Is a Coffee Roasting Business Profitable? A Month's Numbers

A coffee roasting business can make a wide margin on every bag, because the coffee in a bag costs a fraction of its price. In the example below, a 12 oz retail bag costs $4.36 to roast, pack and sell and goes for $18, and a 5 lb wholesale bag costs $20.44 and goes for $46.25. A two-person roastery selling 300 retail bags and 60 wholesale bags a month takes in $8,175, keeps $5,641 after the cost of every bag, and $3,241 after rent and the other monthly bills, on top of paying for the roasting hours. Whether yours does depends less on the price of a bag than on volume, the mix of retail and wholesale, and a handful of small leaks that add up. Below is the month worked through, and a free sheet to run your own.

The short version

• Work out each bag's cost from its real ingredients: green, roast loss, samples, bag, labor, gas and card fees.
• Subtract that from the price to get what each bag contributes to the month's bills.
• Retail bags contribute more each; wholesale bags fill the roaster every week.
• Profit is the month's contributions less fixed costs: rent, insurance, the loan, software, marketing.
• The leaks are roast loss creeping up, samples nobody counts, green that sits, and discounts.
• TaroStack costs every roast from its own lot and loss, so the margin is a number you see. More below.

Step 1: what a kilo of roasted coffee costs

The roastery buys a Brazil at $6.10 a kilo landed, loses 15.3% of its weight in roasting, and gives about 1% away as samples and cupping. So a kilo of coffee that reaches a bag costs:

$6.10 ÷ (1 − 0.153) ÷ (1 − 0.01) = $7.28 a kilo

Divide, don't add the percentage: you need more than a kilo of green for every kilo of roasted coffee, and the samples come out of what's left. The full working is in roast loss and cost per bag.

Step 2: what each bag costs and contributes

Contribution is what each bag leaves to pay the month's fixed bills and the profit. Per pound, the retail bag earns far more ($18.19 a pound against $5.16), which is why retail looks better on paper. But a café takes 50 pounds a month without anyone marketing to it, and a retail customer takes one bag when they remember.

Step 3: the month

The labor line already paid for the hours spent roasting and packing, at $20 an hour, so the $3,241 is on top of that. That month needs 238 kg of roasted coffee, about 284 kg of green, which is a little over four bags from the importer. What it takes to get to this point, from licenses to the first green order, is in how to start a coffee roasting business.

Break-even, and what growth does

With no wholesale at all, the fixed costs are covered by 176 retail bags a month ($2,400 ÷ $13.64, rounded up). Below that, the roastery is paying to exist. Above it, every retail bag adds $13.64 and every wholesale bag $25.81.

That's where the business case lives. Win two more cafés taking 30 more 5 lb bags a month between them and the month's profit goes up by about $774, with the same rent, the same loan and the same roaster. Doubling wholesale to 120 bags adds $1,549. Fixed costs only rise when the roaster runs out of hours, which is the next problem, and a good one.

Where the margin leaks

The bag-by-bag margin is wide, so small leaks hide in it. On this month's 238 kg:

None of these shows up on an invoice. The roast loss only shows if somebody weighs in and out and does the division. The dead green only shows when somebody finally opens the bag. Each one is small, and together they're the difference between a business that pays and one that's busy. Why each lot needs its own loss, in dollars, is in coffee roaster inventory software.

Get the profit sheet

Download the coffee roasting profit sheet. It has the inputs (green cost, roast loss, samples, labor rate, gas, card fees), each bag's cost and contribution at your volumes, and the month with fixed costs, profit, break-even and how much green to buy. Change any number and the rest follows. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Roasted cost per kg   =green per kg / (1 - roast loss) / (1 - samples)
Contribution per bag  =price - cost per bag
Break-even bags       =ROUNDUP(fixed costs / contribution per bag, 0)

Where this stops working

The sheet runs on averages: one green price, one roast loss, one sample rate. A real roastery has five origins at five prices, each lot losing its own percentage, a new lot arriving at a new price every few weeks, and two people roasting on different days, with the roast log in a spreadsheet that's only as good as its last entry. The margin on the sheet is the margin of a coffee that doesn't exist. And the leaks in the table above are exactly the ones a monthly spreadsheet can't see, because they happen one roast at a time.

How TaroStack does it

TaroStack turns that one averaged margin into a real one, per lot, per roast and per bag, without anyone doing the sums.

Every lot carries its own cost. Green comes in with the importer's lot number and the price you paid, with freight and other landed costs spread across what arrived, so each lot's cost per kilo is its own. Every roast is a batch: it takes green from the lot you used, you enter what came out, and the batch shows its roast loss and its actual cost against the recipe's standard. That's the first leak caught: a roast that lost two points more than usual is visible the day it happens. And from your own batch history, TaroStack checks whether a roast yields what its recipe claims, so a drifting scale or a wetter lot turns into a number you can act on.

Every bag knows its coffee. Packing is a recipe that takes the bag, valve and label off stock and gives each 12 oz or 5 lb bag the lot of the roast inside it. Margins are reported per product on what each bag actually cost, and a price-creep report per supplier shows an importer nudging prices up. Samples and giveaways are written off with a reason, so the 3% that used to vanish shows up in the losses report.

Nothing sits until it's flat. Stock that isn't moving shows how long since it last went out, and the reorder list shows each green coffee in days of cover at the rate you roast it, so you buy the next bag when you need it rather than when you think of it. Planning turns your cafés' standing orders and your sales history into what to roast and what to buy, and cafés are customers with their own orders and delivery notes, so growing wholesale doesn't mean growing the paperwork.

Lots and stock value are on every plan, from $49 a month; roasts, packing recipes, true cost and planning are on Standard at $99. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

How much does a coffee roasting business make?

It depends on volume and mix more than price. In the example, a two-person roastery selling 300 retail bags and 60 wholesale bags a month makes about $3,241 after every bag's cost and the fixed bills, on top of paying for the roasting hours.

What is the profit margin on roasted coffee?

On each bag, high: in the example a $18 retail bag costs $4.36, and a $46.25 wholesale bag costs $20.44. The business's margin after rent, insurance and the rest is lower, and depends on selling enough bags to cover those.

Is wholesale or retail coffee more profitable?

Retail earns more per pound; wholesale earns more reliably, because a café orders every week without marketing. Many roasters need both: wholesale to fill the roaster, retail to lift the margin.

How many bags of coffee do you need to sell to break even?

Divide your monthly fixed costs by what each bag contributes after its own cost. In the example, $2,400 of fixed costs and $13.64 per retail bag means 176 bags a month before any wholesale.