Start a coffee business
Want to start a coffee shop? Good. You’re in the right place. For years, we’ve written on essential topics for aspiring coffee shop owners. We’ve helped hundreds of would-be coffee business entrepreneurs get their start. Our commitment to helping you successfully open a coffee shop or start a coffee stand has been evident over the years. But we are not done yet! We continuously aim to be the best online resource for those wanting to start a coffee shop business.
This article is no different. We will discuss the important elements you will need before you start a coffee shop or a coffee business.
Any successful business or idea doesn’t just happen overnight. Contrary to overwhelming belief, a successful business always starts with deliberate research, planning, and execution. Ask any successful coffee shop owner and they will tell you that it doesn’t stop there. You are always trying to be better, to perfect your systems, to provide more value, growing, evolving, and profiting. If we understand that there is no “perfect” way to start and most importantly maintain a coffee business, we will be less hard on ourselves.
Like brewing the perfect cup coffee, starting a coffee business requires a little science, a little math, a little art, and a little bit of passion all poured together.
A little bit about this list: We have written several featured articles on “how to start a coffee shop” or “how to open a coffee shop” or “how to start a coffee stand”, and they all pose important steps that we believe is important for your planning.
Why This is a Good Time to Start a Coffee Business
Americans and other nationalities drink coffee – lots and lots of coffee! For Americans, we consume, on average, over three cups of coffee a day. About 75% of Americans drink coffee with about 54% taking to it daily. The trend is expected to continue. An expanding market is good for any business. With coffee being one of the most widely consumed beverages in world and in the United States, one could argue that it is a good time to start a coffee shop or open a coffee kiosk in your community.
Still we often get questions on starting a coffee shop business, including “where do I start?” or “what do I need to start a coffee shop?” There is certainly no “right” way to start a coffee business. Below, we outline the steps you will need to start your coffee shop or coffee stand business.
“So, what do you need to start a coffee shop?”
Want to start a coffee shop? We've outlined some common steps to take to get your coffee shop business started:
Start a Coffee Shop Business By Assessing Where You Are
Unlike other coffee shop business resources, we don’t just want you to buy our coffee shop startup kit and be gone. We also want you to be successful. We want your business to work for you.
The question that others don’t ask is whether you are ready to start your coffee shop. It is okay to realize that you aren’t sure and that you are investigating how to open your own coffee shop business. That is an important distinction because it means that you are actively trying to figure out whether starting a coffee business is the right thing for you, at this time.
The reality is that far too many times people jump into the coffee business and invest a lot of their savings only to lose it all. By the time they are deep into starting a coffee shop, they realize that the venture is not for them. Unfortunately, by that point, it’s usually too late to recoup some major expenses.
If the answer is “yes” or “I believe so” or “I am currently doing my research and figuring it out”, then we believe it’s a good time to buy our coffee shop startup kit.
Much of life’s successes and decision making require good timing. The truth is that you have to be ready to start a coffee business. This means an honest assessment of your personal and professional life before you move you forward.
Take Away Points:
- Assess personal timing
- Assess personal finances
- Assess personal goals
Determine Who Your Customer Will Be?
Starting a coffee shop can be lots of fun and exciting. And yet, it is still a business. Every successful business does one important thing: it provides a solution to someone’s problem. When you open a coffee shop, you will be providing a service to your customers; need for good coffee. While it may sound like a small thing, the reality is that your coffee shop can generate tens of thousands of dollars in revenue every year doing just that. However, in order to generate the revenue you will have to provide your coffee to customers. The question then becomes “who will your customer be?”
When you start a coffee business, you will want to know exactly who your customers are going to be. Here are some typical examples of specific coffee customers at three coffee businesses:
Coffee Stand: My customers will be the morning commuters jumping on the I-5 Freeway heading for work in the morning.
University Coffee: My customers will be students for the junior college across the street who are looking for a place to study, meet friends, and grab their coffee before heading off to class.
Neighborhood Coffee: My customers will be neighbors and patrons using the self-laundry business next store.
