Coffee cost price calculation, plus juice and sandwich

The four parts of a cost price

A cost price is built the same way for a black coffee, a fresh orange juice or a sandwich. You add four things, in this order.

• Ingredients for one portion: ground coffee, milk, sugar, fruit, bread, filling, sauce.
• Waste: product thrown away, drinks remade, spoiled fruit, unsold bread, grinder purge, staff drinks and meals.
• Packaging: cup, lid, straw, paper, bag. Zero for a coffee served in a cup on site.
• Share of fixed costs: rent, wages, electricity, water, gas, internet, accountant, maintenance, spread over what you sell in the month.

Measure a real portion, not a theoretical one

The calculation is only as good as the portion. For coffee, weigh the ground dose of ten cups in a row and take the average: a grinder setting that drifts by one or two grams changes the whole month. For milk, measure what your staff actually pour into a coffee with milk.

For fresh juice, squeeze a full crate and count how many glasses you get. Orange yield changes with the season and fruit size, so repeat the test when the supplier or the season changes. For sandwiches, weigh the filling of five sandwiches made by different people: that is often where portions grow without anyone deciding it.

Coffee cost price calculation, with juice and sandwich: an example

The table follows an imaginary snack. Example assumptions: coffee beans at 160 MAD per kilo and 7 g per cup, oranges at 6 MAD per kilo and 600 g per glass, cooked chicken at 50 MAD per kilo and 100 g per sandwich. Example fixed costs: 16,500 MAD a month (rent 5,000, wages 9,000, electricity, water and gas 1,500, other 1,000) for about 6,500 items sold, so 2.50 MAD per item. None of these prices is a market survey: they are examples to replace.

The food-cost ratio (ingredients and waste divided by the selling price) shows how much of each dirham you take goes into ingredients. Gross margin here is the selling price minus ingredients, waste and packaging: the money left to pay fixed costs, and then you.

Spreading fixed costs without fooling yourself

Dividing fixed costs by the number of items sold gives each product the same share. It is simple, but a sandwich keeps a member of staff busy far longer than a coffee. If your sales mix is very uneven, you can weight by preparation time: for example one unit for a coffee, two for a juice, three for a sandwich.

Also remember that one more coffee does not raise the rent. The fixed-cost share is mostly for checking the month. The useful figure is the break-even point: monthly fixed costs divided by the average gross margin per item. In the example, if your average gross margin is about 10 MAD (you sell more coffees than sandwiches), 16,500 MAD divided by 10 MAD gives 1,650 items a month, about 64 a day over 26 opening days. Below that, the month loses money even if every product looks profitable.

Setting the selling price

Start from the ingredient cost (ingredients plus waste), then choose the food-cost ratio you aim for. Suggested price = ingredient cost divided by that ratio. For the example sandwich, 9.72 MAD divided by 35% gives 27.77 MAD. A ratio of 25 to 35% is a common rule of thumb in food service, not a law: hot drinks usually run much lower, sandwiches higher.

Then compare that price with your neighbourhood and with what your customers will pay, and round to an amount that is easy to give change for. If you are registered for VAT, ask your accountant to run these numbers on the price before tax.

When to raise your prices

Redo the calculation whenever a supplier invoice changes, and at least once a month for your three best sellers. A few signs tell you it is time to act.

• A product's food-cost ratio stays several points above your target two months in a row.
• Items sold per day stay below your break-even point even though you are full at peak hours.
• New rent, a new wage or higher electricity raises your fixed-cost share.
• Before touching the price, check waste and portions: that is often less risky than a price rise.
• Raise in small steps, one product at a time, and show the new price clearly rather than quietly shrinking the portion.

Loyalty: a reward costs its cost price

A free coffee does not cost you its menu price but its ingredient cost: in the example about 1.38 MAD, not 10 MAD. The full profitability calculation for a loyalty card has its own guide on this site.

Stampylo does not calculate cost prices, does not manage stock and does not connect to a till system. If you use it for the stamp loyalty card, the dashboard shows how many rewards were given in the month: multiply that number by the reward's cost price to know what it really cost.

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