Think There’s No Profit in Selling Coffee? Think Again!

Image of a Starbucks coffee cupI always figured the price I paid at the store was not much higher than that which a large coffee selling company would pay. Sure … it’s not. Wrong.

Here is an example:

Starbucks reported paying a higher price per pound in 2007 compared to the year before. A penny more per pound. So… I guess that can add up considering how much they sell. But… what did they pay per pound?

Starbucks bought 352 million pounds of coffee in fiscal 2007, according to its report. That’s up from 294 million pounds in 2006.

Starbucks paid an average price of $1.43 a pound for coffee in fiscal 2007!

I would love to go to the store and pay that. Good grief! I don’t know but that appears to be a pretty wide profit margin considering what they charge for a cup and that we are paying nearly $4 a pound. You think?

Note: Even though they are up $48mil in poundage from the year before, they are still needing to close down shops due to profit loss.

Starbucks says: We pay $1.43 a pound, we sell it back to you for $10 a pound! hmmm….

# The average customer spends $4.05 per visit for coffee; the average fast-food-restaurant visitor spends $4.34 for an entire meal.
# For a cup that costs $3.40, at least 40 cents is profit. When Starbucks bumped the 8-ounce cup off the menu, the 10-ounce “tall” (the new small) increased profits by 25 cents per cup for only 2 cents of added product. Can be seen at: Fast Company Article title: Coffee + Cash

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