As I’ve worked in coffee and seen all of this firsthand, you’re not persuading me. I also think you’re talking about gross margin which does not include costs such as cup material, equipment, labor, rent, etc etc.
But this is my point. The product isn’t underpriced, your just not being efficient enough elsewhere and therefore not profitable. It’s not profitable to hire an expensive building to sell a small ticket item. The product isn’t too cheap, the running costs are too expensive. I can’t hire a building and pay people to sell toast, and then only make money by selling it for £5.
But anyway, the big shops are doing absolutely fine, so again, the product isn’t underpriced, they are more efficient selling it.
And the point on coffee being underpriced is entirely about the extent to which the labor which produces is undervalued. Guess what happens to the price of a coffee when you pay the farmers, shippers, and baristas a living wage?
The debate of whether we underpay farmers in poorer countries for these products is a seperate one. But the same applies to fruit, chocolate etc.
But if the price did go up then it would go up relatively to the consumer at home (the delightful coffee I made myself would cost me more than 20p it did cost) as well as to business, so the relative price change would be accepted. If small independents can only make profit by raising the price significantly on chains, without offering something significantly better, then they go bust as I doubt enough people will pay it.
You think that's bad you should look at some big construction companies' profits. Where I work at the moment their record profit is about £38m off something like £1.6bn turnover and a lot more faffing about than making coffee, although we do also make a lot of shit coffee.
Quite a bit more moving parts in construction! Also with raw materials prices sky rocketing I’m sure that won’t have helped. It’s standard for a lot of industries to only make small profits (or anything) relative to turnover. Basically make enough to pay off the loan/mortgage, then you eventually have the asset at the end to sell for cash. The poorly run ones go bust, the well run/good/efficient ones stay alive/thrive.
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