Should You Buy an Existing Coffee Shop or Start From Scratch?

Should You Buy an Existing Coffee Shop or Start From Scratch?

The Ultimate Coffee Shop Question: 

Should You Buy An Existing Coffee Business or Start From Scratch?

When you set out to start a coffee shop, you generally have three options:

• Invest in a coffee franchise
• Buy an existing coffee shop
• Start a new coffee shop from scratch.

Each of these has its advantages and disadvantages. We discuss coffee shop franchises in another article. However, in this post, we'll specifically discuss buying an existing coffee shop versus starting a new coffee shop from scratch.

Should you buy a coffee shop or set up a new coffee shop?

The answer always depends on your situation. If you have been operating a coffee shop as a general manager and the owner wants to sell you the business, it may make total sense to buy the existing coffee business. If you have a specific and unique coffee shop concept, you may want to start your business from scratch.

Much of the time, it comes down to money, potential terms of the purchase, timing, and whether or not the physical space fits with your overall coffee business concept. 

Before purchasing an existing coffee shop, the following elements need to feel right:

• Price
• Timing 
• Location
• Terms
• Current Sales

You have to feel good about each of these before you move forward with your coffee business decision. Feeling good about just one or two of these elements should not propel you to purchase a coffee shop.

Personally, being at peace with all of these factors listed above should be a priority before you set out to purchase an existing coffee business. 

In this article, we will take a look at the advantages and disadvantages of each of these methods when it comes to opening up your own coffee business.

The decision should be based on what makes the most sense to you right now. Among these should include your personal finances and well-being, health, the existing market, terms of the purchase, and your coffee shop budget. 

Should you buy a coffee shop or start from scratch?

Should You Buy or Start Your Own Coffee Shop?

The Advantages and Disadvantages

Purchasing an established coffee shop business can be the right choice for you. There is a lot of appeal in purchasing an existing coffee shop and jumping in and serving coffee immediately. It is likely the fastest way to get into retail coffee.

On the other hand, you might want to start with a clean slate and open a coffee shop business without any entanglements or issues that come with buying an existing business.

One of the best ways to determine whether or not buying a coffee shop makes sense is to write a coffee shop business plan. A well-thought-out business plan will help you see if an existing business (location, build-out, and customer base) will fit within the vision of your own coffee shop.

The PROS of buying a coffee shop business:

Starting any business from the ground up takes a lot of work, time, and money.

Things such as finding a suitable location, negotiating over a lease, spending thousands on a build-out, building a brand, and going through the permitting process can be a big hassle!

Therefore, buying a coffee shop business that is already established may allow you to jump right in. As such, a turnkey coffee business might be the right answer in certain circumstances. 

You want to be sure you are buying a profitable coffee shop and not a failing coffee business. If the coffee shop is struggling, you may want to walk away no matter how good the price is. Optimistic thinking and the planning of a miracle turnaround for a struggling coffee business don't always happen, even with the best management skills.

But let's assume for a moment that a coffee shop is making a profit. Let's look at some advantages of buying it.

Let's consider a few pros of buying an existing business:

You have an established customer base.

Local customers will probably already know about the coffee shop business. Having an already established business and goodwill with local customers used to come in every morning can be an excellent thing for a new business owner.

The coffee shop build-out is complete.

The plumbing, electrical, design, and layout are already complete and working fine. The coffee business has already met the local building department's requirements, health department, fire department, and other local agencies that allow it to currently run as a coffee shop (though you probably double-check!)

Coffee equipment may be included in the package.

Your coffee shop equipment matters – a lot. So, when you buy a coffee shop, be sure to negotiate for existing equipment – if it is the type of equipment you will need. Having the right equipment in the existing space can be a time saver. Of course, your coffee equipment needs entirely depend on what's on your coffee shop menu board. Will you keep the menu the same? Will you use the same vendors?

The location is perfect for you

sometimes, a business decision is made on how it will impact your daily life. Perhaps the location works for you because it’s near your home, children’s school, or other convenient aspects.

The Cons of buying an existing business:

Even the best coffee shops can have some negative aspects that you'll have to consider. Remember, buying a coffee shop business – no matter how wonderful – may not be the most optimal for you right now.

Additionally, even the most promising café or coffee shop may be riddled with baggage (financial obligations, legal matters, issues with neighboring businesses, etc.) that you don’t want to carry as you start your new coffee business.

Poor Reputation

The established coffee shop might have established a bad reputation among its customers or have poor goodwill in the community. They may have built a reputation for delivering bad service and bad coffee. Breaking an established reputation may be difficult in some communities. This is especially true if much of the reputation has been written online on various review sites, such as Yelp or Google Reviews.

Remodeling Might Be Expensive

Space may need to be changed considerably for you to enact your coffee shop concept. Some cities and counties may require some upgrading when a new business is established or a change of ownership is declared. An existing business may have been “grandfathered” into various regulations, which allows them to avoid expensive remodeling. You want to check with your local building department. 

Poor Lease Terms

When you buy an existing business, you will most likely inherit the existing property lease terms that are non-negotiable – at least until the lease is up. Buying an existing coffee business doesn’t mean you own the property. You have a right to use the property through your lease terms. The existing lease may be unfavorable to you or the existing coffee shop. A poor lease may be one reason why the current business owner has decided to sell his coffee shop in the first place. Major upgrades and repairs may be needed. While the existing equipment might be worth something – it may require costly maintenance.

