cafe prices

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cafe prices

Postby Sharpjd » Wed Jan 07, 2009 7:21 pm

A trip to a green and white logoed chain cafe (strictly in the name of research) got me thinking about pricing and resulted in the following thoughts which I wonder if anyone else has had:

With a bit of Christmas branding, syrup, steamed milk and 1 shot of coffee this chain charge £3 for a drink. With some basic maths I put the cost of ingredients including takeaway cup at <25p. For an independent to make the same profit on a flat white (22g at £12/kilo, great kit/baristas) they would have to charge >£3.30. That's outrageous you say...the most I'd pay for a flat white is £2.50.

So, if every chain store closed tomorrow we couldn't all move into the vacant properties and sell wonderfully crafted £2.50 flat whites. Even if you confidently assume a 25% higher volume of drink sales you can't maintain good enough margins to pay the rent.

If Starbucks created a coffee model that can pay prime location rents do we have to condede that our model can't? You can steal Starbucks customers but you'll never have their prime corner shop.
Last edited by Sharpjd on Wed Jan 07, 2009 11:59 pm, edited 1 time in total.
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RE: cafe prices

Postby Joris » Wed Jan 07, 2009 7:34 pm

I think being as big as *$ and owning multiple shops on prime locations is not possible without losing on the side of quality. Unfortunately this also means that those who choose the side of quality will probably never become rich.
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RE: cafe prices

Postby Beanie » Wed Jan 07, 2009 8:23 pm

What do they charge without the "bit of Christmas branding, syrup..."? What does a 'normal' caffe latte cost? What sizes are we talking?

Our shop only does one size latte (either 10 or 12oz, I believe) for CDA$3.75.

I really should walk into the Charbies 30 seconds from my home soon to look @ pricing. But I do know that every time I walk by it, it's not even half as busy as we are... except maybe @ 06:00... cause they open an hour earlier than us and there are maybe 5 ppl in there in a 15-30 minute span.

I also don't think you need to be a mega-chain to do well. Granted not multi-million or billionaire rich, but definitely well enough ;) And besides, it's not really money that makes us truly rich ;) *gets out the sappy puke bucket* :P

Another couple thoughts to throw in... Starbucks has benefit plans, training programmes, marketing budgets of the likes the indies don't. If you owned the corner shop to be leased, you'd prolly go after the prime rate (plus?) to a tenant like Starbucks... whereas if Starbucks didn't exist and/or you really preferred/demanded an indie coffee house in there, I could see negotiations being made to accommodate that "ideal".

And one more... do indies REALLY need/want that 'prime' corner shop? From what I've seen round these parts, it's better to have them 'anchor' the area and open an indie within walking distance... looks like it might be a more profitable way to go about doing business ;)
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RE: cafe prices

Postby kingseven » Wed Jan 07, 2009 8:53 pm

>15p? That seems a little low for raw materials. The quality of their materials is pretty high, and even with their buying power I would have calculated it higher - milk cost alone would account for nearly 10p wouldn't it?
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RE: cafe prices

Postby Sharpjd » Thu Jan 08, 2009 12:23 am

Apologies, numbers now corrected.

My general point is that the coffee we talk about here doesn't have nearly the profit margin that Starbucks have managed to create...no one here would pay £3.30 for a flat white but Starbucks christmas drinks are bestsellers during December and a lot of people happily support that very margin.

I'm not saying we should strive for these margins or that we need the best prime retail sites in town. Having never really gone to Starbucks I only got thinking about all of this in the last few days...how a site and rent that work for them could easily be impossible for a coffee bar with a different coffee philosophy.
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RE: cafe prices

Postby petikas » Thu Jan 08, 2009 6:45 am

Last week I had a terrible cappuccino at Coffee Beanery and paid €4.50 for it!
I guess it includes the price for their huge store but that doesn't change the fact that I paid 4.50 for a cappuccino I didn't enjoy. :(
When I was in London I was astonished when I was asked for less than 1GBP for an espresso at Monmouth, I thought I misheard the cashier so I asked again!
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Re: RE: cafe prices

Postby smoocher » Thu Jan 08, 2009 7:16 am

Sharpjd wrote:no one here would pay £3.30 for a flat white


yeah i would? if the drink was well crafted and used good ingredients i wouldn't have a problem paying those prices. for example if flat white suddenly put all their prices up by a pound i probably wouldn't stop going there.

i'm not sure i reallly understand your point though. the reason some drinks in starbucks are expensive are because they are either a) massive, literally like a liter or coffee or something, b) have a shit ton of ingredients, syrups, chocolates, marshmellows, cream, powder mixes etc etc
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RE: Re: RE: cafe prices

Postby Tristan » Thu Jan 08, 2009 8:26 am

Hugo charges £2 for a flat white.
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Postby smoocher » Thu Jan 08, 2009 9:22 am

i've never been but isn't relish quite far away, like a drive away, therefore i'd imagine his rents would be much cheaper
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Postby Eschatologist » Thu Jan 08, 2009 1:28 pm

those who choose the side of quality will probably never become rich


Like anyone who actually cares about coffee does it for the money :roll:

I do what I do for a lot of reasons, and money is pretty much the last on the list. I love working outside. I love only working 4 days a week. I love leading people to drink things they'd never normally try, and watching their faces light up. I love that I care enough about my own business to remember the names and regular orders of arbout a thousand people. I love that I've been doing this for about 5 years and have still barely scratched the surface of knowing everything I want to about coffee.

Best of all, I love that I'm answerable only to myself, and not some top-heavy corporate behemoth, who's business model seems to revolve around paying people more, the less they interact with the actual people who buy their damn product.

That figure of 25p/cup needs a breakdown too, or I'll think you just made it up :wink:

Edit for clarification: ingredient cost may by that low, just, but as anyone who actually runs any kind of business will tell you, that's the tip of the iceberg. Staff, heating, lights, maintainance, depreciation, wastage, rent, business rates... the list is endless, and all deductible from that £3.00.
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Postby bruceb » Thu Jan 08, 2009 1:58 pm

I wouldn't complain about paying whatever they asked if a café, restaurant, coffee shop or whatever would serve me a good espresso or espresso-based drink. Unfortunately, no matter what I am asked to pay I get something more like dish water or banana boat sludge than coffee.

To me expecting to get served good coffee is like buying a Rolls, Aston Martin, Ferrari or Lamborghini: If I have to ask the price I can't afford it. The difference is that those cars (whether they are good or not) are available.
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Postby radish » Fri Jan 09, 2009 12:42 am

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