Calculating milk and coffee cost for coffee shops
Milk and coffee are some of the highest cost for the hot drinks section in your coffee shop. Milk works out more expensive than the coffee and most owners of coffee shops do not research the milk dairies enough. This often results in the purchasing of very expensive milk and the loss of a lot of money.
Coffee for coffee shops should be bought in wholebeans and these usually come in 1 kg bags. One espresso is approximately 7 grams of ground coffee. This means that we can brew 145 espressos with one bag of coffee. Let's say that we pay £12 for our bag of coffee. This makes the cost of one espresso £12 / 145 = 8 pence.
Milk is usually best when bought from a local milk dairy. It is really important to purchase fresh milk for the foaming process; the fresher the better. Buying milk in bigger bottles works out cheaper usually since you are not paying for the packaging.
Image you sell a cappuccino in your coffee shop in a 6oz cup. 6oz is 240ml. A full cup will be 1oz of espresso and 5 oz (150ml) of milk. Make this 4oz (120 ml) milk since we have created some foam. Imagine we are paying £0.55 per liter for our milk. This means that 4oz (120 ml) cost us 6 pence.
Add your sugar, stirrers and take out cup (if applicable) and you can work out your profit per coffee.
Example 6oz cappuccino:
Cost: 8p (coffee) + 6p (milk) = 14p
Sell for £2.20. Take off the VAT first resulting in the NET sale of £1.83.
Gross profit = £1.83 - £0.14 => £1.69 => 92.3% profit margin
Always take your VAT off first and remember this is purely the gross profit (before you pay everything else).