 (lids in a case) = 8 cents per lid (also rounding up)
And sleeve:
$72 (per case of sleeves)÷ 1,000 (sleeves in a case) = 7 cents per sleeve (rounding up again)
Total cost for cup (15 cents), lid (8 cents) and sleeve (7 cents): 30 cents.
2. Milk
Assuming a price of $5.00 per gallon of milk, find your price per ounce:
$5.00 (per gallon) ÷ 128 (ounces in a gallon) = 4 cents per ounce.
Multiply 4 by the amount of milk you are using. The amount of milk varies depending on the volume of espresso and syrup, but will generally be around 9 ounces:
4 (cents per ounce ) x 9 (ounces) = 36 cents
Milk cost for a 16 ounce latte: 36 cents.
Assuming the price of a 750ml bottle (25.4 ounces) of flavored syrup costs $9.00, and you'll use 1.25 ounces per latte, find your price per ounce:
25.4 (ounces) ÷ 1.25 = 20 servings per bottle.
Then divide the cost per bottle by number of servings:
$9.00 (per bottle) ÷ 20 (servings) = 45 cents
Syrup cost per 16-ounce drink: 45 cents.
4. Espresso
There are approximately 32 double shots in a pound of espresso. Assuming a pound of espresso is $10:
$10 (per pound) ÷ 32 (double shots) = 31 cents.
Double shot of espresso cost per drink: 31 cents.
Using the above numbers, a flavored latte costs about $1.42 to make.
Subtracting your cost ($1.42) from your retail price (say, $5.00 - $5.50) makes your gross profit per drink up to $4.08.
The above prices are just averages. If you pay shipping on any products, don't forget to add that cost. f you have any questions about calculating cost per serving, don't hesitate to contact us!
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