If you love coffee and the idea of opening a coffee shop (or some other type of coffee business), you’re in the right place!
Here at CSSU, we provide resources for aspiring coffee shop owners on how to set up their coffee business more affordably and more importantly, more efficiently.
For you, that means less spending, bigger savings, and higher probability for success.
Deciding to open a coffee shop is a big deal.
It can be life changing.
No doubt, it can make some pretty impactful changes on your life and the life of your family.
Establishing a successful coffee business can open more doors and opportunities for you in ways you can only imagine. Because every coffee business is different… you will have to ask, how would a coffee business impact your life?
Is starting a coffee shop the right thing for you?
Starting a coffee shop makes sense for people who are tired of sitting behind a desk for 8 or 10 hours a day.
Setting up your own coffee shop business is logical for people who want to socialize more while they are at work. And it certainly makes a lot of sense if you like the idea of making an impact on your community as coffee shops often do.
If you are tired of commuting to work, sitting behind a cubicle and watching the clock wishing you could be outside, then maybe investing in a coffee business is the right thing for you. If so, you'll be entering the amazing world of coffee where passion, curiosity, and customer service matter.
But… You Gotta Look Before You Jump!
Starting a coffee shop requires you to be aware of many elements. These elements deserve your attention and respect.
We do ask that you carefully examine your unique situation before jumping in and starting a coffee business.
One of the ways to do that is by doing your research – and by the looks of it, you already are doing your research or else you wouldn’t be here!
CSSU provides you the very first stepping stones to starting your coffee business planning.
We offer the most effective way to see if starting a coffee business is the right thing for you… and if it is… it offers you a sneak peek at what other coffee business owners did to start their coffee business.
We believe that there has never been a better time to set up your coffee shop business than right now. We also believe that we provide one of the best resources to start your coffee shop business planning, from the coffee shop business plan, to developing your coffee business budget, to understanding your coffee equipment – we have it all here in one place.
Depending on your location, a coffee shop can do very well in a changing economy.
By doing your planning, developing your concept, building your budget, and looking at your options, you can open your coffee business more effectively, easily, and with less money.
In the following article (and throughout our website), we will be leaning in on the topic of “how to start a coffee shop” less money.
While it may appear unclear for many people who want to start a thriving coffee business, the fact remains that you will need some money.
The question is how much does a coffee shop cost?
Realistically, no one can answer this question without first knowing some basic conceptual ideas of what you want, such as:
- Where will your coffee business be located? (Real estate costs vary widely from city to city.)
- What do you plan on serving your customers? (Your equipment and space requirements, and inventory adds to your fixed and variable costs.)
- What kind of coffee business do you want? (For example, do you want a coffee bar, bakery, or a kiosk stand?)
These are just a few of the main questions you will need to ask yourself. However, with the answers to these three questions you can really boil down the anticipated costs for your coffee business into a ballpark figure.
As you plan out your business and as you find out more information about what kind of business you want through your research, your concept may change.
A changing budget is a natural thing and should be expected. Just realize that when your concept changes, so does your budgetary needs.
We’ll talk more about your coffee shop costs next…
Your Coffee Shop Startup Costs
Now let’s consider your coffee shop startup costs. Of course, this will vary on the volume and location, etc. We've written extensively on the subject of coffee shop budgets, so we won't get into the details here. Rather, we’ll work with generalities for simplicity sake.
Just how much does it take to start a coffee shop?
As mentioned previously, it really depends on the kind of coffee shop business you have in mind. Answer the three questions above and you will begin to determine your costs parameters.
Your space and real estate costs and your “build out” will have a lot to do with it as well.
For example, the physical space you are looking at might be “perfect”, but it may require you to put in another door to comply with ADA laws. It may require you to build out the coffee bar, install new sinks, install new wiring, a mop closer, patch up holes, paint, and put out a new floor.
So, again there are a lot of factors… and each of these can be either costly or save you money in the long run.
But I realize that many readers want numbers! So, we’ll get to that.
Take into consideration what we just discussed, a coffee business could cost $25,000 to $150,000 to $250,000 dollars to setup. Again it depends on the concept, the location, the menu, the equipment and space requirements, etc.
Is this a lot of money?
Yes, it’s safe to say that starting a coffee business requires a significant investment.
But what if a $35,000 coffee business brings in $600 – $1100 a day in gross revenue?
A busy coffee shop with the right location and product offerings can bring in many hundreds of dollars per day.
A small coffee operation can take in $10,000 to $16,000 per month in revenue.
