How To Open A Coffee Shop

– The 10 Most Important Steps –

Let’s open a coffee shop, shall we?

Many coffee enthusiasts dream of opening their own little coffee shop one day.

If you are like me, you begin each day with a good cup of coffee.

Market research and experts estimate that all people drink about 2.5 billion cups of coffee a day. The entire coffee industry is booming.  And, there are no real signs of any slowdown.

Rather the opposite, more and more specialty coffee shops open everywhere.

These new shops add even more variety to an already very rich coffee culture. Many new big franchise companies but also very individual coffee shops open with own trademarks, unique concepts and exciting coffee creations these days.

There are many wonderful blogs and stories of people traveling around and exploring new coffee shops and flavors.

Maybe one of these bloggers or coffee travelers will stop by at your coffee shop one day.

So, if you want to combine your love of coffee with your entrepreneurial spirit. To open a coffee shop is not a bad idea to do so at all.

Here are some helpful and solid steps on how to get things started.

I am looking forward visiting you at your own coffee shop any time soon then.

1. Write a Solid Business Plan

Many ambitious and even more so overly passionate business starters do not take this first step very seriously.

It is crucial that you are not one of these aspiring entrepreneurs. Having a solid business plan on hand will definitely help you in the long run. You will appreciate your initial planning a lot when moving forward.

To open a coffee shop is like opening any small business. It preferably requires a solid business plan combining all essential points.

I will list the most important key points below.

• What is your business? What kind of customers will it serve?
• How will it become profitable?
• What is your target market or your primary customer demographics?
• Who are your competitors?
• Formalize some sales and revenue projections.
• Set realistic and timely milestones and goals.

Make up Your Mind To Open A Coffee Shop

As you have maybe already noticed, a business plan is more than just putting together some rough ideas and hopefully finding investors.

It is a real handy way to list out all steps. You can fully consider what you will need to open your own business.

You might even make your final decision, whether opening a coffee shop is truly right for you or not.

With your first ideas and points written down, you may be wondering how much a coffee shop owner will eventually make. As you can imagine, there is no definite or broad answer.

It will depend on quite a few things. But mostly on how fast you are able to attract a steady customer base.

With a steady income, you can eventually break even. At some point, you will even generate first profits. After you have already paid for expenses like rent, equipment costs, payroll and other factors.

Generally, local networking and social media marketing will take some time. So, please be patient and believe in yourself regardless of interior or exterior distractions.

Have the Right Mind-Set

Believe me, there will always be people doubting you. But many of them will not have the courage to do what you are trying.

So, please stay focused and keep on believing in your own dreams.

This of course goes for anything in life. And not just for opening a coffee shop.

Okay, this is clear for us now. But when will I make my first real money?

Again, the answer is maybe more complicated than you might want to hear.

It is all about your return of investment, in short ROI. When is your coffee shop making money and returning enough to cover all expenses and pay back your first investments?

The good news is, due to the entire growth of the whole coffee industry. A coffee shop’s ROI has very high potential.

But that does not automatically mean that everyone can just open a coffee shop tomorrow. And, it will become an overnight success story.

It will take hard work.

You will need a careful overall planning and oversight. Additionally, a coffee shop business requires smart budgeting to maximize your ROI.

Anyone, who has opened a business will more or less tell you the same. Starting a business is not always just glamorous.

Your profit margins will be tight for at least the first one or two years.

But with great sacrifice comes great success. Every successful and self-made entrepreneur will tell you so.

There is no short-cut. Put in the hard work, stay patient and good things will come around. This I can promise you.

The next steps will help you opening your coffee shop the right way.

2. Find the Right Location To Open A Coffee Shop

The next step goes hand in hand with the previous one.

Take your time. Because, in order to be successful, you will need the right location for your coffee shop.

Local market research and customer behavior will tremendously help you here. Of course, you probably know your own home playground the best. It is helpful to explore and understand all needs and desires of your own local community.

If you plan to open your coffee shop at a rather unknown area, simply do the research, first. Wander around and become a customer yourself. Try to engage with local people as best as you can.

Many big franchise companies usually make the same mistake when they want to expand. They simply put the same shop and same concept at a different location.