Your potential coffee-drinking customers are everywhere! A growing number of people are willing to drink coffee at any time of the day. If you see a group of potential customers either commuting (to and from work) or looking for a place to congregate, you should also consider all the ways to put a coffee business right smack in the middle of them!
In your mind (and in your coffee shop business plan), I want you to picture your “typical” coffee shop customer. Some people may describe that typical customer as an “avatar”. Whatever the word, you should have a solid idea of who your customer will be. After you figure out who your coffee shop customer will be, build your business around making the best experience and providing the best product to that customer.
Determine What Type of Coffee Shop or Coffee Business You Want
When you set out to start a coffee shop you will need to first start thinking dreaming about the coffee business you want. Dream big. When you dream about your business, make no effort to curtail your dream based on money or other barriers. Dreaming about your business is an important step to galvanizing the motivation to take the next step – whatever that step is.
Dreaming about opening a coffee shop is probably the most important step of all because it helps you to visualize the business you want to achieve. It helps you better articulate your feelings into a real picture of your coffee shop or coffee stand.
Determine what kind of coffee shop you want. Don’t worry, the reality of your budget, your available leasing space, as well as other factors will quickly come up against your dream. So, even if for a moment, try to capture the very best of your business concept. Once you do this, you can dream big. You can gently carry your dream back down using what resources you do have available.
- Take time to dream.
- Visualize the very best you can create.
- What would you offer if you had unlimited resources?
- Allow yourself to fully conceptualize your feelings/emotions surrounding your business goals.
- Have something in your mind as you move forward with the realities of planning
Determine Your Menu
Your menu determines a lot about your coffee shop business. From marketing to your actual leasing space requirements, you menu can be looked at as the important linchpin. Okay, so if you want to open a coffee shop or you want to start a coffee drive-thru stand, we probably already know that you will want to serve coffee.
Your coffee beans: Where will you get your coffee beans from? Which coffee do you like? Are there coffee roasters in your area that you would like to work with? Why not start early and ask to see which roasters can provide you with the contract terms that work well with you. While we are on the subject of working with coffee roasters, find out what they can provide you (in addition to their beans) in terms of training and coffee equipment.
Aside from coffee, most coffee businesses sell at least a dozen other products, from teas, juices, sodas, water, hot chocolate, and alcohol beverages. When it comes to your food choices, will you offer donuts, bagels, pastries, or cakes? Some coffee shops (even drive-thru coffee stands) provide more substantial offerings like sandwiches, burritos, patty-melts, etc.
If you want to deepen your menu, your equipment needs will obviously increase, so determine what you want and work out your budgetary needs from there. Aside from you budget, you want to be able to look at each product and product line, determine where you will get your item from – and start calling.
Why start early with your menu? Determining “the finalists” for your menu choices can be fun. But it may also take some leg work. Consider for example the following scenario:
You love Magic Bakery’s muffins. You want sell them in your coffee drive-thru stand. They love the idea of opening a new account, but they require a minimum order of say three dozen on a daily basis. Let’s say that you may think you may sell no more than one dozen on a daily basis. This may not work for you and your coffee business unless there is some negotiation or an agreement that you can feel good about.
The truth is that you may not be able to do business with Magic Bakery. Your business partnership needs to work with/for you. If it doesn’t, continue looking for other vendors. Many vendors will sit down with you and have you try out their product lines. Make it a point to spend time with each of them.
Take away points:
- Dream up your menu
- Be specific in terms of everything you plan on offering to your customer
- Consider your space and equipment needs for all of your menu offerings
- Take the time to investigate the terms and potential working relationship with all your vendors
- Adjust your menu as you learn more
Determine What Your Equipment Needs Will Be
Your coffee shop equipment is a big part of your coffee shop or coffee stand business. It is with your coffee equipment that you store and produce your product for your customers. Therefore having quality equipment is essential! Determining what your coffee equipment will be, should be done long before you spend a single dollar on equipment.
Your menu, your anticipated volume of espresso sales, and your space requirements will impact what kind of equipment you will need. Take a moment to consider what each of those will look like.
