This is one of those numbers every café owner should know.
Not roughly. Not somewhere in the right ballpark. Actually know.
A chai latte selling for £4.00 or £4.50 can look like a very profitable drink. And it can be.
But the chai itself is only part of the story.
There is the concentrate, the milk, the cup, the lid, wastage, labour and, where applicable, VAT.
It all adds up.
So, how much does that chai latte actually cost you?
Start with the chai
The easiest place to begin is your concentrate.
Let’s say a one litre bottle of chai costs £13.50 and your recipe uses 40ml per drink.
That gives you 25 servings from the bottle.
£13.50 divided by 25 gives you a chai cost of 54p per drink.
Simple enough.
But this is also where comparing chai purely on bottle price can send you in the wrong direction.
More on that in a moment.
Add the milk
Next comes the milk.
The exact cost will depend on your supplier, cup size and recipe, but let’s assume somewhere between 25p and 40p per drink.
Your chai and milk together are now costing around 79p to 94p.
If you are serving takeaway, you will also need to account for the cup and lid.
Add another 15p to 25p and you could easily be at around £1.00 to £1.20 before labour and other overheads enter the picture.
Against a £4.25 selling price, there is clearly the potential for a healthy margin.
But there is a catch.
Cost the recipe, not the bottle
This is the bit that matters.
Always do the calculation using the recipe you will actually serve.
We have seen cafés choose a cheaper chai concentrate, only to discover they need considerably more of it to get enough flavour through the milk.
Use more concentrate in every drink and that cheaper bottle suddenly does not look quite so clever.
This is why cost per serving tells you far more than cost per bottle.
Imagine one chai costs £10 a bottle and another costs £13.50.
The £10 option looks like the obvious winner.
But if you need 60ml of the first and only 40ml of the second to make a drink with the flavour you want, the numbers start telling a very different story.
Taste and cost need to work together.
A good chai has value beyond the margin
There is another side to this that spreadsheets cannot completely capture.
Customers do not choose drinks based on your ingredient costs.
They choose them because they taste good.
A chai with real spice, depth and character can become one of those drinks people remember, recommend and specifically come back for.
That has value.
The cheapest possible drink is not necessarily the most profitable one if nobody is particularly excited to order it again.
For us, this was an important part of developing Jeeves & Jericho Chai Fusion.
It had to deliver plenty of tea and spice. It had to be easy for a barista to make consistently. And the numbers had to make sense for the café serving it.
Character in the cup. Commercial sense behind the bar.
You need both.
Know your numbers
If you are thinking about putting chai on your menu, create a simple costing sheet.
You only need a few figures:
Bottle cost
Serving size
Number of servings per bottle
Chai cost per drink
Milk cost
Cup and lid cost
Selling price
Gross profit per drink
You can go further and account for VAT, labour, wastage and overheads depending on how you manage your menu costing, but those basic numbers will immediately give you a much clearer picture.
It takes a few minutes and makes comparing different chai products considerably easier.
Because the question is not really:
“What does a bottle cost?”
The better question is:
“What does it cost me to make a chai my customers will want to order again?”