If your brand is Starbucks, this might work, because people already know and recognize you. But for many others, finding or creating your own niche is much more profitable in the long run.

In general, you should maybe find something centrally located. A place where people already frequently pass by on a regular basis.

Ideally, your new coffee shop building should already be a well-integrated spot of the local community you are wishing to serve.

Dream Big but Go Small

When opening our own coffee shop, most of us will probably not have rich friends or investors to support us.

So, we should always try to keep our initial costs low. Yes, the size of your own coffee shop will matter. But no matter how much space you will have, the love and creativity you will put into it will matter more.

The cost of renting or even buying a commercial space like a coffee shop can be quite high.

The lease for a storefront in a sought-after area will improve your odds for early success. But, it will also increase rental costs and give you a bigger financial burden right from the start.

If I may, I would suggest to maybe not go with the best-located and nicest available opportunity, because additional costs will follow.

While you open your new coffee shop, you will also need water, electricity and maybe gas.

On top, you might want to renovate or furnish one or two things in your new shop. My advice, become creative but unique and still stylish the same time.

You don’t always need to buy the fanciest light fixtures, cabinets and decorations. For many of these things, you can find creative ways on your own. Also, to save some money here and there.

Other bigger expenses will come anyhow, like coolers, freezers, coffee making equipment and so on.

3. Create a Floor Plan

A good floor plan is vital for a coffee shop.

Trust me and please do it, if you just open a coffee shop. You will thank yourself later.

The goal is to give your customers enough space to form a line, for example. Additionally, employees will need enough functional space to have the materials they need within reach quickly.

Creating an efficient work space to quickly make coffee and laying out a comfortable seating area for your guests will save you a lot of potential headache later on.

Because once you have opened your coffee shop. Bigger changes will be more difficult to quickly implement.

Again, take your time to produce a good floor plan.

Play customer and employee yourself. Walk yourself through every scenario you can think of.

If you are making coffee, what needs to be near you? What do you want to have near you as a customer?

Visualize everything you are able to. And, put it down on paper once a clear concept is developing in your head.

Do It Yourself

Of course, with the help of the internet you can also make floor plans these days.

Besides affordable websites like Room Sketcher, there are also a few very good free websites.

Try to draw an initial and rough plan on paper, first. As next step, you can go online and play around a bit more.

Autodesk Homestyler is one of these. You can use this program to entirely design your own floor from scratch. Or, you can choose from a gallery of designs instead.

Furthermore, you can later personalize it and bring in your own look. There is even an option to experiment with real-world products and brands.

When you finished your design, share it with friends. Their honest feedback can further help you.

Floorplanner is another one and very easy to use. It features loads of drag-and-drop furniture and many more items. Go ahead and play around a bit.

After, you can also just easily print it out.

As alternative, you can also go and check out Gliffy. It will certainly help you as well.

4. Purchasing Equipment To Open A Coffee Shop

When we want to open our coffee shop. We can divide our equipment shopping list into two categories.

Below, I will share a handy overview for starters with you.

Brewing Equipment

We have to realize one thing very early. Namely, to implement a professional setup in all regards as best as possible.

In general, specific equipment needs for any small business are subject to variations. But there will be one thing that is for certain.

You should not just acquire equipment you use for your simple morning coffee at home. Professional equipment can get quite pricey.

But industrial coffee brewing and filtration equipment will put you on another level right away.

Here are a few pieces that no coffee shop can go without.

• Water filtration system
• Commercial coffee grinder and drip coffee maker
• Espresso machine

Now, the hardest part will be to decide what device exactly you need. And, how much you will pay for it.

In case you really go for high-quality equipment in order to make your customer’s favorite drinks. You can easily reach 10.000$ in total.

This shows us how expensive it can be when eventually starting to open a coffee shop.

Again and as general rule, let’s start slow and increase when our budget will allow.

Growing a business gradually instead of planning for unrealistic numbers enables you to manage the scale of your business even under the tightest of margins.

Initial Inventory and Other Supplies

Below, you can find a short overview of basic things to get.

-Coffee beans and teas

– Cups in all sizes and containers in general

– Napkins, stirrers, straws, lids etc.

