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.