We will never know the exact numbers. However, from reported figures we know that $SBUX, $DNKN, $PNRA, $MCD all have similar margins across gross, ops and P&L (50-70, 10-20, 10-20 respectively).
the goal of all fast food centers is to produce a unit cost as close to $1, preferably lower, as possible and we also know from reported figures that 1 cent is the expected associated labor cost of a starbucks unit.
Knowing that the price of milk on commodities market is 16.42hwt or 1 cent / oz, knowing that SBUX coffee beans are 7cent/oz we can extrapolate that suitable extra costs for alternative milks must be in the single figure cent range.
Further supported by how if you are to go to a post-supply-chain-shipping-and-procurement wholesale vendor then the price of oatly barista edition oatmilk is 10c/oz and we can very safely assume that SBUX gets it much MUCH cheaper so we at least know the ceiling is $0.1
So, while I was exaggerating for effect in my original reply, the actual numbers- even if they are paying the same price as I would walking into a wholesaler (EXTREMELY unlikely):
price of 16oz cow milk latte: $4.25, unit cost $1, milk cost 1c
So in the extreme worst case scenario for starbucks they are making an extra 6% profit per ounce on oatmilk over cow milk, so not at cost-to-price parity.
And that’s the worst case, they are probably making more.
So in one comment you’ve gone from less than a cent to possibly 10 cents. And the price increase isn’t a dollar, it’s 70 cents.
Your calculations don’t seem to include increased refrigerated space required, additional man hours, increased inefficiencies, and possible increased spoilage. The price increase does not strike me as unreasonable given the circumstances.
“So while I was exaggerating for effect in my original post”
exhibit b:
“extreme worst case scenario”
exhibit c:
“almost a dollar”
waaaay ahead of the gotchas and objections my dude.
Additional space isn’t an overhead rolling operating cost, and per unit is probably infestisimal. Additional man hours is a weird objection, do starbucks even track for “reaching for a carton slightly further away”? I imagine the time savings for moving a carton 4" closer are measured in the thousandths of seconds
oat milk has a longer shelf life (6 months) than cow milk (5 days) and when opened too (10 days vs 2)
The price doesn’t have to strike you as reasonable or not because we are discussing whether we think starbucks are making a profit on oat milk or not. To me it’s obvious they are making more of a margin on oat over dairy, whether or not that is good/bad, reasonable/unreasonable, fair/unfair is an entirely different conversation
Additional space isn’t an overhead rolling operating cost, and per unit is probably infestisimal. Additional man hours is a weird objection, do starbucks even track for “reaching for a carton slightly further away”? I imagine the time savings for moving a carton 4" closer are measured in the thousandths of seconds
Either they added a new refrigerator or made room in an existing refrigerator. To make room something needs to be removed, less room for regular milk means more trips to a walk-in to restock. More SKUs means more time on ordering and inventory. If they added a refrigerator then there’s added electricity costs.
oat milk has a longer shelf life (6 months)
I meant once opened, which is more like a week. Which means they likely all need day dots put on them. More man hours (or minutes, or seconds)
The price doesn’t have to strike you as reasonable or not because we are discussing whether we think starbucks are making a profit on oat milk or not.
They’re a business, I assume they make a profit on everything. Oat milk lattes would seem to be a strange loss leader.
again I already addressed those objections in my post before you commented. Shelf space is cheap, refrigeration already exists and is not an added cost, expanded refrigeration is a single point cost that is quickly paid back by sales, I dont think adding day dots is putting starbucks out of business.
they already have separate supply chains for paper cups, crockery, beans, syrups and milks — I know this because I worked on a project that used their paper cup supply chain a few years ago. Plus they already have an oatmilk supplier so they’re not even adding an additional sku.
I assume they make a profit on everything
yes, the point of this thread is “should companies by allowed to significantly profit more on allowances made for not being ablebodied” && “is charging more for dairy intolerance the same as charging more for using a wheelchair ramp or a braille menu”
yes, and what I was inferring is refrigeration is understood to be a necessary part of food service, so you can’t really say “food companies shouldn’t be regulated by preventing them charging extra for disabled patrons because they have to refrigerate the food!”
