If you really love coffee and people (like, really love coffee and people), you may be considering opening a coffee shop. If so, you'll need to learn how to start a coffee shop the right way.
If you really love coffee and people (like, really love coffee and people), you may be considering opening a coffee shop. If so, you’ll need to learn how to start a coffee shop the right way.
Trust me, plenty of folks think their passion for coffee is all that’s needed to make a successful go of things. However, in reality, having a solid understanding of what it takes to open a cafe increases your chance of making it work.
That’s why I’ve written this guide. I’ve come up with 10 guidelines to help give you a better understanding of how to open a coffee shop. And once you’ve become familiar with everything you need to do, I believe you’ll be able to make your dream coffee shop a reality. Let’s jump right in!
Overview: What Does It Take to Start a Coffee Shop?
This is the main question I’ll be trying to answer in this guide, and the short answer is that it takes a lot of time and hard work. Oh, and a substantial amount of money, too.
Of course, the longer answer is that you’ll have to be enthusiastic, resilient, flexible and much more. Plus, you’ll have to do your best to remain positive, seeing as it’s unlikely you’ll avoid a few setbacks along the way.
Of course, opening a coffee shop will be much more difficult if you don’t already have a passion for coffee. What’s more, remember that you’ll be engaging with the public day in, day out. So, it helps if you enjoy interacting with people and developing new relationships.
Finally, be prepared for this project to consume your entire life for quite some time as you’re building your new business. In other words, you can wave goodbye to hobbies, vacations and a fixed schedule for a while. Believe me, this is the only way to succeed, but it’ll definitely feel worth the sacrifice once your coffee shop is thriving.
Should I Open a Coffee Shop?
Before going any further into the subject of how to start a coffee shop, I encourage you to stop and ask yourself a few questions.
The most important question to consider is why you want to do this in the first place. Does it come from a deep love of the perfect espresso? Is this a dream you’ve always had? Or perhaps you long to provide a special gathering place for your local community.
Take plenty of time to address questions like these and write down your answers. This will be super valuable moving forward, especially as you begin to identify your goals and brand identity.
Oh, and be prepared to realize that you might not be ready to open a cafe, at least not yet. For example, if you don’t have any coffee shop experience, maybe it’d be better to get some experience working as a barista first. After all, there’s no reason why you can’t delay for a year or so until you’ve learned the ropes.
How to Open a Coffee Shop: 10 Steps to Success
As most of you guys know, I worked as a professional barista for years before starting Coffeeness. Having been in that world, I’ve seen many businesses flourish, and quite a few fail.
While you may imagine that opening a coffee shop is pretty straightforward (it’s only coffee!), the truth is that there’s a lot to deal with. So, I’ve come up with 10 guidelines, all of which are essential to consider. However, you can bet your bottom dollar that something will come up that isn’t on this list – that’s just how it goes.
Oh, and don’t imagine that this is the precise order in which you should proceed. In reality, you’ll need to do some things simultaneously or prioritize one step over another for a while.
Identify Your Concept
Before you really get started, it’s important that you have a clear idea of your coffee shop’s brand identity. You may already have some idea of what you want, but it’s a good idea to consider whether or not that’s what your future customers want or need.
So, spend time thinking about things like your coffee shop name, logo, menu and overall vibe.
While you’re at it, I’d recommend conducting some market research at this point. Go and check out busy local cafes and figure out what makes them successful. Of course, you don’t want to just copy what other local businesses are doing, but you’ll get valuable information about what’s working in your target area.
As you’re developing your coffee shop concept, think about your target demographic and what kind of coffee shop they’ll want. For example, if you’re planning to set up in a college district, plenty of seating and good WiFi will be must-haves. You should also consider pricing, your menu and the potential for offering food during this stage.
Ultimately, building a strong concept for your coffee shop will help set your business apart from the competition, increasing the likelihood of future success.
Write a Coffee Shop Business Plan
Before disappearing too far down the conceptual rabbit hole, you’ll need to create a solid business plan for your future coffee shop. In doing so, you’ll document and refine all aspects of your cafe’s finances, market analysis, menu and much, much more.
Whether you create your own coffee business plan or hire a professional to help, you’ll be glad you have one further down the line. What’s more, a detailed and well-structured business strategy will help you to secure financing.
Here are the basic sections of a business plan for your own coffee shop:
Executive summary
Business description
Business management team
Marketing analysis
Marketing plan
Financial plan
Get Funding
Unless you happen to be sitting on an especially large pile of money, you’ll need to obtain funding for your coffee shop business. As it happens, there are quite a few ways to get financing, but remember that you’ll need to cover costs for equipment, supplies, initial payroll and any number of other expenses.
