Choose the Best Location to Open a Coffee Shop

Choose The Best Location to Open a Coffee Shop

Coffee Shop Location Analysis

Finding the Best Location to Open a Coffee Shop

Finding the right location to open a coffee shop is one of the most critical factors for your success. Choosing the right location for a coffee shop business site can boost sales. On the other hand, choosing the wrong location can devastate your bottom line.

The perfect location for a coffee shop should appeal to your customers and make it easy for them to visit your coffee shop.

But if we all know that our success largely hinges on choosing the best location, why do so many people fail to pick the right spot?

In today's post, we will be discussing critical thoughts on finding the perfect location to open a coffee shop. We will also provide some practical strategies that you may want to employ when starting your search.

We will provide a free downloadable coffee shop location checklist pdf (found below) – so that you can use it as you visit potential sites for your coffee shop.

How to Choose the Best Location to Open a Coffee Shop

What Makes a Great Location for Your Coffee Shop?

What should the perfect coffee shop location criteria be based on?   First, let's explore some important factors to finding the best location for opening a coffee shop.

Criteria to Find The Best Location to Open a Coffee Shop:

• Demographics
• Accessibility
• Visibility
• Traffic
• Competition
• Budget
• Zoning & Permits
• Lease terms

Coffee Shop Location Analysis

Location Selectors for Choosing a Coffee Shop Location

How to Choose the Best Location to Open a Coffee Shop

Location Demographics

Your chosen area's demographics may be one of the first things to consider when searching for your coffee shop location.

Whom are you aiming to serve?

Demographics can be based on any number of data subsets, such as income, education, religion, race, age, profession, among others.

For example, it may be your vision to open a coffee shop bakery downtown. If, however, the customer base in the area is not interested in your products – or they believe them to be too expensive – you will be hard-pressed to generate adequate sales.

Your bottom line will struggle if your price point is too high for your targeted demographic. Besides your price point, other factors matter, too.

It would be best if you asked yourself the question:

Will the demographics in this area provide the sales numbers I need to sustain my business?

If the answer is yes, you can then continue to do your search in that area. If the answer is no, then you need to keep looking for a different location. No matter how wonderful the space is, if your target market isn't reachable or accessible, you will struggle to stay in business.

Location Accessibility

Your coffee shop location needs to be easily accessible.

Every degree of difficulty in reaching your coffee shop – either by foot or car – will shave off potential customers.

Your job is to find a coffee shop location that makes life easy for your customers to reach you.

The idea of accessibility is both real and perceived. While each location has its differences, we know what accessibility looks like.

Common accessibility factors may include vehicle turn-in lanes, sidewalks, curb cuts for wheelchairs and strollers, and ample parking. 

The flow of traffic, street lighting, and signals may also play a role in getting in and out of your coffee business area. The convenience of accessibility is a huge factor.

You can open a fantastic coffee shop. But if it's inaccessible or difficult to get to, you will lose customers. Additionally, consider how neighboring businesses would impact your business. Will the flow of traffic from other companies discourage your customers?

Your Visibility

If a customer can't see you, they can't buy from you.

Your coffee shop should be visible to oncoming traffic and pedestrians.

Much of your marketing will be based on your exterior signage, but if your location is too far back, difficult to see, or located in a strange spot that hides your entrance, you will struggle to get customers.

Even your most loyal customers will find it hard to reach you. Therefore, look for a noticeable space to open – a place where people in cars or on foot can identify your business.

How to Choose the Best Location to Open a Coffee Shop

More Criteria Create More Specificity

Local Traffic

Traffic is the name of the game when it comes to your coffee shop location.

To get sales, you need to capture a percentage of customers that pass near your business every day.

It's a game of percentages.

If you are on a typical commercially zoned street, you should expect a percentage to come into your business throughout the course of a week.

The percentage can vary. We may estimate that .2% to .5% would stop into your coffee shop at least once per week.

For example, you might assume that one customer will stop by for every 200 cars passing your coffee shop. That is, of course, about a .5 percent capture rate. If a thousand cars pass your coffee shop, you might get five customers, and so on.

The higher the traffic, the more expected customers you will have. Your job is to turn those visiting customers into regulars and boost your overall percentage between random passerby customers and your loyal customers.

The Local Competition

Another important factor when finding the best location to open a coffee shop is the level of competition. Some cities and neighborhoods have a considerable level of competition. Another area may be less so.

You will have to decide whether access to many customers is worth going toe-to-toe with established competitors.

Your competition could include:

• Chain coffee shops
• Fast food restaurants
• Breakfast or brunch cafes
• Independent coffee shops
• Gas stations that serve coffee

If you decide to move into a highly competitive neighborhood, area, or city, how will it affect your coffee business?

Your competitors are all working hard to develop customer loyalty and employ strategies to keep their customers and grow their business – and you can expect they will double down on marketing, promoting, and supporting their business.

