What is the Real Cost of Coffee?

When you buy coffee at Starbucks, what are you actually paying? Unfortunately, the most expensive one in a cup of coffee is the cup itself. Larger franchises are profitable through commercial promotion and brands, not products to sell. (1) This leads to unequal profit sharing, large companies like Starbucks and Nestle can maximize profit and enjoy affordable coffee. Currently, owing to the overproduction of worldwide coffee, the price of coffee is lower than the original price. This is a demand of consumers.

The price of coffee is changeable. Mass market coffee like Folgers and Maxwell House cost about $ 5 per pound, but Superrea coffee like black ivory coffee (such as coffee made from elephants in the intestines) cost hundreds of dollars per pound You can reach it. More common "expensive" coffee baked by companies such as Counter Culture, Stumptown, Blue Bottle, etc. are usually sold for about $ 20 to $ 29 per pound. You can easily assume that more expensive coffee will pass a partial premium to farmers, but this is not always the case. "I do not necessarily have to think that high prices mean goodness of working conditions or paying for high prices due to sustainability of the environment unless otherwise stated," Ionescu says. "If your coffee is cheap, I think you can think that the environment and working conditions may not be good."

The retail price of coffee shop drinks varies. Espresso drinks can be sold for over $ 4. Retail prices fluctuate frequently due to fluctuations in the cost of raw coffee or dairy products. The retail price of 1 pound roasted coffee beans ranges from $ 10 to $ 20. Like some Pete Coffee, the retail price of luxury coffee or "spare" coffee per pound ranges from $ 50 per pound to $ 80 per pound. Coffee shops rely heavily on part-time employees and most workers hardly need skills. Many employees earn income slightly above minimum wage and remuneration may be much lower than the average salary of all US employees. The starting salary of Starbucks employees is about $ 8 per hour. Some Starbucks employees have formed unions to negotiate better wages, time and benefits.

Coffee beans are the main material, and coffee is about half of the company's total sales. Therefore, the profit margin depends to some extent on the cost of coffee beans. In 2011, coffee bean prices soared to $ 3 per pound (Kollewe, 2011). The price was very difficult to predict in the past few years. Since 1985, Howard Schulz is a very productive and reliable CEO who succeeded in developing Starbucks as the world's largest restaurant chain. Along with Howard Schulz, there are many other key executives who have worked at Starbucks for over 10 years, and they contributed to the success of Starbucks. The danger here is that many of these important executives are part of the retirement age. Starbucks persuaded Troy Ulster to stay during his attempts to leave in 2008, as he was the most competent candidate to become Howard Schulz 's CEO position