Good coffee doesn't need to be expensive

Is it actually possible to find a good shot?

Moderators: GreenBean, Gouezeri, bruceb, CakeBoy

Good coffee doesn't need to be expensive

Postby bruceb » Tue Sep 01, 2009 11:33 am

I just opened a package of advertising from a local wholesaler we sometimes deal with. In it there was a brochure called "Coffee Special." There are bags of coffee, various fully automatic espresso machines, pads and pad machines, capsules and capsule machines, biscuits, various forms of sugar, powdered "whitner," etc. What caught my eye was the very first page with the title "Good coffee doesn't need to be expensive." Of course, they don't mean that in regard to the customer, but to the café/restaurant/bar owner. The sample calculations for material costs are quite interesting:

Espresso
1 Espresso - €0.073
1 sugar packet - 0.14
1 caramel biscuit - 0.30
Total 0.117 (That 11.7 cents)
Average counter price €2.20

Cappuccino
1 Espresso €0.070 (they recommend a cheaper coffee for cappuccinos)
70 ml milk 0.050
1 sugar 0.014
1 larger biscuit 0.062
Total Total 0.196 (19.6 cents)
Average over-the-counter price € 2.80

Latte Macchiato
1 Espresso - 0.070
70 ml milk 0.050
1 sugar 0.014
1 larger biscuit 0.031 (small biscuit)
Total Total 0.165 (19.6 cents)
Average over-the-counter price € 3.10

The enormous profit margin did not bother me, the whole restaurant business works that way. What struck me is that if you replace the crap coffee they are recommending with a high-quality, fresh product the cost would only increase by about 7 cents per cup. That way the profit margin would still be more than €2 per espresso. In other words, material costs are not the limiting factor.
Three Francesconi (CMA) espresso machines - Rossi, San Marco, LaCimbali, Faema and 2 Mazzer Major grinders- CoffeeTech Maggionlino, Hottop, Alpenröst and HW Precision roasters.
I decided I needed a bit of a change so I roasted some Monsooned Malabar. That was a change!
Image
User avatar
bruceb
 
Posts: 5361
Joined: Sun Apr 04, 2004 12:49 pm
Location: Northern Hesse, Germany

Re: Good coffee doesn't need to be expensive

Postby JulieJayne » Tue Sep 01, 2009 8:23 pm

Well I have to say that we are proud to be doing our bit to keep that average down, whilst at the same time keeping the quality up.

Espresso
Average counter price €2.20... €0.70 more than us.

Cappuccino
Average over-the-counter price € 2.80... €1.10 more than us.

Latte Macchiato
Average over-the-counter price € 3.10... €1.10 more than us.

Clearly I should stop worrying about increasing prices.!
Espresso: BFC TCI Lira.
Grinders: Eureka Mignon (2), Mahlkonig Guatemala,
Roaster: Gene Cafe.
Retired... Cimbali Junior, Cimbali Alinox.
User avatar
JulieJayne
 
Posts: 371
Joined: Tue Oct 04, 2005 5:06 pm
Location: Dordrecht, Nederland

RE: Re: Good coffee doesn

Postby SlowRain » Wed Sep 02, 2009 5:00 am

I have never been involved in the food services industry, so I had no clue about pricing. It wasn't until recently that I started to think about it a bit. Knowing what I know now, I very seldom go to coffee shops anymore. If I do, I try very hard to seek out owner-operated ones in out-of-the-way locations. I can drink the same quality coffee for sometimes up to half the price. I don't want to pay too much for labor, rent, wireless Internet, plus profit. Very few seem to be capitalizing on this section of the market. It's either crazy-expensive pricing or else disgusting coffee. Where's the balance?

Julie, I've never tasted your coffee, but I like your pricing. How would you describe your coffee shop and your location? What is your customer base? Are you losing money (sorry if this one is too personal)?
La Pavoni PRH, Aerobie AeroPress, 2 Bodum French presses, Sözen Turkish mill, Porlex ceramic mill, Feima 600N
User avatar
SlowRain
 
Posts: 174
Joined: Mon Nov 24, 2008 3:02 pm
Location: a Canadian expat in Taiwan

RE: Re: Good coffee doesn

Postby triptogenetica » Wed Sep 02, 2009 6:50 am

It's either crazy-expensive pricing or else disgusting coffee.