We recommend not skimping on your coffee equipment to save a little money. Getting random equipment may save money in the short-run (and that isn’t even a guarantee) but could cost you more in the long run. Fixing (and re-fixing) your espresso machine can cost you hundreds of dollars per year. The real cost however is the “down time” you may experience during your hours of operation.
Take Away Tips:
- Your coffee equipment should align with your menu
- Your coffee equipment should meet your anticipated sales volume
- Investing in quality equipment is essential to lower long-term costs
Determine The Real Estate Market
If you want a coffee shop, you’re going to need the “coffee” and the “shop”, right? So, your local real estate market will play a key impact on your monthly expenditures and can dictate the trajectory of your business viability and growth.
What can you do before you start your coffee shop business? Our recommendation is that you should do some basic research on the real estate market in your area. Consider what the average square footage costs are. Are there any current spaces vacant? And if so, how much are they asking for it? Many places will often cite their costs via square footage or yard, while others will simply give you a monthly dollar amount. Start figuring out the rental costs early in the process. This will help you to determine your startup costs, your break-even point, how much you will need to barrow and finance, and simply allow you to compare with other cities or towns that you may be interested in.
A big part of your rental agreement is the fine print. Look at the terms. What are the restrictions (or possible restrictions) to every specific location that you are considering? Are there extra costs associated with your specific business?
Your “To Do” List:
- Look for available and likely vacancies
- Compare square footage costs
- When you find out the costs, ask about other factors such as minimum leasing requirements, options, etc.
Determine What Your Break-Even Point Will Be
When people think about starting a coffee shop, the first thing that pops into their mind is serving coffee. And while that is important, one of the key factors for you to determine right away is your break-even point.
When you start focusing on your coffee shop business, one of the important things you will need to consider is at which point does your coffee shop business start to break-even? This “point” is important because it really determines when/where you are losing money or making money.
We have spent a lot of time in previous articles discussing your break-even point. However, for the sake of simplicity, we’ll simply review it here.
Your coffee shop break-even point is the calculated point at which you are not losing money nor making money. To arrive at this point, your total revenue should equal your total costs. Now this could be calculated on month-to-month basis or an even larger manner that includes your original startup costs. From an operating standpoint, many businesses simply calculate the costs of goods sold versus your gross revenue.
Look at Your Local Health Department Regulations
Every municipality in the United States (and Canada and Australia) has a health agency or department that works with food and beverage businesses to ensure the health of the public. Many local health departments have well-established guidelines for businesses like cafés, restaurants, food trucks, espresso stands, and coffee shops. Because each state and county has their own specific regulations that serve to protect the health of people from food-borne illnesses, you should start getting to know who those agencies are.
We recommend embracing your local health department and look at them as a partner (rather than foe) when it comes to your business. Most health department inspectors are busy and want to see your business succeed. They also want to see the public safe from any problems that may be associated with a business. Therefore to pass your local health department inspection, we encourage you to make some calls early in your planning process.
Each type of coffee business may have their own specific requirements. The type may be determined by the food you serve, where/when you serve it, how you serve it, and where you serve it. So, for example, if you have a coffee shop kiosk located at a mall you may be treated differently than having a full-fledged kitchen. Each health department may require you to pay a certain amount of fees, so find out what the regulations are in your community.
Take Away Points:
- Find out more about your local health department or agency.
- Get contact names, numbers for the person you may be working with.
- Determine the work-flow you will need to abide by to get your health permit.
- Start early.
- Our Coffee Shop Startup Guide offers a great interview with a health department expert.
Start Putting it Together in a Coffee Shop Business Plan
We’ve certainly covered a lot of topics on how to start a coffee shop already in the first eight steps. The next thing you we strongly recommend is putting it all together in a coffee shop business plan. Getting your thoughts and concept down on paper and written in an organized and comprehensive manner will help you flesh out your plans even further.
