Green coffee at $4.50 per pound becomes roasted coffee at $6.80 before you pack it, and the bag that sells retail for $18 yields a different margin than the five-pound bag you wholesale to a café for $42. If you book green purchases as an expense and roasted sales as revenue without the steps between, wholesale looks like charity and retail looks like print-money.
Specialty coffee roasting is a manufacturing business with two margin profiles, one shrinkage event, and a WIP that lives in the roaster and the cooling tray.
Green-to-Roasted: Where Weight Disappears
Roasting loses 12–20% of green weight as moisture. A 10-pound batch of green at $4.50/lb ($45) that yields 8.4 pounds roasted has a green-only cost of $5.36 per roasted pound before any other cost.
Book it in stages:
- Green purchase:
Dr Inventory — Green Coffee $45/Cr Cash $45. Quantity 10 lb at $4.50, by lot and origin. - Roast: Transfer green to WIP:
Dr WIP — Roasting $45/Cr Inventory — Green $45. Roast, then transfer to roasted:Dr Inventory — Roasted $45/Cr WIP — Roasting $45, but now at 8.4 lb quantity. Unit cost is now $5.36/lb. - Shrinkage is implicit: You did not lose $8.04 of value — you repriced the remaining pounds. Do not book shrinkage as a separate loss unless beans are burned or spilled; the weight loss is part of the conversion.
If you produce defective roast (quakers, scorched batch), then book the loss: Dr COGS — Roast Loss $X / Cr Inventory — Roasted $X for the pounds wasted.
WIP That Isn't Just Beans
Work-in-process for a roaster includes not just beans in the drum but also gas, labor, and packaging staged.
- Direct labor: Roast time, profiling, and cupping. Track minutes per batch and apply a loaded rate.
- Machine cost: Roaster depreciation and maintenance per batch. A $18,000 roaster over 5,000 batches is $3.60 per batch.
- Packaging: Bags, valves, and labels are inventory until used, then part of roasted inventory cost or a separate packaging cost. Don't bury a $0.75 bag in general supplies.
A fully costed roasted pound might be $5.36 green + $0.90 labor and machine + $0.50 packaging = $6.76. That is the cost to compare against wholesale $8.40/lb ($42/5 lb) and retail ~$12–$18/lb depending on bag size.
Wholesale vs. Retail: Two P&Ls, One Ledger
Wholesale and retail have different prices, different costs, and different cash cycles.
- Wholesale: 5-lb bags at $42 ($8.40/lb) to cafés, net-15 terms, delivery cost, and account concentration. Margin per pound is $1.64 ($8.40 − $6.76), 19.5%. Volume is high, margin low, cash is delayed.
- Retail: 12-oz bag at $15 ($20/lb) direct or via e-commerce, with shipping, platform fees, and marketing. Margin per pound is $10+ after fees, but volume is lower and acquisition cost is higher.
Keep the streams separate: Revenue — Wholesale Roasted, Revenue — Retail Roasted, and corresponding COGS — Wholesale and COGS — Retail that each reflect the same $6.76 cost but different fees and delivery.
A single blended margin hides whether wholesale growth is actually diluting profit.
Keep Your Finances Organized From Day One
Green-to-roasted is where cost, inventory, and channel mix meet. Track green by lot, roasted by batch, and margin by channel, and the next price increase can be by channel, not across the board.
Beancount.io keeps each lot, batch, and bag as an inventory transaction with quantity and cost, fully version-controlled and auditable. Get started for free and make shrinkage visible, not surprising.