Is It Hard to Open a Coffee Shop?

Is It Hard to Open a Coffee Shop?

Coffee Shop Startups

Is It Hard to Open a Coffee Shop?

With 70 percent of American adults drinking coffee daily and buying high-quality gourmet coffee, starting a coffee shop can be an appealing business to start.

The steady growth in demand for good coffee and the desire for a sense of community give coffee shops a higher probability of success than other retail stores.

Yet, there are challenges to opening a coffee shop. Even well-funded coffee shops fail to be profitable and sustainable.

We’ve taken a deeper look at why coffee shops fail in the past and arrived at one conclusion: The lack of preparation.

The steps to start a coffee shop are often straightforward, but opening a coffee shop can be challenging if you don’t do your research and planning.

To be sure, there are potential pitfalls everywhere with a tremendous financial risk that can devastate your finances.

The best bet to ensure the successful start of your coffee shop is to understand the process, learn from other coffee shop owners, and develop your concept thoroughly.

In this post, we will discuss the challenging aspects of starting a coffee shop and how you can best avoid and mitigate pitfalls, avoid financial disaster, and enjoy a higher probability of success.

Is It Hard to Start a Coffee Shop?

There are vital elements of a coffee shop that need to be addressed to ensure the success of your startup. Each of these elements carries its own set of challenges. A problem with one factor could create a domino effect with the others and stifle your coffee shop business quickly.

Let’s lay out a few challenges that make your coffee shop difficult to open below:

Defining a Winning Concept

Your coffee shop concept needs to be defined before starting your business.

A “winning concept” means having a coffee shop concept that works for that specific location and those specific potential customers in that given area.

Without a specified coffee shop concept, your business will be like a sailboat without a rudder and travel in the direction dictated by the ocean currents.

Yet, defining a winning coffee shop concept may be more complicated than it seems. There may be lots of competing ideas that all seem reasonable and exciting. Choose the most sustainable option that works with your budget.

Once you decide on your coffee shop concept, the next steps to starting a coffee shop become easier to take.

Learning Who Your Customer Is

Understanding who your customers are – and what needs they have – can sometimes be hard to do if your coffee shop doors aren’t open yet.

Yet, taking the time to learn what your customers like and what motivates them to visit your coffee shop is essential. This can often be done by observation and listening to neighboring businesses and residents.

To learn who your customers are:

• Visit other local retail stores
• Patron nearby coffee shops
• Research the local demographics
• Walk the neighborhood
• Conduct surveys
• Speak to the local Chamber of Commerce
• Visit local organizations

The learning never stops. The truth is that your coffee shop needs to adapt to your customer’s needs continuously.

Even after you open, the chances are that your customers – and their needs – may change over time. Customers are often transient. Adapting or anticipating what they need requires effort, purposeful observation, listening, and engagement.

Finding The Money To Start Your Coffee Shop

Finding the money to start your coffee shop can be challenging, even if you plan everything right. Even so, creating a coffee shop can be extremely hard – if you don’t have a business plan to get off the ground.

A coffee shop business plan will help to answer:

• What kind of coffee business are you starting?
• How much money will your coffee business cost?
• Detail your coffee shop funding mix.

From there, you can begin to find your sources of funding. But keep in mind that even with significant planning, it can be hard to secure the money to start a coffee shop.

We recommend reading our other post, How Much Does a Coffee Shop Cost?

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Finding the Right Location

Finding the right location for your coffee shop can be among the most complex challenges to starting a coffee shop.

The risk of picking the wrong location for your coffee shop is reasonably high without proper location assessment – and it is highly probable that it will lead to business failure.

Your thorough research, planning, and honest location assessment will be vital to choosing the right location for your coffee shop. Everything from studying local demographics, counting customers, assessing the competition, and rental costs will be a factor. Even if you get a real estate broker to help you, you need to be engaged in the entire process.

Finding the right balance that works explicitly for your coffee shop concept can be hard at times. Choosing the right location depends on a number of factors and depends on what area you are focused on opening a business. For example, starting a coffee shop in Europe will be different than setting up a drive-thru coffee stand in Oregon. We recommend starting early, getting help, and being diligent.

