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    The Coffee-WiFi Theorem

    Posted on July 1, 2011 by David Pierce David Pierce | NO COMMENTS

    Mat Honan is using the coffee shop’s free Wi-Fi, and drops some math to decide whether or not he feels bad:

    At a big chain, the profit margin on a single cup of coffee can be pretty high—at Dunkin’ Donuts, for example, it’s estimated to be as much as 95 percent. Starbucks, meanwhile, has a gross profit margin of nearly 60 percent (which takes much more than a cup of coffee or even just the store itself into account). They give you WiFi as a way to keep you in there buying drinks.

    While smaller, locally owned cafés (obviously) don’t publish their financials, roughly speaking you can expect a return of about 70 to 80 percent on a cup of coffee or latté. That doesn’t factor in other expenses the shop has, like rent and insurance and payroll. And a high-end cafe with great beans and skilled baristas will, oddly, often earn less overall than the place on the corner with the airpot full of hour-old brew that tastes like santorum. But still. They make money when people buy coffee, or they go out of business.

    The conclusion? Drop $15 over the course of the day, and camp out guilt-free. And stench-rich.

     

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    About the author: David Pierce (1175 Posts)

    David Pierce, the founder of Digitizd, is now Reviews Editor at The Verge.


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