Piggyback coffee shops are a low-cost idea for starting a coffee business.
Piggyback Your Coffee Shop Business
What is a Piggyback Coffee Shop?
A piggyback coffee shop is a coffee shop that piggybacks on another business.
In the U.S., we refer to a piggyback ride – as the process of jumping on top of another person's back or shoulders for a ride. If you grew up in the United States, chances are that your father or older sibling gave you a piggyback ride when you were a kid.
In the same notion, we refer to piggyback coffee shops. “Piggyback Coffee Shops” is a term Coffee Shop Startups coined several years ago to illustrate the parallel comparison. That is when your business jumps onto an existing business that is already operating.
In this post, we will discuss the benefits of piggyback coffee businesses, provide a few examples, and how you can get started with your piggyback coffee shop.
To be sure, piggybacking your coffee shop is an excellent low-cost coffee shop idea you'll want to consider.
Why Piggyback Your Coffee Shop?
Benefits of Piggybacking Your Coffee Shop:
- Less Money
- Less Time & Hassle
- Mutually Beneficial
- Less Risk
Less Money
Piggybacking your coffee shop onto an existing business can often require less money than opening a coffee shop from scratch. There may be a couple of money-saving reasons, but the primary one is that you share rent for a fixed space.
If you are invited into the space by an existing business owner, much of the needed remodeling may or may not be ready for you to move in.
While there is a chance that you may have to invest some money in remodeling, plumbing, or getting the necessary permits, it may only be a fraction of the cost when compared to remodeling an empty space.
Less Time & Hassle
The time to find a great coffee shop location can take months or even years. However, if you have a location that is ideal and is already being used as a business, then it's possible that you can potentially save lots of time.
Having a business place already open can remove a lot of hassle from the existing search and opening. Dealing with the property owner, getting credit checks, securing a deposit, or other aspects may take a long time. Piggybacking onto an existing business can remove a lot of the traditional hassles.
Mutually Beneficial
Having a piggyback coffee shop can be mutually advantageous to both businesses. For example, the customers that both businesses bring to the premises can also be the other business's customers.
Let's consider a small chocolate company that sells artisan chocolates. Your customers can buy chocolates, and their customers can buy your coffee, thus creating a mutually beneficial arrangement.
In addition to customers, you can share expenses like the monthly rent, security, utilities, and insurance. You may also consider sharing the cost of employees.
Less Risk
Piggybacking on an existing business may expose you to less risk and the potential loss of more money. For example, if your coffee business fails, you may simply move your equipment out and draw up plans for a different type of business. Ultimately, your risk level varies depending on your circumstances and actions, so you'll want to plan out your coffee shop thoroughly.
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Piggy Back Coffee Shop Ideas
How to Piggy Back Your Coffee Shop
Write A Coffee Shop Business Plan
Even if you know the location and the concept, you will still want to write a coffee shop business plan. Your coffee shop business plan will help you stay focused as you develop a working budget, marketing strategy, and other items, including an exit plan. Make sure to tailor your business plan to fit your particular site, location, and partnership with the existing business.
Our Complete Coffee Shop Startups Kit has a business plan template you can edit fully.
Determine Your Coffee Shop Funding Mix
While a piggyback coffee shop may be typically smaller in scale and cost, you'll want to create a working budget. We find it helpful to look at your coffee shop startup budget through your ability to access money.
I recommend developing your coffee shop funding mix. This will help you determine where you will get your money from and the strategies you need to take to get your funds.
Money is vital in starting a successful coffee shop, so you mustn't glaze over this part of your planning.
Research the Area
Piggybacking your coffee shop may provide you with a great deal (low rent), but will the clientele work for you?
You'll want to research the local area and the existing business' customer base. Will the local customers be your customers?
What kind of products would your local customers be interested in? For example, a coffee entrepreneur here in Seattle piggybacked on an existing flower shop and enjoyed immediate success. The coffee entrepreneur also had the physical space to serve waffles because her customers wanted a place to have breakfast.
Pick The Right Equipment
Depending on the arrangement and space considerations, you'll need to get the right coffee equipment. For example, suppose you are severely restricted with space. In that case, you may need a one-group espresso machine, a small coffee grinder, and a small under-counter refrigerator, among other items.
If you have ample space, you'll be able to get more equipment and develop your existing space to reach your capacity service level. However, remember that you may not be able to compromise on specific pieces of equipment, such as the number of sinks you will need having a grease trap, among others.
Get General Liability Insurance
As with any business, you will need to get insurance to cover your general liabilities as well as insurance for your equipment. Being safe and protected is extremely important, so get insurance before you start serving customers.
Setup Your Business Structure
Set up a coffee business structure that legally registers your business with the state you are operating in. We've covered business structures and focused on LLCs for Coffee Shops – and you'll want to check out those posts.