This revenue is really feasible. Consider what it will take to make $10,000 per month (gross numbers).
To bring in $10,000 per month, you will need to make an average about $333 per day.
How many transactions will that take?
Consider that your average sale is $3.75 (The price of a large vanilla latte).
If you do the math, you will need about 88 or 89 transactions per day.
Increase your average sale to $4.75, then you will only need about 70 transactions per day to meet the $10,000 per month benchmark!
Of course, your specific menu and your specific sales volume will determine the actual numbers, but this should give you some perspective.
Your Sales Volume Matters (But so does your average receipt)
So the question comes down to sales volume and average price of your ticket (or transaction). Both our important when we consider profitability.
Consider the Following Hypothetical Scenario:
Let’s say you have a small coffee shop and you are open for 12 hours per day (7am to 7am)
For the sake of fun, let’s break down the number of customers you will have per hour of the day, with a “morning rush” in customers:
- 7am to 8am (15 customers)
- 8am to 9am (22 customers)
- 9am to10am (17 customers)
- 10am to 11am (12 customers)
- 11am to 12pm (13 customers)
- 12pm to 1pm (8 customers)
- 1pm to 2pm (9 customers)
- 2pm to 3pm (11 customers)
- 3pm to 4pm (8 customers)
- 4pm to 5pm (13 customers)
- 5pm to 6pm (9 customers)
- 6pm to 7pm (7customers)
Total Customers 144
Average sale is $3.75 x 144 ≅ $540 per day …or $16,200 per month
(Again, this is an approximate scenario)
So What Do These Numbers Mean?
So, let’s say you’re initial investment is $40,000 to start your coffee shop.
This $40,000 is a significant figure. However, if you plan your shop well to maximize sales volume, as well as boost the price of your average sale; and if you manage to keep costs down, save money, and avoid common mistakes, you now begin to see the potential of your coffee business.
Using the approximate scenario above, bringing in $16,200 per month in revenue is very significant. Now of course, you can’t pocket that money and go on vacation.
You have financial obligations. You will have to pay your rent, your labor (baristas), your inventory, any interest, and you will have to pay back loans, or pay yourself back of any money you spent on equipment, etc.
Now again, let me emphasize that this is only one hypothetical scenario. You might need to spend more and you may make less. It just depends on your business. Nevertheless, you can see how daily sales can add up to large monthly revenue.
When setting up a coffee business (or any business for that matter!), there is a possibility that you can save thousands of dollars or you can waste thousands of dollars in the process of setting up your coffee business.
You can also waste thousands of dollars in the ongoing monthly operations.
What’s the difference between saving and spending money, needlessly?
Planning, planning, and planning!
But to plan your coffee business correctly, you have to do your research. Every coffee business is different. There is no “one simple way” to start your coffee shop. To save your money, you will have to know where to start. You will have to know what works and what doesn’t… and to do that you need to ask questions of people who have already done what you are about to set out to do.
Most people understand the value in learning from others… but when starting a coffee shop or coffee business… many business owners don’t research, budget, or plan much of anything. It's hard to see anyone succeeding by approaching the opening of a coffee shop in such a manner.
Our goal here at CoffeeShopStartups.com is to provide you with the planning tools you need to save money.
Additionally, we want to be upfront with you in all elements of setting up your business.
Some coffee shop owners struggle for their entirety of their business.
Many, we believe, struggle needlessly. We wonder how many of them actually took the time to plan out their business. How many of them utilized the resources available to learn from other coffee stand owners?
Where Can You Save?
Saving money on your coffee shop business will be important – even if you have the extra money. Certainly you can use the saved money to re-invest towards your business or other life expenses. The best way you can save money on your coffee shop is to do your research thoroughly before you spend any “real money” on leasing, equipment, and inventory. You will want to research even before you work with consultants or contractors. A great way to ensure that you have done the research and given each scenario the proper thought is to write out your coffee shop business plan. Having a thorough coffee shop business plan that reviews all elements of your business will be essential for you to save money.
The third way to save money is fully understanding the space and equipment you will need – and how you can get them more cheaply. Knowing what to look for in terms of the right equipment. Forth, the next place to save is by looking for the right location that works for your coffee business. Will the location serve your customer base? Sometimes, the “right location” might not be the right location for you and your business concept. This is why it's important to write down your business concept in a business plan before you sign a lease.
How to Start a Coffee Shop With No Money?
Can you start a coffee shop with no money? The short answer is: NO.
You simply need money to start a business.