Your coffee shop business plan isn’t just for you (to get your plan of action down), but it is also for your property manager and your potential investors. As part of doing their “due diligence”, property managers will want to see that you have done your homework too. While they will be collecting a rent check from you every month, they also want you to have a successful business in their property space. Property owners and managers are also stakeholders in your coffee shop business, and will most likely ask to see a well written business plan.
Your coffee shop business plan will tell a lot about your abilities. First and foremost, your coffee shop business plan will display, quite effectively, your ability to articulate your vision for your coffee shop or espresso stand.
Your ability to construct a synopsis detailing exactly what you plan to do, how you intend to do it, and when you will achieve profitability will bode well when a property manager is trying to decide what type of business should be in their vacant space.
We’ve written about the importance of writing a business plan for your coffee shop several times before.
- How to Start and Write Your Coffee Shop Business Plan
- Five Good Reasons Why To Start Your Coffee Shop Business Plan
- Why Start Your Coffee Shop Business Plan
- Why You Shouldn't “Cut and Paste” Your Coffee Shop Business Plan
We understand that actually sitting down to writing your plan can be difficult or intimidating. We know that staring at a blank screen can be paralyzing.
Sure, you can get help or you can “cut and paste” business plan categories, but will you have a grasp of what exactly you will need to write?
Our coffee shop business startup kit, offers audio interviews that will help expand your knowledge and depth about the retail coffee industry, but it all has an easy-to-use business plan template.
Take Away Points:
- Having a business plan for your coffee shop is important.
- Writing a business plan isn’t just for you but for your property manager
- Get help with your business plan
Brainstorm on Getting the Money Together
Starting a coffee shop is a process. If you have followed the steps outlined until now, you know that you have come to point that you need to get money together to actually see your coffee shop or espresso stand to fruition.
As you develop your business plan, you will figure out how much all the pieces cost (these include your space, your equipment, furniture, inventory, and wages). You will then need to figure out your overall break-even point for your coffee business. This is an important step because you will need to know how much money you will have come up with in order to last long enough to be self-sustaining.
Once you figure out how much money you need to start your coffee shop or espresso stand, you will be utilizing one or more options to do so.
Here are likely scenarios for finding money for your coffee shop (or espresso stand):
- Personal savings
- Silent investors
- Investing partners
- Bank loans
- Personal credit cards
- Crowd funding
- Mix of all of these
Get The Knowledge You Need Before Hand
Starting a coffee shop? Depending on your level of experience you will want to learn as much as you possibly can about the retail coffee experience. There a number of ways learn how to open you own coffee shop business. While some investment is probably a good thing, you don’t necessarily need to spend hundreds or even thousands of dollars on getting to know “how to start a coffee business.”
Certainly, there are many ways to find out for yourself. For starters you can ask your favorite coffee shop owners how they got started. We think that like any good business person, you will want to speak to others who have gone on to be successful at the very thing that you wish to do. In this case, it’s learning how to open a coffee shop!
By speaking directly with those who have already opened their café business or coffee stand, you will get to know much more than any book could possibly offer.
Our advice: ask them to sit down with you for lunch. Additionally, come prepared with the right questions to ask. It’s worth it to spend $30 or $40 and take out the coffee shop owner to eat while you are able to ask your essential questions.
Of course, you want a variety of opinions and points-of-view, so we recommend that you do this with a number of coffee business professionals and veterans.
Learning directly from those coffee shop owners who have already succeeded and failed, will allow you to develop your own business.
What makes our Coffee Shop Startup Kit unique is that we offer a wide-spectrum of resources that, when taken collectively, you will be well-prepped to start your business plan and your coffee shop launch.
The first thing we recommend is listening to each streaming audio interview on each topic. Then you will want to review the various guides that come with the package.
Finally, you can start your business plan with our easy-to-use template. With a depth of background knowledge and our template, starting your coffee shop will be easier than ever!
Take Away Tips:
- Take steps to learn from experts (or people who have already started their coffee business)
- Don’t re-invent the wheel: Figure out what works and what doesn’t
- Invest in learning about the retail coffee business
- Approach coffee shop owners
- Consider getting our startup kit
Come Up with a Game Plan
What’s the next step in starting your coffee shop? Okay, so you’ve worked on the first ten steps that we’ve just detailed above. You have also worked diligently to start your coffee shop business plan and have completed the first draft.