It may cost more

Business owners who sell their coffee businesses want to maximize their sales. They might want to charge far above the market rate for their business or elements of their business. For example, they may want to charge you exactly what they paid for their 12-year-old espresso machine!

Buying a Coffee Business

Don't Pay for Other's Business Mistakes

The Pros of Starting a Coffee Shop From Scratch:

Starting a coffee shop business from scratch means that the business has never been legally formed before. Starting an entirely new coffee business can offer you some important benefits.

• Having a clean slate – Having a clean slate to open your new coffee business is beneficial. You can create the first customer experience with a new coffee shop. Additionally, you have the opportunity to start your own branding from scratch, which is a great opportunity to connect with new customers and the community as a whole. Your coffee shop can provide a new, exciting community space that delivers profitability and human connections. 

• New coffee equipment – New or lightly used coffee equipment and a modern coffee shop design is appealing. You get to choose which coffee equipment fits best with your design. 

• Potentially Less Expensive – Starting a coffee shop on your own can sometimes be cheaper, too.

• A Fresh Start – Starting a new business will ultimately help you avoid dealing with any residual issues that a previous owner or tenant had. This includes any debt, taxes, obligations, legal issues, etc.

The Cons of Starting a Coffee Shop Business from Scratch:

While starting a coffee shop from scratch is appealing on many levels, there may be some drawbacks.

• Starting a new coffee shop may take longer – Starting a new business may take longer than simply buying an existing one. Even after research and negotiations, you can jump right into the business when buying an existing business.  This is not the case for starting a new coffee business where much research, planning, and build-out time is necessary.

• It may cost more – The coffee shop startup costs will be more apparent as you need to buy equipment and pay for essential construction costs. In other words, if the general structure or “build-out” is already in place, you could save money. However, if the build-out is completely different from what you want, you might have to pay for the total remodel. Negotiating a lease with a landlord might be more difficult and exhaustive if there has never been a coffee shop in the space before.

• Permits can take time – Paperwork, permits, and successful passing of all requirements may be lengthy and costly. Customers may not be used to having a coffee shop or coffee business in that location, so you may need to go the extra mile to promote your coffee business.

Buying a Coffee Shop Summary

Whether you buy an existing coffee shop or start a coffee shop from scratch, there are certainly pros and cons to each. Both can be a feasible step to a profitable coffee shop business, but it needs to be looked at seriously under the context of what your budget is, what your vision is, and what spaces are available.

Additionally, it would be best to ensure that the existing business is making money, what terms you are getting with your purchase, and how much baggage you will carry.

You don’t want to be the cleanup crew to a poorly run coffee business. You don’t want to be stuck holding the bag. When the time comes to pay bills from a business you just bought.

Whatever direction you choose, do your homework. It would help if you had a coffee business plan written. Having a coffee shop business plan will make you a better negotiator.

Your research matters – The more hours you put into getting as much information on starting a coffee shop business as possible, the better for you.

Study the existing property lease. Look into the permitting requirements and study the demographics in your area. Leave no stone unturned when it comes to your coffee business. The mistakes you make because of a lack of research can cost you many times your initial investment. Your due diligence may take extra time and money – but it will be worth it.

Are You Ready To Get Started?

Unlock Your Dream Coffee Shop Business with Our Exclusive Coffee Shop Startups Kit!

Ready to transform your passion for coffee into a thriving business? Look no further! Our Coffee Shop Startups Kit is your key to brewing success. Here's why you can't miss this opportunity:

35-Lecture Coffee Shop Business Course: Our kit provides a comprehensive A-to-Z lecture series that covers what you should know and how to plan your coffee business. No more guesswork – follow our proven roadmap for success.

Comprehensive Coffee Shop Business Guide: Our kit includes a detailed, step-by-step guide that takes you from creating your concept to your grand opening.

Expert Interviews and Insights: Benefit from insider tips and industry secrets that successful coffee shop owners and experts share during one-on-one interviews. Learn from the best to stay ahead of the competition.

 Business Essentials: We provide business plan templates, checklists, and resources to streamline your startup process. From permits to menu planning, we've got you covered.

Cost-effective Solutions: Save time and money with our expert advice and budgeting tips. Maximize your ROI and minimize headaches.

 Adaptable to Any Setting: Our kit is designed to suit various locations and customer demographics, whether you're eyeing a trendy urban spot or a cozy corner in a suburban neighborhood.

Includes Exclusive BONUS Material!

👉 Order Now and Begin Your Journey!

Don't let the complexities of starting a coffee shop overwhelm you. Our Coffee Shop Startups Kit is your ticket to entrepreneurial success. Take the first step towards owning a profitable and fulfilling coffee business today.

Join the thousands of successful coffee entrepreneurs who started with a dream and a great plan. Your journey to coffee shop greatness begins right here!

Comprehensive. Proven. Affordable.

The Complete Coffee Shop Startup Kit

(Instantly Delivered To You)

Complete Coffee Shop Kit Sales Graphic

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.