Q&A: Questions to Ask Before Starting a Coffee Shop
Getting Started
What Should I Know Before Starting a Coffee Shop?
If you want to start a coffee shop, you likely have many questions—or at least you should! Our coffee shop startup blog explores many coffee shop business questions.
Starting a coffee shop can be an incredible journey; however, before you start planning and spending real money on your caffeine-powered business, you’ll want to consider a few likely questions and answers.
In this post, we begin a coffee shop question-and-answer series that will help you think about your coffee shop business planning. We hope to offer similar posts in the future.
Since your coffee shop concept is likely different from the next entrepreneur's, you’ll each have unique answers, but I think they are great to consider as you start your coffee business journey.
Your Coffee Shop Customers:
Question: What does your ideal coffee shop customer look like?
There’s no right way to start your coffee shop planning; however, figuring out who your customers will be should be a top priority.
In other words, start your coffee shop business with your customers in mind.
Focusing on your customers from the start will help you stay focused on your mission and keep you from spending extra money. From here, you’ll be able to determine your coffee shop menu and start substantial planning, including budgeting for the right coffee equipment, perfect location and eventual opening.
When determining your customer, dig deep. In fact, I advocate creating an avatar of your customer to get very specific. For example, perhaps your target customers are 25 to 45-year-old professionals who work downtown. Your avatar can be Jason, at 35 year-old mid-level manager at a tech company who enjoys great coffee at home but loves to get great espresso during the day.
Coffee lovers like Jason may prefer artisanal coffee and are willing to pay $5–$7 for a specialty espresso-based drink. Or there’s Bridget, a 50-year-old artist who would like to indulge in some live music or poetry readings and enjoy your smoothies.
With this information, you can craft your customer’s experience, desired menu, and price points – and develop your coffee shop budget.
Your Coffee Shop Competition
Question: What niche are you filling in the market, and who is my main competition?
Understanding the specific coffee niche in your local market that your coffee shop will fill is absolutely crucial. This knowledge, coupled with an awareness of the number of competitors within a specific area, will help you understand your place within your community.
People love coffee everywhere. And where there are coffee lovers, there is a need for coffee shops. Therefore, you’ll likely encounter some competition as a coffee shop owner, so plan for that before you decide on your location. This is true, especially in a high-traffic or densely populated area. After all, you’re likely not the only one who sees profit in coffee-loving customers. Therefore, you’ll want to determine your Unique Selling Proposition before opening to differentiate yourself.
Typically, you will encounter direct competitors and substitute competitors. Direct competitors could be other independent coffee shops or chain coffee shops. Indirect competitors can be pancake houses, fast food joints, or 24-hour gas stations that serve coffee.
Staying ahead of your competitors will be a big part of your success. Finding ways to differentiate yourself could mean adding things to your menu and offering different experiences or services. For example, you might decide to offer an additional wine menu and light hors d'oeuvres. Or you may add some music, live comedy, or game night. These will be hard for your chain coffee shops and substitute businesses like 7-Eleven to copy.
For more information, check out our blog post, How to Start a Coffee Wine Bar.
Your Coffee Shop Location
Question: Where will the best location be for my coffee shop?
Location is crucial in most retail businesses but is especially important for coffee shops. It also is the scariest because you’ll likely sign a multi-year lease – so it’s best to prepare first.
Before you move forward, you’ll want to make sure that your location fits your budget and allows you to efficiently reach your target customer.
Before approaching a property manager, you will want to visit various locations during peak hours to gauge the potential foot traffic and sales. I always recommend counting customers. For example, what is the pedestrian traffic like between 7:00 a.m. and 9:00 a.m. (peak coffee hours)?
Let’s say your preferred location is near a bus or metro stop. According to pedestrian counts, foot traffic between 7:00 and 9:00 a.m. averages 600 people. Would serving 7% of the average pedestrian traffic during that time suit your sales estimates?
Look at how your location will ultimately deliver sales for you and be convenient for your customers. We delve deeper into this topic in our blog post, How to Beat Your Coffee Shop Competition.
Coffee Shop Startup Costs
Question: What is my total coffee shop startup cost?
Just thinking about money can get overwhelming – and it’s essential to get it right.
It’s no wonder that most coffee shop dreams shatter when we bring up your budget. It doesn’t have to be this way. My recommendation is that when it comes to developing your coffee shop startup budget, honesty is essential. You have to be honest with yourself about the numbers.
We’ve written about developing your startup budget, including How to Start a Coffee Shop Budget.
Here’s just an example of some costs:
- Property Lease (2 months): $12,000
- Renovation (including labor): $17,000
- Coffee equipment and installation: $23,000
- Coffee Shop Permits and Licenses: $2,000
- Initial inventory (coffee, milk, food): $5,000
- Barista Training and Labor: $4,000
- Marketing and mech: $2000
- Total startup cost: $64,000
As mentioned, once you develop a startup budget, you can develop your coffee shop funding mix. This financial mix will allow you to determine just how you will pay for your startup.