Your business structure, such as a limited liability company, will allow you to legally work, hire employees, and open a bank account in your company's name. It is an essential step to opening up your business.
Check the Zoning Laws
Before you sign any sublease or commit in writing, double-check with your city and county. Some areas are zoned for particular businesses and not others. So, a metal fabrication company would be fine for a specific zone, but the geographical location may not be zoned for a coffee shop. It's always best to double-check the zoning rules and regulations before you dive in.
Negotiate a Sublease
While you may have been invited to piggyback a coffee shop into an existing business by the owner, you will want to have a written lease. A written lease will protect your right to operate on the premises.
A written lease legally allows you to access the property, operate your business, and sell agreed-upon items.
I strongly encourage you to have everything in writing – everything from your ability to use the water, electricity, restrooms, parking spots, specific space for signage, your ability to host customers, etc. In addition, you'll want to have a written agreement on the type of compensation or rent, percentages of sales, or any other payments you need to address.
Work with City Departments
Before setting up your coffee shop, you'll still need the approval of your health department and, possibly, your buildings department.
I strongly recommend calling these local agencies and finding out any pertinent information regarding the existing business and address.
You'll want to have a plan to satisfy each other department's requirements before spending any money on remodeling.
Plan for Growth & Exit Strategy
Sometimes a business can experience lots of growth. This is a good thing, but not everyone has a plan for it.
For example, consider what you would do if you had so many customers that you'd disrupt the existing business. You will want to have this discussion with your business partner and develop a plan.
Additionally, you want to plan for an exit strategy. Your exit strategy may include selling your business to the business you are working with or another coffee entrepreneur.
How to Piggy Back a Coffee Shop:
- Write a coffee shop business plan
- Determine your coffee shop funding mix
- Research the area
- Pick the right equipment
- Get general liability insurance
- Set up your business structure
- Check the zoning laws
- Negotiate a sublease
- Work with city departments
- Plan for growth & exit strategy
Further Reading: Why Do Coffee Shops Fail?
Piggyback Coffee Shop Examples
Piggybacking a coffee business can work with any number of businesses. However, you'll want to ensure you address the basic steps before you start. These steps include the proper zoning, permits, and necessities such as water, power, and space to work.
Below are a few piggyback coffee shop ideas that may get your brainstorming juices flowing.
Coffee Shop and Flower Shop
Can you smell the profits?
Piggybacking on an existing flower shop can bring in customers for you and your partnering business. For example, a flower and coffee shop can be a real treat for local customers looking for a cup of coffee and walking out with a bouquet of roses for their loved ones.
Coffee Shop and Workspace
Coffee businesses in community workspaces may be a win-win situation. First, you may consider approaching a local workspace business and asking if you can set up inside or outside their business. Then, whether you have an interior kiosk or an exterior coffee cart, you'll have the attention of those who utilize the workspace.
Coffee Shop and Beauty Salon
A hair salon and espresso is just the winning combination your local beauty salon is working for. Many customers at local beauty salons often have to sit and wait for their hair or nails to be worked on. So why not provide them the opportunity to enjoy a vanilla latte or a seasonal coffee beverage while they wait for your partner's services?
Coffee Shop and Record Store
A record shop (or book store) will often benefit from offering an espresso bar or coffee beverages. A coffee at a record store (or a bookstore) enhances the retail experience for the customer. If your local record shop doesn't have coffee service, consider approaching them and asking if they would like to work together.
Conclusion
Piggybacking your coffee shop can be beneficial – profitable and save you money. It remains a great low-cost coffee shop idea.
To get started, you'll want to look around your city and neighborhood and consider approaching businesses that might fit your vision for your business. You'll want to select a business that works for you and provides you with the space you want to be in personally.
Related Questions
Are piggyback coffee shops profitable?
A coffee shop business that piggybacks on another business can be profitable and certainly less costly to start up.
However, the same factors important for other coffee shops' profitability ring true: you need the traffic to drive sales. Therefore, before setting up your coffee shop, you'll want to estimate your coffee shop sales and then determine if the location will work for you.
For more information, please read, How Much Does a Coffee Shop Owner Make?
Why would I want to piggyback on another business?
For several reasons, you may want to start a coffee shop piggybacking on another business. First, finding the right location can be challenging, especially if you are interested in reaching a particular market. Therefore, piggybacking on an established business with an established customer base may provide additional benefits, less risk, and a lower financial entry barrier. Second, as mentioned, there's a good chance that you can reduce your coffee shop startup costs. Third, you may already have a built-in customer base ready for you to serve.
What are the requirements to open a coffee shop?
If you decide to piggyback your coffee shop, you'll still have to satisfy the general requirements to open a coffee shop. But, of course, your requirements may differ depending on your concept, menu, and location, so you'll want to read out post on the requirements to open a coffee shop.
Are You Ready To Get Started?
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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.
