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Permalink Reply by April Fritzen on July 8, 2008 at 5:23pm

I try to average 25-28% for payroll. Creating a spread sheet in excell is a good way to calculate for pricing your products. I mark up everything at least 100%. You can probly find some formulas with a google search.

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Permalink Reply by Jay Caragay on July 8, 2008 at 8:20pm

On a very rudimentary basis, your COGS should be no greater than 30% of your retail price. Quite simply, this means that it should cost you no more than 30 cents to make a one dollar beverage. This includes all costs excluding labor, rent, utilities.

Ideally, payroll should be 25% or less than gross revenue. And rent is best at 6% or lower of your gross revenue.

What do I charge for a 12z latte? $3.25 - and that's adhering to the 30% COGS.

However, my price is not quite relevant. You need to sit down and do your own breakdown and analysis to understand your costs and figure out the right retail price for your business.

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Permalink Reply by ray peck on July 8, 2008 at 8:53pm

Really great, thanks april and Jay for their input.

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Permalink Reply by Stickman on July 8, 2008 at 9:03pm

When I was opening my shop I was told lots of stuff about percentages and all that. I'm sure we're all different. Here's what I aim for:

payroll (including me) about 30% (excluding me it's about 15%-20%)
Food mark-up in restaurants is usually 3:1
Retail goods are 2:1 or less - depending. I aim for 1.7:1 to move stock more quickly.
12oz dbl latte = $4
Pastry mark-up, see above. Although we bake our own from scratch and it's more difficult to determine ratios as we have raw ingredients, labour, electricity, etc...I'm willing to earn less on baked goods to encourage loyalty due to quality.

What's your goal with this info, Ray?

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Permalink Reply by ray peck on July 8, 2008 at 10:12pm

Stickman...I have been operating fairly loosely and have gotten away with it to a point. Meaning I have not really watched my costs but have fallen into the %'s somewhat. I want to tighten my belt and be responsible as a business owner. There are times I have fear around looking at my checkbook avoiding an experience of being defeated. I have taken on looking everyday without fail for the last few weeks and find that very freeing....I know where I am and what next to do. Sounds silly, but true.

The other part to what I am up to with this info is I am in conversation and analysis with another small coffee store owner in partnering with me opening 2 new stores. Thx for asking.

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Permalink Reply by Alex Galt on July 9, 2008 at 6:05am

Our payrolls is about 20%, which doesn't include us (my wife and I). We do a standard 100% markup for things like chocolate bars, insulated mugs, etc. For food and beverage, it varies. We charge 3.50 for a 12 oz, double latte. And our pastry markup varies. We do best (way more than 100%) on the bakery that we make ourselves (muffins, blondies, scones, biscotti), and between 75% and 150% on the bakery that we have our freelance baker make (cakes, bars, and so forth).

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