At some places, you can have both :(
Bezzera BZ35 (ex Gaggia Carezza)
Grinders - Iberital MC2, Bezzera BB105, Hario Skerton
Aeropress, Cona C, Hario MCA-5 and TCA-5 vacpots
Beans - Behmor homeroast
triptogenetica
 
Posts: 395
Joined: Sun Jul 27, 2008 2:14 pm
Location: Oxford, UK

RE: Re: Good coffee doesn

Postby SlowRain » Wed Sep 02, 2009 8:35 am

True.
La Pavoni PRH, Aerobie AeroPress, 2 Bodum French presses, Sözen Turkish mill, Porlex ceramic mill, Feima 600N
User avatar
SlowRain
 
Posts: 174
Joined: Mon Nov 24, 2008 3:02 pm
Location: a Canadian expat in Taiwan

Re: RE: Re: Good coffee doesn

Postby JulieJayne » Wed Sep 02, 2009 10:26 pm

SlowRain wrote:Julie, I've never tasted your coffee, but I like your pricing. How would you describe your coffee shop and your location? What is your customer base? Are you losing money (sorry if this one is too personal)?

We are a coffee shop, selling coffee tea and chocolate. That does give us an advantage on pricing, since we buy direct from the roasters.
We sit in a side street, of a small town. Customers... tourists, the entire expat Italian community, for espressos, English Expats for tea, Dutch locals for Koffie Verkeerd or Cappuccinos.
And no we are not losing money.
As the title said "Good coffee doesn't NEED to be expensive."
Espresso: BFC TCI Lira.
Grinders: Eureka Mignon (2), Mahlkonig Guatemala,
Roaster: Gene Cafe.
Retired... Cimbali Junior, Cimbali Alinox.
User avatar
JulieJayne
 
Posts: 371
Joined: Tue Oct 04, 2005 5:06 pm
Location: Dordrecht, Nederland

Re: RE: Re: Good coffee doesn

Postby SlowRain » Wed Sep 02, 2009 10:54 pm

JulieJayne wrote:And no we are not losing money.
As the title said "Good coffee doesn't NEED to be expensive."

Good to hear. I like your pricing model.

I usually think from a consumer's point of view, so I like it when companies price their products and services so as to be busy. I don't feel like I've been taken advantage of that way. Some businesses don't understand that, under certain circumstances, they can make more money in the long run by lowering their prices, or at least make the same amount of money while providing a better buying experience for their customers, making the customers happier and warding off potential competition.

The thinking being promoted by the above brochure is horrible and based on making quick money by taking advantage of others' hard work. Still, I can't entirely blame them as consumers will plop down any amount of money for the perception of being trendy and sophisticated. I think I've been guilty of that myself.
La Pavoni PRH, Aerobie AeroPress, 2 Bodum French presses, Sözen Turkish mill, Porlex ceramic mill, Feima 600N
User avatar
SlowRain
 
Posts: 174
Joined: Mon Nov 24, 2008 3:02 pm
Location: a Canadian expat in Taiwan

RE: Re: RE: Re: Good coffee doesn

Postby Styles » Thu Sep 03, 2009 5:47 am

Your staff work for free?
City powers your machines gratis?
Machines never need servicing?
Your landlord never asks for rent?
You actually want people to pay LESS for coffee drinks?

Let's attack this with a vague sense of business acumen, if we're going to at all.
Styles
 
Posts: 136
Joined: Mon Oct 08, 2007 7:04 am
Location: East London.

Re: RE: Re: RE: Re: Good coffee doesn

Postby SlowRain » Thu Sep 03, 2009 3:02 pm

Styles wrote:Your staff work for free?
City powers your machines gratis?
Machines never need servicing?
Your landlord never asks for rent?

I don't see where anyone is even insinuating this. Some words that were used were owner-operator, out-of-the-way locations, and wireless Internet.