– Food and drinks (You can meet various customer demands. You could offer tea, bottled water, juices and baked goods. Additionally, there could be salads, ready-made sandwiches, ice cream and so on.)

– Suppliers such as cream and packets of real sugar

– Low-calorie substitutes for sugar, such as syrups and spices like cinnamon and nutmeg

– Milk and cocoa powder

POS Systems and Financial Software

When you get bigger, you can also start thinking about a bit fancier stuff.

Later, you could also install modern payment transaction technology. Initially, modern POS software will cost you 50$ to 200$ per month.

This might sound expensive for the beginning. But later on, it actually tends to pay itself off.

It will eventually help you to become more efficiently in running your business. Making inventory and tracking all transactions much easier. You will have your own accounting software in place, more or less.

Overall, this will save you time and additional staff expenses.

Additional Overhead

Now, after all of this buying, do you still remember the points from before?

Besides all of the above items, there is still the monthly rent, renovations and installations.

At some point, you can even think about adding a security system and insurance to protect your investment.

5. Finding Staff and Vendors

There are two more essential components to consider when we want to open a coffee shop.

But why do I put staff and product vendors in the same section?

Because they stand for two additional factors adding to your costs. All aspects will eventually have to tie to your break-even point.

Until you will not open your coffee shop in reality. There is no way to exactly calculate food and labor percentages. You can only estimate and carefully source the market.

Overall, this will be an essential part to make sure your business is performing well.

However, you can already start planning the right way. Right from the scratch and start, let’s keep track of these costs as well.

As a result, we can estimate a realistic amount of revenue. It helps us to make sure that none of our costs mentioned are becoming unsustainable or unaffordable at some later point.

In the food service industry like a coffee shop. Food and labor costs are referred to as prime costs.

These so-called prime costs should ideally not exceed 60% to 65% of the total revenue. Usually, coffee shops have it a bit easier. If we would compare to other restaurants and food and beverage businesses in general.

Coffee shops don’t necessarily have to plan serving a broad menu of food. Some basic snacks are usually enough with your coffee drinks.

Cost Percentage Overview

Below you can find the average percentage overview of total revenue in most restaurants.

• 60% to 65% of prime costs go to labor
• Food and beverage costs average 28% to 35% of total sales
• Regular coffee drinks have an average margin of 15% to 20%. Specialty coffee drinks usually have an average margin of 12% to 18%.

If you plan to serve regularly more food than usual coffee shops do. You should still be able to keep your overall food costs below 25%. The food profit margin is usually much higher than with coffee drinks.

This leaves you more room for labor while remaining profitable.

As summary, we can say that our coffee shop business plan should include a section in which we forecast our expected revenue.

Try to calculate and break your cost down to each food or coffee drink serving. And, this should be established for all items on your menu.

It will provide you with a set of goals to aim for.

Additionally, we are getting a better idea to estimate the overall and remaining budget. Our coffee shop can use it to hire more or better staff, for example.

6. Marketing To Open A Coffee Shop

There is no doubt. To open a successful coffee shop, we will need great marketing.

Online and social media marketing are key factors. You should try to be present on all major social media platforms.

On top, with programs like WordPress, you can easily start your own coffee shop website.

These tools will help you to drive customers to your shop. Find your own little niche. Stay consistent in creating content.  And, actively engage with your audience.

Furthermore, you avoid the trouble of hiring a consultant to help you with marketing.

Instead, you can acquire your own knowledge. Outreach or subscribe to a software like ShopKeep, for example.

It will definitely help you reaching out to your customers.

Additionally, the ShopKeep POS system integrates with email marketing tools like MailChimp. This platform allows you to curate email lists for as little as 20$ per month.

7. Becoming Complaint

Of course, we plan to open a legal coffee shop.

For this, we will need permits to be able to run our business. Allowances to serve food, play music, hire employees and so on.

The very first permit every business will have to acquire is a Business License. The Employee ID Number follows right after.

It will allow you to open and operate a legitimate business with legal employees.

A Certificate of Occupancy and Food Service License is also mostly needed in all countries.

