Kais01
New member
I have a coffee shop and I am thinking of beginning the JOURNEY of learning to Roast to increase profits. What is the average profit margin on beans?
Roasters Profit Margin
- Thread starter Kais01
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peterjschmidt
Active member
Can't say how much profit there is until you set the selling price.
I've been paying around $3.50 - 4.25 per lb. for green, multiply that by ~18% for moisture lost, and you can round it up to $5/lb for the cost of the coffee, before adding in any costs to roast it. Decent bags and labels will add another 50cents.
I've been paying around $3.50 - 4.25 per lb. for green, multiply that by ~18% for moisture lost, and you can round it up to $5/lb for the cost of the coffee, before adding in any costs to roast it. Decent bags and labels will add another 50cents.
slurp
New member
Hi Kais01,
That is a good question. Basically it boils down to how you buy your green. The more you buy the lower the price as well coffee is a commodity and the price is also based on the stock market.
If you bought a Colombia Bucaramanga Excelso when the market was $1.85 (pretty current market) after diffs and warehouse fees the green coffee cost $2.45 per pound. That does not include fright, so depending on quantity freight changes a lot but lest say you are buying 1000 pounds and the freight cost is $.035 per pound. The green to your door is $2.90.
Now you have the green and it is time to roast and bag (leaving out the equipment on purpose). Figure it takes you 30 min to roast 20 pounds of coffee and 30 min to bag it. (average lets not split hairs here) so you pay a person $12 per hour to work, your roasted coffee cost cost $5.00 per pound. Add a bag, label and tie your coffee is costing about $6 per pound to produce.
Do not forget that you have to pay off the equipment and lets say for fun that is $2 per pound, oops figure additional $2 per pound for electricity and gas /propane. Your coffee cost $9 per pound to produce. You sell it for $14 per pound retail and you have made $5 per pound.
You can get your cost down many ways but this is about average.
Hope this helps.
That is a good question. Basically it boils down to how you buy your green. The more you buy the lower the price as well coffee is a commodity and the price is also based on the stock market.
If you bought a Colombia Bucaramanga Excelso when the market was $1.85 (pretty current market) after diffs and warehouse fees the green coffee cost $2.45 per pound. That does not include fright, so depending on quantity freight changes a lot but lest say you are buying 1000 pounds and the freight cost is $.035 per pound. The green to your door is $2.90.
Now you have the green and it is time to roast and bag (leaving out the equipment on purpose). Figure it takes you 30 min to roast 20 pounds of coffee and 30 min to bag it. (average lets not split hairs here) so you pay a person $12 per hour to work, your roasted coffee cost cost $5.00 per pound. Add a bag, label and tie your coffee is costing about $6 per pound to produce.
Do not forget that you have to pay off the equipment and lets say for fun that is $2 per pound, oops figure additional $2 per pound for electricity and gas /propane. Your coffee cost $9 per pound to produce. You sell it for $14 per pound retail and you have made $5 per pound.
You can get your cost down many ways but this is about average.
Hope this helps.
slurp
New member
Funny Peter we both had very similar answers
peterjschmidt
Active member
You're scarin' me, buddy.
expat
New member
Even tho' I work my math in Euros I'd say that Slur's figures are a good 'go by'. And the bag/label figure jibes real close with mine once I do the currency conversion.
Amhas
New member
I appreciate that someone raised this topic because it got me thinking... In the end you might be close to actual cost/lb, but I wonder about a few things you mention here.
1. From what I have seen labels/bag cost go down with bigger purchases too, so that price seems high at $1/lb. Not siting anything here but it would completely depend on the bag and label you choose but it would easy to get this down even in small volumes to less than $0.50/lb
2. $12/hour... not sure how that adds $1/lb at 1 hour for 20lb. Assuming you're paying one person to roast and bag that's $0.60/lb. Half that if you are roasting and paying someone to just bag/label. Again I'm not sure what the rate of qualified/trained/experienced roaster would be here. It might be more than $12/hr.
3. $2/lb for energy cost? :-D I'm going to have to so some math here but my guess that even if your using propane (assuming you're using a gas unit) that you couldn't be exceeding $1/lb and most likely much less than that. How much gas do you expect to use per hour with a 5k unit? I'm seeing units in that size range rated around 20,000 to 40,000 BTU/hr. If that's correct lets just say you have a unit at the high end 40,000 btu/h which at my local rate would be $1.17/therm and 40,000 btu = .4 therms (if I got the conversion correct). So you're looking at $.47. Hard to say but I highly doubt it is that high since that's the high rating and the average is less than that. Taking into account electricity is more difficult since I don't have an exact measurement but I'm going to assume it is much less but at worse it is about the same, so I am going to make some assumptions here but again it has to be less than a $1/hour to run the machine and there for at 20lb per hour at a energy cost of $1/hour you're looking at about 5 cents a lb. :images:
4. might be missing the cost of a facility to roast in. I guess that is unless you already have the facility, just looking to add to an existing business.
5. agreed the cost of equipment is a variable completely driven on what you buy (used/new also play a part), so I'm not sure how you came up with $2/lb here. This is a difficult factor here so I hesitate to even estimate this.:decaf: A good roaster lasts for a very long time, arguably a lifetime with good maintenance and repair (another cost not calculated in here). Based on a 20lb per hour rate that you are talking about that's probably something in the neighborhood of a 5 kilo unit. A new high end name brand unit like that could cost you between $25k and $50 or more (if a afterburner is required in your region). I have seen similar older used models with afterburner for between $12 and $25k. Again this can vary on what brand but this is what I would consider high end quality unit, or if you happen to score a used unit at a steal. One would then have to figure out how they pay for that unit, but assuming it is a loan that cost could either be spread across the life of the unit or just the period of the loan. Lot of variables here which one would have to factor in to the cost and the way they spread that cost.
