Cost of coffee in cafes

magicbastarder

There's an article in the Irish times, written by a cafe owner, justifying the cost of a coffee in a coffee shop being €3.80. just wondering if anyone with knowledge of the sector has a comment on his calculations?

For example, he has calculated the cost of the beans, per cup, at 41c. If they're using 14g of beans (which is a roughly standard double shot I think) per coffee, that's 30 quid a kilo. Are coffee shops paying 30 quid a kilo for coffee?

https://www.irishtimes.com/food/drink/2024/05/26/heres-how-the-cost-of-your-expensive-cup-of-coffee-breaks-down/

I assume he's calculating at least 14g per cup!

893bet

• Staff wages: 119c (this includes about 25c in taxes paid by staff to the Government and employee/employer contributions)

Why include tax the staff pay on their salaries?

timmyntc

https://www.boards.ie/discussion/comment/122186003#Comment_122186003

Employer pays your gross, then you pay tax out of that.

Why not highlight how much income tax is levied on your cup of coffee?

Oscar Madison

Rates - Electricity & a host of other costs!

If you feel that this is too expensive purchase a small flask

& bring your own with you.

magicbastarder

https://www.boards.ie/discussion/comment/122186421#Comment_122186421

It's double counting. If he is counting how much he pays the staff, and how much tax they pay, the tax they pay is double counted. And not a cost to him.

Allinall

It’s bullshit.

Loan repayments are not a cost. Only the interest element.

Taxes that staff pay are not a cost.

Also, the allocation of overheads depends entirely on how many coffees are sold in a year.

On the other hand, there seems to be no allowance for wastage, which would be a significant enough cost.

Put simply, every business will have wildly varying costs.

In general with the likes of cafes, the price is usually set at what the market will bear.

Those that can manage their costs at that price point will survive, and those that can’t, won’t.

barneygumble99

I go to the same place most mornings because it opens early and the coffee is fantastic. Not a coffee snob by any means but compared to the coffee in the self service machines in petrol stations which I have used on the odd occasion, it’s chalk and cheese. €3.80 for the coffee in the place I regularly go to. I bring my own cup otherwise it would be €4. In Applegreen the same cappuccino is €3.60 but the .20c difference is pittance when you consider the chasm in quality.

That said , I will be buying my own coffee machine very soon as my work hours are changing and my preferred coffee shop won’t be open early enough.

caviardreams

https://www.boards.ie/discussion/comment/122186477#Comment_122186477

Its not double counting - the say the 119 cent includes taxpaid - they are not counting both, it is just a breakdown

orangerhyme

https://www.boards.ie/discussion/2058353285/cost-of-coffee-in-cafes

There's obviously lots of variability on price of coffee beans but most places would pay around half that i.e. €15/kg

I don't think any coffee places are scalping people except Starbucks, they're definitely overcharging for the quality you get.

McDonald's is half the price of Starbucks and much nicer coffee.

magicbastarder

It should not include income tax paid by the employee, in any context, as this is not a cost to the cafe owner.

cmac2009

https://www.boards.ie/discussion/2058353285/cost-of-coffee-in-cafes

The article is littered with errors so can't possibly take it seriously.

The cost for the coffee seems remarkably high - most are using blends and there's no way they are paying that much a kg.

Just appears to be another poor me hospitality piece.

magicbastarder

https://www.boards.ie/discussion/comment/122186517#Comment_122186517

Is a double shot standard in most cafes? I.e. is 14g (which was my figure, I'll reiterate) a reasonable average?

orangerhyme

https://www.boards.ie/discussion/comment/122186526#Comment_122186526

I think just one shot (14g/16g) per cappuccino, latte, americano unless requested otherwise.

So it's 20c a shot. Most of the cost of a coffee is everything else like labour, rates, rent, insurance etc...

Double espresso would be two shots.

893bet

https://www.boards.ie/discussion/comment/122186510#Comment_122186510

but tax paid depends on the individual….their credits, how many hours they work etc

Greyian

https://www.boards.ie/discussion/comment/122186518#Comment_122186518

The income tax paid by the employee comes from the gross wage, which is the amount the employer pays (plus other employer PRSI also).

The author isn't double-counting anything, in this instance he's trying to show the multiple times the government gets a cut from the €3.50 example.

What is actually wrong in the article that the very first figure given as a cost (the 47c VAT) is incorrect. With a sales price of 3.50, VAT at 13.5% would make up 41.7c and not 47c.

I'd also have major doubts about some of the other figures (e.g. 20.5c per coffee, how much milk is being used per coffee? Or 41c worth of beans sounds very high. I'd also love to see how €1.19 in wages is calculated, seeing as there's no cleaning of cups/mugs etc. if dealing with disposable cups/lids)

mrslancaster

https://www.boards.ie/discussion/comment/122186518#Comment_122186518

It is a cost to the cafe owner though, as the business has to pay the total gross amount to the employee. The fact that employees then have to pay a portion of that over to revenue for income tax, prsi and usc, doesn't reduce the cost to the business. In addition, the business also has to pay an employers prsi contribution on top of the total gross pay.

