The most marked-up food and drink on the High Street and why it costs so much
Outspoken food critic Giles Coren tried a so-called ‘five star’ Full English Breakfast recently that set him back £21.50 ($26). When it arrived on his table, he wasn’t happy. Turns out this fry-up may have been marked-up by around 3,000%, way above the accepted norm of 25-35%. So here's list of food and drink items with similarly high mark-ups, and my take on whether they're justified or not.
1. Coffee from any chain café
Millions of us turn to chain cafés to tide ourselves over for that painful period between our morning coffee at home and our endless coffees at work, but is it worth it? Research shows that the ingredients of the average coffee shop drink are worth about 30 cents, while the average cost to the customer is $2.70. That means this costly coffee is marked-up by 817%.
2. Soft drinks at bars
The mark-up on alcoholic drinks at bars is substantial, but soft drinks go the extra mile. Take Coca-Cola, for example. Fountain Coke comes in the form of concentrated syrup. Bartenders just add water and CO2 to create the strange drink we think we love. The mix is five parts tap water, one part syrup, so a 500ml glass has 83ml of the gooey stuff. One 7 litre box of the syrup costs around £60 from a supplier, and makes 84 glasses of coke. The cost of Coca-Cola per glass for the bar, then, is 80 cents. If you pay, say, $3 for that glass, you’re looking at a 257% markup.
3. Cinema popcorn
The mark-up on cinema popcorn has been estimated as anything from 800% to 1,275%, which is not surprising considering the cheap raw materials involved and the infamously high price per box. But before you switch to smuggling in your own snacks for life, consider this: since the price of a movie ticket is shared with a distributor, 40% of a cinema’s profits come from food and drink. Your $7.35 large popcorn is keeping that cinema open.
4. Potatoes
However your potato is served, you're probably paying too much for it. Potatoes are always in season, and always easy to purchase in huge sacks. The going rate at print works out as 37 cents a kilo. If a 100g portion of chips costs you as little as $1.23, you’re still looking at a 3,240% markup.
5. Bottled water
Bottled water is the mother of all mark-ups. Two litres of tap water costs as little as 0.02 cents. The same amount of bottled water would set you back around $1.23. That’s a 400% markup. If you really want to splash out, ‘designer’ water can be marked up by 280,000%! Some might think they're paying for how ‘pure’ the water is, or for that ever-so-slightly-different mineral taste, but this might be misguided. A 1999 study found that 25% of bottled water was just tap water. More recently, the head of Australian bottled water brand Nature’s Best admitted that consumers were only paying for plastic bottles, since the water inside was 'basically free'.
So what should we do?
These mark-ups don’t come out of nowhere. They help cover the cost of advertising, branding, delivery, renting a location, and paying the staff who work their magic to cook up and serve the products. Many people who order a triple venti half-sweet non-fat caramel macchiato would say their barista deserves every penny. And buying expensive popcorn helps keep cinemas open. But it's worth picking apart where these prices come from so we can decide for ourselves if we’re happy to pay them, or if we’d rather pop our own corn and sneak in a bottle of tap water from home.