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There's A Good Reason Why Iced Coffee Costs More Than Hot

Yes, iced coffee seems expensive. But if it's real and good, the price tag may be warranted.

There's A Good Reason Why Iced Coffee Costs More Than Hot
[Photo: courtesy of Starbucks]

Yes, it's annoying: You walk into a coffee shop on a hot day, order an iced coffee, and then are dismayed to learn that the transaction neared—if not eclipsed—$6. For just a cup of coffee.

If the economics of cold coffee have disturbed you, you're not the only one. Earlier this week, a woman sued Starbucks for putting too much ice in her iced coffee cups, thereby giving customers less product. She's asking for $5 million.

Whether or not Starbucks puts too much ice in its cups is for the courts to decide. But it does bring up another interesting conundrum: Why does iced coffee always cost more than hot? Is this all a big scam? As a former barista, my inclination was to say "no," but I decided to ask some other people in the industry to get their perspective.

This entire question can be boiled down to cost. That is, do all of the components that are needed to make a cup of iced coffee cost more than a normal batch of drip? This is a bit of a gnarly issue. I emailed the Brooklyn-based roasting company Lofted Coffee and asked its founders their thoughts. "We frankly could not come up with a good answer for you," wrote Lofted's Aric Carroll. But he went on to explain a few key points.

For one, iced coffee supplies cost just a little bit more. For example, they require plastic cups as opposed to paper, along with straws; both of these cost more than standalone paper cups. Also, iced coffee obviously requires ice, meaning the coffee shop likely needs to invest in an ice machine. These increases, however, are only slight. But perhaps it adds up when you have to buy enough to serve a packed cafe.

The big differentiator, however, is whether or not they're serving quality product. The trendiest—and most expensive—way to serve "good" iced coffee is to "cold brew" it. Cold brew is made by grinding beans coarsely, having them sit in room-temperature water overnight, and then filtering the grinds out to produce cold-brew concentrate. This extract is then cut with water to make what we know as iced coffee. Some coffee shops dilute the concentrate more than others. But according to the numerous baristas I asked, the amount of cold-brew iced coffee you get from one bag of beans is significantly less than what you would get if you used it for automatic drip hot coffee.

Not to mention, making cold brew requires more labor and planning than making a quick batch of hot coffee. Most industrial-sized setups make about 10 liters of concentrate, and setting each one up can be annoying (I can speak to this personally). All of the baristas I talked with agreed that if the coffee shop is making real cold-brew coffee, a price increase is warranted. As one former coffee shop manager texted me "obvi if it's cold brew it'll cost more."

I will add the caveat that there are other ways a coffee shop could be making iced coffee—some cost more, some cost less. But most places utilize the cold-brew method because it's become nationally known as a "craft coffee" practice. Whether cold brew should be double the price of hot, well I won't go that far.

If the establishment, however, is just putting hot coffee on ice, then you have reason to complain.

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