Just as you need money to buy lunch, you need money to buy a vanilla latte, you are going to need money to start a coffee shop.
However, with that said, you personally may not need money to start a coffee business.
Like many other business owners who lack the initial startup funds, you can borrow money, you can crowdfund your coffee business, or you can bring in partners that have the funds to carry you over until you are profitable. We strongly recommend that if you do borrow money or bring in partners that you pay close attention to your business plan.
Your coffee shop business plan will be your “North Star” and will help you develop your coffee business inside-and-out. It will help answer the question, “How much money do you need?”
You don’t want to ask for less than you need as you want to have enough to see you through until your business is profitable.
So what are your options? There is no right answer as it all depends on your business concept, location, menu selection and customer base. However, we have detailed some options previously written blog posts below, which are worth a read.
How Much Do Coffee Shop Owners Make?
Coffee business owners take the risk in starting their business and they deserve any of the rewards and profits. Taking the steps to start a coffee shop can reduce the risk and increase the probability of profits.
But detailing how much a coffee shop owner makes, depends on a number of important factors.
Usually, you can determine how much a coffee shop owner makes by answering these five questions:
- What is the volume of business?
- Is the coffee business turning a profit?
- If so, how much profit is the business making?
- How is the owner paying himself or herself?
- How is the revenue being allocated?
The owner of the coffee business can be breaking even but he/she may also be including themselves in the cost of his/her salary just like any other employee. For example, as an owner, you may give yourself a base salary of $12 an hour. Consider the following basic general category costs of running a coffee shop.
- Labor (which may include owner salary)
- Expenses (fixed and variable)
All this Equals the “Total Cost of Doing Business”
Remaining profits are then invested back into the business, put in the bank, or utilized by the owner to do whatever he or she wishes.
How to Find The Right Location
Finding the right location for your business is significant for the success of your coffee business. Your business location will ultimately determine your sales volume and your ability to turn a profit and ultimately succeed.
But what is the right location for your coffee business?
The right location is often at the vortex of the right space and right price.
Consider the graphic below:
Your challenge is to find the sweet spot between these three elements. I recommend starting to look for your location early on in your business planning.
It takes a bit of time to find the right location for your coffee business. And once you find the right place, you will have to then determine if the lease is the right “lease” for your coffee business.
My recommendation is that you start preparing early:
Whether you are just thinking about starting a coffee shop or would like to open up a coffee shop in three months, start looking for now for the optimal locations that you believe fit the “sweet spot” for your coffee business.
Start writing out your coffee shop business plan. Property managers will often require a business plan before taking you seriously. Having a well-thought business plan will lend a lot to your credibility and even your ability to articulate what you want from a particular property location.
Your Equipment Needs When Starting a Coffee Shop
Your coffee business will depend on some essential tools to deliver the coffee your customers want. Of course, you will need an espresso machine and coffee grinders (but which ones?) and we will need other basic items like a refrigerator, drip coffee brewer, small wares, and other items.
The complete of coffee equipment for your coffee shop ultimately depends on your menu. What are you planning to serve?
In our Complete Coffee Shop Startups Kit we have nearly an hour long conversation with a coffee equipment expert. We also detail a thorough coffee equipment checklist.
For more information on coffee equipment we offer a deeper look with a previous blog post here.
How to Start a Coffee Shop Business Plan
Starting a coffee shop that is ultimately successful begins long before you pull your first espresso shot. Your coffee shop business plan is a large part of your business planning – and thus, an essential element to your success.
We acknowledge that sitting down and starting a business plan for your coffee shop can be a difficult thing, especially if you have never written one before.
There are plenty of free business plan templates around and you can probably get the gist of the elements in the plan. But ultimately, many will not detail the important details that a coffee shop business plan will need.
We think your business plan can be written more effectively if you had a business plan tailored specifically towards opening a coffee business.
While an editable business plan template comes with our Complete Coffee Shop Startups Kit. It will save you hours of time researching and hours of time in writing your business plan. It contains detailed information on each section of your plan to help you better understand and articulate your vision to yourself and others.
Collectively, our Coffee Shop Startups Kit is an important step to starting your coffee shop business planning. And offers one of the best ways, in our opinion to start your coffee shop business planning.
We have also written some specific articles on your coffee shop business plan:
Start a Coffee Shop That Succeeds By Planning
We’ve created the easy and affordable way to research and plan out your coffee business. Our Coffee Shop Startups Kit can help you plan out your business. It's the most comprehensive way to research and learn about setting up your own coffee shop business.
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