Is $4cad + tax too much for a cup of coffee?
Is it?
In anywhere other than North America, a 10oz/~300ml is not that small, and I bet we brew our coffee using more coffee than any chain (meaning more caffeine in less liquid).
But the main point I’m speaking on today has been on my mind for quite a while and this review was the spark.
Delving deep into this subject is going to open up multiple angles in my answer as I try to bring a greater understanding to the the nuances associated with not just coffee as a product, but the hospitality industry as a whole.
The amount of work that goes into bringing coffee from farm to cup has only become a major talking point over the last decade or so, but if I was addressing just the local market we trade in, I would say that I have seen few roasters in this city that have started to highlight the Specialty Coffee industry when addressing sustainability and traceability in the supply chain.
Read about the hard work Lulo Coffee put in to curating its range of coffee, and how they aim to create a more sustainable supply chain in a bid to prolong the life of coffee as an ‘attainable luxury’ product.
So, is $4.00 + tax too much for a cup of coffee? Honestly, it’s not even close to what it should be, and is only really an introduction to the kind of price coffee in cafes will be available for in the future.
Anecdotally, I was in London, UK a couple of weeks ago, and found most places I went to (who took pride in their coffee offering) were charging £4 for a double espresso, which on the day I'm writing this, converts to $7.19 CAD.
Obviously, I’m talking about one of the most expensive cities in the world, but the product we supply and care so much about, has the some serious overheads that go into producing the level of quality we strive for.
Modern coffee needs to be viewed like other established specialty products, like wine, whisk(e)y, cheese or chocolate. High quality, carefully sourced, terroir driven flavor profiles are what has pushed the serge in specialty coffee shops popping up in all parts of the world and what home brewers are spending hundreds and sometimes thousands of dollars to gain access to in the comfort of their own homes.
The culinary industry on a whole needs refreshing, and the style of coffee we offer can be found all around the globe.
If we go to a bar, a glass of wine under $10 would be rare to find, and we’re ok spending $5 on a bottle of sparkling water at a restaurant, but the thought of paying more than a couple of bucks for another one of lifes little pleasures is a step too far?
What goes in to making a cup of coffee?
This is an incredibly loaded question to kick things off. I’ll work my way through the supply chain to help bring a little more clarity on the details we have to consider when trying to develop our business strategy and what costs go into crafting high quality coffee.
The quality of raw products
My last post went into some detail on the kind of coffee we offer at our cafes. Specialty Coffee is a grade of coffee bean that holds an incredible range of flavor and sensory markers that make high quality beans stand out from any other.
The work at farm level that goes into producing coffee is mostly ignored by the average consumer. In fact; I’ve met many people that don’t know that coffee is a fruit, or that it needs to be picked, sorted, washed, sometimes fermented, milled, dried, quality controlled, packed, shipped, roasted, quality controlled (again), packed (again) and shipped (again) at a minimum.
Teams of people are hired to hand pick perfectly ripe fruit, sort and remove any defective fruit, ferment, mill, dry, sort again, package and transport tons of coffee beans on a farm.
After a coffee goes through the SCA grading system, that coffee will be picked up, shipped (usually by boat then truck) to either specialist green importers or straight to a coffee roaster.
The full process from farm to importer takes several months of work.
Coffee crops are at the whim of local weather fronts and climate issues, meaning that when droughts occur, the knock on effect for coffee producers can put them in difficult situations, just like Canadian farmers. This adds to the price of whatever crop they were able to produce to minimize the loss of income as much as possible.
Coffee grows in a fragile ecosystem, if any of you have read about the possible chocolate extinction by 2050, coffee shares this ecosystem.
Logistics
Coffee isn’t the most attractive commodity for logistics companies, as it takes a lot of room, is incredibly heavy (traditional coffee bags range from 60-70kg) and is relatively cheap in its cost per pound, when compared to more favorable imports, like electronics.
Logistics on a whole is an incredibly delicate and challenging sector right now, with freight costs drastically rising due to global crisis’ like the pandemic and Suez canal obstruction, along with more recent issues happening on the Red Sea.
