Why is a cup of coffee so expensive?

I thought it would be interesting to talk a little about the economics behind a cup of coffee, and why the price of your daily cup of coffee in a cafe is rising.

Links:

[tomwalker]

As a consumer and not someone who works in the industry, this was really helpful

[joshshirtcliffe]

As a manager of a café and restaurant, this is validation that it is really hard to make money, even the smallest slip up in terms of staff costs or overheads, any wastage, and that 10% profit is down the drain! I totally agree with your point about landlords. In my head, there would surely be a thriving local business scene if rent was cheaper in our cities. Maybe that’s too simplistic, but it seems possible!

[sdhiousdfyhsdioufsdoiufh]

Is it really expensive?
Maybe in a cafe.
But at home it’s dirt cheap considering it comes from across the world.

[timdeboer]

Lets not forget that a good barista cafe needs excellent equipment. A good esspresso machine can cost a lot of money. Then there is al the extra equipment needed. That needs to be replaced every couple of years. People want to sit in a good looking cafe so interior has to be kept up to date. Nowadays people require a good website that also cost money to make and maintain. All in all I respect anyone wanting to open their own barista cafe

[joshtipton]

Also, especially don't get angry at cafes that pay their staff well and increase their prices as a result. Great thoughts as always.

[francasariego]

Absolutely. I own a small cafe where we get the best of the best coffee we can... And if we keep 10% of the price, we can really be happy about it

[michaelsanders]

This video could be applied across the board to the restaurant / bar sectors too. The model remains the same resulting in tiny margins for the business. The unfortunate reality is that most people aren't prepared to pay what it really should cost to go out to eat and drink.

[erehinater]

1st of all I would like to say sorry about my English.
I have been watching yours content for a few months and have to say. I really like yours content and appreciate yours effort to help coffee lover to understand more about coffee.
As a new comer in Coffee industry (I just start agriculture Arabica coffee for about 2 years so my coffee still not ready to be sold but I was in my country specialty coffee community for a while now) I can say that in one ton of coffee Cherry there will only be around 100-200 Kilo of good quality green bean after all the process. While the world demand is so high the price on demand is very low for producer like me (due to most customers have no idea what is high quality coffee). So what happened? We sell low-quality (Deflect) to mass market and hog all high quality one for niche market we have (Mostly auction or face to face deal). Not to mention middle man. XD

I hope someday you will go more in-dept in region/species taste profile and what coffee deflect look like.

Have a good day

[sudeepcoolbanerjee]

Is a dedicated pour video still coming? The one about different ratios explains some things about pour over, but I've really been looking forward to your in depth version.
And thank you, you're doing such a great job with all the videos.

[MrAnhedonic]

I have no issue with expensive coffee when it's good. But so long as it's good.

[patrickbodell]

Sometimes you make me worry that my dream of quitting my day job and opening a specialty coffee shop might be best left as a dream. I do really appreciate your videos about the coffee industry. It really helps put a lot of the risk into perspective.

[koohiino]

Very interesting! I was a barista is San Diego for a little and I became infatuated with the coffee culture and the whole world behind it, especially in terms of business and quality. I observed the cafe I worked at and saw that unless you have a very high volume of customers, it’s extremely difficult to turn a consistent profit. A great espresso and cup of coffee will make regulars (besides the normal customer service and atmosphere in the shop). Didn’t realize that a high quality versus low quality coffee would be almost insignificant to the cost of running a cafe! Our espresso was okay... but that is something to think about! Quality in the long run. *Side note, the cafe unfortunately closed down a couple weeks after I left and was only open for about 9 months... so this video helped clear up some of my financial questions!

[Halabalooza]

In Russia we also pay 2-3£ per cup of coffee. Some cafés cell it for 5-7£. But monthly we earn just about 400£. Don't think someone in UK earns the same)))

[phs]

In india, a roadside tea shop will sell coffee for 10rs.(0.14usd)
Even cheaper in areas with low rent.

They have hot milk with dissolved sugar ready, they add some instant coffee and give it to you...

1 litre milk = 23rs
1 cup = 100ml or so.
Given they probably add a lot of water to milk,
I cup of milk costs them 1.15rs
Plus a 2rs sachet of instant coffee.


Whereas a coffee in a proper coffee shop, i.e, with an espresso machine and actual beans,
It costs upwards of 100rs.

[thedanalcantara]

The same thing is true in the restaurant industry as well. Even in places where the tables are constantly full and the prices are high, those profit margins are razor thin.

[davetreadwell]

And if you’re Starbucks, you save money by not paying tax!

[davidjteo]

James thank you for always making your viewers feel like they matter as people <3

[StaticCamperVan]

Excellent as always.
Three years ago, I decided to give up traditional living. And in doing so, gave up having to pay rent. The hundreds of dollars that used to be spent on housing now is available to spend on making my life more enjoyable. One of the truly delightful indulgences I can now afford is spending $5 on a really good cup of coffee. And I never, ever feel it’s money wasted.
Thank you for your videos.

[jibeneyto]

Coming from Spain, I found coffee in the UK initially terribly expensive and also very homogeneously priced across the country. A Spanish "café con leche" at a bar in a large city like Madrid will cost €1.50 to €2. It can go down to €1 outside of large cities and in less fancy bars. But in the UK the cost of a latte is pretty much standard at £2.70 everywhere, about twice as much as in Spain. And it's the same in central London as in Derby.

[BruceDuncan]

James: Maybe I am showing my ignorance here but: 1) Businesses under the VAT threshold (~£75k turnover) do not pay VAT (assuming they remember to claim it all back), and 2) VAT is a tax on value, so even if you are VAT registered you are not paying the VAT on the whole value of the item, only the difference between the price you charge for it and the price you paid for the ingredients. Have I missed something obvious?