Is it Hard to Open a Coffee Shop?

Coffee Shop Startups

Signing a Property Lease that Serves You

After finding the right location, you will most likely need to sign a coffee shop property lease. It’s not that signing a lease is hard. What is hard is negotiating the terms of your coffee shop business lease – at a price that makes sense.

Even the best location for a coffee business can have unreasonable terms and conditions that can stifle your business in the long run.

In our Complete Coffee Shop Startup Kit, we discuss your coffee shop startup property lease at length. Since your lease can make or break your business, even at the best coffee shop location, we recommend listening to this interview before signing on to any lease.

Getting The Permit Approvals

When you open a coffee shop, you will need the approval of several local agencies. Among them may be the health department, fire department, and buildings departments. Each of these agencies has its own rules and regulations – and although they are often aware of each other’s regulations, they have their own priorities that need to be addressed before giving you the approval to open your coffee shop.

If you live in the United States, it’s fair to estimate that each county and state will have its own layer of governmental agencies. If you plan to set up a mobile coffee unit, you may have to get a health permit from each county you plan on working in.

Sometimes agency requirements may seem unreasonable but understand that their job is to protect consumers, workers and ensure the health and safety of all who encounter your business – that also means you!

Finding The Right Contractors

The chances are you will need help building out your coffee shop. The design, lighting, plumbing, and remodeling will likely all require the work of licensed contractors. While you might be able to do a large portion of the build-out yourself, you will probably need to rely on some expertise.

Sometimes, paying other contractors to “do it right” and “do it to code” will be well worth the money spent.

Finding the right contractors for your coffee shop can be challenging. Even if you are located in a large city, finding good, reliable, and honest contractors to build out your coffee shop can be a painstaking endeavor.

I recommend putting out your feelers early. Ask other coffee shop owners for recommendations and keep those contacts handy.

Hiring The Right People

If you intend to have a small coffee shop, every employee you bring on board will play an essential role in your success.

Every barista will contribute to the energy or vibe of your coffee shop. Every hire can impact your coffee shop’s reputation and the quality of your service.

In the same light, hiring the wrong people could ruin your coffee business and ultimately lead to a failed business.

As with finding good contractors, you may also have a challenging time hiring good baristas, cooks, bakers, and chefs.

The chances are better that you can easily find great hires if you increase the pay and benefits to your employees (though this is not guaranteed!)

Long before you hire your first barista or staff member, determine what roles you need to fill and why you need them filled. Additionally, figure out the coffee skills and personalities you need. You may need a cheery disposition for those early-morning baristas, but you also need someone reliable and experienced in getting the coffee shop up and running for the day.

While you can place ads on Craigslist.com, you may also post your call for new hires on Instagram or your blog. Connect with baristas from other neighboring coffee shops. It’s common for a barista to work at a few different coffee shops.

Utilize the interview process to ask questions and convey the goals and culture you are trying to establish. Call references and take your time to hire. Call for a second interview if you need to confirm availability and job requirements. After hiring your baristas, you will want to offer some barista training to get them on board with your program.

Sticking To Your Concept

Starting a coffee shop isn’t hard, but sticking to your coffee shop concept might be.

When you first set out to open a coffee shop, it’s common to have many competing ideas. Sometimes, these competing ideas can mix to re-emerge after you have decided on a single coffee shop concept.

Having a mixed coffee shop concept can scatter your attention, cause lots of delays, and cause you to lose tons of money in the process. Even with the best business plan and intention, sticking to your coffee shop concept over time always offers challenges.

For example, you may start out thinking that you want to roast your own coffee beans. You plan and budget for space and choose a specific location that works for roasting but then drop the roasting operation. This decision can change the entire nature of your business and divert your focus off your chosen coffee shop concept.

I recommend deciding on your concept and then fleshing out the details in your coffee shop business plan. Develop your coffee shop budget, get your funding mix together, and then move forward.

