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How to Start a Coffee Shop

Learn all you need to know about starting a coffee shop, from initial research to acquiring equipment to attracting customers.

Shop owners turning the open sign on your new coffee shop
December 19, 2022
Mollie Jackman
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Reading time about 9 min

Coffee — it’s a daily ritual for over half the population, but for many, it’s more like a passion. If you’re a caffeine-fueled entrepreneur, starting a coffee shop may be the perfect venture.

With the right knowledge and an enthusiasm for roasting, processing, and brewing those beautiful beans, you’ll get your café up and running in no time. Ready to get your neighborhood adequately caffeinated? Check out our handy guide that lays out how to start a coffee shop and get the wheels turning on actually making those coffee shop dreams become a reality.

#1

The Research Phase

Someone working at laptop in coffee shop

Even if you’ve dreamed of starting a coffee shop business for many years, you will still need to investigate the specifics to get started on your vision. You’ll need to determine things like budget and brand concept to move forward, so let’s start at the beginning and build your coffee shop business plan.

 

Startup Costs

There are a few factors to consider when breaking down the average cost to start a coffee shop. The majority of American adults are coffee drinkers, and most drink at least a single cup of joe on the daily. This is great news for you, as it means your business has a built-in fanbase. But it also means your customers know their stuff, and you’ll need to fund a high-quality startup to appease their caffeine cravings.

Starting costs range from $80,000 to $300,000, depending on what you’d like to do with your coffee shop startup space. Factors that affect this cost include your choice of seating, drive-thru options, and building style. If you choose to start with a coffee truck or stand, your costs may be lower — perhaps even closer to $50-60,000. Knowing these amounts is a vital first step when it comes to creating your business plan, but keep in mind they’ll vary based on your location and the resources available in your area.

What does this startup cost include, you ask?

  • Rental/building costs
  • Any required equipment
  • Décor and design
  • Food and beverage inventory
  • Payroll and other billable expenses (for any consulting, design work, etc.)
  • Taxes, insurance, and license and permit fees
  • And more

While the cost of starting a coffee shop business may seem daunting, the right business plan and financial proposals will help you get through this step with no extra hassle. You’ll also have the opportunity to choose between several types of business structures, and it’s a good idea to work with a financial expert or consultant to decide what will work best for your organization.

 

Finding Your Market

We’ve established that coffee is a well-loved commodity, and your customers will probably range from commuters looking for a quick caffeine buzz, to espresso aficionados looking for the next best cup of coffee available in town. To make sure you’re truly serving the needs of both types of customers, you’ll need to do some market research. Here are some questions to ask as you survey the surroundings to find your niche:

  • Do I notice any trends among the other coffee places in town?
  • Which coffee shops seem the busiest, and why?
  • Who provides the best service and what does that include?
  • Whose coffee tastes the best?
  • What is missing from the local coffee scene?

Take note of trends in décor, brewing methods, types of coffee beans, or popular menu items, and consider them when making decisions for your coffee shop startup.

The most important part of this research is to identify a need or niche that is unfilled by your competition. Maybe the cute little bookstore coffee shop isn’t staffed with polite employees, and the corner kiosk offers only a light, watered-down tasting roast. Perhaps no one is offering vegan pastries or non-dairy milk. If you can identify any shortfalls among your competitors, you’re primed to improve on their offerings and create a new commodity in your locale.

 

Creating Your Brand

Found the niche you want to take on? Great. It’s time to get started building your brand. If your plan is starting a coffee shop business to fill gaps in both customer service and product quality, for example, you’ll want to create a brand that reflects your goals and offerings. Choose a name that represents your “why” and gives your customers an idea of what they’ll find when they step into your space.

This is a great time to start working on design — in both the physical and digital spaces. You’ll want the look of your coffee shop to reflect the experience you want your visitors to have, and your logo and website should be an extension of those feelings. Consider hiring an interior designer for the coffee shop design, and a graphic designer to assist with the creation of logos, signage, and your virtual presence. (This will be especially important if you choose to offer online ordering!)

Check out this site for some tips on branding your coffee shop, plus examples of successful marketing ideas.

 

Choosing Your Location

Another step you can take after finishing your market research is choosing the ideal location. Use the information you’ve gathered by exploring other coffee shops to determine the best space for yours — whether you end up with a corner café, a library-adjacent strip mall, or a repurposed old home. If you’ll be serving up elaborately crafted lattes or offering space to linger, your best bet may be near a college or a luxury shopping center. Aiming for a simple counter-style vibe? Try an industrial part of town or set up a coffee kiosk along a busy commuter route.

One more thing to consider when hunting for the perfect spot to start a coffee shop? Price! Whether you’re renting or buying, location is a big factor in the cost you’ll pay for your property.