You should also think about getting a liquor license as well. Serving alcohol as part of a coffee shop or having coffee bar concept is becoming increasingly popular.

As you can imagine, all of the permits carry certain application costs. These can vary from state to state or from nation to nation.

Please make sure to include it in your overall cost breakdown and business plan.

8. Finding the Right Suppliers

Like you and me, your customers are also looking for a quality experience when they come into your coffee shop.

This means to order and offer quality ingredients and coffee. Plus, a great coffee experience should go right along with quality service.

You have probably experienced it yourself already.

Sometimes, you go to a local coffee shop again, maybe three or five days later. And, the coffee does not taste or looks the same anymore.

It is very tough to always produce the same quality every time. But, this is especially crucial in the coffee business industry.

Therefore, work on becoming consistent. Additionally, build a quality supplier network around you and your coffee shop.

From the Bean to Your Customer

The end goal should always be to keep your customer experience consistently on a high level.

When you first open your coffee shop. Don’t panic and take your time. Spend the necessary time finding the right coffee supplier for your business.

You might have to try out a lot of suppliers and their coffee beans, at first.

Consider carefully and don’t rush into things. Find the right one that will work for the products you want to offer. There are many good suppliers with reasonable prices.

Eventually, you yourself should be comfortable and confident with the coffee taste you are offering.

Training, Training and Training

Like for many things in life, training always makes us better.

Not just for yourself but for your employees, too. Create consistency by training employees extensively.

It usually takes two to three months until a fresh employee can serve consistent high quality coffee.

Support your staff members along the learning process. They will undoubtedly pay it back to you in serving your customers the best possible way.

Get them as best familiar with every single working step as possible. Only then and when truly feeling comfortable with each step, you should let them touch the espresso machine.

Believe me, your team and your customers will surely appreciate your efforts.

9. Create a Warm, Inviting Environment

It is actually very simple.

A coffee shop is never just about a good cup of coffee.

Even I myself have my favorite coffee shop to spend many hours at.

Many people frequent coffee shops as a place to do work. Or, they meet to catch up with friends. Others are just looking for a relaxed place to take a break from their workday.

Cleanliness and friendliness are two key factors here. All customers should truly feel welcomed.

Ideally, you want your coffee shop to have a warm and inviting atmosphere. The coffee shop has to become a place for meetings, to relax and for lively chit chat all around.

But, it should also be a place that is easy to keep clean and orderly.

Right from the start, when you choose how to design the shop. Try to take into account how many people you want the coffee shop to fit.

Brainstorm the kind of atmosphere you are looking for to create for yourself, your staff and your customers.

10. Serve on the Front Line

Essentially, to open a coffee shop is comparable to any other customer service-intensive business.

The owner, you, should be present as much as possible. It is best to become fully engaged yourself, such as taking orders, serving and communicating with staff and customers.

First, you really understand all processes and know where to improve or adjust, if necessary.

Second, having a hands-on presence helps to motivate your staff to perform at their best, too. This is especially important when you just open your coffee shop.

Every customer, every cup of coffee counts.

Just in case, you are unable to be present most of the time yourself. You should try to find a good, trustworthy, reliable and fully service-minded manager.

The Bottom Line To Open A Coffee Shop

To become independent and run a small business will never be just easy.

It takes some special character to take on this challenge.

But to open a coffee shop can give you an easier start. Because, now might be the right time for all those coffee enthusiasts.

Consumption and interest in the specialty coffee culture increased steadily in recent years. And it does not seem to stop any time soon.

While competition from much bigger and more powerful coffee chains might have been a problem. It is not so much today, anymore.

Modern consumers prefer to support local neighborhood shops.

Especially, if you are offering what the big coffee chains cannot.

Create a truly unique, friendly and welcoming atmosphere. Add great quality and service to each one of your coffee drinks. And, the path to long-term success seems very promising.

So, if you ever wondered how to take the first step.

All of the above points can help you to open your own coffee shop. Please think about all of these various steps. And see if such a project is realistic for you or not.

Do you want to hear my opinion?

Go for it and try! But have a proper plan as support.

I hope to visit your coffee shop soon.

What do you think? Do you have anything to add, how to best open a coffee shop?

Let us know.