Why Is Coffee at Cafes So Expensive?
Many people have noted that coffee at cafes seems to be extremely expensive, especially when compared to the cost of making coffee at home. The prices for coffee drinks made on the espresso machine such as lattes and mochas are even higher, and a frequent topic of griping for many cafe and coffeehouse customers. There are a number of reasons why coffee at cafes tends to be so expensive, and you may be surprised to know that coffee at cafes is sometimes a losing proposition for the owners, who may make the bulk of their income from the food they sell. The price of coffee includes all of the expenses that go into running a cafe.
One of the main reasons why coffee at cafes is expensive is because it actually costs a lot to make. While the coffee itself may not be terribly expensive, the cafe must pay staff to make it, and they must also cover overhead costs like rent, electricity, insurance, trash bills, and water fees. Since many cafes have a fairly large staff, costs for compensating employees alone can rack up very quickly, forcing the cafe to raise prices accordingly.
Many people also expect a great deal of variety when they order coffee at cafes, and this is also expensive. It is much cheaper to offer only a few types of coffee, but most coffee shops offer a huge assortment, all of which must be made fresh and kept well stocked by staff. A large menu of espresso drinks also costs, as staff must learn to prepare each drink properly, and they must be prepared to deal with special requests from customers.
Another issue is the type of customers which visit cafes. Many customers spend hours in a cafe, especially one which offers wireless Internet, and these customers may purchase a minimal amount of food and drinks, often sticking to the cafe's stated minimum for table occupancy, if there is one. When turnover in a cafe is low, the cafe attempts to make up for it by pricing its food and drink in such a way that it can still make a profit. The hope is to balance costs between seated customers who eat up resources for minimal returns, and customers who order things to go, thereby using minimal resources.
When people order coffee at cafes, they also do not think about the associated costs. A cup of coffee might not seem that expensive, but sugar and various creamers are usually offered free of charge, and these condiments can be quite costly. Although not everyone uses it, milk especially can get extremely expensive. The price also includes the cup used to serve your coffee, along with stirring implements, to-go lids, and protective sleeves which keep to-go cups comfortable to hold.
For people who spend a lot of time in cafes and want to save money, there are a few options to think about. For example, many cafes offer a discount to customers who bring in their own cups. While the discount may seem small, it adds up significantly over time. People may also want to ask about frequent buyer or stamp cards, which often offer deals like one free cup for every 10 purchased.
It may surprise you to hear that coffee in Spain costs as little as 70 cents a cup and that Italy and other southern European countries sell coffee cheaply. Yet, they have a minimum wage that is much higher than paid certainly in the USA, plus all the same overheads as everywhere else in the world.
I think that perhaps they should do like a self service station to cut back on costs. At QuikTrip they have like a "push for coffee" station that you can get. It's just like a fountain drink station, but for coffee. You simply select a cup (prices are determined by the size of the cup selected) and push a button to dispense one (or many!) types of hot coffee drinks into your cup. Then you pay like any other item. Simply show the employee what size you got and they will tell you the price.
This is way cheaper than any other cafe that I've seen! In fact, the largest size, 24 oz, was only $1.29! They also have a nice selection of coffee flavors like Mighty Mocha or Pumpkin Spice Latte. Why can't big name coffee brands like Starbucks be like this? Clearly it works for QuikTrip.
To me, it's the same mentality as movie theater food and drinks. First of all, where else are you going to go? Bringing outside food into a lot of places is forbidden, and there isn't going to be another gourmet coffee shop ten feet away from the one you're at.
I can understand that a high-end coffee shop is going to purchase high-end raw ingredients for their beverages. You're not going to find those ingredients in your local grocery store, so you're partially paying for the fact that they have the Guatemalan Insanity coffee beans and you don't.
I just returned from a trip to Rome Italy and the average cost for an espresso was 1 Euro (about $1.30). I really don't buy the argument about all the expenses for running a cafe. They have the same expenses in Italy.
RE: above posts. There are different levels of addiction and caffeine is at the level of sugar and other substances that have action in the central nervous system. During the day the amount of adenosine rises, and, when it gets high enough we are quite sleepy. Adenosine level drops as we sleep and is low. It is histamine in the CNS that stimulates us to wakefulness. If that made much sense, we would not need caffeine to wake us in the morning and we shouldn't need an antihistamine to be sleepy. Clearly, the effect on the circadian sleep cycle is not what drives our interest in coffee. Reducing it to nothing but caffeine may be misleading.
A genetic basis for the desire for coffee has been established in departments of behavioral genetics. The same is not true of tea. Go figure. There were more tea shops in London when I was there than coffee shops. Coffee lowers the risk of Parkinson's Disease and bestows other health benefits. With all these other reasons for drinking it, it seems odd to quibble about the cost. One of the first laws of business is that something is worth what someone is willing to pay for it. Why would anyone in business deliberately charge less? gmrIt
It’s all about marketing and creating a culture for people who are gullible enough to put a premium on a simple hot drink. Every business has overhead expenses. First off, a coffee vendor can buy coffee much cheaper than you can at the food store due to their high volume leverage buying power. The cost of cups, lids, stirs, sugar, cream etc. is a minor investment.
I see what our office pays for those items they provide free to our employees. Not to mention the value of the company’s little advertisement stamped on each cup. After we all “Wake Up and Smell the Coffee”, we can discuss the marketing strategy of selling bottles of tap water for $2.
Now that really is ridiculous, the way you have tried to justify this. The amount of overhead does not justify the amount in proportion that is charged per cup. All food restaurants make their money on food and could even afford to give coffee for free. you must be working for a coffee machine company (vested interest) to claim this. If the public were not so complacent, perhaps they would question the direction society has taken to accept such expense. Tthe coffee culture has become a convention along with the acceptance of unprecedentedly high and unjustified costs.
Overheads certainly add up, although I've been interested in why all sorts of things cost different amounts in different countries for exactly the same things. It's baffling. I'm currently in New Zealand where prices are out of control.
Coffee here, however, is the same price I used to pay in LA, but here the labor costs are far greater, utilities too and a much smaller population. So it sort of makes no sense. Once again!
Good idea for an article. Enjoyed it.
Another reason is that coffee is pretty much all they sell so those profits must cover everything, especially all the many different taxes, which as we know can often be excessive.
A shop in a prime location can be looking at a couple of thousand dollars a day in overhead, whether they open the doors or not. Plus, coffee is ever popular and caffeine addicts will pay most anything for a fix. If you think caffeine (by the way, it is speed -- just like Meth -- only on the low end of the spectrum, of course if it was processed and concentrated it would be right up there with the rest) isn't addictive, think again. Try stopping a coffee addict and you'll have big trouble on your hands before long. The ones who quit go through a not so nice and painful withdrawal that can last two weeks or more. This means they will, and do, pay the high prices for a shot of coffee, up to $9 or more I've heard in the biggest cities (which also have the highest rents and taxes).
However, if the shops expanded their merchandise into more and other areas the price would drop because the burden would be shifted.
I've often wondered how they survive when so many people sit for hours using the Internet. However, the extremely expensive coffee shops (e.g. Starbucks) were successful long before WiFi existed. So it can't be just that.
I also don't think the overhead argument counts for much because in the old days coffee was very cheap (my parents remember a nickel a cup) in coffee shops that had all those same overhead costs.
Which leaves the great variety of not-trivial, easy-to-make coffees. This must certainly be a significant expense but I can't believe it accounts for the enormous price.
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