The price of a small (illogically called the ‘Tall’) Starbucks Cappuccino is now £2.05. The Venti now costs £2.65 (2008 prices)
This year the price of Starbucks drinks have increased by more than the rate of inflation.
Costa Coffe and Cafe Nero have both kept their prices below £2, but, industry analysts argue that it is highly likely they will be tempted to increase the price of their drinks.
Unlike alcoholic drinks, coffee is not subject to excise duty. Therefore, how can coffee companies such as Starbucks justify such as high price?
The Price of a Cup of Coffee
- Milk 6%
- Coffee 2%
- Labour 18%
- Rent 13%
- Admin 26%
- Cup / sugar / lid e.t.c 4%
- V.A.T. 15%
- Profit 14%
It is interesting that the smallest part of the price is the actual coffee beans. Even if the price of coffee doubled, it would only have a negligible impact on the final price of coffee.
In recent months the wholesale price of milk has increased significantly. This is due to both growing demand (including demand from China) and a shortage of supply from the British milk industry. Therefore, this has contributed to higher costs.
Rent is a big factor, especially in city centres. Also one feature of coffee drinking is that there is quite a low volume. People may buy 1 coffee and sit for other an hour.
In my personal experience, I find Starbucks coffee a little disappointing. (though on a recent trip to US, I had a really great dry cappuccino – so quality does vary) Generally, in UK I prefer the taste and quality of Costa Coffee and Cafe Nero. I don’t object to paying £2 or even £3 for a cappuccino, but, I would like higher quality standards.
Buying Office Space
In this era of laptops, one of the main attractions of a coffee shop, is that it makes a break from working at home. Often I take a laptop, and write for an hour. As much as buying a coffee, I’m renting office space. I’m particularly fond of a nice Blackwells cafe (Cafe Nero) in the centre of Oxford. It’s a great cafe because it’s in a bookshop; there isn’t irritating music and there is a literary vibe which helps with writing.
To be honest, if the price of a cappuccino increased from £2.30 to £3.30, I’d probably still go there.In that context the price of a starbucks isn’t a rip off, if you’re getting a nice environment.
- By the Way your welcome to buy me a coffee ;)
- The Economics of the price of Coffee
- Starbucks – about
- Starbucks Coffee at Telegraph
About The Author
What would you define as “Starbucks”?
Just the CEOs, or the workforce that makes and serves too? Of course you would include them.
So you have profit (for all) at Starbucks = (18+26+14) % = 58% (68.2% excluding VAT).
Isn’t that rather large? I mean sure everyone needs to be paid, but 68% of what they charge forgetting the compulsory tip to the government?
I guess its due to the number of customers that go to starbucks, that they could sit there for 1h or 1h30.
How many coffees are bought per hour/day/whatever at a Starbucks in a major place?
I’m a former Starbucks employee and it definitley takes more than just filling up a flask. The starbucks frappuccino cannot be replicated at home unless you have managed to get the specially made bases they use.
Also, milk steamers are expensive but if you only want a filter coffee, then a home made batch does just fine.
I agree that I’ve found espresso I preffer. That doesn’t extend to all their coffee types though. Also, it is so far the only place I’ve found that has a sugar free syrup.
It is also worth noting the amount of loss a Starbucks store will go through a day. If the milk falls below a certain temperature, then it cannot be reheated and must be thrown away. A lot of smaller coffee shops won’t practice this. Also, if a Barista makes a mistake, or the customer is unhappy, or the wrong drink has been taken from the end of the bar then another one must be made.
At the end of the night the food waste (muffins, pastrioes etc cannot be sold the next day) can be very significant. I’ve previously thrown away £60 worth (that isn’t the most, either). It can’t be donated or even taken home by staff due to health and safety (claim attempts if someone was ill).
Staff are allowed as many drinks as they like (within reason obviously) when they are working, including 30 mins before and after their shift. Also 50% off food on their breaks. I think it’s 25% the rest of the time.
Each day there should be 2 coffee tastings carried out by baristas which equals a minimum of 2 cake pairings.
Also, after every hour the coffee in the filters much be thrown away and a new one made in order for it to be kept fresh.
Every day there is a minimum amount of venti cups that must be made into samples and offered out.
They pay higher than minimum wage and are generally good employers, they’ve even won employer of the year awards.
Note that in the uk at least stores are aiming to increase their community involvement and so if you would like to ask for volunteer help or the donation of filter coffee for a fate etc then go and ask.
Their prices don’t vary that much from Costa etc, not when you consider the difference in cup sizes (a lot of places don’t offer 3 sizes) and I’m not sure anywhere offers a size as big as Starbucks’ Venti.
Did you also know that if you bring your cup back and you have had an espresso based drink or a filter coffee you can have a free tall cup of filter coffee?
Anyway, hopefully that’s been a bit of an insight.
What is the actual price of all the Drinks from Starbucks?
Can I point out that the prices have recently gone up because VAT has returned to its 17.5% rate. A tall latte was £1.99 during the 18 months in which VAT was 15%.
In your ‘breakdown’ of the costs you have quoted 15% for VAT, rather than the 17.5%.