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Friday, March 20, 2015

$0.10 cents a cup (really)

I think I did the math
The next time you go in to you're a local gas station where there's only four of five brands
Think about the profit  cost of the product of gasoline which is only five cents to the manufacturer in about five cents to the store never mind that the state take 39 cents  of that gallon and the federal government takes between 6 cents and 7cents  
Ago to think of the gases speculators trying to make a killing on all the gas commodity
There certainly in the wrong commodity business they need to be in the coffee bean commodity business The only place for them to go is up
Where my going with this
Well this morning I thought I was pretty  slick after finding a parking spot for the big truck,,went into the Dunkin' Donuts coffee shop and ordered coffee cream and sugar put two dollars on the counter an to my surprise I was informed that is now $2.11 cents for an 14 ounces. Cup of coffee   Okay so we made it a small coffee
So traveling to my delivery destination sipping my small coffee,,,,, I stewed about this for about three hours
And no,,no,, cars  were run off the road due to my lack of high caffeine and  pondering this delicate subject
So I came away with A revelation that there is no money in a gas station business
However C O F F E E     yes
Seeing as how I don't drink Starbucks coffee, but I used to drink Dunkin' Donuts  this is what I came up with    I'm definitely in the very wrong business

For Dunkin' Donuts coffee 
And for those watching my weight not one donuts were consumed.     (Today)
At 128oz pr gal, that small cup 1.80$ 10oz + 12.8 cups. or 21.48 pr gal
                            Medium cup 199$ 14oz. + 9.1 cups or 17.91 pr gal
                                Large cup 2.25$ 20oz + 6.4 cups or 13.50 pr gal 
                  And yes prices may vary at participating  Dunkin' Donuts outlets
And no I didn't go into Starbucks to get their prices,, it would've been way too scary,
Now if you really think you been taken in the shorts read the article about  profit

Not all coffee beans are the same
Before the advent of specialty coffee chains, most people simply chose between regular or decaf. Starbucks changed coffee drinkers' expectations so that ordering a grande half-caf soy latte at 120 degrees is just another order. Green Mountain offers a variety of options as well through its single-serve portion packs. Dunkin' Donuts offers the fewest options of the three. The one thing all of the companies have in common is that they use high-quality arabica beans.

Arabica beans are typically grown at high altitudes and vary in taste depending on the geography in which they are grown; beans from Latin America differ in taste from beans grown in Africa which differ from beans grown in Indonesia. Most of Starbucks' signature blends are made with beans from farms in Indonesia and the Pacific Islands, where the beans typically have stronger, more earthy flavors. Dunkin' Donuts sources its coffee from Latin America, where the beans are sweeter, and Green Mountain sources from all three regions in roughly equal proportion.

Premium price for premium coffee
The strong and bitter beans that Starbucks uses are considered to be of higher quality than the milder beans used by Dunkin' Donuts. However, both companies charge high prices for their beverages. Industry experts say that an 80% mark-up for high-end brews is commonplace. For instance, a $7 cup of Starbucks ultra-premium coffee is rumored to cost the company only $1.30 to produce. The margin on lower-priced coffee may be even higher -- experts believe a $2 cup of coffee from Dunkin' Donuts may cost the company only $0.10 to produce.

With gross margins over 50% , it is clear that coffee is an extremely profitable product. Just last summer, Dunkin' Donuts chief financial officer said, "[W]e are a beverage company." For a company with 'Donuts' in its name, this is a particularly telling statement about the profits to be made in the coffee market.

Market segments
Starbucks, Dunkin' Donuts, and Green Mountain may compete in the same industry, but each targets a different segment of the coffee-drinking population. Starbucks' customer base is the most affluent of the three. The company roasts its high-quality Indonesian arabica beans into premium blends and offers a wide variety of modifications to its main menu; Starbucks boasts more than 87,000 drink combinations. It also offers an inviting atmosphere that encourages customers to linger; it offers a gourmet coffeehouse experience and therefore charges premium prices for its food and beverages.

Dunkin' Donuts, on the other hand, is more like the McDonald's of coffee. Its primary objective is to get customers in and out as quickly as possible. The coffee is milder than Starbucks' intense premium brews, and the atmosphere is an afterthought, but Dunkin' Donuts is positioned as the best option for undiscriminating coffee drinkers and hurried professionals who do not have time to wait for a gourmet brew to be made.

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