Coffee Cost Percentage: What Should It Be?

Coffee is the best margin product in a café. A well-made flat white costs $0.50–0.90 to produce — including beans, milk, cup, and lid — and sells for $5–6. That's a cost percentage of roughly 10–18%, far better than any food item on your menu. But many café operators don't actually know their coffee cost percentage, because they've never calculated it properly.

What should your coffee cost percentage be?

Total coffee and beverage cost should sit at 22–30% of beverage revenue. The lower end is achievable for high-volume operations with efficient milk usage and well-priced menus. The upper end is typical for specialty cafés with premium beans and higher milk ratios.

What's actually in your coffee cost

Coffee beans

A double shot espresso uses approximately 18–22g of ground coffee. At $30–50 per kg for specialty beans, that's $0.54–$1.10 per double shot. Many operators only count beans when calculating coffee cost, which significantly understates the real number.

Milk

Milk is typically the largest cost component in coffee. A flat white or latte uses 150–200ml of milk. At $1.50–2.00 per litre, that's $0.23–0.40 per drink — before accounting for any waste or oversteaming. Across hundreds of coffees per day, milk cost is significant and worth tracking separately.

Cups and consumables

Takeaway cups, lids, sleeves, and stirrers add $0.15–0.30 per takeaway coffee. For a café doing 200 takeaway coffees per day, that's $30–60 per day in consumables alone — over $10,000–$20,000 per year.

Syrups and extras

Sugar-free syrups, vanilla, caramel, alternative milks — these add cost that is often not tracked. Oat milk at $2.50–3.50 per litre vs dairy at $1.50 is a meaningful cost difference if 20–30% of your customers choose it.

The milk waste problem

Milk waste is the most common reason coffee cost runs high. Oversteaming, incorrect ratios, split pitchers, and milk poured and not used all add up. A barista who consistently oversteams and tips 50ml per drink is wasting roughly 10 litres of milk per 200 coffees served — about $15–20 per day, or $5,000–7,000 per year from one person's habit.

The solution is barista training, standardised ratios, and measuring actual milk usage against theoretical usage. Most cafés that do this exercise for the first time find 8–15% milk waste — which, when eliminated, has a meaningful impact on beverage cost percentage.

When did you last raise your coffee price?

Specialty coffee bean prices have increased 20–40% over the past two years in most markets. If your flat white is still $5.00 and your bean cost has risen from $28/kg to $42/kg, your coffee cost percentage has shifted significantly without you changing anything. A $0.50 price increase on your standard coffee — from $5.00 to $5.50 — recovers most of that margin. Most customers accept small price increases without complaint if the quality justifies it.