A single cup of chamomile tea might cost you €0.40 to make, yet many café owners think it's just €0.15. Tea and herbal tea margins look deceptively high at first glance. But hidden costs can slash your profits if you're not calculating correctly.
Why tea margin differs from coffee margin
Coffee calculations focus on beans, milk and sugar per cup. Tea costs spread across different areas:
- The tea bag or loose tea
- Hot water (energy costs)
- Milk, sugar, honey (with many tea types)
- Dishware (cup, saucer, spoon)
- Time (tea steeps for 3-5 minutes)
Most entrepreneurs calculate just the tea bag cost. Your margin appears to be 90%, but reality tells a different story. This oversight is a mistake that costs the average restaurant EUR 200-400 per month in miscalculated pricing.
Calculate the costs per cup of tea
A proper margin calculation requires adding all expenses together:
💡 Example: Earl Grey tea
Selling price €2.50 (incl. 9% VAT) = €2.29 excl. VAT
- Earl Grey tea bag: €0.18
- Hot water (energy): €0.03
- Milk (optional): €0.08
- Sugar/honey: €0.02
- Dishware (washing): €0.04
Total costs: €0.35 per cup
Your food cost becomes: (€0.35 / €2.29) × 100 = 15.3%
That delivers a solid margin of almost 85%.
Herbal tea costs exceed expectations
Premium herbal tea carries higher purchase costs than standard tea varieties:
💡 Example: Fresh mint tea
Selling price €3.20 (incl. 9% VAT) = €2.94 excl. VAT
- Fresh mint (15 grams): €0.45
- Hot water: €0.03
- Honey: €0.08
- Dishware: €0.04
Total costs: €0.60 per cup
Food cost: (€0.60 / €2.94) × 100 = 20.4%
Still profitable, but notably higher than regular tea.
Tea blends: monitor the mix ratio
Custom tea blends require calculating every single ingredient:
- Base tea (black/green/white)
- Herbs and spices
- Dried fruits
- Aromas or essential oils
⚠️ Watch out:
Calculate per gram, not per bag. A blend of 3 grams costs more than a regular tea bag of 2 grams.
Don't overlook energy costs for water
Hot water requires energy. Tea needs boiling water (100°C):
- Per cup of tea: approximately 250ml water
- From 15°C to 100°C = 85°C temperature difference
- Energy costs: approximately €0.02-€0.04 per cup
At 100 cups of tea daily, this impacts your margin by €2-4 per day.
Tea margin vs. coffee margin
Standard margin comparison across café beverages:
💡 Margin comparison:
- Regular tea: 80-90% margin
- Premium herbal tea: 70-85% margin
- Fresh tea blends: 65-80% margin
- Coffee: 85-95% margin
- Cappuccino: 80-90% margin
Tea typically generates slightly lower margins than coffee, yet remains highly profitable.
Seasonal tea prices
Certain herbs and tea varieties experience seasonal price fluctuations:
- Chamomile: more expensive in winter (cold season)
- Fresh mint: cheaper in summer
- Ginger: price fluctuations due to harvest
Review your purchase prices quarterly and adjust menu pricing accordingly to maintain margins.
How do you calculate the margin on tea? (step by step)
Gather all costs per cup
Add up: tea bag/loose tea, hot water (energy), milk, sugar/honey, and dishware costs. Don't forget any ingredient that goes in or with the tea.
Calculate your selling price excl. VAT
Divide your menu price by 1.09 (at 9% VAT). For example: €2.50 incl. VAT = €2.29 excl. VAT. Always calculate with the price excluding VAT.
Calculate your food cost percentage
Use the formula: (Total costs / Selling price excl. VAT) × 100. A food cost of 15-25% for tea is healthy, then you keep 75-85% margin.
✨ Pro tip
Audit your herb suppliers every 8 weeks during peak seasons. Chamomile prices can jump 40% between September and December, while mint drops 25% in summer months.
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
Should I include VAT in my tea cost price?
No, always calculate with the selling price excluding VAT. Tea in cafés falls under 9% VAT. Divide your menu price by 1.09 to get the price excl. VAT.
What is a healthy margin on herbal tea?
A food cost of 15-25% is healthy for herbal tea, which means 75-85% margin. Premium herbal tea may have slightly higher costs than regular tea.
How do I calculate loose tea per cup?
Weigh how much you use per cup (usually 2-4 grams). Divide the kilogram price by 1000 and multiply by the number of grams per serving.
Should I include energy costs for hot water?
Yes, hot water costs energy. Calculate approximately €0.02-€0.04 per cup for heating 250ml water from room temperature to boiling point.
Are tea blends more expensive than regular tea?
Usually yes. You pay for multiple ingredients (base tea + herbs + spices). Calculate all ingredients per gram and add up for the total cost price.
How do steeping times affect my labor costs?
Tea steeps 3-5 minutes compared to coffee's instant preparation. Factor in staff time if you're hand-delivering steeped tea to tables. This can add €0.15-€0.25 per cup in labor.
📚 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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