#2

The Research Phase

Coffee shop plans graphic

Now that you’ve researched and planned to your heart’s content, it’s time to start taking action toward your dream of owning a coffee shop. Now is the time to create a business plan using all the information you’ve gathered in the previous steps. Don’t worry if that sounds daunting, we’ve got plenty of resources on how to write a business proposal.

 

Applying for Financial Support

Once your official plan is ready to roll, you can use it to gain financial support in the form of loans or investments. If you’ve saved enough of your own capital to cover your coffee shop startup costs, you’ll be able to skip this step.

There are a few ways to access funds for entrepreneurs who don’t have the cash upfront:

  • Speak to a local bank or credit union to obtain a small business loan
  • Ask friends and family for their buy-in
  • Use a crowdfunding site to raise money AND reach potential customers
  • Research and apply for any small business grants you may be eligible for

 

Obtaining Licenses and Permits

Another step that may vary based on location and jurisdiction is licensing. You’ll need to look into what permits and licenses are required to start a coffee shop in your state. This process can take some time, so be sure to gather everything from your business plan and have all your information prepared before you begin the application process. It can take weeks to receive permits and licenses even when your business is approved, so be sure to leave ample time in your plans.

#3

You’re In Business

Coffee shop owners looking at mobile device

You’ve made your business plan, you’ve acquired all the necessary funding, permits, and licensing, and you’ve even got your brand image solidified - so you’re ready to get brewing. Now that you’ve reached this part of the process, it’s time to take the final steps and prep for the grand opening of your coffee shop startup!

 

Buying Your Equipment

Your business plan and brand will determine many of these next steps, starting with the tools you’ll need to outfit your coffee shop. When starting a coffee shop, acquiring the right equipment needs can seem daunting, but we’ve got it covered. And if you are concerned about expense overwhelmingly, remember the cost to open a coffee shop is already factored into your start-up costs. Depending on your chosen specialty, this list may vary, but here’s a good place to start your equipment list:

  • Roaster (if you’re roasting your own beans)
  • Basic drip coffee brewers
  • Espresso machines
  • Specialty brewing devices, including pour over, cold brew, AeroPress, French press and more
  • Coffee grinders
  • Blenders
  • Prep spaces
  • Storage shelving
  • Safety equipment

You can find a more comprehensive list of coffee shop startup equipment here.

 

Setting Up Systems/h4>

To operate a successful business, you’ll need systems in place to make sure things run smoothly. From point-of-sale to staffing to inventory and delivery, we’ll cover all the bases to ensure your coffee shop startup operates to its fullest potential.

Point of Sale (POS) is the first stop. Choosing the right POS system for your coffee shop is essential to your customer experience. Look for a tool that prioritizes ease for your customers while also providing an easy training experience for you and your staff. Finding this balance will provide your visitors with an expedient and pleasant experience.

You’ll also need to create systems with your chosen coffee supplier if you’re not roasting your beans in-house. Make sure to set up regular delivery dates and quantities and establish a go-to contact at your supplier to address any issues that may arise. Need help finding a supplier to provide your coffee beans? Read up on wholesale coffee suppliers.

#4

The Final Steps

Coffee shop with line of customers

There are a few essential parts left to complete the process of how to open a coffee shop — and if you do it right, it could even turn into a coffee empire!

 

Finding the Right People

Staffing your coffee shop with the best people can make or break your customer experience, and that’s where recruiting employees comes in. You’ll need to find staff who are passionate about your product and train them to excel at creating your menu items. Your customers will be able to sense their enthusiasm, and their shared excitement will create a more pleasant experience for everyone from barista to regular café visitor.

Not sure what positions to post to your local hiring boards? Check out this handy coffee shop hiring guide.

 

Serving Up Your Specialties

The last (and probably the most fun) step in the process of starting a coffee shop business? Deciding your menu items! The basics may be obvious — you know, coffee. But maybe your shop will specialize in yummy decaf, unique flavored lattes, or a wide variety of teas. You’ll need to decide whether your shop will serve food, and if so what type. Will you offer pre-cooked pastries, cookies and desserts, or add sandwiches and paninis?

Once you determine the makeup of your menu, you’ll need to set your prices. Obviously, it’s important to turn a profit on your offerings, but be sure to factor in specialized training, employee time, and specialty ingredients when setting your prices.

The aesthetic you’ve chosen for your coffee shop will inform the price range your customers expect to pay as well. For example, more complicated drinks and menu items may cater to a higher-spending, leisure crowd, while simpler items like drip coffee and granola bars cater to an on-the-go clientele.

Find help with your coffee shop pricing strategy.

From quick pick-up counters to campus study spaces to quaint neighborhood hangouts, coffee shops offer us a place to feed our love of the beverage, do our work, relax, and meet up. If your love of these spaces has called you to to start a coffee shop of your own, we hope this guide helps you blend your vision with your plans to create the perfect brew.

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