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The price for shot addition and size-up is expensive at 5 professional coffee shops including Starbucks. |
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Room 701, Seoul YWCA, 1-1, Myeongdong 1(il)-ga, Jung-gu, Seoul,
TEL +82-02-774-4050, FAX +82-02-774-4090
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Effective Date |
: June 28, 2012 |
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Dept. in Charge |
: Cost Analysis Team |
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Tel. |
: 02-774-4060 |
The price for shot addition and size-up is expensive at 5 professional coffee shops including Starbucks.
KRW 200~400 will be enough for shot addition and size-up cost.
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According to the results of a recent survey, consumers had complaints about the expensive prices of coffee at major coffee shops. The Cost Analysis Team of The Korea National Council of Consumer Organizations (KNCCO) (President Kim Yeon-hwa) has analyzed the different raw materials and costs for Espresso coffee products at major coffee shops with an attempt to propose a more reasonable price for the consumer.
To look at the coffee making process at major coffee shops, the basic is the Espresso (SOLO), then water is added to make Americano, and if milk is added, it becomes a Caffe Latte (Refer to [Table 1].).
To analyze the costs of the product, the cost for raw materials, labor costs, indirect costs, and various other costs including marketing expenses have to be calculated. But considering that labor costs, indirect costs, and various other costs as well as the profit of the company are already included in the price of Espresso according to the coffee-making process at major coffee shops. KNCCO analyzed the cost for the additional parts rather than analyzing the cost for raw materials and proposed a proper consumer price from the additional cost (1)
The price analysis was conducted for the prices of Espresso shots, Americano vs Espresso, Additional Cafe Latte vs Espresso, and Size-up of Americano and Cafe Latte at the 5 major coffee shops (the 5 companies which opened the most shops of direct management in 2011: Starbucks, Pascucci, Coffee Bean, A Twosome Place, and Caffe Bene).
[Table 1] Composition of raw materials for each kind of coffee at professional coffee shops
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Kind of Coffee |
Composition of raw materials |
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Espresso |
Coffee beans(10g) + water(30ml) |
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Americano(R) |
Espresso(solo) + 1shot(30ml) +water(295ml) |
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Americano(L) |
Americano(R) + 1shot(30ml) +water(88ml) |
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Cafe Latte(R) |
Espresso(solo) + milk(325ml) |
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Cafe Latte(L) |
Caffe Latte(R) + 1shot(30ml) + milk(88ml) |
Currently, most major coffee shops charge for additional shots and size-up of Espresso. The following are the results of the precise cost analysis of the materials added.
[Table 2] Sale price of Espresso coffees at major professional coffee shops
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Company |
Espresso(S) |
Americano(R) |
Americano(L) |
Cafe Latte(R) |
Cafe Latte(L) |
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Cafe Bene |
4,000 |
4,500 |
5,000 |
4,800 |
5,300 |
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Twosome |
3,000 |
3,800 |
4,300 |
4,100 |
4,600 |
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Starbucks |
3,400 |
3,900 |
4,400 |
4,400 |
4,900 |
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Pascucci |
3,000 |
3,800 |
4,300 |
4,000 |
4,500 |
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Coffee Bean |
3,000 |
4,000 |
4,500 |
4,500 |
5,000 |
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Average |
3,280 |
4,000 |
4,500 |
4,360 |
4,860 |
KRW 200 is enough for additional Espresso shot!
The direct materials cost for Espresso (solo) was KRW 196.03. KRW 181.37 for 10g of coffee beans (2) and KRW 14.66 for 30ml of water(3). Considering that the average sale price of Espresso (solo) is 16.7 times of direct materials cost, it was deemed appropriate to charge only for the raw materials at the time of the addition of the Espresso shot. Thus, we propose that the cost for the addition of one shot of Espresso be KRW 200.
The appropriate price for addition of Americano(R) vs Espresso is KRW 350, and the price for addition of Cafe Latte(R) vs Espresso is KRW 770!
