While great coffee and impeccable customer service can lead people to line up outside your door, you need to keep your food costs in line—or you'll still lose money.
Take the basic latte. Are you charging enough for it to make a profit?
A successful food-service operation has food costs that are around 30% to 35% of total revenue. If a cafe 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:
Example prices below are just averages. If you pay shipping on any products, don't forget to add that cost as well.
1. Cup, Lid and Sleeve
Take the cost of a case of cups (say, $100) and divide by the amount of cups per case (1000). This is your cost per cup:
$100 (per case of cups) ÷ 1,000 (cups in a case) = 10 cents per cup
Do the same calculation for the lid:
$50 (per case of lids)÷ 1,000 (lids in a case) = 5 cents per lid
$50 (per case of sleeves)÷ 1,000 (sleeves in a case) = 5 cents per sleeve
Total cost for cup (10 cents), lid (5 cents) and sleeve (5 cents): 20 cents.
Assuming a price of $3.00 per gallon of milk, find your price per ounce:
$3.00 (per gallon) ÷ 128 (ounces in a gallon) = 2.3 cents per ounce.
Multiply 2.3 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:
2.3 (cents per ounce ) x 9 (ounces) = 21 cents
Milk cost for a 16 ounce latte: 21 cents.
3. Flavoring Syrup
Assuming the price of a 750ml bottle (25.4 ounces) of flavored syrup costs $4.50, 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:
$4.50 (per bottle) ÷ 20 (servings) = 22.5 cents
Syrup cost per 16-ounce drink: 22.5 cents.
There are approximately 32 double shots in a pound of espresso. Assuming a pound of espresso is $8:
$8 (per pound) ÷ 32 (double shots) = 25 cents.
Double shot of espresso cost per drink: 25 cents.
Using the above numbers, a flavored latte costs almost 89 cents. Subtracting your cost (89 cents) from your retail price (say, $3.50) makes your gross profit per drink $2.61.
If you have any questions about calculating cost per serving, please feel free to email us or give us a call at 800.826.4177!