Coffee Economics

Coffee-economics – or what you really pay for when ordering a cappuccino

In London, over the last weekend, I spent on average £ 2.50 per cup of coffee in different places. So far, so normal.

Later, while waiting in the hotel-lobby for my traveling companion, I overlooked a few newspapers and magazines the place offered for guests. And stumbled upon a study about coffee prices.

To be precise, about the cost breakdown for a medium-sized cappuccino, sold for £ 2.20 by the ubiquitous coffee shops in town.

My guess is, that most people would assume, a mayor part of this cost is for the coffee, shipped in from South America.

Well, according to retail researcher Allegra, who conducted the study, the cost of coffee in a £ 2.20-takeaway-cappucino is a mere 8 pence.

I have to admit, I was stunned. For what do I really pay, when ordering a cappuccino?

The packaging and extras – including the cup, lid, stirrer, napkin, sugar and milk are 24 pence, three times the costs of coffee…

Staff costs make up 53 pence of the price, 38 pence are calculated for rent or rates, and 33 pence for administration.
Finally, the tax man collects a VAT (Value-Added Tax) of 37 pence.

After all these costs are deducted, the coffee shops are left with 28 pence – that’s a profit-margin of nearly 13%.

Cappuccino to go: 8 pence for the coffee, 37 pence for the TVA – I’m still puzzled.

That’s it with coffee-economics, but we stay on the subject of VAT or TVA. Romania is number 1 within the EU in one specific TVA-sector. But it’s not about the ‘cotă standard’. More on that in the next chapter:

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