How much does it cost to open a coffee shop beyond ingredients?

An iced americano can cost about 1.5 yuan in ingredients and a raw coconut latte no more than 4.2 yuan, so a 20 yuan cup looks profitable on paper. In practice, owners say recouping the investment quickly rarely happens once other costs are counted.

Independent shops lack the purchasing scale to reach industry floor prices, while chain stores face franchise fees and brand pricing rules. Add labor, rent, utilities, and waste, and the simple ingredient margin on an americano coffee drink tells only a small part of the story.

The ingredient cost of a glass of iced Americano may be only 1.5 yuan, and that of a raw coconut latte is no more than 4.2 yuan. Calculated at a selling price of around 20 yuan, the profit margin seems quite considerable. In reality, however, coffee shop owners generally say that opening a coffee shop is far from this simple. Independent shops are constrained by their purchasing scale and find it hard to get the industry's floor price; chain stores have to face constraints such as franchise fees and brand pricing. After labor, rent, utilities, waste and other expenses are added up, the idea of recouping the investment in a short period or even getting rich overnight often fails to hold. This article will combine specific cost data to break down the respective operational difficulties of independent coffee shops and chain coffee shops, helping coffee lovers view the matter of opening a shop more rationally.

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Recently, a netizen saw such an advertisement at an exhibition. The advertisement listed the cost prices of four common coffee drinks currently found in coffee shops, among which the lowest cost price was 1.5 yuan for an iced Americano, and the highest was 4.2 yuan for a raw coconut latte.

Thinking of the prices commonly seen in coffee shops now, and then looking at the clearly marked cost prices in front of him, this netizen could not help but wonder: if a glass of iced Americano with a cost of 1.5 yuan is priced at 20 yuan for sale, and calculated on the basis of selling 100 glasses of iced Americano every day for a month, then in one month there could be a profit of around 50,000. In that case, wouldn't opening a coffee shop mean recouping the investment and making a profit in a short period, and getting rich overnight might no longer be just a dream talked about verbally.

Nowadays, coffee costs have gradually become more transparent. Some coffee lovers can even make a cup of coffee at home for just a few yuan. However, coffee shop owners generally say that opening a coffee shop cannot be calculated so simply.

Independent coffee shops

In many people's view, opening a coffee shop is not difficult. After choosing a good location, decorating, and equipping all kinds of professional equipment, one can start doing business. If the shop has a stable flow of customers and can achieve a certain amount of sales every day, it seems that a short-term recouping of the investment can be achieved.

However, because independent shops are small in scale and consume little, they cannot stockpile production ingredients in large quantities, so the ingredient cost is hard to bring down to the industry's floor price. A cost price of less than 5 yuan as shown in the picture above is something most independent coffee shops cannot achieve in terms of ingredient cost.

In addition, if many independent shops have no unique features, they may fall into the dilemma of "depending on the weather for a living," with turnover fluctuating sharply. Therefore, many shop owners will put effort into creating shop features, whether working on the store's decoration, increasing the variety of products, or adding other elements such as baking and clothing. But no matter what they do, costs will rise greatly, and the payback period of the coffee shop will naturally be extended.

And if labor, utilities, packaging, waste and other expenses are included, an independent coffee shop may remain in a state of negative income for quite a long time after officially opening. In the view of some shop owners, although the difficulty of a coffee shop recouping its investment in a short period is not as hard as climbing to the sky, it is almost there.

Chain coffee shops

Since independent shops are so difficult to run, some people may think that joining a chain brand might also make them rich overnight. After all, chain brands have already gained consumer recognition. "The predecessors plant trees so later generations can enjoy the shade." If one opens a chain coffee shop, relying on brand awareness, customer flow and order volume are guaranteed to a certain extent, and the possibility of the shop recouping its investment in a short period will be much higher.

Previously, Luckin's chief strategy officer Li Ying mentioned that the ingredient and packaging cost of a cup of Cotti coffee is about 5.5 yuan. Adding miscellaneous expenses such as rent, labor, and utilities, the cost of a cup of coffee will not exceed 9 yuan. If a store sells more than 400 cups per day on average, it can make a surplus, and the store's payback will not be indefinitely far away.

A regional chain brand featuring a selling price of 9.9 also once publicly stated that if a couple joins its brand, they can generally recoup their investment in 6-10 months. If the daily cup output reaches 200 cups, the monthly income can be 20,000 yuan.

From this point of view, chain coffee shops that rely on brand advantages are more able to realize the dream of getting rich overnight. In fact, this is not the case. The first step in wanting to open a chain coffee shop is the franchise fee. Franchise fees differ among brands, ranging from over 100,000 to several hundred thousand.

Second, unlike independent shops, the pricing of chain brands is decided by the brand side. If a cup of coffee costing less than 9 yuan is priced at 9.9 as required by the brand side, then the actual profit margin of the drink is not large, and rapid recouping of the investment requires increasing sales to boost profits.

Returning to the netizen's original doubt, looking only at this ingredient cost of less than 5 yuan, if a cup of coffee is priced at twenty or thirty yuan, the profit margin can be described as huge. As long as one can open a shop, one can more or less make a hefty profit.

But after a round of operations and becoming a coffee practitioner, many people find that the originally imagined short-term recouping of investment and getting rich overnight are hard to achieve in the face of realistic factors such as rent, utilities, operations, and waste. Many young people harboring entrepreneurial dreams invest time, money and energy in their own coffee shops, only to be defeated by reality in the end and finish miserably.

One can only say that ideals are丰满, reality is bony, and the same is true for coffee shops.

Image source: Internet

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The above content is compiled by CoffeeHunters, a coffee news website.