It’s fair to assume that a King size Reese’s at Speedway is a luxury good. The double chocolate delight is essentially reserved for the upper echelons of society. It’s the sort of treat that only a select few can enjoy, on special occasions or when they feel like treating themselves. Naturally, then, it’s a bit pricier than your usual bar of chocolate. But perhaps that’s what makes it so special. You’re paying a bit more for a moment of indulgence.
You might think that it’s impossible to price a Reese’s at Speedway. How can you put a price on such a luxury indulgence? But you’d be wrong. We spoke to Matt Simmons, Director of Marketing at Nabisco, the company which owns and creates the famous chocolate bar, to get an idea of how much exactly a King Size Reese’s at Speedway costs.
The Math Behind The Price Tag
Reese’s is the gold standard among chocolate bars. It’s enjoyed around the world and made famous for its distinctive dark chocolate coating. Simply put, if you haven’t tried it, you haven’t truly lived. So in order to put a price on such a luxury treat, we need to take into account the cost of production and what, if any, overheads the business might have.
Nabisco makes several different chocolate and mint variations of Reese’s. But for the sake of simplicity, we’ll use the traditional recipe, which is made of 72.78% chocolate, 17.78% milk chocolate, and 10% vegetable cream.
Let’s break down the cost of making a 100 gram bar of this luxury confection, excluding any overheads. We’ll assume a reasonable cost for all the essential ingredients (see below for a more detailed breakdown), as well as the cost of labour, which will depend on the area and how many staff you have on hand. Given that this is a luxury bar, we’ll also assume high overheads, meaning that even if you put in the most expensive and sophisticated equipment, there will still be a cost associated with running the factory.
Production Costs
Firstly, let’s look at the cost of the raw materials. Assuming that you’re using the same chocolate as before (72.78%), we can work out that it will cost you $16.25 to obtain the 100 grams of chocolate, which is almost $8 for every 100 grams. This is, in part, due to the fact that you’re paying more for a high-quality product, but it’s also because chocolate is a relatively expensive ingredient. And remember, you’re not just paying for the chocolate itself. You’ll also need to factor in what is essentially an empty calorie (that is, it has zero nutritional value).
Overheads
Now, let’s move on to the cost of equipment and premises. To start with, you’ll need a large and expensive freezer. This is required in order to store the raw materials before they’re packaged and frozen. Next, you’ll need some sophisticated mixers. These are required in order to create the perfect homogeneous mixture of ice cream and chocolate when making the bars. You’ll also need a big cooler to store the finished product in. And don’t forget to add a big microwave to the arsenal. This will be required in order to heat the candy bars for the consumers.
Marketing Costs
Even luxury goods need to make money somehow. In the case of Reese’s, this is mostly done through commercial marketing campaigns, such as television and radio commercials as well as billboards, bus wraps, and cinema movie premiers. So let’s add these up. Radio commercials will run you $15,000 per week, plus you’ll need billboards every other block, along with bus wraps and cinema premiers which will cost you another $15,000. So that’s a total of $60,000 per year for ads. And you’ll need a huge marketing budget, if you’re to stand a chance of competing with the likes of Budweiser and Kit Kat.
Gross Profit
So, given that we’ve priced out the cost of production and overheads, we can now work out how much profit Reese’s is making. First off, you’ll need to multiply your cost by 1.10, in order to account for your profit. So, let’s say that your production cost was $16.25 per 100 grams, and you made a gross profit of $17.85. This means that you’re turning a $17.85 profit per 100 grams, or 17.78% of your total production cost. Not too shabby, but expensive stuff!
As a comparison, let’s say that you’re making 12 chocolate eggs, each one costing you $1.50 in raw materials, and you want to sell them for $3 each. In this case, your gross profit would be $30, and you’ll earn $2.50 per egg. Although chocolate eggs aren’t as glamorous as a chocolate bar, perhaps a nicer egg couldn’t be bought for the same price.
So, in summary, the price of a King Size Reese’s at Speedway is $17.78 per 100 grams, assuming you’ve paid for all the raw materials as well as the cost of labour and overheads. This makes it the most expensive chocolate bar in the world. And it’s fair to say that it’s not a product which is readily available to the average person. It’s a luxury item, intended for the upper echelons of society. So, if you truly want to treat yourself, you’ll have to look no further than your own wallet.