Our recommendation is that the first thing you do is review any of the following points. Is there anything else that you need to follow up on? Are there any “weak links” that you would be better off addressing before you move forward?
The next thing is to take a closer look at your finances. How much will you need to borrow? Who will you approach to get the money for your coffee shop? You may have to approach the “candidates” for your business proposals on more than one occasion. Your dedicated research for starting your coffee business and writing a detailed business plan will demonstrate to those you are approaching that you are serious and that their investment may be worthwhile.
An important part of your game plan will be to establish a calendar and benchmarks. Many people establish a likely opening date and work backwards. The reason many people do this is because it costs money to rent out your space, hire employees, etc. Working backwards can/may/or likely save you significant money before you open your business.
You may have heard stories that retail businesses have to delay their opening for a variety of reasons. For restaurants and coffee shop openings, it can happen due to remodeling or construction delays, permitting delays, training delays, or delays with getting your equipment installed. So, ensuring that you have a calendar that allows for extra time can be beneficial.
Take Away Tips:
- Revisit some of the topics we’ve already covered.
- Find your weakest links and strengthen them
- Review your coffee shop business plan
- Take a look at your financing options
- Develop a calendar with benchmarks.
What about Coffee Beverage Training?
Starting a coffee shop with little coffee experience is more common than you may think. If you want to open a coffee business, learning to serve great coffee will be an important aspect of your business.
The quality of coffee you serve matters. So, where do you get the training to make great beverages? Depending on where you live, you have a few options. The first option you consider is going through your coffee roaster.
Many coffee roasters who you will buy your whole bean coffee from often provide complimentary training to you and your staff. Not all local coffee roasters do this, but it is a growing trend and accommodation that many are providing.
This is good for them because it allows them to develop a stronger professional relationship with you and your staff. It also better ensures that you and your staff are serving “their” beans appropriately. After all, you are in essence marketing their coffee brand.
Don’t be shy! Asking the local roasters you are considering working with to help you and your staff with training. For obvious reasons this will save you lots of time and money – as well has expand your level of coffee expertise.
A second option is to go to a training seminar, perhaps through the SCAA or other national or regional coffee event. During their week long events they are likely to offer classes (usually for a fee) for espresso training.
A third option is getting training from the existing owner. If you are buying an existing coffee stand or coffee shop, consider adding training to the mix to help “sweeten” the deal. Many coffee shops that are selling would be happy to have you train with them.
Finally, if all these options don’t work in your favor due to scheduling or inability to find something that works, consider hiring a coffee trainer for the day to come in to train you and your staff.
Take Away Points:
- The quality of coffee you serve matters.
- Start figuring out where you will get the training from
- Coffee roasters often provide complimentary training services (so be sure to ask)
Starting Your Coffee Shop Today
Take Your First Step:
Ultimately, you should start a coffee shop in a way that works for you and your personal situation. The idea it to embed the recommendations that we’ve detailed here in this article with your own plans with your own common sense. If you haven’t done so already.
While there are plenty of things to think about when you decide to open a coffee shop, we encourage you to embrace the challenge! Have fun. Enjoy the process and it will come much easier. After all, a successful coffee shop business is waiting for you on the other end of your struggle.
There is no shortage of advice and resources for you to learn to “how to start a coffee shop” or start your coffee stand. We believe that we offer something far superior than any book or program. We offer you to essentially sit in on real conversations with real coffee business veterans where we discuss how to start a coffee shop.
We believe that after you listen to hours of informative conversations that are relevant to you as you start your own coffee business, you will be exposed to a wide-spectrum of topics you’ll want to know.
Additionally, our complete kit provides you with a business plan template that you can easily use to start and write your own coffee shop business plan.
If you are simply interested in exploring more about starting your own coffee shop business, consider checking out our blog. When you are ready or feel you want to take your coffee business to the next level, you may think about getting our Complete Coffee Shop Startup Kit.
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