Oscar_Madison

if hey were indeed making just 25c per cup they would no longer be in business - they’re making a lot more than that - I’m not saying there aren’t issues in coffee shops but this person is just plain wrong

magicbastarder

https://www.boards.ie/discussion/comment/122186701#Comment_122186701

the income tax i pay is not a cost to my employer. my salary is.

my tax bill is not a cost to my employer, and never has been. my income tax does not factor in how they justify the prices they charge, and it's farcical to suggest it should.

Greyian

https://www.boards.ie/discussion/comment/122186708#Comment_122186708

But your income tax impacts how much your employer has to pay you, and how much they have to pay you does factor into their costs.

The point of showing the 25c (which I don't believe is accurate) is to show that of the 3.50 price for the coffee, more than just the VAT element of it ends up with the government.

downtheroad

He says coffee beans are VAT exempt. They aren't, they're zero rated.

Same for milk.

He harps on about the VAT rate being 13.5%...I'll bet he didn't pass the VAT reduction on to his customers when it was temporarily reduced to 9%. That went straight into his pocket, which wouldn't have helped inflation (he blames the VAT restoration as a contributing factor to inflation).

I buy my coffee from an Irish roaster for less than what he is paying per kg. He sounds like a poor business operator.

That article is full of holes.

Jim2007

https://www.boards.ie/discussion/2058353285/cost-of-coffee-in-cafes

It does not really matter what the figures are nor who tries to justify it or argue against it, you can't get cheap stuff in an expensive economy. Nobody is going to subsidize your cheap stuff - not the landlord renting the premises, the employees working there, the suppliers or anyone else because they all have to live in the same expensive economy as you do. Arguing for cheap stuff is just not realistic because no one is going to take the hit.

SouthWesterly

https://www.boards.ie/discussion/comment/122186477#Comment_122186477

He pays employers prsi.

mrslancaster

https://www.boards.ie/discussion/comment/122186708#Comment_122186708

So you agree that your salary is the cost to the business but that is the gross salary. What you take home in net pay is not a figure that a business accounts for, because every employee has individual circumstances ie. tax credits etc. The total cost to the business is the gross salary amount plus the employer prsi.

whatever.

75c is what a takeaway coffee costs including vat. The most expensive part is 20-30c for the cup and lid. That's from a self serve machine

A served coffee or tea in provided cup or mug costs just shy of 1 Euro

Those figures are extracted from a joint insurance action with a small shop that had a deli and coffee area against Irish Water for business losses

mykrodot

I have a flask and a keep cup. The flask I fill with coffee from home to have when I'm out and about, sometimes the cup too. But what pisses me off is that I am charged the exact same amount in all petrol stations and cafes for a coffee even though I bring my own cup. No discount, no incentive!

I rarely buy coffees anymore, I make good stuff at home both in a cafteria, an italian espresso maker, an Aeropress and even a Nespresso maker (funny that's the one I like least!). Just sometimes when I'm out all day I need to buy one, but there should be a discount for bringing your own cup!

Chris_5339762

If I'm out with people then of course I'll have a coffee with them.

If I'm on my own - no way. Cafes can't justify €4.00 for a cup of coffee, I don't care what these articles say. Its fleecing on a grand scale.

A half kilo of high end coffee beans (Jacobs Meisterrosting) can be bought for €4 online (plus delivery).

JVince

https://www.boards.ie/discussion/comment/122186477#Comment_122186477

Employer PRSI.

Then add in holiday pay, bank holiday pay and sick pay.

Cost of employing a €12.70 minimum wage person is over €17 per hour.

magicbastarder

he explicitly listed the taxes paid by the staff separately.

"Staff wages: 119c (this includes about 25c in taxes paid by staff to the Government and employee/employer contributions)"

maybe it's just badly worded, but at face value, he's listing staff wages, and the income tax the staff pay.

JVince

https://www.boards.ie/discussion/comment/122186526#Comment_122186526

Nope.

For a standard 12oz coffee you would need 22-24g

The 14g figure is usually for a 8oz coffee which is more a restaurant size cup. Or in service stations they'd be the "small" cup.

Beans usually about €15-18 per kg if you want decent quality.

magicbastarder

i just think the article is a missed opportunity. for example, it would be better if they'd mentioned differentiated marginal costs more clearly too; you could be forgiven for thinking they're using about a third of a unit of electricity to make a cup of coffee, which is madness; this is presumably that business's total electricity bill divided by the number of coffees they sell, but if so, they'd be loading the non-coffee costs in there too.

timmyntc

https://www.boards.ie/discussion/comment/122186926#Comment_122186926

Employee gross is business expense. Of this gross, it includes ~25c across PAYE/USC and PRSI employee/employer that is all tax (i.e. straight to govt)

Thats not double counting?