I prefer owner-operated shops because the owner's share is less than if he or she had to pay salaries AND make a return. That can be passed on to the customer. I choose out-of-the-way locations because the rent is CHEAPER, not because it is free. I dislike wireless Internet because the users often plug in their laptops--sucking up electricity--and also sit there for a long time nursing one cup, effectively preventing a table from generating revenue. They don't usually pay more for their cup (which I think they should). All of these costs get spread out. I don't want to pay for anything extra that doesn't give value to me. I'll search for places that do give value to me, and I will pay a reasonable price for it.


You actually want people to pay LESS for coffee drinks?

Most definitely. Coffee shops are enjoying a free run right now, at least regarding pricing. They're trendy, and people are eating up the lifestyle; and coffees are being bid up pretty high in auctions. Right now a lot of coffee shops are thinking only of themselves and what they want to accomplish. The trend will dissipate--then what? When that happens--and it will happen--businesses will have to start thinking about what they should have been thinking about all along: pricing and value for their customers (sounds a little like the American auto industry, doesn't it?)

Let's attack this with a vague sense of business acumen, if we're going to at all.

:lol:
I think the combined histories of capitalism and Western society prove my point. The present model is unsustainable. After the present trend wears off, people will demand value. Prices must come down. I applaud all businesses that are looking at it from the consumers' point of view and not pursuing an unnecessarily high-cost strategy. Decor is nice, location is convenient, wireless Internet is handy, but it is about the coffee. A cup of coffee isn't that expensive. It doesn't have to be that expensive. Good coffee can be brewed and served at a reasonable price and still make a profit. However, it can only support an empire or rake in easy money if it is overpriced.
La Pavoni PRH, Aerobie AeroPress, 2 Bodum French presses, Sözen Turkish mill, Porlex ceramic mill, Feima 600N
User avatar
SlowRain
 
Posts: 174
Joined: Mon Nov 24, 2008 3:02 pm
Location: a Canadian expat in Taiwan

RE: Re: RE: Re: RE: Re: Good coffee doesn

Postby kingseven » Thu Sep 03, 2009 3:48 pm

I think we need to be careful here distinguishing genuinely speciality coffee from every day generic C-grade coffee, and they experiences they can help deliver.

I want coffee prices for drinks to go up. I want to be able to spend more money on coffee as a roaster, to pay better and to pay more sustainably. As long as they value chain is passed to the consumer I consider this a win. Raw coffee is too cheap, especially the really good stuff, and I hope it doesn't stay that way.

This is separate from C-grade generic coffee used by chains, often as part of a dissatisfying process where the value of the drink does not meet the price charged. I think the chains are suffering in the UK from people realising that the price/value equation doesn't work for them. However it has been interesting to see independent quality focused businesses grow during the recession, at a very healthy rate. They are worth the money. I'd like for those businesses to be able to spend more on their roasted coffee, so roasters could spend more on greens. I want people to sell a £3 cup of coffee that is worth every penny. It doesn't need to be every coffee they sell, but I'd like to see that. That would be positive progress. Actually I'd like to see a £5 cup of coffee, and I think there are a few coffees out there that just about justify that price tag - though a great deal lies with that business serving it to help complete the experience. Great restaurants charge a lot, but ideally the whole package makes the experience worthwhile.

Cheap is a terrible thing. Our quest for cheap has pretty much ruined this planet, left us dissatisfied, and completely misaligned our definition of cheap. I don't want cheap meat, cheap fruit or cheap coffee. I do want value, enjoyment and nourishment. They don't have to be mutually exclusive.

Rant over.
http://www.jimseven.com

I'll never own too many items with which to enjoy coffee.
User avatar
kingseven
 
Posts: 2118
Joined: Tue Feb 24, 2004 12:04 pm
Location: London

RE: Re: RE: Re: RE: Re: Good coffee doesn

Postby SlowRain » Thu Sep 03, 2009 4:35 pm

Seems like Dutch tulips.

I, as a consumer and not as the owner of a coffee-related business, don't want £3 coffee. My father is a farmer, so I understand the growers' perspective all too well--unfortunatley his produce isn't trendy.

