How to work out GP on a flat white

Gross profit (GP) is what's left from a sale after paying for what went into it. On a flat white that's the coffee, the milk and, for takeaway, the cup and lid. Wages, rent and energy come out of what's left, so GP is the first number to get right.

1. Cost what goes in the cup

Take each ingredient's pack price and work out the share one drink uses.

• Coffee: a 1 kg bag at £22, 18 g a double shot, so 18 ÷ 1000 × £22 = 40p.
• Milk: 2 litres at £1.30, about 180 ml steamed, so 180 ÷ 2000 × £1.30 = 12p.
• Cup and lid: £9 for 100, so 9p.

Total cost to make: about 61p. Add a little for the milk you pour away when steaming; most cafes lose 5 to 10%.

2. Take VAT out of the price

Hot drinks carry 20% VAT, so if you're VAT registered, a sixth of a £3.40 flat white goes to HMRC. You keep £3.40 ÷ 1.2 = £2.83. That's the number GP is worked out on.

3. Work out the GP

£2.83 − £0.61 = £2.22 gross profit, which is £2.22 ÷ £2.83 = 78%.

That's healthy for coffee, where most cafes aim for 75 to 85%. The catch is that the number moves. When milk goes up 10p a litre, or a new barista pulls 20 g instead of 18 g, it drops without anyone noticing.

4. Check the sizes and the extras

A large latte with 300 ml of milk can make a lower GP than a small one if the price gap is only 30p. Oat milk often costs three times as much as dairy, so a 40p surcharge may not cover it. Cost each size and each extra separately.

Try your own numbers in the free GP calculator.