What Is in the Price of a Latte? A Cost Breakdown

A latte now costs more than a sandwich in some cities, so it is natural to wonder where the money goes. What is in the price of a latte? Mostly people and property, not coffee. A UK industry study of chain cappuccinos found the coffee itself accounted for only about 3–4% of the price, the same share as the milk. Staff wages took nearly a quarter, rent and administration took 15% each, and tax took a big slice too. The café’s profit was around 13%. Ingredients are the small part of what you pay for; the barista, the counter and the seat are the big part.

Key takeaways

• Toast’s 2025 pricing data put the average US latte at $5.60, against $3.27 for drip coffee.
• In Allegra Strategies’ 2013 UK analysis, coffee and milk were each about 3.6% of a cappuccino’s price; cups and extras were about 7%.
• Labor, rent and administration together made up more than half of the price.
• A homemade latte with fresh specialty beans costs roughly $1–1.50 in ingredients in our worked example.

In this article

1. The breakdown, line by line
2. Why the coffee is such a small slice
3. Why a latte costs more than drip
4. Worked example: a homemade latte
5. What pushes latte prices up
6. FAQ

What is in the price of a latte? The breakdown, line by line

Detailed public breakdowns are rare because cafés guard their numbers. One of the most cited comes from Allegra Strategies, a London foodservice research group, which in 2013 analyzed a medium cappuccino priced at £2.20 in two UK chain shops. A cappuccino and a latte use the same ingredients in different proportions, so the structure is a useful guide to any milk-based espresso drink.

Two caveats. First, this is a 2013 UK snapshot: wages, rents and milk prices have all moved since, and the shares differ by country, city and café. Second, in the UK the 20% VAT is included in the menu price, whereas US menu prices usually exclude sales tax, which is added at the till. Still, the shape holds up widely: ingredients are a small fraction, and the fixed costs of running a shop are the bulk.

Why the coffee is such a small slice

A double shot uses roughly 14–20 grams of ground coffee. Even expensive specialty beans bought wholesale by the kilo work out to well under a dollar per drink. Milk is similarly cheap per cup. What is expensive is everything around them:

• Labor: a latte takes skilled hands at every step: dosing, tamping, pulling the shot, steaming and texturing milk, pouring and cleaning. Staff are also paid for quiet hours, opening and closing.
• Rent: cafés need busy, visible locations, which are the priciest per square foot.
• Equipment: a commercial espresso machine and grinders are a major investment and need regular servicing.
• Administration and overheads: insurance, utilities, card fees, accounting, waste, water filtration and marketing.
• Waste and spoilage: milk that goes past date, pastries that do not sell, shots dialed in each morning.

If you have ever wondered how thin the margins are from the other side of the counter, our guide to how to open a coffee shop walks through startup and running costs.

Why a latte costs more than drip coffee

Toast’s 2025 pricing data put the average US latte at $5.60 and regular drip coffee at $3.27, with cappuccino at $4.94 and espresso at $4.36. The gap is mostly about milk and minutes. Drip coffee is brewed in batches and poured in seconds. A latte needs a fresh shot plus 6–10 ounces of steamed milk, made one at a time, and alternative milks such as oat or almond add a further cost. Our explainer on how many espresso shots are in a latte shows why sizes and shot counts change the price too.

Worked example: what a homemade latte costs

Here is a transparent calculation you can redo with your own prices. Assumptions: a 12 oz (340 g) bag of fresh specialty coffee at $18, an 18 g double shot, whole milk at $4 per US gallon (3,785 ml), and about 200 ml of milk per latte.

The ingredient gap is about $4.44 per drink, but home lattes are not free of other costs: you need an espresso machine or a moka pot and frother, plus electricity, water and cleaning time. For a full yearly comparison including equipment, see home coffee vs coffee shop cost, which we will not repeat here.

What pushes latte prices up

• Green coffee prices: they swing with harvests and futures markets (our article on the coffee C price explains how). Because coffee is a small slice of a latte, even large bean price jumps move the menu price less than you might expect.
• Wages: as the largest single cost line, wage increases feed directly into prices.
• Rent: renewals in busy districts can reshape a café’s whole cost base.
• Dairy and alternative milks: milk is a bigger share of a latte than of an espresso or drip coffee.
• Packaging: takeaway cups and lids add cost that a ceramic mug does not.

Make your own café-style latte

The good news from the numbers: the part that makes a latte taste great, fresh coffee, is the affordable part. Our 6 Bean Blend is a dark roast built for espresso with a thick crema, and African Espresso, a medium-dark blend from Kenya, Tanzania and Ethiopia, gives a fruitier, livelier shot under milk. For a flavored latte without syrup, try Vanilla Hazelnut, a single-origin medium roast with roasted hazelnut and creamy vanilla notes. All are roasted 1–5 days before delivery.

Latte price FAQ

How much does it cost a café to make a latte?

The ingredients and cup usually cost a small share of the price; in the Allegra analysis, coffee, milk and packaging together were under 15%. The full cost, including labor and rent, is much higher.

Why is oat milk extra?

Barista-style plant milks typically cost the café more per carton than dairy milk, and they are bought and stored separately, so many cafés charge a surcharge.

Is a latte more profitable than drip coffee?

Not necessarily per minute. Drip is fast to serve; a latte earns more per cup but takes more labor and milk.

Does a bigger latte cost the café much more?

Mostly in milk and cup size. Many cafés use the same double shot across sizes, so larger sizes often cost little extra to make.

Sources

1. Coffee Represents 3-4 Percent of a Chain Cappuccino Cost, Research Group Says, Daily Coffee News, 2013 (Allegra Strategies data).
2. How Much Does Every Type of Coffee Cost?, Toast, 2025.

Facts checked in October 2026.

Keep reading: Home coffee vs coffee shop cost · Latte vs cappuccino vs flat white · Blends