Profiling
Once we have our green beans at the roastery, we need to make sure it tastes as good as possible.
Coffee loses ~15% in weight loss when roasted, so one pund of green coffee that costs $6/lb USD actually work out at $7.20/lb USD ($10.29/lb CAD) not including labour and roastery operating costs.
Rarely will a coffee be where we want it to be from the first roast, so profiling is an incredibly important part of the production process. We usually have it dialled in on our second or third roast.
Once the coffee is profiled on the roast machine we put it through testing to make sure it is easy to work with on cafe bars and on home machines for our retail customers.
All of this adds to the raw cost of materials, ensuring quality is there for everyone working with and drinking our coffee.
Infrastructure
We adjusted our business structure at the beginning of 2023, with the closure of two of our cafes and opening a coffee roasting facility, giving us more control over what we produce as a company.
More recently, we have added our new downtown location on Laurier Avenue, which houses our central kitchen, giving us full control over another vital area of our business.
These locations serve and will supply food and coffee to our more established Wellington Street and VIA Rail locations along with wholesale customers.
Wastage
We always try to keep wastage as low as possible, but if you have worked with coffee before, or dialled in a new bean on your home espresso setup, you’ll know its never as simple as just pressing a button.
We follow exact recipe and never serve anything we wouldnt be proud of.
The drip coffee we make in cafes has a shelf life of around 90 minutes, so we refresh our coffee regularly in order to only serve quality drinks.
Staff and Training
We try our best not to throw staff in at the deep end when onboarding new recruits.
Investing in the people who serve you coffee everyday to follow company procedures that help make your visit to our cafes a pleasant one isn’t cheap.
Additionally, we like to pay our baristas a living wage, minimum wage just doesn’t cut it these days. Canada is an expensive country to live in.
Business growth
Finally we talk about the business itself. The companies we compete with and how we need to maintain a sustainable business model in order to continue doing what we do.
Staffing alone is a major cost. With minimum wage reaching $17.20ph, the knock on effects of these increases for small businesses can easily be the deciding factor in closing down.
We have set a base wage of $17.50ph for our staff, this is often raised after a probationary/training period. To open a cafe for 8 hours (8-4), produce food in house and give quality service, we are looking at around $500 per day on staff alone. We like to pay our baristas a living wage, minimum wage just doesn’t cut it these days. Canada is an expensive country to live in.
There is also holiday pay and taxes that go into staffing costs.
Add rent, cost of ingredients, taxes and utility bills on top and you will realise just how fine the margins are when running a business in the hospitality sector.
We cant compete on price against any of the giant chains and quite frankly, we woudn’t want to.
Uninformed consumerism is one of the major issues when looking at modern problems of capitalism such as climate change and social justice issues.
Seeing a luxury product like coffee as anything other than a privilege to have access to every day, is what will drive the extinction of several plant crops we cherish so much in the modern world, and an overall shortage in coffee, wine and chocolate if things dont improve.
Q. How can I lower the cost of my morning cup of coffee?
A. Make it yourself.
Maybe this sounds a little condescending at first, but there has been a major shift in how coffee lovers are getting exposure to the best beans the world of coffee has to offer and its helping to make coffee more enjoyable and affordable to those who have adopted the craft.
The hobbyists who have fallen all the way down the rabbit hole may have ended up with kitchen counters covered in coffee brewing equipment that can easily run into the multiple thousands of dollars in cost.
It now feels like a good majority of coffee lovers have equipment with more modern capabilities at home than most cafes do.
To lower extremes, having a small, efficient coffee setup( i.e aeropress/pour over, grinder, scales) does the job perfectly, and these are brewing devices that are used by leading, award winning coffee shops across across all continents.
For an initial setup price of ~$150 (or less if you’re thrifty), a home brewer’s cup of specialty coffee will end up at around $1.50, maybe $2 if youre into some real high end stuff.
We offer regular open tastings and brew classes to help those interested gain a better understanding of benefits of brewing at home.
We also stock the incredible xBloom brewer, where crating incredible pourover coffee is as easy as pressing a button.
Get in touch for more details on office coffee subscriptions, tasting sessions and machine demonstrations.