Is It Hard to Open a Coffee Shop?

Keeping Within Your Budget

When you start a coffee shop, cost overruns are common. Even the best estimates and anticipated expenses can blow through your coffee shop budget with just a few hiccups.

Still, it is essential to develop a sound coffee budget and provide some margin of error or slack for everything you budget out. For example, you might want to add a 10% to 20% budgetary cushion for your estimated expenses and overruns.

Developing your coffee shop funding mix should include this margin of padding so that you can have more time and money to ensure the completion of your coffee shop startup. You don’t want to run out of cash entirely before you can open your doors.

I recommend keeping track of your spending by creating a system that works for you. This means saving receipts, keeping invoices, and entering them into your favorite accounting software program. You can also compile them in an excel spreadsheet. Whatever way you choose, be consistent.

Much of the cost overruns occur when you don’t realize just how much you are spending. Keeping a cost spreadsheet will help you keep your awareness up and adjust your spending.

Choosing The Right Coffee Equipment

Walk into a retail coffee supply store, and you’ll see hundreds of products that you would love to have. Many of these pieces of coffee equipment you may not need. But a good sales rep and a dose of excitement could blow your budget.

• Commercial coffee equipment is expensive. Buying the wrong coffee equipment, having it shipped, and installing it can lead to cost overruns.

• Choosing the right coffee equipment for your coffee shop depends greatly on your menu offerings, available space, coffee startup budget, and other details.

For more information, read our post, Equipment You Need to Start a Coffee Shop.

Pricing Your Menu Options

Pricing menu items is a hefty challenge that most coffee shop owners have. Most coffee shop owners have a hard time deciding:

• At what price do you set your coffee?
• Do you use the competition’s prices?

There are different pricing strategies that you can utilize. The most important thing is that you achieve a balance between the quality of the coffee and service you provide and the ability of your customers to pay for it. Check out the Pricing Guide that comes with our Complete Coffee Shop Startup Kit.

Staying Passionate

Starting a coffee shop is exciting, but it can also be overwhelming for long periods of time. Maintaining your enthusiasm and passion for your project can be hard to sustain over time.

Stay passionate by taking care of yourself – your health, your mental and emotional state. This is done by protecting your personal and family time. Eating healthy, getting enough sleep, and making sure your personal obligations are being addressed are essential.

Bring people on board to help you maintain your passion for your business. This may include your baristas, chefs, cooks, or other employees.

Is It Hard to Run a Coffee Shop?

Coffee Shop Startups

The Real Challenge Is Operating a Coffee Shop

While setting up your coffee shop can be difficult – even with a well-thought business plan – the daily operations of a coffee shop after opening can be the real challenge facing most coffee shop owners.

Common challenges for a coffee shop owner:

Managing Inventory

One factor in reaching profitability is managing inventory well. Managing your coffee shop inventory can be challenging, especially if you have never done it before.

On the one hand, many of your coffee shop menu items are perishable. On the other hand, your coffee shop menu items can sell out. Finding the right balance between selling your inventory and not selling out too soon will make all the difference in your profit margins.

One way to help with this is using a point-of-sale system that allows you to track your inventory.

We’ve written a detailed post on coffee shop POS systems that assesses some popular POS systems.

With the help of your POS, creating a system for you and your employees to follow will help you save money and maximize profits. Additionally, the data you receive can help make you a better coffee shop manager.

Delivering a Good Product Every time

Delivering excellent coffee is essential to your coffee business. But providing a superior product – whether it’s a vanilla latte or hot lunch, is hard to do 100 percent of the time.

But it must be done.

The competition is too great to be inconsistent and mediocre. The potential loss of customers based on one negative experience or bad cup of coffee can increase significantly over time.

If you don’t serve a great product every time, you have to fix it. If you don’t offer excellent service every day, you need better training. In turn, better training elevates your game and makes your coffee shop special.

Know Your Operational Costs

How much does your coffee shop cost to run every day or every month?

What systems are you employing to help you keep track of your fixed and variable costs?

