Are you planning to open a coffee shop? Whether the profit is a secondary driver or it’s your biggest dream, owning a coffee shop requires some preparation and knowledge.
The coffee industry is always changing and if you want to break into and gain success, you should be super creative.
But before you start creating your business plan, you might wonder, “How much do coffee shop owners make?” Let’s find it out below, keep reading.
Set Realistic Expectations
Before we dive into the world of numbers and income, it’s important to do your own research and set realistic expectations.
The coffee shop industry is highly developed these days. First, there are many competitors, including Peet’s and Starbucks, so consider opening your coffee shop far away from them.
Secondly, don’t expect that your coffee will bring you thousands of dollars. Let’s say, you have a coffee shop in a small city and you have 150-200 customers visiting your store daily.
Each customer spends about $5. Your coffee shop works 6 days a week and this means you have an average income of $4,500-$6,000 a week.
Now consider taxes, equipment lease payments, utilities, rent, marketing, and salaries, and your revenue might not be so impressive. Not to mention your salary. In fact, it’s okay.
It’s important to realize that your coffee shop might have busy days and slow weeks. If you keep growing your business, coming up with new ideas and ways to attract more customers, your revenue may rapidly grow.
What The Research Shows
Multiple statistics have proven that there are lots of opportunities in the coffee shop industry and it’s possible to procure great revenue.
With about 90% of Americans drinking coffee beverages daily, which is about 200 million people, running a coffee shop is a great idea.
According to research, 50 coffee shop chains in the United States make 70 percent of the revenue in the coffee shop industry.
The average net profit of a small coffee shop is nearly 2.5 percent of sales, excluding the salary of the owner. The bigger coffee shops tend to earn more profit, though.
When running a small coffee shop, you can increase your revenue by creating sales volume. Plus, your café’s location plays an important role in how much you earn.
If you’re opening a small cafe rather than a coffee shop chain, consider choosing the place where you’ll be the single café in the neighborhood. Opening a coffee shop near the offices or college campuses will boost your sales, too.
Besides coffee drinks, you might make extra cash by selling breakfasts, baked goods, and special meals. Happy hours can also help you make extra profit.
Statistics show that running a coffee shop is oftentimes profitable, yet it requires constant work.
If you open coffee shops in a few different locations, you can successfully compete with the big chains.
The type of coffee shop matters, as well. A small coffee shop won’t cost too much to open, but it can bring small revenue in the beginning.
Running an independent coffee shop will require at least $200,000, but you can earn much more as you go. Paying a rent monthly or annually is costly while having your own shop will save you heaps of money.
What Are the Major Revenue Factors?
The revenue of your coffee shop depends on several factors. The major ones are your number of sales and your average receipt totals.
In order to gain success, you should ensure the number of sales and receipt totals are either steady or always increasing.
The number of sales equals the number of customer transactions during the day.
If your coffee shop draws more customers, you get higher numbers of sales, accordingly.
Receipt Totals And How To Increase Them
The average receipt totals depend on how much customers spend in your coffee shop.
One receipt can be $5 while the other one can be as much as $100. For instance, one customer can order a cup of latte while the other one can splurge on espresso, muffin, or snack.
Calculate your average receipt price by dividing all your orders up by your total sales.
By adding the average receipt total number of customers, you’ll find out your overall revenue. Based on these numbers, you can come up with your income forecasts.
It’s possible to increase the average receipt totals by constantly improving your service and menu. If you’re selling coffee drinks only, you’re not going to make a fortune.
There’s a difference in selling only espresso for $3 and espresso ($3) and a piece of chocolate cake for $7 and get $10 in total.
Think about special offers and coffee plus cookie combination to boost your sales. Sometimes customers visit a specific coffee shop not because of coffee, but because of the desserts they sell.
As you determine your “quiet” hours, you’ll need to come up with creative ideas on how to draw more customers.
Gross Revenue Calculation Example
200 X $6.15 = $1,230 per day
$1,230 X 7 days = $8,610 a week
$8,610 X 4 weeks = $34,440 a month
$34,440 X 12 months = $413, 280 a year
Although a number of customers visiting your coffee shop matters, the most important thing is how much they spend on the products you sell.
You can have 50 customers visiting your coffee shop and spending $400 or 100 customers spending $200. It’s critical to monitor your offers and add more products to your menu.
You might be asking - what about net profit? This is going to differ wildly depending on the location, the volume you're doing, how many people you have on staff, your marketing expenses, and a whole lot more.
You will have to do the research on your end to estimate what it will cost, but there are thousands of profitable coffee shop owners all over the US.
This is is just an example - unfortunately, we can't give you exact numbers. According to one source, the average coffee shop owner makes between $60,000 $160,000 a year.
It’s hard to say exactly how much coffee shop owners make as the revenue depends on a number of important factors.
Running a coffee shop is usually worth it. Just make sure you work on improving it day by day. Creativity is key for a higher income.
Not only should you attract more customers, but you should also make them visit your coffee shop over and over again -and success will come.
Ready to make your coffee shop dreams come true? Cafe Last is here to help! Fill out our commercial order form and we will help you get everything you need!