Starting up your coffee shop can be a challenge
You’re constantly thinking about the right equipment, what to serve precisely, and how to hire the right staff.
As time passes, the thoughts become too overwhelming, and you can find yourself ditching your dream too quickly.
Well, we’re here to tell you something important: you’re not alone, and you can still make this dream come true.
Today, we’ll share our guide on how to start a coffee business as well as make it stand out in the market.
It can get tricky as you go on, so be sure to take notes as you read!
- How Profitable Is Owning a Coffee Business?
- What You’ll Need to Start a Coffee Business and Associated Costs
- Why You Should Consider Starting a Coffee Business as a Side Hustle
- How to Start a Coffee Business in 5 Simple Steps
- Things to Consider When Building a Coffee Business
- INSPIRATION: Coffee Business Ideas
- Frequently Asked Questions
- Similar Businesses to Consider Starting
- Wrapping Up
How Profitable Is Owning a Coffee Business?
If there’s one point we know for sure is that a successful coffee business is profitable for everyone involved.
Yet, giving you a direct answer on how much you can make from owning one would be challenging as it depends on various factors.
For example, the location, type of service, and pricing strategy can all have an effect. Plus, the competition alone is hard to fight!
According to IBIS World, there are around 72,136 coffee and snack shops in the U.S., with a 2% growth rate.
Hence, your business venture’s revenue and subsequent profit margin can vary.
According to Glassdoor, a reputable platform that helps people in their job search, a coffee shop owner earns from 30,000$ to 66,000$ annually.
What You’ll Need to Start a Coffee Business and Associated Costs
The first step in starting a successful coffee shop business is planning and adjusting your budget.
First, you need to know how much you’re supposed to spend and, from there, how much you can make later.
Here are some of the main costs you need to consider:
The location of your coffee shop business is everything. It can leave you with more than 300 or less than 50 customers daily.
Because of that, you’ll have to pick a place with high foot traffic, usually costing around $10,000 to rent.
2. Equipment and Furniture
The next element you must remember is the tools and utilities your shop will use to produce its coffee.
You’ll need at least one espresso machine, a coffee roaster, a grinder, and much more.
At the very best, this could cost you from 30,000$ to 300,000$.
Of course, you can’t open a coffee business without the actual coffee or the little snacks that go with it!
Depending on what coffee you want to serve, how you want to serve it, and what food you’ll have, you’ll need an average of 10,000$–25,000$.
Because you’re just opening up, you shouldn’t expect to earn much money from the get-go.
Hence, building the team and management’s first salaries within the start-up plan is best.
For example, a good barista makes around 2,250$ per month; cashiers make 2,000$, and a shift supervisor around 2,500$.
5. Powerful Marketing Strategies
To get your name on the map and help people discover you, the coffee shop needs a marketing strategy.
This means you’ll need to call in a specialist that can help you develop and implement an effective marketing plan.
It could cost you around $95–$335 per hour for a marketing agency.
Do I Need a License or Certificate to Start a Coffee Business?
Yes, you need various licenses and certificates to open a coffee business.
Here are the main ones:
- Business License
- Food Service License
- Resale License for Sales Tax (if you live in a state that charges the consumers sales tax)
- Sign Permit
- Food Handler’s Permit
- Building Health Permit
There are different permits and papers that you could pursue, like a Live Entertainment License or a Liquor License.
Nonetheless, this mainly depends on what kind of coffee shop you have in mind.
Why You Should Consider Starting a Coffee Business as a Side Hustle
You should start a coffee business as a side hustle for many reasons.
Some are purely practical, while others lean more toward the personal side.
Here are some:
- High demand: If there’s one thing we can tell you for sure, it’s that coffee is one of the most popular drinks in the U.S. Around 66% of Americans drink coffee daily! This makes picking coffee as your business venture a clever move.
- Excellent growth potential: Starting a coffee business as a small venture can eventually lead to something big. The possibility of it turning into a popular franchise isn’t that slim!
- Flexible: Owning your own business and making it your side hustle gives you a lot of control. You can set your hours or work from home; it’s up to you.
- It’s a creative outlet: Having your coffee shop can be a great way to express yourself and experiment. You can try out different blends, create new drinks, and let your personality shine.
How to Start a Coffee Business in 5 Simple Steps
Starting your coffee business can be overwhelming. However, this guide will help you start your journey in five simple steps.
1. Do Your Research
Even if you have everything you need to open your coffee business, there’s still one more thing: research.
Have you taken a look at the market around your shop’s area? Is there an actual need for a coffee shop there?
Rushing over and starting something in an area with a high concentration of coffee shops isn’t the brightest idea.
Also, if there isn’t any competition, you need to ask yourself, why not?
Is it because there aren’t any customers around to attract, or something else entirely?
As a result, the first step in opening a coffee business is to conduct thorough research into the market, location, customers, and competition.
2. Create a Business Plan
Once you have all the information, it’s time to formulate how you’ll take your coffee business forward with a solid plan.
This means you need to visualize how you want your business to start and how you want it to grow.
First, write down your mission, key objective, and target audience.
