The Back Office - guides

How to price a coffee shop menu

Most menus are priced by vibes and the shop down the street. Here is the method that survives a rent increase - modeled figures, labeled as such, from an anonymous multi-unit operator.

Step 1: Know your real cost per item

Not the bean cost. The plated cost: ingredients plus the cup, lid, sleeve, and the waste rate you actually have. A $6 latte carries about $1.10 of real cost for most shops - and most owners have never checked. The food cost calculator does this in a minute per item.

Step 2: The guardrails

Guardrail	Target	Why
Blended COGS	28-32%	Higher and labor plus rent eat the month.
Drink food cost	15-22%	Drinks subsidize food. They are supposed to.
Food food cost	28-35%	Pastries exist to lift the ticket, not the margin.
Single-item ceiling	40%	Any item over 40% is a decision, not an accident. Know which.

Step 3: Price the menu as a system

You need one anchor (the item everyone compares prices against - usually the medium latte), two workhorses (high volume, high margin), and permission to have one or two loss leaders you chose on purpose. Price the anchor to the market, price the workhorses to the guardrails, and audit the rest with the menu engineering tool - it flags the dogs, the stars, and the items that sell constantly and make nothing.

Step 4: The yearly 5% move

Costs drift up every year. If prices do not, the difference comes out of the 12% net - which is the owner's entire pay. A 5% price move on $70k/month is $3,500. Do it once a year, all at once, with a printed new menu and zero apology. Weekly panic repricing after a bad Tuesday is how you train regulars to leave.

Step 5: Watch the ticket, not the prices