Robert McKeon Aloe
Aug 10, 2018 · 4 min read

Baseline Example: Blue Bottle

Blue Bottle Prices

Blue Bottle Coffee is what’s called 3rd wave coffee (1st wave was drip coffee post-WWII, and 2nd wave was Starbucks-type espresso drinks). 3rd wave means special roasts and a quest for even a good shot of espresso. Starbucks does a very dark roast while most 3rd wave shops do a medium roast w

Blue Bottle Coffee is what’s called 3rd wave coffee (1st wave was drip coffee post-WWII, and 2nd wave was Starbucks-type espresso drinks). 3rd wave means special roasts and a quest for even a good shot of espresso. Starbucks does a very dark roast while most 3rd wave shops do a medium roast which leaves more of the original flavors. So to start, I do declare that I like the coffee from Blue Bottle and most 3rd wave joints, but I think they overcharge for just not burning the beans.

3rd coffee shops charge more for roasted coffee and espresso drinks, and normally this doesn’t bother me because I drink most of my coffee with my home setup or personal office. However, a few weekends ago, I stopped in at Blue Bottle in San Francisco. I had a shot of espresso, and I was a little shocked at the price. It was little higher than this picture, but I decided to do a price breakdown.

I think what bothers me even more though is the price to use Soy Milk or Almond Milk…

The Cost of Roasting

Let’s start with the cost of roasting. I’m not sure if you are aware, but I roast my own coffee (https://www.linkedin.com/pulse/progressive-refinement-purification-story-espresso-shot-mckeon-aloe/). So let’s breakdown the roasting cost, at least in my case.

I use a Hottop Roaster that uses 750 watts, and a roast takes 20 minutes, so 0.250 kw/hour. 1 kw/hour is typically on the order of $0.10. I think it is fair to set aside the cost of roasting especially consider at their scale, the cost is probably cheaper. There is a startup equipment cost, but that doesn’t continue. There is a small amount of maintenance costs as well.

Now, let’s consider two coffees from Burundi from Sweet Maria’s and Blue Bottle. I think they are pretty similar in quality.

Below is a table assuming the different amounts of coffee as if you bought them green from Sweat Maria’s. It is key to remember that Blue Bottle is buying in larger bulk most likely directly, so their cost per pound should be even less. Let’s assume their cost for green beans is the same as buying 20 lbs from Sweat Maria’s. Also, assume the weight after roasting is reduced to 88% of the original green weight. So then the bag is sold in store at a high mark-up, and usually they sell in 12oz or 6oz bags. I think this is a sneaky way so you don’t realize you are paying close to $30/lbs.

The Cost of Milk

There are a lot of espresso based drinks. That’s how Starbucks makes their money. They burn their beans to help keep a consistent flavor, but this flavor is not very good on its own, which means people have to add some milk. That’s where the money is, particularly when people are lactose intolerant.

What’s the justification for charging another $0.75 when a person who is lactose intolerant doesn’t get to also drink the milk? Let’s see what the breakdown cost is for both milks assuming they cost close to each other. We can even assume Organic Soy Milk is a dollar more. This also assumes the amount of milk used in the worst case for a cappuccino includes the foamed milk. It’s possible a cappuccino is even cheaper.

Total Drink Costs

I took the list of drink prices, and I calculated actual cost with the assumptions above. I also calculated the cost assuming a double shot ristretto which is how Blue Bottle and many 3rd wave places pull their espresso. So a normal pound of coffee is 453 grams, and a double shot is 14 grams, so there should be 32 shots per pound. See the table below:

In Conclusion

Drinking espresso out and about is expensive, and if you’re selling coffee, you’re really taking advantage of people with lactose issues by charging more for milk alternatives due to the fact that it is pure profit.

Overthinking Life

Thinking too much on Philosophy, Math, Science, Politics, Work, and Life

Robert McKeon Aloe

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I’m in love with my wife, my kids, espresso, tomatoes, cooking, engineering, talking, family, Paris, and Italy, not necessarily in that order.

Overthinking Life

Thinking too much on Philosophy, Math, Science, Politics, Work, and Life

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