Here are just a few avenues to explore as you think about finding startup capital for your business:
Small business loan
Business line of credit
Private investors
Crowdfunding
Of course, there’s nothing to stop you from using a combination of the above methods.
How Much Does It Cost to Open a Coffee Shop?
The cost of opening a coffee shop can vary widely, based on factors like location, the size of the space and the number of employees you’ll need. With all that said, you can expect the initial cost to be anywhere from $80,000 to $500,000.
Needless to say, you’ll have to create a solid budget, although you should plan on spending more than you expected. Oh, and it’s unlikely that your new coffee shop will start being profitable right off the bat, so plan on having sufficient funds to carry you for at least the first six months of operation.
When you’re designing your budget, here are a few of the major expenses to consider:
Location and utility bills
Furniture and design
Equipment and supplies
Payroll
Marketing
Find Your Ideal Location
It might be the case that you have your ideal location in mind right from the start. On the other hand, you may live in a big city with several potential neighborhoods to choose from. Either way, there’s no getting around the fact that a coffee shop location is vital to its success or potential failure.
With that in mind, you should perform a thorough location analysis, taking into account things like the neighborhood’s demographic, amount of foot traffic and ease of parking. Make sure to visit at all times of day and at night – this will give you a clearer idea of whether the location will be viable.
While you’re at it, spend time checking out other coffee shops in the area, asking yourself whether the local market is already saturated.
By doing all this, you’ll be able to see whether or not a particular location is suitable for your concept. And from there you can decide whether you’re willing to modify your concept somewhat.
Once you’ve found at least one potential location, take the time to consider its suitability for what you have planned. For example, is the space big enough? Will it be easy to build out? Trust me, you’re unlikely to find your dream space right away, but it’s easy to get emotionally attached to something that isn’t really suitable. So, take your time and keep a level head!
Design Your Coffee Shop Layout
As it happens, one of the most important things in learning how to start a coffee shop is learning how to create the right layout for your chosen space. In my experience, the most successful coffee shop layout prioritizes the idea of “flow,” both in the front of house area and behind the bar.
In an ideal scenario, customers will walk into your place and instinctively know what to do – where to order, where to pick up their drinks and where to stand while they’re waiting. And all without the need for signs!
As for decor and furniture, you’ll be the one defining the vibe of the place. That said, I will suggest that you play to the strengths of your chosen location.
Finally, don’t neglect the back of house areas as you’re designing your layout. The space behind the bar needs to be more carefully considered than many folks realize. After all, you don’t want an awkward situation where baristas are constantly bumping into each other! Again, consider the overall flow that you’d like to see in this area – that’ll help you position your espresso machine, brewing equipment and ordering station in a thoughtful way.
Obtain Coffee Shop Licenses and Permits
Ask any successful cafe owner about the worst part of starting their business, and I almost guarantee they’ll mention licenses and permits. While I’m not trying to scare you, I’d recommend preparing yourself for a good dose of frustration as you begin to navigate this part of the process. Of course, the permits and inspections you’ll need will vary, depending on where you’re located. Still, I can’t stress enough the importance of starting early, seeing as there’ll likely be substantial wait times involved.
What Licenses Do You Need to Open a Coffee Shop?
As I just mentioned, there will probably be specific permits and inspections for your specific area. So, get in touch with your local government and make sure you have all the necessary paperwork. Here are the most common licenses and permits you’ll need to open a coffee shop:
Business license
Employee identification number (EIN)
Building permit
Food service license
Food handler’s permit
Incidentally, things will get even more complicated if you plan on serving alcohol, making hot food or offering live music. Expect a minefield of bureaucracy, but be patient and resilient!
Source Coffee Beans and Order Equipment
I’m writing this how to start a coffee shop guide for folks who won’t be including a roastery as part of their initial setup. So, sourcing the right coffee beans will be of the utmost importance.
As for the equipment you’re going to need, that’ll vary, depending on the kind of coffee shop you’re starting. For example, if you want to offer all the brewing methods under the sun, your list will be very long. However, there are a few essentials that I’ll list for you below.
Coffee Beans
Obviously, you’ll want to choose the best coffee beans you can find. So, I recommend meeting with a few local specialty coffee roasters and sampling what they have on offer. Many roasters offer their bean wholesale, and might even be willing to work with you to develop exclusive offerings for your cafe.
Whether or not that’s the case, make sure to find a roaster that’s reliable. Plus, it’s worth spending a little more on high-quality coffee beans that are equitably sourced. And at the end of the day, you should actually enjoy the coffee you’ll be serving to your customers.