Those three components will give you a general outline of what needs to follow.
Then, consider your day-to-day operation and financial plans.
For example, how many workers will your shop need? Whatever the answer, don’t understaff to save money—it’ll cost you!
When it comes to the financial plans, think of the earlier costs, the various coffee shop equipment, and if there’s a need to take a small business grant.
The more you plan, the easier it’ll be to succeed!
3. Decide on a Menu
Deciding what you want to serve and how you serve it is crucial before you take the next step.
You can do this by debating what your area’s target audience is.
For instance, are you targeting regular office employees, tourists, or the area’s residents?
With this information, you can customize the menu to the business needs.
You can create a special menu that centers around lunch breaks with options for sandwiches and salads.
Another option is to have it centered around breakfast with choices like pancakes and croissants.
Either way, coffee will be a central aspect, and whatever you add to the list should complement it.
After that, place each item’s average cost and estimated profit margin.
4. Search for a Good Supplier
Ask yourself this question: will you buy from a shop you don’t like its products?
That’s to say, the shop can look beautiful, and the drinks can be unique, but if the coffee product is terrible, no one will buy it!
So, you need to consider your supplier for both the coffee and the snacks.
First, search for a supplier that can offer you quality coffee, e.g., fresh, flavorful, and affordable. Then the same goes for the food.
The easiest way to find a reputable supplier is to ask around and read online reviews.
You can use online directories, industry associations, and even local shops to find recommendations.
But most importantly, don’t pick one immediately.
Instead, take your time in comparing prices and quality, as this can turn into a long-term business relationship.
5. Hire Quality Staff
You wouldn’t want to hire someone unqualified to work in your business after all this planning, right?
You’ll want someone friendly, reliable, and passionate about customer service.
The best way to do this is to define the job roles you need to be filled.
Start with the main employees and work your way up to management.
Once done with that, go ahead and write the job descriptions, including all necessary skills, qualifications, and previous experience.
Lastly, make sure you conduct the interviews yourself.
Mind you, this is the most crucial part of the process.
Meeting the staff yourself can help you see beyond the many resumes you read and will help you establish a more personal connection.
Things to Consider When Building a Coffee Business
As you’re nearing the end of this guide, you should finally have a clear picture of what you need to run a coffee business.
Yet, there are still some minor aspects you need to keep in mind, such as the following:
Can You Run a Coffee Business by Yourself?
You have to ask yourself this question before you dive too deep. The coffee business involves several tasks, such as bookkeeping, managing inventory, and more.
If you don’t feel like you’re up to the tasks, then it’s better to hire a manager.
Are You Ready to Go Green?
As people become more aware of the environment and our impact on it, sustainability has become the new norm.
Consumers are looking for shops with ethically sourced ingredients and environmentally- friendly products.
This leaves you with two choices: Go green or get left behind.
Can You Handle Emergencies?
No matter how well you plan for things, something can always pop up.
For example, you can find yourself with broken equipment, a leak in the shop, or a sick employee.
Because of that, you need an emergency fund to help you out when something goes off in the shop.
INSPIRATION: Coffee Business Ideas
Coffee being a hot commodity is both good news and bad.
On the one hand, you know thirsty customers will always be waiting for their hot beverages.
On the other, there’s bound to be strong competition.
To help your business stand out, here are a few ideas to look over:
- Coffee Shop With Lively Music Events: Make your shop stand out by creating a weekly or monthly event where local musicians can play tunes for your customers.
- Combine Quiet Library Hours With Coffee: Grabbing a cup of joe and heading to the library for a quiet afternoon is an excellent way to de-stress. If you can include a reading nook, it’ll be a win-win situation for your customers!
- Coffee Drinks With Live Painting: Keep your shop out of the traditional zone by including something like live painting sessions where customers can watch artists create something from scratch!
Frequently Asked Questions
Is Coffee a Good Business to Start?
In short, yes, starting a coffee business is a good idea.
The coffee industry is a growing one, with constant demand coming from the consumer market.
In the U.S. alone, around 66% of the population drinks coffee on a daily basis.
What Percentage of Cafes Fail?
Sadly, around 50%–74% of cafe businesses fail within the first five years.
Don’t let this discourage you, though.
Let it be a reason for you to plan better, take precautions, and do enough research before starting your business.
Similar Businesses to Consider Starting
If, after reading this guide, you don’t feel the coffee business calling you, here are a few other options:
- How to Start a Winery Business: Starting a winery business is a unique idea that can bring you a lot of money. However, it requires loads of research, effort, and passion for the wine itself!
- How to Start a Catering Business From Home: Being a caterer can be a great way to earn a living. Doing it from home, though, is even better! It lets you enjoy the extra flexibility without missing out on being a professional.
So there you have it: how to start a coffee business in five simple steps! It’s not as complicated as many people think, but the process can be lengthy.
It’s important you plan for the future and research everything from the location to the coffee machines!
All it takes is a little spark, and soon you’ll be on your way to making the most delicious coffee drinks!
Hope you enjoyed reading this guide.
Tell us your thoughts in the comments, and stay tuned for our next article!