What value in the cup do I, as a consumer, get by going to a busy coffee shop in a trendy location, with oodles of staff and Internet access when I can go to a smaller shop in a back alley, get the same quality of coffee (both are Fair Trade) at half the price, and actually be able to talk with the knowledgeable owner in a friendly environment? I would say that the value some may perceive in the expensive shop's coffee is as much outside the cup as inside. Starbucks, while having less value in the cup, has just as much outside the cup as the above example. That's fine for some and nothing wrong with it: it's their money. On the whole, I think it is only sustainable so long as the coffee trend lasts. At some point, the expensive shops will have to alter their strategy when the trend abates. The reasonably-priced shops offering their value in the cup will have an easier time of it. I don't say it lightly when ask people to look at the American auto industry. Compare it to the Japanese auto industry.

That is a good point about the C-grade coffee, but I somehow think they'll always be around--and will always outsell the quality shops. That, too, is part of Western society--and I don't see that ever changing. We can be wishful thinkers all we want, it doesn't change what humanity actually is.

However, I think you are misunderstanding my point. Read carefully. I said 'reasonably-priced' and 'overpriced'. In no way am I supporting 'cheap'. I am against cheap as much as I am overpriced.
La Pavoni PRH, Aerobie AeroPress, 2 Bodum French presses, Sözen Turkish mill, Porlex ceramic mill, Feima 600N
User avatar
SlowRain
 
Posts: 174
Joined: Mon Nov 24, 2008 3:02 pm
Location: a Canadian expat in Taiwan

RE: Re: RE: Re: RE: Re: Good coffee doesn

Postby mattmills » Thu Sep 03, 2009 5:57 pm

I dont think we can bring this to a specialty vs standard level discussion.

Depending on how you buy your green coffee and the value of that coffee dependsa great deal on how you are buying it.

It is important to note that a lot of the specialty coffees out there are over priced rubbish too, as well as some commercial grade coffees cup very well and great value.
mattmills
 
Posts: 249
Joined: Tue May 11, 2004 8:16 am
Location: Bogota (Colombia)

RE: Re: RE: Re: RE: Re: Good coffee doesn

Postby kingseven » Thu Sep 03, 2009 6:37 pm

How are you defining speciality if not by the cup?
http://www.jimseven.com

I'll never own too many items with which to enjoy coffee.
User avatar
kingseven
 
Posts: 2118
Joined: Tue Feb 24, 2004 12:04 pm
Location: London

RE: Re: RE: Re: RE: Re: Good coffee doesn

Postby mattmills » Thu Sep 03, 2009 10:26 pm

personal definitions and market realities are very far apart we all know that.

there has always been a massive question mark over this area.
specific group coffees or estate coffees are generally accepted as specialy or certainly marketed as such with the expected premiums. However, quite often it is possible to buy a better outside the generally accepted norms.
mattmills
 
Posts: 249
Joined: Tue May 11, 2004 8:16 am
Location: Bogota (Colombia)

Postby JulieJayne » Thu Sep 03, 2009 10:43 pm

The problem with a 3 GBP cup of coffee or more is that it puts coffee into the domain of exclusive. Ultimately overpricing good coffee, means less people will drink it and that will ultimately hurt the entire industry.

I know that our coffee is too cheap, but we are not making our living from serving coffee to drink. It is used more to get people to sample what good coffee can be like, then they buy the coffee to go home and try themselves.

However as a business we have principles. We don't overcharge. We do try to add the same margins on all products. If a coffee is expensive, because it is good, then we try to convince our customers of that. But if the customer won't pay that price, then that coffee has no future.
Espresso: BFC TCI Lira.
Grinders: Eureka Mignon (2), Mahlkonig Guatemala,
Roaster: Gene Cafe.
Retired... Cimbali Junior, Cimbali Alinox.
User avatar
JulieJayne
 
Posts: 371
Joined: Tue Oct 04, 2005 5:06 pm
Location: Dordrecht, Nederland

Next

Return to Places to drink coffee

Who is online

Users browsing this forum: No registered users and 17 guests

cron