For more information, read our post, How to Develop a Coffee Shop Funding Mix.
Developing My Coffee Shop Menu
Question: What should I serve at my coffee shop?
Your menu will be the cornerstone of your coffee shop’s business, so it’s worth developing it. If you are not sure where to start, start visiting your competitors. What are they serving? What seems to be working for them?
Consider the following: Will you serve traditional coffee shop items, such as muffins, croissants, donuts, and breakfast sandwiches? As the day wears on, you might want to switch the menu and serve sandwiches and even serve alcohol at your coffee shop.
While your customers may come for the space and good service, your menu will be the engine of your revenue, profits, and sustainability.
Once you craft a menu tailored to your target market, you’ll be able to break down each element by wholesale costs. This might be easy for muffins or sandwiches you order from a vendor, but it may be more challenging if you make your items in-house.
We’ve broken down the cost of coffee before, and it’s worth a read: How to Determine the Cost of Selling 100 Coffees?
Your Coffee Shop Equipment
Question: What specific coffee equipment should I invest in, and how much does it cost to purchase and maintain?
Your coffee shop equipment all depends on what you are serving. From there, you can think about what type of equipment to invest in. Since coffee equipment isn’t cheap, you will likely want to shop around for the best price from vendors.
Nevertheless, you’ll need to budget accordingly. For more information, please read our blog post, Coffee Shop Equipment Needed to Open a Coffee Shop.
Coffee Shop Permits and Licensing
Question: What permits and licenses do I need in my city, how much do they cost, and how long will it take to obtain them?
Permits and licensing may seem like a nominal expense, but it takes a lot of planning and a good amount of investment, planning, and hard work to get to the point where you can actually setup your inspection appointments.
And it can get expensive, especially if you don’t plan things out well. Before you set up your health and buildings department inspection, much of the cost goes to the location, contractors, and others.
Nevertheless, there are permit and licensing costs. Let’s look at a few of them below.
Example:
- Business license: $150 (file online)
- Health department permit: $800-1500 (4-week process)
- Buildings department inspection: $1200-$1500 (2 month waiting list)
- Fire safety inspection: $250-400 (3-6-week process)
For more information, please read our blog post, Coffee Shop Permits and Licenses.
Coffee Shop Marketing
What should I do to promote and market my coffee business?
Community-based marketing can be highly effective for a coffee shop, especially if you are building relationships with local residents and businesses.
Here are a few examples:
Hosting events or creating community-based collaborations: Partner with local artists or musicians for monthly events to bring in customers.
Sometimes, musicians want a place to perform in front of a live audience.
Loyalty program: Implement a simple loyalty card system (through your POS) offering a free drink after every ten purchases or so, for example.
For more information, please read our blog post, Coffee Shop Loyalty Programs.
Sponsoring local events: Participate in local farmers markets, charity runs, or festivals. Sponsorship fees range from $100 to $1,000 per event. This can get expensive, so price out your sponsorship wisely and determine your rate of return.
For more information, read our post on Selling Coffee at Farmers' Markets.
Hiring Your Baristas
Who Should I Hire to Work for My Coffee Shop?
Before you hire anyone, understand why you are hiring and what you are hiring for. Do you need a barista and a cook? Do you need an assistant coffee roaster and a barista?
Hiring is essential, but hiring poorly can really eat into your margins and slowly ruin your business. Great baristas can generate more sales for your business week-over-week than you can imagine.
For more information, read our post, How to Hire Amazing Baristas.
Coffee Shop Inventory
Question: How Should I Track Inventory?
The best way to track your inventory is by utilizing your POS or Point of Sale System. Finding the right one can be challenging, so we’ve discussed coffee shop POS at length here.
As a new coffee shop owner, inventory management will be a learning curve. After all, balancing how much you need to order to maximize your sales and minimize your risk of waste will be key to saving your profit margins. It will be a game of trial and error; however, focus, awareness, and tools like a POS system can help you tremendously. Good communication between your baristas, general staff, and customers can help you fine-tune your inventory management strategy.
Your Coffee Shop Questions Answered
Starting a coffee shop is often a wonderful lifetime dream, but it requires thorough planning and attention to detail.
Before spending any real money, you can build a strong foundation for your coffee shop business by asking critical questions, such as identifying your target coffee customer, understanding the local market, selecting the right coffee shop location, calculating startup costs, and developing a unique coffee shop menu and Unique Selling Proposition (USP).
Additionally, addressing operational needs like coffee shop equipment, local permits, staffing, marketing strategies, and efficient point-of-sale systems ensures smoother day-to-day management. Taking the time to carefully plan each aspect will set you up for success and help your coffee shop thrive in a competitive market.
To learn more and access comprehensive tools, we highly recommend getting our Complete Coffee Shop Startups Kit, designed to guide you every step of the way.
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* The information on this page is for educational purposes only. We do not offer legal advice.
Coffee Shop Startups
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.