Keeping track of your operational costs (including your inventory spending) is essential for every coffee shop owner to manage – but it can be hard.

Here again, a coffee shop POS system, accounting software, and the help of a bookkeeper can provide the information you need to determine necessary data sets. In turn, this will help you manage your coffee shop more efficiently.

If you are experiencing cost overruns and are struggling to make a profit, turning your coffee shop around may be challenging.

Is starting a coffee shop hard?

How to Open a Coffee Shop More Easily

Recommendations to open a coffee shop more efficiently. Consider the topics we’ve listed above and how each of them can play a role in making your job harder as an aspiring coffee shop owner.

Below, we’ll list a few tips to get your coffee shop started more easily. Additionally, consider reading our post, Tips on How to Start a Coffee Shop.

1. Write a Coffee Shop Business Plan

When you write a coffee shop, you give yourself the gift of foresight. The ability to see how your coffee shop startup will play out – on paper – with a business plan. Of course, the reality is always different, but writing a business plan will ensure that you have thought of all the bases that need to be covered by thoroughly writing out your business plan. This will help you keep your startup within your budget.

2. Study Your Coffee Shop Customer

As you settle in on a coffee shop concept and coffee shop location, consider investing the time and energy to study your customer base. Answer the questions: What will your customers’ expectations be? Why are they coming to your coffee shop instead of your local coffee competitor?

By taking the time to study your customer base or target market, you will want to develop a customer-centric approach to everything you do.

3. Create a Timeline (with Benchmarks)

To help you keep the momentum going, create a realistic timeline that leads to your coffee shop grand opening. A timeline will help provide a visual tool to keep your progress moving forward and allow you to prep and plan for the next upcoming benchmark.

4. Get Help When You Need It

Starting any business is easier with a little help. Starting a coffee shop is no different. Consider getting the help you need by reaching out to current and former coffee shop owners and business experts. Our Complete Coffee Shop Startups Kit is an excellent place to get the knowledge you need to get your coffee shop off the ground. It’s packed with tips, recommendations, advice, and real-world accounts of starting coffee businesses.

Is It Hard to Open a Coffee Shop?

In this post, we’ve covered many items that make starting a coffee shop challenging. Remember that each of them carries its own set of potential challenges. They each merit your time and attention.

We will list them below:

• Define a Winning Coffee Shop Concept
• Learn Who Your Customer Is
• Finding the Funding to Start Your Coffee Shop
• Finding the Right Location
• Signing a Lease that Serves You
• Getting the Necessary Permits
• Finding the Right Contractors
• Hiring the Right People
• Sticking to Your Concept
• Keeping Within Your Budget
• Choosing The Right Coffee Equipment
• Pricing Your Menu Options
• Staying Passionate

Additionally, you will want to read 100 Tips to Starting a Coffee Shop.

Is It Hard to Open a Coffee Shop?

Related Questions:

Is it hard to open a coffee shop in a small town versus a city?

Starting a coffee shop in a small town and city can be challenging if the items discussed above go unaddressed.

Starting a small coffee in a smaller market may seem easier or more attainable because the common wisdom is that the costs will be lower, people are more flexible, and rules aren’t as rigid.

These assumptions may or may not be accurate. Additionally, a small town may – or may not – be able to support your coffee shop business simply because it does not have a large enough customer base to be sustainable.

My recommendation is that whatever size of coffee shop you decide to open, you give it 100% of the attention it deserves to succeed.

Photo credit: Alfiedude

Is it harder to open a coffee shop versus a drive-thru coffee shop?

Starting a drive-thru coffee stand can be an excellent low-cost way to open a coffee shop. However, a drive-thru coffee shop can still be expensive and challenging to open if you cannot do the necessary research and planning.

Some drive-thru coffee shops can be a complex undertaking and often have their unique steps.

Both coffee shops and drive-thru coffee stands are comparable to one another but offer stark differences in design, layout, and service.

For a more in-depth look at opening a drive-thru coffee stand, read our post, How to Start a Drive-Thru Coffee Stand.

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.