I can’t fathom why you’re constantly trying to drag this thread into a discussion about the minutae of drink service operation instead of the topic at hand.
We will never know the exact numbers. However, from reported figures we know that $SBUX, $DNKN, $PNRA, $MCD all have similar margins across gross, ops and P&L (50-70, 10-20, 10-20 respectively).
the goal of all fast food centers is to produce a unit cost as close to $1, preferably lower, as possible and we also know from reported figures that 1 cent is the expected associated labor cost of a starbucks unit.
Knowing that the price of milk on commodities market is 16.42hwt or 1 cent / oz, knowing that SBUX coffee beans are 7cent/oz we can extrapolate that suitable extra costs for alternative milks must be in the single figure cent range.
Further supported by how if you are to go to a post-supply-chain-shipping-and-procurement wholesale vendor then the price of oatly barista edition oatmilk is 10c/oz and we can very safely assume that SBUX gets it much MUCH cheaper so we at least know the ceiling is $0.1
So, while I was exaggerating for effect in my original reply, the actual numbers- even if they are paying the same price as I would walking into a wholesaler (EXTREMELY unlikely):
So in the extreme worst case scenario for starbucks they are making an extra 6% profit per ounce on oatmilk over cow milk, so not at cost-to-price parity.
And that’s the worst case, they are probably making more.
So in one comment you’ve gone from less than a cent to possibly 10 cents. And the price increase isn’t a dollar, it’s 70 cents.
Your calculations don’t seem to include increased refrigerated space required, additional man hours, increased inefficiencies, and possible increased spoilage. The price increase does not strike me as unreasonable given the circumstances.
cf supra—
exhibit a:
exhibit b:
exhibit c:
waaaay ahead of the gotchas and objections my dude.
Additional space isn’t an overhead rolling operating cost, and per unit is probably infestisimal. Additional man hours is a weird objection, do starbucks even track for “reaching for a carton slightly further away”? I imagine the time savings for moving a carton 4" closer are measured in the thousandths of seconds
oat milk has a longer shelf life (6 months) than cow milk (5 days) and when opened too (10 days vs 2)
The price doesn’t have to strike you as reasonable or not because we are discussing whether we think starbucks are making a profit on oat milk or not. To me it’s obvious they are making more of a margin on oat over dairy, whether or not that is good/bad, reasonable/unreasonable, fair/unfair is an entirely different conversation
Either they added a new refrigerator or made room in an existing refrigerator. To make room something needs to be removed, less room for regular milk means more trips to a walk-in to restock. More SKUs means more time on ordering and inventory. If they added a refrigerator then there’s added electricity costs.
I meant once opened, which is more like a week. Which means they likely all need day dots put on them. More man hours (or minutes, or seconds)
They’re a business, I assume they make a profit on everything. Oat milk lattes would seem to be a strange loss leader.
again I already addressed those objections in my post before you commented. Shelf space is cheap, refrigeration already exists and is not an added cost, expanded refrigeration is a single point cost that is quickly paid back by sales, I dont think adding day dots is putting starbucks out of business.
they already have separate supply chains for paper cups, crockery, beans, syrups and milks — I know this because I worked on a project that used their paper cup supply chain a few years ago. Plus they already have an oatmilk supplier so they’re not even adding an additional sku.
yes, the point of this thread is “should companies by allowed to significantly profit more on allowances made for not being ablebodied” && “is charging more for dairy intolerance the same as charging more for using a wheelchair ramp or a braille menu”
Hand waiving something away isn’t addressing it, but fair enough.
it’s not Hand waving - an extra fridge is just cost of doing business.
Everything is a cost of doing business: payroll, electricity, inventory, etc.
yes, and what I was inferring is refrigeration is understood to be a necessary part of food service, so you can’t really say “food companies shouldn’t be regulated by preventing them charging extra for disabled patrons because they have to refrigerate the food!”
I can’t fathom why you’re constantly trying to drag this thread into a discussion about the minutae of drink service operation instead of the topic at hand.