Morning walk in Firenze. Two cappuccinos and a largish very fresh chocolate croissant at Caffe degli Innocenti, €4.20 ($4.47) and no expectation of a tip. How do they do it? This at Starbucks in the States would be more than six bucks (one “tall”) with a croissant made out of genuine leather.
Two gelato cones and a large beer yesterday at the place on the opposite corner was only €11.
I’m American, I own a specialty coffee shop in Italy. Some people have made some good observations as to why coffee is so much cheaper in Italy. The reality, is a lot of reasons all combined. Here is a little list of some of the things I’m aware of. This is in relation to your average neighbourhood, independently operated bar, even those in touristy areas, but doesn’t refer to larger chains or independent specialty coffee, as many of us have been pushing for fair industry standards.
Set up costs. Many set up costs for bars are assumed by the roaster whose beans a bar signs a contract to use. From the machine and grinders to, in some cases, tables, chairs, awnings, even the bar itself can be provided by the roaster- as long as you continue buying their beans.
Portion size. As others have said, Italian bars use around 7g beans per single shot.
Scale. Because of the stand up walk in/walk out coffee culture in Italy, many neighbourhood coffee bars sell many more coffees then their American counterparts. An average sized bar might do 30kg a week. They will close one day usually. At 7g a coffee, 130 shots per kg, at 5 kg a day, thats 600+ coffees a day, mostly espresso/macchiato. The average patron will spend less than 45 sec in the bar. Many American cafes will have a large majority of coffee orders be cappuccinos, lattes and flat whites. By the time a hipster barista in Melbourne or LA has made three perfect flat whites for 5 bucks each, a barista in Milan has made and served 12 espressi for a similar total price.
Quality of product. Most bars serve a blend with 10%-40% robusta. Many Italians swear they prefer the taste and that it creates a better crema, but I’m sure this is a narrative that the large roasters are happy to foist onto consumers. As, see point 1, there are incentives to make the product as low quality as they possibly can.
Labour. Although certainly not unique to Italy, many staff - very many - are paid partially or fully in ‘nero.’ (Under the table). This allows the operator to avoid paying hefty employee taxes and perks.
Tax avoidance. Where do they get the money to pay their employees cash? They don’t ring up sales, thereby avoiding a myriad of other high taxes in Italy.
Less staff. More bars in Italy are run with a husband and wife team or family members, minimising the amount of employees needed.
Price expectations. Coffee is such a ubiquitous part of Italian culture that everyone knows the right range of prices it operates in. One Redditor in this thread thought that the price of espresso is regulated by the government, I have never heard that, and I own a shop here- but it may as well be, as to price yourself above the expected range without the reason of either location (airport/train station) or product quality (specialty), would be financial suicide. You would get a gaggle of angry Italians, zero return customers and close soon after opening. Consequently, sadly, many find themselves stuck in having to follow the above ways of operating their coffee businesses. For many neighbourhood shops the pressure to pay under the table and to avoid paying taxes is fundamentally tied to their ability to exist. Pay every staff member fully on the books? Ring up all your sales? That means your espresso is 1.40 euro, 30% more expensive then the guy across the street and your dead in the water.
TL;DR There are a lot of reasons why Italy has cheap coffee. The average bar sells more, uses less and cheaper beans. Oh, and tax avoidance.