So, especially now that coffee is going through the roof, I'm having trouble working out a retail price for drip coffee. I can still do espresso drinks with a 29% COGS, but if I try that with drip coffee, my retail price is nuts compared to the competition. I do carry Fair Trade from a micro-roaster and, unfortunately, my competition does not, but the coffee house is also in a small Midwestern town where a lot of the customers do not necessarily understand or care about Fair Trade and why it's more expensive. Do I stick to my guns and set my prices based on 29% GOGS or consider it a 'loss-leader' and maintain comparable retail prices, leaving my COGS at 34-39%, but bringing in customers who will buy food too? My overall COGS is almost 40% due to lower margin on drip coffee and retail items where I have 50-60% cost. It's been almost 6 years and I do have my loan paid off now, but with the economy, sales have been sluggish so I'm still not making a salary that's at even poverty level.
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