You will have to determine whether it makes sense for your coffee shop concept to be in a particular spot with intense competition.

How to Choose the Best Location to Open a Coffee Shop

Coffee Shop Competitors To Watch For 

Your Coffee Shop Startup Budget

Choosing the right location for our coffee shop will often come down to our budget.

The truth is all our budgets have a ceiling. We need to understand what our budget and ceiling are. What should your level of expected sales be?

The ideal location may be considerably more expensive than a subpar location.

You will have to weigh the benefits of opting for a coffee shop location that stretches your budget for other sales numbers or customer access.

The question you need to be ready to answer is:

Is the extra $400 a month, for example, worth the placement into a higher-traffic area?

The reality is that many cities are seeing incredible increases in commercial rents throughout the U.S. Some of the ideal locations may be out of our budget's reach.

We need to plan for that – either by decreasing our square footage or moving to a less expensive area.

Knowing your concept and coffee shop budget before jumping into the property marketplace will help you better understand what you can and can't afford. Additionally, it will help you develop your important coffee shop funding mix – which determines where you'll get your funding from.

Zoning Requirements & Permits

Your zoning and permitting requirements will impact your location decision. For example, if you also plan on roasting your coffee beans, you may need to find a particular area that is zoned for roasting.

Every street is zoned for a particular use. Therefore, check with every relevant city agency beforehand.

How to Choose the Best Location to Open a Coffee Shop

Find the best location to open a coffee shop

Additional Coffee Shop Location Considerations:

Are the terms of your lease reasonable?

Despite having found an ideal coffee shop location, you might run into a property owner or manager with unreasonable expectations, requirements, or terms of your coffee shop lease.

While most property managers and owners want you to succeed, they may also have their agenda and motives in placing certain restrictions within your lease. So, before you sign anything, consider all the clauses and terms that your lease obligates you to fulfill. 

Even the “best” location with unfavorable leasing terms can be devastating to your business.

Your lease can obligate you to enormous pressure (financially and otherwise). Therefore, your lease's reasonable terms should always be considered an essential factor in choosing a coffee shop location.

Does the existing space provide for a good layout design?

Choosing the right location for your coffee shop may also require you to look at the actual space you are renting. Does the ideal place also have the perfect space for you to develop your vision?

For example, you may want to have a coffee shop bakery or a coffee shop bookstore. Due to factors like the design or square footage availability, you may have limitations to the additional element for your business.

Coffee Shop Location Analysis

Strategies for Choosing the Right Coffee Shop Location

Find the best location to open a coffee shop

Strategies To Find The Best Location To Open A Coffee Shop

Write a Coffee Shop Business Plan

You got to know what you want before you choose something. Therefore, before you set out to look for the perfect place to open a coffee shop, you have to know what you want.

Writing a thorough coffee shop business plan will help you articulate to yourself and others what type of space you are looking for – and how it fits into your overall business concept.

Your plan will also flesh out who your target market is, your menu items, and what types of elements you need in a space.

Start Your Location Search Early

Don't be surprised if it takes you months or up to a year to find the perfect location in your vicinity.

The geographic location needs to be right, as does the actual space – and you have to be able to get it at the price that works for you and your overall coffee shop budget.

In reality, there is a small window where all of these elements come together for you and your coffee business concept.

Therefore, planning out your business matters before you set off searching for that “perfect spot.” When your opportunities arise, you will be ready.

Know Your Target Market

Part of your planning and research will be determining just who your customer base is.

Get very familiar with your target market. Understand their needs and understand what will drive them to your coffee shop.

On your end, this will help affirm your USP or Unique Sales Proposition. Your USP will help you differentiate yourself in your marketplace.

Set Your Priorities

Since you might not get everything you wish for, it's essential to determine your priorities.

When it comes to finding the perfect place, figure out what you will not compromise on. Will you need access to parking or having a kitchen?

Once you know your priorities, your ability to negotiate and search for a property will be easier.

How to Choose the Best Location to Open a Coffee Shop

Find the best location to open a coffee shop.

Narrowing Down Your Ideal Geographic Location

A coffee business can work everywhere there is potential. So, how should you narrow down your search?

Consider the graphic below.

This coffee shop location graphic above illustrates the general area (in green) that you would probably consider to open a coffee shop. In this example, it's the very large city of Los Angeles.

 It could represent an acceptable commuting range for you to open your coffee shop. In this general space, coffee businesses will thrive. The question is finding the ideal spot for starting your coffee shop within this area.

In the next red circle (in red), you start to localize the site where you would like to have your coffee shop. For example, this would be in a specific part of the city. The localized area this graphic is focusing on is East of downtown Los Angeles.

The purple area is perhaps even a more specific area within your narrowing scope. Finally, from here, you can now determine the exact building or property that you wish to open. This is one way you can choose your coffee shop location.

