In the dessert and beverage business, profit is not a puzzle, but the result of careful calculation. Many F&B business owners, especially those who are just starting out, often determine selling prices based on "guesswork" or following competitors' prices. In fact, without knowing the detailed Cost of Goods Sold (COGS), you are running a business with your eyes closed.

One drink sold may not actually make a profit, or even a loss, if the COGS is not calculated correctly. This article will break down how to accurately calculate COGS per glass, so that you can set the right selling price and maximize the profitability of your beverage business.

Unpacking the Cost Components in One Drink

To calculate COGS accurately, you need to break down each component. Often, business owners forget to count "small" costs like ice cubes or straws, even though they accumulate.

Let's take a look at the main components of the COGS for one glass of contemporary drink:

1. Cost of Main Ingredients

• Beverage Base:Powder drink, tea(leaf/powder), or coffee beans.
• Liquids: Milk (UHT/freshmilk), creamer, or mineral water.
• Sweeteners: Liquid sugar, flavor syrup, fruit puree/sauce/hour.

2. Cost of Fillings & Toppings

• Toppings: Boba / tapioca pearls, popping boba, jelly (such as coffee jelly or grass jelly), crystal jelly, nata de coco, whipped cream, or ice cream.
• Complements: Sauces (caramel, chocolate) or sprinkles(sprinkles, cocoa powder).

3. Cost of Consumables

• Ice cubes: Ice cubes have a production cost (water, ice machine electricity) or a purchase cost. Never forget this!

4. Packaging Cost

This is everything that customers take home with their drinks.

• Plastic or papercup
• Lid convex/flat
• Straws (plastic, paper, or boba straw)
• Plastic sealer (if using a press)

Case Study: Calculating the COGS of "Strawberry Jasmine Milk Tea"

The key to the calculation is the Standard Recipe. You need to have an exact measurement for each beverage made so that the HPI is consistent. For example, let's say you want to calculate the HPI of 1 Cup (16 oz) of "Strawberry Jasmine Milk Tea".

Step 1: Convert Purchase Price to Cost per Gram/ml

First, find out the smallest unit price of your ingredients.

• Jasmine Tea Base (Bobaking): 450 g = IDR 111,000
  • Cost per gram = IDR 111,000 / 450 g = IDR 247/gram
  • Brew Ratio Assumption: 10 grams of tea leaves are used to make 1,000 ml (1 liter) of tea water.
  • Cost for 1,000 ml of tea water = 10 grams x IDR 246.7/gram = IDR 2,467
  • Cost per ml of tea water = IDR 2,467 / 1,000 ml = IDR 2.467 per ml (We round up to IDR 2.5/ml)

• Water: 19 Liters (19000 ml) = IDR 15,000
  • Cost per ml = Rp 15,000 / 19000 ml = Rp 1/ml

• Dreamy Milky Base: 1kg (1000 g) = IDR 69,750
  • Cost per gram = Rp 69.7500 / 1000 g = Rp 69.75/gram
  • Brew Ratio Assumption: 1 gram of creamer mixed with 1 ml of water.
  • Cost for 1 ml base creamer = (1 gram x Rp 69.75/gram) + (1 ml x Rp 1/ml) = Rp 69.75 + Rp 1 = Rp 71/ml
  • Cost per ml base creamer = Rp 71 per ml

• Strawberry Fruitmix (Bobaking): 1 Liter / 1.3 kg (1300 g) = IDR 126,500
  • Cost per g = IDR 126,500 / 1300 g = IDR 97/g

• Simple Syrup (Bobaking): 1 Liter / 1.3 kg (1300 g) = IDR 31,500
  • Cost per g = IDR 31,500 / 1300 g = IDR 24/g
• Ice cubes: Cost per 1 g (assumption) = IDR 1/g
• Complete Packaging (Glass + Lid + Straw): 1 set = IDR 1,200

Step 2: Calculate Cost Based on Standard Recipe

Now, enter the cost per gram/ml into your standard recipe.

After calculating all the raw material costs, you get a COGS of IDR 8,400 per glass. Many people stop at this stage and immediately determine the selling price. In fact, there is one important element that is often missed and this is where many F&B businesses lose profit without realizing it.

Step 3: Don't Forget! COGS is not the only cost

COGS only calculates the cost of raw materials, but to run an F&B business, you don't just pay for ingredients, you also pay:

• Barista/employee salary
• Electricity for ice machine, refrigerator, sealer
• Rent a space
• Plastic, tissue, laundry soap
• Other daily operating expenses

These are called OPEX (Operational Expenditure) or operational costs. The biggest mistake business owners make: calculating selling price only from COGS without including OPEX. If OPEX is not calculated, you may feel "profitable" when in fact your business is only generating cashflow, not profit.

The total OPEX in this example is Rp 10,000,000/month. Now, calculate the OPEX per glass based on the estimated sales. For example, the sales target is 3,000 cups per month.

OPEX per glass = Total OPEX / number of glasses per month

OPEX per glass = Rp 10,000,000 / 3,000 glasses = Rp 3,300 per glass

Once you know the full cost per glass, you can then calculate the ideal selling price. In the F&B industry, the general rule is:

The ideal COGS (food cost) is around 30% - 40% of the selling price.

If your food cost target is 30%, then:

• Selling Price (before VAT) = COGS / 0.35
• Selling Price (before VAT) = IDR 11,700 / 0.35
• Selling Price = IDR 33,428 ≈ IDR 33,500

With a selling price of IDR 33,500, you have a gross profit of IDR 21,800 to cover OPEX and make a net profit. Also, keep in mind that the final selling price is also highly dependent on the profit margin you want to achieve. Not all outlets or brands use the same margin, as each business has different pricing and positioning strategies in the market.

Can't Count? Let Bobaking Team Help You!

Calculating COGS in detail does require precision. However, this is a crucial step for the success of your F&B business. The accuracy of COGS is highly dependent on the consistency of the quantity and quality of the raw materials you use.

Choosing the right supplier is key. Quality raw materials from Bobaking not only guarantee a consistent premium taste for your desserts and beverages, but also provide price and supply stability, making your COGS calculation much easier to control.

Good news! Bobaking's team of experts don't just provide raw materials. We are your growth partner. We're here to help you:

• Calculating COGS: Our team can help you break down the costs and calculate the COGS for each of your beverage menus.
• Menu Development (R&D): Looking to create a unique and profitable new signature menu? Our R&D team is here to help.
• Free Product Demo: Try and experience the premium quality of Bobaking's beverage powder, boba, jelly, and other raw materials at your doorstep.

No more running your business by "guesswork". It's time to take full control of your profits.