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Surprising Finding in Rankings of Top Cities for Coffee

A one-time loser in the coffee wars has seen its fortunes turn around.

While the coffee industry is valued at around $48 billion a year, the spending is certainly not spread out evenly around the country. 

Recent research sought to evaluate the coffee markets in major cities based on 12 criteria including costs, number of coffee shops, coffee spending per household, donut shops per household and more. 

According to a the calculations by personal finance site WalletHub, a standard-sized cappuccino costs the least in Hialeah, Florida. A standard-sized cappuccino costs three times less in the Miami suburb than in the Denver suburb of Aurora, Colo.

Overall, however, San Francisco came out on top in the rankings, thanks to having the highest number of affordable coffee shops rated above 4.5 by their customers and the second-most coffee and tea manufacturers per capita in the country.

It was a marked turnaround for a city which in previous decades had earned low marks for its java. "A Great City's People Forced to Drink Swill," a San Francisco Chronicle headline once blared in February of 1963.

San Francisco's ranking also came ahead of a frequent contender for such awards. 

A Cup of Coffee in Florida, Colorado and Washington

Seattle, which is often called the coffee capital of the nation due to its place as headquarters of Starbucks  (SBUX) - Get Free Report, took second place while Orlando, Honolulu and Portland rounded out the top five.

When looking at cappuccino prices alone, Laredo and Arlington in Texas followed Hialeah as the cheapest. Those who cannot imagine life without that daily cup of coffee shop joe better stay away from Gilbert, Arizona and Minneapolis — after Colorado's Aurora, they have the second and third most expensive cappuccinos in the U.S.

Financial experts often suggest having coffee at home to cut down on those daily going-out expenses. But while Honolulu has a lot of affordable coffee shops, it takes the top spot in the country for the highest prices for a pack of coffee.

Starbucks Coffee Shop Lead

In Miami, it costs the least which is half of what one would have to pay up in the island capital. Hialeah and Raleigh, North Carolina have cheap packs of coffee while Columbus, Ohio and Oakland, California follow Honolulu for a spot among the most expensive.

"Suburban shops tend to be doing well right now as more and more people are working at home and not going downtown," Boston University business strategy lecturer Gregory Stoller says in the study. "Just when you thought the market was saturated with, say, Dunkin  (DNKN) - Get Free Report and Starbucks, there’s always room to expand that pie."

Is The Latte Factor A Real Thing?

Popularized by writer David Bach, the term "latte factor" first started gaining traction in the 1990s — the latte, or any cup of coffee consumed out instead of at home, has become a metaphor for small daily expenses that bust household budgets and can lead to big savings when cut out of one's daily routine.

While the book was initially perceived as a genius personal finance tip, the latte factor has also faced criticism — some have brought up that it is often used to deflect from more systemic problems relating to inflation and wealth inequality.

It has, for another generation, also morphed from the latte to the avocado toast — in 2017, Australian real estate mogul Tim Gurner caused an ouctry with comments about millennials would be able to buy homes if they stopped spending on avocado toast.

But while the idea of whether one can get closer to a down payment by saving $1,810 a year -- the $4.96 average it costs for a cappuccino across the country multiplied by 365 days a year -- alone, there is no denying that frequent visits to the coffee shops can burn a hole in the pockets of those who are already tight on money. That's especially true if they routinely add in a $4 pastry on top of their drink.

"Perception is often reality," Stoller said. "If [people] are overpaying something they might be mentally associated with higher quality."