Coffee Shop Location Analysis

Narrowing Your Coffee Shop Location Down

Ultimately, your coffee shop concept will determine the best location. Your job is to discover as much about the area where you wish to open your coffee business as possible. Even if you are reasonably familiar with the region, do your research anyway – assume nothing.

Stay focused on your market

Look at local demographics to determine the average income in the area, and look at the unemployment numbers and house and apartment rental statistics. Understand the customers you will be serving if you choose a particular location.

Contact the local Chamber of Commerce

Your local chamber of commerce is an excellent resource to find out information on the area you wish to open. In addition to providing you with local data, they also have their finger on the pulse of new trends and potential pitfalls. Look up their website, give them a call, and attend local mixers. They may also have a few referrals to provide you, including possible location options and brokers to help you find your coffee shop space.

Visit as many local cafes as possible

Choosing the right location also depends on the local competition. We’ve discussed it earlier, but I want to emphasize how important it is to see what is available in the local market. What are people buying?

American Community Survey

Check out the American Community Survey by the US Census Bureau for a macro-level area analysis. You will find tons of free info in your local area. Before settling in on a location, figure out the local economic trends.

Network as much as possible

Get out and meet people in the area. Talk to local business owners and potential customers. You would probably be surprised at the info you might get.

Check Your Zoning

If you happen to find a few good options, always check with your local agencies for zoning approval before signing your lease.

Coffee Shop Location Analysis

Additional Location Criteria Questions:

How much rent should I pay?

While you want to find the ideal physical space and location for your coffee shop, you want it at the “right” price.

The cost of your rent cannot be too high, or you will never be able to make a profit.

Costs vary from city to city. Typically, most retail consultants would like your coffee shop location costs to be only about 15% of your overall revenue. In some cities, this is exceptionally challenging.

However, considering the other costs involved in operating a coffee shop, anything higher than 15% or 20% will make your ability to turn a profit extremely challenging.

With those percentages in mind, ideally, your sales should look like this:

Picking the best location to open a coffee shop

Are you stuck on moving forward with a location?

Think Outside the “Coffee Shop” Box

You might be in a situation that corners you when it comes to choosing the right location.

When this happens, I have three recommendations:

• Don't stop looking.
• Get help finding the right location.
• Think outside the box.

What does thinking outside the box mean?

It means going beyond the traditional parameters of what a coffee shop is supposed to be like.

You may discover that there are a lot of low-cost coffee shop options available to you.

Take a look around in various corners of your community. Where would or could people benefit from a well-served coffee business?

There are plenty of low-cost coffee business ideas that may work for you and your community. By experimenting with your coffee shop concept, you might be able to unlock a success story waiting to happen.

The fact is that people want coffee everywhere. A variety of coffee business concepts could be successful in your area.

We've seen it firsthand.

• One flower shop owner in Seattle had some extra retail space and needed more people to enter her business. She asked another business owner to start a second café in her store. It was a big success.
• A dreary coin laundry business needed a pick-me-up. There was a commercial space available next door. This paved the way for a new small coffee shop to open and serve customers waiting for their clothes to wash and dry.

Coffee can succeed anywhere there are people.

You have to look out for opportunities. Success at finding those opportunistic locations may rely on a little luck, but mostly it depends on your preparedness. 

How much space do I need for a coffee shop?

The space required to open a coffee shop ultimately depends on your concept, menu, capacity, and sales numbers expectations.

But ultimately, you don’t need much space. Many successful coffee shop businesses are limited in their physical space.

While they may not be able to serve a full menu, profits could still be impressive.

However big or small your physical space is, it must be reviewed by your local health and building departments. A coffee business should be compliant with specific codes, such as accessibility, doorway size, restroom, an appropriate number of sinks, etc.

What amenities would you like to provide your customers?

When finding the perfect coffee shop, consider what type of experience you want your customers to have.

Your coffee shop customers want to visit a location where they feel safe and comfortable. Besides, you may want to offer outdoor seating with outdoor furniture.

Your mission to provide your customers with certain amenities will be another factor when searching for a coffee shop location.

At a minimum, your coffee shop location should provide:

• A safe environment for you and your customers
• Easy access for cars and pedestrians
• Easy parking (Parking for disabled persons)
• Good lighting for early morning and nighttime patrons
• Available space for signage
• Strategic placement for normal traffic flow
• Reasonable lease terms
• Reasonable prices

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Based in Seattle, Washington, USA, Coffee Shop Startups is dedicated to providing you with the most relevant information on how to start a coffee shop business successfully. Over the last 11 years, we've helped thousands of aspiring coffee business owners worldwide. We harness the experience, wisdom, and knowledge of many successful coffee shop owners to help you increase your chances of success and profits. We support business owners who want to start a coffee business by providing them with valuable information on starting their coffee business successfully.