So, especially now that coffee is going through the roof, I'm having trouble working out a retail price for drip coffee. I can still do espresso drinks with a 29% COGS, but if I try that with drip coffee, my retail price is nuts compared to the competition. I do carry Fair Trade from a micro-roaster and, unfortunately, my competition does not, but the coffee house is also in a small Midwestern town where a lot of the customers do not necessarily understand or care about Fair Trade and why it's more expensive. Do I stick to my guns and set my prices based on 29% GOGS or consider it a 'loss-leader' and maintain comparable retail prices, leaving my COGS at 34-39%, but bringing in customers who will buy food too? My overall COGS is almost 40% due to lower margin on drip coffee and retail items where I have 50-60% cost. It's been almost 6 years and I do have my loan paid off now, but with the economy, sales have been sluggish so I'm still not making a salary that's at even poverty level.
It kinda sounds like you are using a timer grinder? I find these a little trickier to calibrate, though you can definitely still adjust both weight dispensed and grind settings to get you exactly where you'd like to be. As you've noted, your setting may be a bit coarse. To adjust your grinder, you'll need a couple of screwdrivers and maybe wrenches, plus an accurate scale (having the capability of weighing .05 oz increments or better would be helpful). A G2 or G3 grinder will be even easier.
Before you make any adjustments, record your current settings, record your starting batch weight, and set aside a sample of ground coffee sample so that you can get back to where you are today. Also, brew a batch without coffee in the basket and measure how much water you actually get so that you know exactly how much water you are dealing with.
To get to an approximate grind setting, one idea might be to buy a bag at a better chain store and have it ground there for flat-bottomed filter. Many chains have their grinder calibrations checked regularly against samples to make sure everyone is doing it correctly. Your desired grind setting may turn out to be different, but this will get you into the right ballpark.
Adjust your grind setting to match the new sample, then see where your current weight is. If your timer is still set to dispense too much, weigh out your test batches by hand with your scale. Try something in the 4-4.5oz per half gallon range and taste it. If it is too strong and bitter, make your grind a bit coarser and try again. If too weak, make the grind finer (probably not finer than your chain sample though) or increase weight. Play with different combinations of weights and grind settings to get a nice balance. Take good notes and keep samples of grind settings so that you may return to previous settings as needed.
Note that .1 oz weight changes will have significant effects, so try to be very precise.
Once you've settled on a good weight, adjust the timer on your grinder to dispense that weight. You'll want to check several batches to verify consistency.
Taste with an open mind, take good notes, and good luck!
I do carry Fair Trade from a micro-roaster and, unfortunately, my competition does not, but the coffee house is also in a small Midwestern town where a lot of the customers do not necessarily understand or care about Fair Trade and why it's more expensive. Do I stick to my guns and set my prices based on 29% GOGS or consider it a 'loss-leader' and maintain comparable retail prices, leaving my COGS at 34-39%, but bringing in customers who will buy food too?
A loss leader, should be viewed as a item that will drive incremental traffic and sales for your store. If Fair Trade coffee doesn't have a demand within your local community, taking a smaller margin on each cup doesn't make it a 'loss leader'
Have you educated your customers on the benefits of fair trade?
For a small Midwestern town, a buy local campaign could be successful.
Do you offer and bundles? ie 16 oz FT coffee and pastry for $x.xx
I put this page up to help plan COGS, you should find it pretty helpful
Consider getting rid of the 20oz size.
20oz cost more to make yet can't get the same % of mark up as 12oz or 16oz.
We've actually found we sell more 12oz than 16oz. (As, I'm assuming you're selling more 16oz than 20oz).
We sell a 12oz mocha for $4 after tax. Absolutely no complaints.
Find another roaster with a better focus who can sell you better coffee. Yes it'll cost more, but weight the benefits: It'll be fresher coffee, better quality green beans, more sustainable and most likely will be willing to offer training and/or other resources.
It'll also give you a better reason to charge more.
People pay for our coffee because they can tell a difference and the know (not feel) that its worth it.