Equipment Needed to Open a Coffee Shop
As promised, here’s a list of essential equipment to purchase for your new coffee shop:
The best commercial espresso machine you can find
Dedicated espresso grinder
Commercial coffee brewer
Drip coffee grinder
Airpots
Small under counter fridge
Large storage fridge
Ice machine
Hot water dispenser
Of course, there are a load of supplies to get hold of too, including an espresso tamper or two, the best espresso accessories, pitchers for milk foam, knock boxes and different sizes of coffee mugs and glasses. Plus, you’ll need all manner of consumables and disposables, including sugar, syrups, milk, napkins and to-go cups and lids.
Hire and Train Staff
Let me first say that you shouldn’t wait too long before starting to interview and hire staff for your coffee shop. I mean, you want to be able to find the right folks, so this process will take some time.
Make sure you have a crystal clear idea of the vibe you wish to present to your clientele before interviewing potential hires. That’ll definitely make the training process go more smoothly.
Speaking of, once it comes time to train your staff, spend loads of time on the coffee shop menu, how to make latte art (if that’s your thing), how to taste coffee and the constituent parts of different types of coffee drinks. Heck, be prepared to become more of a micromanager than you ever thought possible for at least a few weeks. After all, this coffee shop is your new baby!
Incidentally, I’d consider hiring at least one “lead” barista – an employee willing and able to take on more of a leadership role. It’s always good to know there’s someone you can rely on to take charge when you’re otherwise occupied.
Advertise Your Coffee Shop
If you get lucky, you’ll open a coffee shop that people love in a busy location. Even if that’s the case, promoting your new business venture can really help it grow, thrive and (most importantly) start turning a profit in a hurry.
Whether you focus mainly on digital marketing, old-fashioned campaigns or a combination of both, advertising your coffee shop can be extremely effective.
Coffee Shop Marketing Ideas
There are endless possibilities when it comes to coffee shop marketing. Plus, if you’ve created strong branding and a great logo, your chances of success increase greatly. Let’s take a quick look at the five most effective coffee shop marketing ideas.
Get online: It almost goes without saying that you should have a website to promote your cafe. Even if you have to hire someone to build it for you, the upfront cost will be worth it. At the same time, make sure your business is listed on Google and Yelp.
Use social media: It doesn’t matter how you feel about social media. What matters is that this is free advertising for your coffee shop if done right. So, get yourself on Instagram and Facebook and start creating engaging posts!
Word-of-mouth: Don’t underestimate the continued power of word-of-mouth advertising! Encourage your loyal customer base to spread the news about the hottest new coffee shop in town.
Use traditional marketing: Again, this is old-fashioned but still effective. Everything from flyers, mailers and community events will help boost your business.
Customer loyalty programs: Trust me, “frequent flyer” programs like punch cards really work. Customers get so excited by the prospect of a free drink that they’ll make it their mission to fill up the card.
Prepare for Your Grand Opening
Once all the pieces are in place, the final inspections have been signed off on and you’re raring to go, you might be tempted to go all in and unveil your baby with a grand opening. However, I’d strongly recommend hosting a soft opening instead.
A soft opening is fairly standard among new coffee shop owners these days. It gives you a lower-stakes opportunity to evaluate your business model and identify any potential issues.
You can still create some buzz for your soft opening by making it an exclusive invite-only affair. Heck, you might even want to just quietly open with limited hours and without fanfare for a week. Either way, feel free to offer promotions and discounts, as well as elicit feedback from both customers and staff.
Final Thoughts on How to Open a Coffee Shop
If you’ve made it this far, you’ll hopefully have a much better idea of how to start a coffee shop than you did before starting to read my guide. Just remember that even the biggest coffee companies had to start somewhere.
Also remember that by starting a coffee shop you’re creating a third space for others to enjoy. As you’re navigating the long road ahead, keep this at the forefront of your mind. The end result will be a cafe with a welcoming atmosphere and outstanding customer service that encourages coffee lovers to return again and again.
I hope this guide has given you a clear idea of how to start a coffee shop. I’d love to hear your feedback and experiences. The comments section is all yours!
Starting a Coffee Shop FAQ
The amount of money required to start a coffee shop will vary depending on your location and the type of business you want. You can expect to spend between $80,000 and $500,000.
A coffee shop can be decently profitable, with a profit margin of up to 25% depending on location, pricing and overheads.
In short, it’s practically impossible to open an independent coffee shop with no money. You’ll need to secure capital in order to develop and open a cafe.