To look at the additional material cost for an Americano (Regular, 355ml) and Caffe Latte (Regular, 355ml) vs Espresso (solo), an Americano can be made by adding one shot of Espresso (solo) and water (295ml) to the Espresso (solo), and the cost for the additional materials was estimated at KRW 340.14.
Caffe Latte(R) can be made by adding milk(4) (325ml) to Espresso(solo), so the cost for additional materials was estimated to be KRW 769.6. Therefore, we propose that the additional price of Americano vs Espresso be KRW 350, and the additional price of Caffe Latte vs Espresso be KRW 770.
The appropriate additional price for size-up of Americano(R) is KRW 240, and that of Caffe Latte is KRW 410! | |
Depending on the size of the stores, the ratio of retail margin 3) To look at the cost for size-up, Americano (Large, 473ml) needed one additional shot of Espresso (solo) and water (88ml) to the Americano(R), and the cost for the additional materials was estimated at KRW 239.02. In the case of a Cafe Latte (Large, 473ml), 1 shot of Espresso (solo) and milk (88ml) is added to the Caffe Latte(R), and the cost for the additional materials was KRW 404.41. Therefore, for the additional price for size-up, we propose KRW 240 for an Americano and KRW 410 for a Caffe Latte.
[Table 3] Additional costs and proposed prices (unit: KRW)
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Kind of Coffee |
Additional raw material |
increased costs
(raw materials) |
Proposed additional prices |
Range of additional prices at 5 professional coffee shops |
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Espresso(solo) 1 shot addition |
Coffee bean(10g) + water(30ml) |
196.03 |
200 |
500 or 600 |
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Americano |
① Americano(R)
vs Espresso(S) |
1Shot(30ml) + water(295ml) |
340.14 |
350 |
500 ∼ 1,000 |
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② Americano(L)
vs Americano(R) |
1Shot(30ml) + water(88ml) |
239.02 |
240 |
500 |
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Caffe Latte |
① Caffe Latte(R)
vs Espresso(S) |
milk(325ml) |
769.60 |
770 |
800 ∼ 1500 |
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② Caffe Latte(L)
vs Caffe Latte(R) |
1Shot(30ml) + milk(88ml) |
404.41 |
410 |
500 |
As shown in the results of the investigation, KRW 500 (KRW 600 at Starbucks) charged at most coffee shops for an additional shot is a little too much and so are other additional charges (Refer to [Table 3].). Thus, we demand that major coffee shops reduce their prices.
In addition, KNCCO will keep monitoring the prices of coffee to stabilize prices for the consumer and ask for the reduction in additional prices to check the excessive increase of prices by major coffee shops.
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1) It is possible to judge the appropriateness of the current sale price by directly calculating the costs of an Americano and Caffe Latte and the desirable profits. However, the access to the information on cost is restricted to a third party and the decision of the appropriate profit may be controversial. So such an analysis of cost was not attempted.
2) For the price of 10g of coffee beans, the average price of the beans imported from the U.S., Italy, Brazil, Switzerland, the G.B., etc. on the basis of the statistics in 2011 was used. It is higher than KRW 143.57 for 10g, which is the price of U.S. made coffee beans that are used the most in the coffee shops of foreign brands.
3) For the price of water, the average consumer price of 'Samdasu'(KRW 977/2,000ml) as of June, 2012 was used.
Cost for 30ml of water = KRW 977/2,000ml×30ml = KRW 14.66
Cost for 295ml of water = KRW 977/2,000ml×295ml = KRW 144.11
Cost for 88ml of water = KRW 977/2,000ml×88ml = KRW 42.99
4) For the price of milk, the average consumer price of 'Seoul Milk'(KRW 2,368/1,000ml) sold in Seoul as of June, 2012 was used.
Cost for 325ml of milk = KRW 2,368/1,000ml×325ml = KRW 769.60
Cost for 88ml of milk = KRW 2,368/1,000ml×88ml = KRW 208.38 |
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