The SAR 18 Latte Lie: Real Coffee Shop Profit Margins in KSA

If you ask an amateur to calculate the profit of a cup of coffee, they will do this math:

Milk + Beans = SAR 5.
Selling Price = SAR 18.
Profit = SAR 13.

If this were true, every cafe owner in Riyadh would be a millionaire.

The reality of the Saudi market in 2025 is that your “Gross Margin” is being attacked from every angle: mainly by ZATCA, your landlord, and the delivery apps.

This guide breaks down the actual Cost of Goods Sold (COGS) for a standard 12oz Latte, so you can price your menu correctly and avoid going broke while looking busy.

Table of Contents

Quick Breakdown: Where Does the SAR 18 Go?

Here is the anatomy of a single cup sold in Riyadh:

Item	Cost (SAR)	Who Gets It?
Selling Price	18.00	Customer Pays
VAT (15%)	– 2.35	ZATCA (Govt)
Net Revenue	15.65	You
Coffee Beans (20g)	– 2.50	The Roaster
Milk (280ml)	– 1.70	Nada / Almarai
Cup + Lid + Sleeve	– 1.40	Packaging Supplier
Waste & Spillage (5%)	– 0.30	The Sink
Gross Profit	9.75	Contribution Margin
Overhead (Rent/Staff)*	– 5.50	Landlord / HR
NET PROFIT	~ SAR 4.25	The Owner

*Overhead assumes selling 200 cups/day in a standard shop.

1. The “Cup & Lid” Inflation

New owners often budget SAR 0.50 for a cup. This is a fatal error.

In the era of Instagram and TikTok, you cannot serve coffee in a generic white paper cup. You need a “Double Wall” cup (so customers don’t burn their hands) and a high-quality lid that snaps shut tight (to prevent spills in cars).

The Cost: Custom printed cups from local suppliers (like Sary or Cups & More) cost between SAR 1.20 and SAR 1.65 per set.
The Lesson: That beautiful packaging you see on Pinterest costs 3x more than you think.

2. The “Dial-In” Waste: Money Down the Drain

Every morning at 6:30 AM, before your doors open, your Head Barista is throwing money away.

To ensure the espresso tastes perfect, they must “dial in” the grinder. This usually takes 3 to 5 double shots per group head.

The Cost: ~100g of coffee per day = SAR 15–20 daily loss.
The Impact: Over a month, you are throwing away SAR 600 of beans just to calibrate the machine. This must be factored into your COGS.

3. The “Alternative Milk” Trap

Standard full-fat milk (Nada/Almarai) is affordable at ~SAR 6/liter. But Saudi customers love Oat Milk and Almond Milk.

The Price Gap: Premium barista oat milk (like Oatly or Alpro) costs SAR 14 – 18 per liter wholesale.
The Fix: You must charge a modifier fee (e.g., +SAR 4) for plant-based milk. If you don’t, you are losing money on every single vegan latte you serve.

4. The Delivery App “Margin Kill”

This is where most cafes bleed out.

If you sell that same SAR 18 Latte on HungerStation or Jahez, the math changes drastically.

Commission: These apps charge approx 20% on the total bill.
The Math:
- SAR 18.00 (Price)
- Minus SAR 3.60 (App Fee)
- Minus SAR 2.35 (VAT)
- Net Revenue: SAR 12.05
The Result: After deducting your ingredients (SAR 5.90), you are left with SAR 6.15 to pay your rent and staff. You are barely breaking even.
The Strategy: Always have a “Delivery Menu Price” that is 20-25% higher than your in-store price to cover the commission.

5. Overhead: The Volume Game

Your rent and staff salaries are fixed costs. Whether you sell 1 cup or 1,000 cups, you pay the same rent.

Scenario A (Slow Day): You sell 50 cups. Your rent/staff cost per cup is SAR 24. You lose money.
Scenario B (Busy Day): You sell 300 cups. Your rent/staff cost per cup drops to SAR 4. You make money.

This is why Location Strategy is critical. A cheap rent with no foot traffic will kill you faster than an expensive rent with high volume.

Final Verdict: How to Be Profitable

Negotiate Bulk: Lock in contracts with roasters for better bean prices. (See our Suppliers List).
Mark Up Delivery: Never sell at in-store prices on apps.
Control Waste: Weigh your dose. Every gram counts.