A coffee shop owner has broken down the cost of making a coffee and revealed why prices can now top £3.50.
A 25-year-old content creator, known as @jazlifts_ on TikTok, went to a London coffee shop to ask its owner about the rising cost of hot drinks.
While speaking to Rob from a cafe called Monies in East Putney, Jaz learned that the average cost of making a coffee can be as little as 70p.
However, Monies charges £3.50 for a regular coffee, which is a difference of £2.80. However, Rob explained that there is a good reason for the higher price.
Jaz said: ‘It’s easy to be gobsmacked by the prices these days and assume that the owners behind the business are making money from their coffee, but it’s not as easy or profitable as it often seems from the outside – it’s very hard work!’
Cafe owner Rob (pictured), from Monies in East Putney, broke down the cost of a coffee in a chat with Jaz, 25, a content creator and gym owner based in London.
Jaz said on TikTok: ‘Have you ever had your morning coffee and wondered, “Why the hell is this costing me £4?”
‘Well, today I’m going to speak to Rob for Monies in Putney to find out how many coffees a shop like his needs to sell to stay open.’
Rob said: ‘It doesn’t cost much to make a coffee, probably about 70 or 80p when you pay for the beans, milk and cups. But then you have to add in staff costs (and) rent.
‘So when you’re starting out, you don’t sell enough coffees and maybe you don’t make money for a while until you get to that level.’
In an interview with FEMAIL, Rob provided a detailed breakdown of the costs. He explained that making coffee costs 40p, the cup and lid cost 10p and milk costs 20p.
Monies charges £3.50 for a coffee, but 60p of that is VAT. This leaves them with £2.20, which also goes towards variable costs such as electricity and rent.
When Jaz asked how many coffees the cafe would need to sell to break even, Rob said, “If we were just selling coffee, in a small shop like this, we would need to sell at least 200 to 250.”
Rob added: ‘As soon as you get to 300 or more, then you’re starting to make some money.
Rob explained that the cost of a coffee can be as low as 70p, but there is a good reason why a cappuccino or latte can cost £3.50.
“Although you can go into a coffee shop and see people sitting in every seat – it looks like a lot of people – but at the weekend it’s £7-£8 per transaction, and during the week it’s more like £6,” Rob added: “So you’ve got to be selling a huge volume of coffee.”
Rob explained that although he had always loved coffee, he took a risk and opened a coffee shop.
He said: ‘I’ve been open for almost three years now. I did quite a bit myself in terms of installation and so on, but I’d say it cost me about £100,000.
‘I had an ice cream brand in Cornwall. I sold my share so I had some cash to invest in another business.
He said: ‘I’ve been open for almost three years now. I did quite a bit myself in terms of installation and so on, but I’d say it cost me about £100,000.
‘Obviously I love coffee, I love going to coffee shops in London, (and) I took the plunge with it.
Monies sells single origin coffee beans from Cornish roasters Yallah and describes itself on its website as: ‘Specialist coffee bar in the heart of East Putney with Cornish roots, a love of art and a passion for buying locally.’
Jaz explained in the caption: “The goal of this series is to shed some light on exactly this and, most importantly, give you more reasons to support these amazing local small businesses.”
This comes after news that the cost of hot drinks is set to rise, with coffee and tea prices spiralling in global markets.
Wholesale coffee prices have risen more than 20 percent since January after crops were hit by extreme weather in major producing countries including Vietnam and Brazil.
Tea prices have risen 34 percent in the past month alone due to rising industry costs and the Red Sea crisis affecting container ship movements.
UK coffee shops rely on robusta and arabica beans for the millions of americanos, lattes and cappuccinos they make.
In April, the price of robusta coffee futures reached £3,211 per tonne on London markets, up 20 per cent from £2,674 in January. And in New York, the price of arabica coffee beans reached $5,105 (£4,125) per tonne, up 23 per cent from $4,151 (£3,354) in the same period.
A prolonged heatwave in Vietnam, one of the world’s largest producers of robusta beans, has damaged crops. Andrew Moriarty of analyst firm Mintec said: “Robusta prices have been rising for some time due to two successive lower harvests in Vietnam.
‘In recent weeks, production estimates for the previous 23/24 crop have declined, and many market participants now expect the latest crop to be down around 20 percent year-on-year.’
An investigation by The Grocer magazine found that prices for Nescafé Gold Blend instant coffee have risen by an average of 5.5 per cent since last week.
A spokesman for Nestlé, which owns the brand, said the company had seen “significant increases in the cost of coffee, making it much more expensive to manufacture our products.”
Gareth Redmond-King, from the Climate and Energy Intelligence Unit, said: “The cost of our morning coffee is skyrocketing as climate change hits crops in Brazil and Vietnam. Worsening extreme weather events are threatening food crops in the UK and abroad.
“We import half of the food we consume; damaged crops limit supplies and increase prices in our stores.”
Recent data shows a 34.52 percent increase in tea prices over the past month, making them 50 percent higher than a year ago.
The main factor is said to be the disruption of shipping to the world’s largest producers and exporters – China, India, Kenya and Sri Lanka – as a result of attacks on ships in the Red Sea.
Faced with the looming shortage, Marco Forgione of the Institute for Export and International Trade said: ‘Our tea supply and demand tranquillity has been disrupted by recent disruptions, which have led to higher prices.
‘These disruptions have had repercussions throughout the global supply chain, increasing price pressures, contraction and availability issues, all of which puts even more pressure on already tight consumer pocketbooks and complicates companies’ supply chains.’