Coffee and tea deliver the highest margins in hospitality. While steak might yield 30% margin, coffee consistently hits 80-90%. Most operators can't calculate their exact profit per cup though.
Most restaurants struggle with 20-30% food margins while their coffee machine quietly generates 80-90% profit per cup. The difference between operators who understand their beverage costs and those who don't can mean thousands in annual revenue. Yet calculating your actual coffee margin takes less than five minutes.
Typical margins on coffee and beverages
Hot beverage margins vary by establishment type, but rarely drop below 70%. Here's what you'll typically see:
- Espresso/americano: 80-90% margin
- Cappuccino/latte: 75-85% margin
- Tea: 85-95% margin
- Specialty coffee: 70-80% margin
💡 Example: Cappuccino calculation
Menu price: €3.50 incl. 9% VAT
- Selling price excl. VAT: €3.21
- Coffee beans (18g): €0.36
- Milk (150ml): €0.24
- Other (sugar, crockery): €0.05
Ingredient costs: €0.65 → Margin: 79.7%
Why are the margins so high?
Coffee and tea maintain relatively low ingredient costs compared to selling price. The main drivers:
- Small quantities: Just 18 grams of coffee beans for a double espresso
- Bulk purchasing: Coffee beans per kilo remain relatively affordable
- Minimal waste: Coffee and tea don't spoil quickly
- Zero preparation loss: No trimming waste like meat or fish
Cost price calculation per cup
For accurate margins, total all ingredient costs per serving:
💡 Example: Americano
Menu price: €2.80 incl. VAT (€2.57 excl. VAT)
- Coffee beans (16g at €20/kg): €0.32
- Water: €0.01
- Sugar sachets/milk powder: €0.05
Total costs: €0.38 → Margin: 85.2%
⚠️ Note:
Always calculate using your actual coffee bean purchase price. Specialty coffee can reach €30-40/kg, while standard blends often cost €15-20/kg.
Difference between coffee types
Not all coffee beverages deliver identical margins. Milk and syrups create the variation:
- Black coffee: Highest margin (85-95%)
- With milk: Slightly reduced margin due to milk costs
- With syrups: Additional costs of €0.15-0.25 per shot
- Plant-based milk: Premium milk reduces margin by 5-10%
💡 Example: Comparison of coffee types
All sold for €3.50 (€3.21 excl. VAT):
- Americano: €0.38 costs → 88% margin
- Cappuccino: €0.65 costs → 80% margin
- Latte with oat milk: €0.85 costs → 74% margin
Tea: even higher margins
Tea often delivers the highest margin of all beverages. From years of working in professional kitchens, I've seen tea bag costs range between €0.05-0.15, depending on quality:
- Standard tea: €0.05-0.08 per bag
- Premium tea: €0.12-0.20 per bag
- Loose tea: €0.08-0.15 per serving
At a selling price of €2.50 you'll easily achieve 90%+ margin on tea.
Impact on your total revenue
Coffee and tea often become the silent profit drivers in your business. A bistro selling 50 cups of coffee per day:
💡 Example: Annual coffee revenue
- 50 cups/day × €3.21 excl. VAT = €160.50/day
- 6 days/week × 52 weeks = €50,076/year revenue
- At 80% margin = €40,061/year gross margin
Coffee alone generates €40,000+ gross profit annually.
How do you calculate your coffee margin? (step by step)
Determine your ingredient costs per cup
Add up all costs: coffee beans (weight × price per kg), milk (ml × price per liter), syrups, sugar. Don't forget anything, not even the small amounts.
Calculate your selling price excluding VAT
Divide your menu price by 1.09 (at 9% VAT). A coffee of €3.50 becomes €3.21 excl. VAT. Use this to calculate further.
Calculate your margin
Margin % = ((Selling price excl. VAT - Ingredient costs) / Selling price excl. VAT) × 100. At €3.21 selling price and €0.65 costs = 79.7% margin.
✨ Pro tip
Track your exact bean usage by weighing your portafilter before and after grinding for 20 consecutive coffees. Most operators unknowingly over-dose by 2-3 grams, which cuts margin by 15-20%.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Why are my coffee margins lower than 80%?
Check if you're using premium ingredients (expensive beans, plant-based milk, syrups) or giving too generous portions. Also, low selling prices will reduce your margin significantly.
Should I include depreciation of my coffee machine?
Not for food cost calculation. Depreciation is a fixed cost you calculate separately. Focus on ingredient costs per cup first.
How many grams of coffee beans do I use per espresso?
Standard 7-9 grams for a single espresso, 14-18 grams for double espresso. Measure this once in your own machine to be certain.
Is specialty coffee still profitable with those high purchase prices?
Yes, but your selling price needs to increase proportionally. At €35/kg beans and €4.50 selling price you'll still achieve 75%+ margin.
How often should I adjust my coffee prices?
Check your purchase prices every quarter. Coffee prices fluctuate regularly, and suppliers adjust frequently.
What's the actual cost difference between regular and oat milk?
Regular milk costs about €0.16 per 150ml serving, while oat milk runs €0.30-0.35. This €0.15-0.20 difference can drop your margin by 5-8% per drink.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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