I've seen every COGS discussion on these boards, I believe.  I'm looking at Big Train products, which I know have a dubious reputation among the different participants on the board.  To keep the COGS below 30%, for a 16oz serving, I'm looking at having to charge nearly $4.10.  Does that sound right?  Each bag of...stuff from Big Train nets about 20 16oz servings (using 120cc of product).  For a 12oz serving, I'm assuming you can get by with just 60cc, in which case the COGS look much better.

Thoughts on COGS for blended beverages are welcome.

MG

Views: 420

Reply to This

Replies to This Discussion

We ditched our blenders 5 years ago so can't speak specifically to COGS for blended beverages. Bottom line if you want to keep the doors open and make even a tiny profit price based on your COGS regardless what Joe Blow is charging. If you are attempting to mimic the big chains menus and compete on price you loose and always will. They have massive buying power.

Our focus is on quality. A hand shaken iced 16oz syrup added latte we charge $4.60 with double shot, $5.60 quad shot. The few syrups we offer are in house made as is our chocolate sauce. Our customers don't bat an eye and we have been growing at over 50% annual rate for over three years surviving the recession also recently voted "best coffee in Clark County" in local newspaper reader's poll. 

Michael,

Kerry recently purchased Big Train. Not sure if that helps them or not.

I can share with you we cut out distributors and pass the savings on to our customers. We have a one case minimum which is five pouches of three pound bags which can be mixed ($80) or straight ($75). 85 - 16oz. drinks in a case. Ends up to be about .88 cents per 16 oz. drink. Free Tubs, scoops and shipping. The cost of our product to produce is twice that of our competition...which means we use better ingredients. Frappes should be the best margin product other than coffee that you sell. We sell a introductory mixed sample case for $25 if you would like to check it out call me or google Enlightened Beverage or Treehouse Brands. 

I hope you find a mix that works for you.

Kind regards,

Jim

Thanks, Mike and Jim. I understand the need to charge an appropriately high price for quality. Jim, I've taken a look at your products. I like that you offer the basics. You seem to be quite a bit cheaper than many alternatives. But you mentioned that your products are of greater quality. How are you able to compete?

Michael, 

Great question. We sell directly to the customer, we do not use distributors. That is the main difference. Quality is our biggest advantage, we also private label for several companies. One private label customer wanted a knock off of a major competitor. To give you an idea about quality -we can sell the competitions product with the very same ingredients they use for $47 dollars per case delivered (we sell private label in pallet quantities only). Our Enlightened Beverage line we sell for $75 delivered. We are not trying to get rich, we know it is tough making a living as a cafe owner so we are here to help. And in turn we hope to grow our business by being an asset to our customers.

Find a middle ground. Do what it takes to survive. Upgrade your quality when you can, and make your cost cheaper if you have to. You can put your foot down and say "I will never change my principles", but you may struggle financially, or even have to sell. I want to give my community the best, but the community has to reciprocate that they want or need the best as well. I agree with Mike about competitive pricing. You can't compete with Starbucks or McDonnalds on pricing. Just be better than them. It's not hard to do ;). But if you take it too far without your customers consent, then you may start hemorrhaging money on labor and costs. Testimonies of successful people can be encouraging, educational, and critical for growing our businesses. But what works for Mike 100% may only work for others 50% of the time. Or not work at all. 30% cogs seems high to me for a blended drink though, considering it's mostly ice. You may benefit from modifying your Big Train recipe to make it more cost efficient. Is that including all your paper and condiment cost as well? Or do you keep that in your overhead?

Danny

Hey Danny,

Thanks for the response.  We include the paper and condiment costs in COGS.

Hi Jim,

Do you have any current customers I could speak to about your enlightened product line?  About how large of an order is a pallet?    I see you sell samples for $25.00.  How long does that take to ship?


Jim McKenzie said:

Michael, 

Great question. We sell directly to the customer, we do not use distributors. That is the main difference. Quality is our biggest advantage, we also private label for several companies. One private label customer wanted a knock off of a major competitor. To give you an idea about quality -we can sell the competitions product with the very same ingredients they use for $47 dollars per case delivered (we sell private label in pallet quantities only). Our Enlightened Beverage line we sell for $75 delivered. We are not trying to get rich, we know it is tough making a living as a cafe owner so we are here to help. And in turn we hope to grow our business by being an asset to our customers.

Sure Michael,

I just "friend requested" you so once you "friend" me I can send you a private message with some names and numbers of our customers. You can also give me a call 651-769-4820 or email me at one of the emails on our site the "info" one works fine.

A pallet is 80 cases, a case is 5 x 3 lb pouches.

Sample cases ship via FedEx ground from our production facility in Chicago. Usually two to three days to OKC. Shipping is free and the mixed case will come with 5 tubs, lids and scoops (free as well). 

Reply to Discussion

RSS

Barista Exchange Partners

Barista Exchange Friends

Keep Barista Exchange Free

Are you enjoying Barista Exchange? Is it helping you promote your business and helping you network in this great industry? Donate today to keep it free to all members. Supporters can join the "Supporters Group" with a donation. Thanks!

Clicky Web Analytics

© 2020   Created by Matt Milletto.   Powered by

Badges  |  Report an Issue  |  Terms of Service