I'm a really tight pricing guy. I'm going to be switching my espresso menu to a higher quality. By that, I mean switching to a GMO free, grass-fed, organic milk, and paying more for much better tasting espressos. In doing this, I am also going to eliminate my large sized latte's off of our menu. I will have a 10 n 14 oz latte, and I will go with an 8 oz cappuccino only.

When I break down my drinks I do it with the high average amount of milk use, and a pretty exact gram amount of espresso. Since I pull double shots only, I factor a double shot for both small and medium cafe lattes. New espresso is going about .02 cents a gram, and milk is at about .05 cents a fluid oz. And my paper cost for small is .13, medium is .16.

Before, I always factored my paper in at base cost with my ingredient cost, and then went on sales percentage going for anywhere between 20-30% COG. But I've been thinking deeper lately. The cost of paper. Should I make it like my retail items and sell at 50% COGS since I don't technically craft the cup? Should I sell it at cost at .13-.16 in addition after my Mark-up to ingredients? Or should I continue including into my base cost. What do you do at your cafe, and what is your reasoning? We also have ceramic cups. I don't change the price of my drinks if they use a ceramic instead. Is that unethical from a sales perspective? 

10 oz latte with paper included in base: 2.95 retail (cost/.3)

10 oz latte with paperx2 added afterwards: 2.75 retail (cost ing./.3)+(paper x 2)

10 oz latte with paper cost added afterwards: 2.65 retail (cost ing./.3) + paper cost

The nickels and dimes make a huge difference in the coffee world.

(we take any extra steamed milk, which usually isn't much, and keep it in a steel pitcher in the fridge. If someone orders a smoothie or blended espresso, we use the extra milk in that.)

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The way I see it, Cost of Goods Sold means cost of goods sold. If you do anything other than your first scenario, the cost of the goods you sold will be higher than 30%.

Also, there is cost associated with your ceramic cup - you had to buy it, it will have a finite life span, and you'll have to pay to replace it when it breaks. I wouldn't hesitate to charge the same as a takeaway.

50% COGS? I like the optimism! 

But really, your pricing should be based on 25% COGS. And include the paper and condiment costs. 

As a comparison, we charge $4.25 for a 12z latte.

Keeping steamed milk in the fridge and reusing it for blended drinks. Im having some trouble grasping that. Not judging at all just wondering if youve had any issues with that.

Danny,

I agree with Jay and Jeff.

We're about 23% on our latte COGS. The smaller you are, the more important it is to have a firm grasp on your numbers.

And re-using any milk is bad practice. It is a health hazard. It exists at and unsafe temperature as it cools to the "proper" temp in the fridge. And if you practice and learn the correct amount when you steam milk for lattes, there should be next to nothing left over.

I knew a place that pulled stir sticks out of their trash, rinsed and reused them just to save a buck. They're not in business any more. Please, dump all your extra steamed milk, or you will wind up being that guy.

And raise your prices or it will be a tough road. 

I didn't clarify actually. The 50% cogs is applied only to strictly non prepared items. I was just toying around with the idea of turning the paper cost around at 50% instead of including it with the, and again didn't clarify, "no more than 30% cogs". I won't deny my hesitancy to mark up my menu. One study showed recently that our city ranked 7th in the nation for poverty. I don't honestly believe that, but that kind of headline can really take a negative toll on a community. I'll go in today and play around with no more than 23% specialty drinks espresso. What do you recommend for pour over compared to drip?

I've been back and forth on the milk thing. But if that where true, then there is a TON of gourmet to standard dairy based dishes out there that are unsafe for consuming. I'll give my health inspector a call and see what he thinks. Thanks for caution!

Not to go too far down this side path, but there is a difference between cooking a milk-based dish and then chilling it quickly through the "danger zone" and the way it's often done in coffee shops that save leftover milk.

For starters, these gourmet dairy-based dishes are done that way because it's the proper way to do it, not as a means of minimizing waste. Also, they should be chilled quickly. Depending on the model, small undercounter fridges are good at keeping things cold, not so good at making them cold.

Have you tried leaving an accurate thermometer in that milk pitcher and watching what happens? I'd be curious to see how long it takes to get below 40 degrees. Probably longer than one might think. My other concern would be that every time you dump a little warm milk in there the temp of the whole mass rises back above 40 again. Plus you're pulling it out to use it. I'd be willing to bet that, depending on who's on bar, the contents of that pitcher spend hours in the danger zone each shift.



Jeff Macpherson said:
Keeping steamed milk in the fridge and reusing it for blended drinks. Im having some trouble grasping that. Not judging at all just wondering if youve had any issues with that.

I haven't tasted a difference. Texture is about the same. Reducing waste is number one and we have come miles improving that area. All of my staff now proudly shows me their empty steam pitchers after they have prepared a drink, and I commend them appropriately.
I don't disagree that the quality of the milk majorly degrades after steaming. I do jest that once it's blended with ice and a bunch of other stuff, you'll never know the difference in a blind tasting. I'll experiment with the cooling time as well. We keep that fridge dialed to about 33 degrees. But it does get a lot ore use than other fridges. And there will be variation in temperature if warm is added back in. Again, I'll work on that some today. And taxes..... Sigh

Brady said:

Not to go too far down this side path, but there is a difference between cooking a milk-based dish and then chilling it quickly through the "danger zone" and the way it's often done in coffee shops that save leftover milk.

For starters, these gourmet dairy-based dishes are done that way because it's the proper way to do it, not as a means of minimizing waste. Also, they should be chilled quickly. Depending on the model, small undercounter fridges are good at keeping things cold, not so good at making them cold.

Have you tried leaving an accurate thermometer in that milk pitcher and watching what happens? I'd be curious to see how long it takes to get below 40 degrees. Probably longer than one might think. My other concern would be that every time you dump a little warm milk in there the temp of the whole mass rises back above 40 again. Plus you're pulling it out to use it. I'd be willing to bet that, depending on who's on bar, the contents of that pitcher spend hours in the danger zone each shift.

A refrigerator is wholly unsuited to chilling hot/warm product. By adding hot product to the fridge, you're also raising the interior temperature of the fridge and leaving yourself open to danger zone contamination of all its contents.

The better route is to place a container (probably stainless) in an ice bath and add the milk to that. The contact ice/water combination will draw the heat out of the leftover milk faster and help prevent bacterial development.

And while you're "saving" some money by reusing the leftover milk, I think that savings will be quickly depleted if you ever get his with a food poisoning charge. I use pretty expensive milk and we discard leftover milk because it's not worth the risk and financial exposure.

Alright. That's probably enough feedback to convince me not to save milk. I'm actually not apposed to it. It encourages me and all my staff to put more into drink prep and that's a really great thing. I'm just really glad I have a place to get feedback. When I first started out the previous owners didn't know enough about espresso to give me any good advice, and there was nothing easy to access (and really, there still isn't) that goes over this kind of stuff.

Jay Caragay said:

A refrigerator is wholly unsuited to chilling hot/warm product. By adding hot product to the fridge, you're also raising the interior temperature of the fridge and leaving yourself open to danger zone contamination of all its contents.

The better route is to place a container (probably stainless) in an ice bath and add the milk to that. The contact ice/water combination will draw the heat out of the leftover milk faster and help prevent bacterial development.

And while you're "saving" some money by reusing the leftover milk, I think that savings will be quickly depleted if you ever get his with a food poisoning charge. I use pretty expensive milk and we discard leftover milk because it's not worth the risk and financial exposure.

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