$2 Cup of Coffee - not for me

I like a cup of coffee with my breakfast, especially when I go out to eat. It’s one of the luxuries that I afford myself as part of my plan for frugal living.

Nevertheless, I have sworn off coffee at restaurants of late because they are just asking too much for this simple and cheap beverage.

At the risk of this turning into a rant, I offer you my observations about the cost of coffee in a restaurant.

Although a minor expense in the big scheme of things, I think you’ll get value from this discussion by looking at several points of comparison. If nothing else, you’ll probably never look at a cup of coffee the same way again.

What is Coffee?

If you think about it, coffee is a lot like tea – both hot beverages are about as close to hot water as you can get without being simply hot water.

How much are you going to pay for a cup of hot water? Not much I assume. Me either.

The Issue

The cost of breakfast around Cheyenne varies a bit. It's typically between $6 and $9. Coffee doesn’t vary that much. Nearly every breakfast establishment in town charges $2 for a cup of coffee.

I understand that it’s one of those “bottomless cups,” but am I the only one thinking that $2 is way too much for coffee? Perhaps others are thinking what I’m thinking, but they keep ordering coffee and paying about 25% of what their meal costs for a basic hot beverage that is very nearly as common as water.

As a consumer, I vote with my wallet, so let’s do the math to see what my wallet thinks about the cost of coffee.

Coffee Math

Folgers “classic roast” ground coffee on the Internet in August of 2009 was selling for $12.50 for about 34 ounces. It says it makes up to 270 six ounce cups. I don’t know anyone except ladies at the country club who drink those little 6 ounce cups with their pointed pinkies, so let’s say we’re going to pour a generous ten ounce cup of coffee. That container of coffee from Folgers will make 162 ten ounce cups.

That’s 8 cents worth of coffee per ten ounce cup. And, that’s the retail price, not the wholesale price that’s available to restaurants.

If the breakfast establishments were to multiply their cost of coffee by 6, which would be good markup in my book, it would cost about 50 cents a cup. Now, that’s more like it. I think paying 50 cents for a cup of coffee would be fine, but these places are charging $2. That’s 25 times the retail cost of the coffee. That’s an awfully steep markup.

Looking at it another way, at $4 a gallon for gas, a ten ounce cup of gas costs just a hair more than 31 cents. That means coffee in your cup is almost double the price of the most expensive gasoline in your tank. Here in early August of 2009, I can buy a gallon of gas for the price of a cup of coffee and a small tip.

What is wrong with this picture?

Copy Cats?

I can’t really blame the business establishments for gouging us on the coffee – they saw us get suckered into the “way more than the price of gas” for bottled water, so they probably figured they could do the same with this beverage. And, they have.

Now there are folks that spend $3 to $5 at Starbucks for a venti-latte-swirl-combo-cinnamon-coffee-float with a "twitch," and that’s fine. They can pay what they want for that fine rich flavorful fluffy coffee. I’ve even enjoyed a few Starbucks creations over the years. They’re good.

However, when we’re talking generic coffee made in bulk with a commercial hot beverage service machine, I’m not about to pay the “hand crafted” price, and I’m certainly not going to pay half of the “hand crafted” price either.

The decision is all yours. If you really enjoy a cup of coffee and you don’t mind paying the outrageous price, then have at it. As for me, I’m sticking with my plan for frugal living and just saying “no” to those that are charging way too much for coffee.

I don’t care if Juan Valdez himself rides all the way up from Colombia on his burro just to pour me a cup, I won’t be paying $2 for it. I’ll thank him for all his effort, but I’m not paying $2 for a cup of coffee.

Thank you very much, I'll have water - until you start charging me for that.

Done with Cup of Coffee, back to Frugal Living Tips

There certainly is a broad scope of topics here at Frugal Living Freedom. When you think about it, money permeates so very many activities in our lives, therefore, being frugal encompasses a wide range of interests, from being employed to taking a vacation, and just about everything in between. Enjoy the variety, pick up some new ideas, and start making frugality a part of your signature.

I'm a big proponent of being debt-free, and I mean entirely debt-free - no mortgage payment. It's not essential for financial freedom, but you'll love the feeling once you get there. If you didn't have a rent or mortgage payment, how much more could you do for yourself with your current level of income? I suspect plenty.

If you ever hope to see an abundance of wealth, you need to plug the hole in your boat. The wealthy don't necessarily make lots of money, instead, they know how to hang onto what they make, and make it work for them.