Introduction
Although Starbucks is widely known as one of the top coffee chains in the world, how much it costs to make one of their coffees is still uncertain. The complexity and cost of Starbucks coffees have been long debated and yet, there is still no definitive answer. This article examines the cost of making a cup of Starbucks coffee, exploring the different components involved, such as the brewing and ingredients, as well as additional items commonly used for customization. Additionally, an analysis is made of other cost factors such as equipment and labour. Finally, perspectives from experts in the field are also included.
Brewing Costs of a Starbucks Coffee
The cost of brewing a cup of Starbucks coffee varies depending on the type of coffee beans used. Generally, the higher quality beans would result in the most expensive cup of coffee. Moreover, the price of the beans vary depending on the type of beans and their origin. For instance, according to an article in Forbes, Arabica beans are more expensive than Robusta beans. In addition, an Arabica bean from Ethiopia may be more expensive than one from Columbia.
The second most significant cost of a cup of Starbucks coffee is how it is brewed. As there are various brewing methods such as pour-over, cold-brew, and espresso, the cost of brewing would depend on the method used. For example, a pour-over would typically require more time and additional items such as filters, which naturally increases the cost.
Ingredients
The cost of the ingredients used in a cup of Starbucks coffee is another factor to consider. Apart from the coffee beans, other items such as milk and creamer, syrups and sweeteners, and spices may be used for flavouring and customisation. As there are different types of these ingredients, their prices also vary. Additionally, some of these ingredients may have additional cost depending on their quality. For instance, organic products and Fairtrade certified products typically come with a higher price tag.
Equipment Requirements
The cost of Starbucks coffee also takes into account the cost of equipment such as coffee makers and grinders. Usually, these may come with a price, depending on the quality of the machines. Depending on the type of business, the cost of equipment may be significant. Some may even opt to rent the equipment instead, though that would incur more costs in the long run.
Labour and Overhead Costs
Apart from the brewing, ingredients, and equipment costs, there are labour and overhead costs to consider when calculating the cost of a Starbucks coffee. The labour costs are mainly composed of the wages of the staff. Depending on the location and the number of employees, the labour costs may vary significantly. Additionally, overhead costs may include items such as utensils, cups, lids, and spoons.
Expert Perspectives
According to an article in The Motley Fool, a U.S. based financial services company, the cost of a cup of Starbucks coffee is approximately $2.90. This cost is composed of the previously discussed components, with most of the cost coming from the labour and overhead costs.
In addition, an article by Business Insider includes perspectives from an ex-barista of Starbucks. According to their estimates, the coffee chain makes a profit of around $3 to $4 for each espresso-based coffee, about four times what it costs to make the drink.
Packaging
The cost of Starbucks coffee is closely tied to the packaging. Although most drinks are purchased in-store, some may opt to get their coffee as a “to-go” cup. The packaging for these drinks usually consists of cups, lids, sleeves, and straws, which all come with a price.
In addition, the cost of packaging goes even deeper, down to the materials used. With the current sustainability movement, the use of biodegradable materials has become popular. However, these come with a higher cost than other traditional materials.
The cost of the packaging also affects its visual appeal. Since aesthetics are important for most Starbucks customers, the packaging for the products must be attractive and of high-quality. Moreover, this may require the use of specific materials, which may also come with a hefty price tag.
Furthermore, some packaging may also have additional features. For instance, some may have built-in warmers, which allow the customer to keep their coffee warm for a longer period of time. These extras will naturally add cost to the overall price.
Customization
Apart from packaging, the cost of Starbucks coffees takes into account the customisations available. A wide variety of customisations are available, ranging from extra creamer to more exotic spices. Furthermore, some customisations come with a higher cost than others.
Moreover, the cost of customisations also depends on the add-ons used. For example, almond milk is a popular substitute for regular milk, but it is typically more expensive than other alternatives. In addition, some add-ons may also require more time, resulting in longer wait times and additional labour costs.
On the other hand, some customers may opt for simpler customisations. Yet, as minor ingredients such as sugar or cream often come in individual packs, the cost for these customisations still accumulate in the overall price of the drink.
Takeaway Considerations
When customers opt for the “to-go” option, additional considerations must be taken into account. Apart from the need for take-away packaging, customers must also account for the cost of transportation of their beverages. As such, this may add to the overall cost of their Starbucks coffees.
In addition, the cost of take-away items may also vary depending on the chosen vessel. For instance, reusable cups are generally more expensive than paper cups. Moreover, they must be properly cleaned and maintained, resulting in additional costs.
Competition and Value Pricing
When considering the cost of a Starbucks coffee, it is also important to take the competition into account. As Starbucks is a well-established coffee chain, there is strong competition in the market. As such, the chain has to keep its prices competitive enough to maintain its market share.
Moreover, Starbucks also provides additional value to its customers beyond the cost of its coffees. For instance, its loyalty program is one of the most well-known in the industry. Likewise, the company’s app provides additional discounts and other perks which add to their value.
In addition, Starbucks often implements value pricing strategies for their drinks. For example, the company may offer discounts for certain items or introduce limited time promotions in order to attract customers. As such, these strategies help the company remain competitive in the industry.
Advertising Cost
Apart from value pricing strategies, Starbucks also invests heavily in advertising. The company frequently makes use of traditional marketing methods such as television advertisements, as well as more modern forms of advertisement such as social media campaigns.
Although the cost of advertisements may appear insignificant in comparison to the other costs of making coffee, it still adds up over time. According to a report from The Wall Street Journal, Starbucks spent over $1.1 billion on advertising and related costs in 2019.
In addition, Starbucks also adopts a more sustainable approach towards advertising. The company educates its customers on its sustainable practices and showcases the results of their initiatives.
As such, this helps the company not only reach their target market, but also establish a positive brand image. Furthermore, this type of advertising often comes with a higher cost than more traditional methods.
Analysis and Insights
Overall, the cost of making a Starbucks coffee is highly variable depending on a variety of factors, from the quality of the ingredients used to the complexity and time it takes to make the drink. Additionally, the cost is also affected by the packaging, customisations, transportation, and the advertising costs. Taking all the factors into account, prices for Starbucks coffees range from inexpensive to quite expensive, depending on individual preferences and requirements.
That being said, the cost of making a Starbucks coffee does not have to be a deterrent. In fact, the cost of Starbucks coffees is often justified by the high quality of the ingredients and expertise used. Moreover, the company’s sustainability initiatives and popular loyalty programs add even more value to the price tag.
