Starbucks’ margins

Starbucks’ lattes get cheaper the bigger the size. At £2.05, the 12 fl. oz. Tall equates to £0.17 per fl. oz. The 16 fl. oz. Grande will set you back £2.40, or £0.15 per fl. oz. And the Venti (20 fl. oz., as its name in Italian suggests) costs a whopping £2.65, or £0.13 per fl. oz. (As an aside, that’s 4% more liquid than an imperial pint.)

Looking at it a different way, the incremental four-ounce increases will set you back a little over six pence per fluid ounce. So if the Tall latte was priced based on three top-ups rather than as a drink in itself, it would cost £0.75.

So, assuming the effort taken to make each of the drinks is comparable, and assuming Starbucks breaks even on the Grande and Venti top-up portions (the additional coffee, milk and the incremental cup cost being no higher than £0.25), then £1.30 of each drink’s cost is profit. In actual fact, they’ll make money on the top-ups too, so the £1.30 figure is artificially low.

Comments

One Response to “Starbucks’ margins”

  1. swag on August 3rd, 2008 23:14

    “And the Venti (20 fl. oz., as its name in Italian suggests)”

    Didn’t anyone tell Starbucks that they’re on the metric system in Italy?

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