Just in the U.S. alone, more than 60% of the population drinks coffee every day and that too, more than three cups a day. With numbers like those, the market presents some good opportunities for people looking to open up a coffee shop.
So if you love brewing yourself a shot of espresso every morning and have an entrepreneurial streak as well, a coffee shop is the perfect way to combine two of your favorite hobbies. However, before that, you must answer the question: how to open up a coffee shop?
Starting any kind of business is tricky and a coffee shop is no exception, even when you have a large market out there. You need to put in a lot of time and effort before you even get to the opening part.
Fortunately for you, we’ve put together a comprehensive guide on how to open up a coffee shop so that you know exactly what you need to do to open a successful coffee shop.
Do Your Research and Create a Business Plan
One of the very first and most important things you need to do is carry out some research and create a business plan. This initial research and planning will be nothing short of an investment that will provide great returns down the road.
Doing proper research beforehand will help you learn more about the coffee shop industry and consequently, help you make a better business plan. Then, that business plan will eventually help you make key decisions such as choosing a location, deciding on the concept, and even obtaining financing.
Therefore, research is a crucial step that you don’t want to skip if you want to succeed in opening a profitable coffee shop.
Some other ways research can help you is by helping you decide on the type of coffee shop you want to open. For instance, there are some coffee shops that just sell coffee without any seating area. Some coffee shops offer a drive-through option.
Additionally, research can help you decide on a concept for your shop, depending on the type of demographic you are targeting. More importantly, research can also help you with networking.
Networking is incredibly important for any business but even more so for small businesses. So, especially if this is your first entrepreneurial venture, you need to make sure you spend time networking.
Get in touch with other entrepreneurs in your circle and ask them to share their experiences, their mistakes as well as achievements. You can share your ideas and get feedback on them.
If you are struggling in a particular area, you can seek their advice and guidance. This way, you not only get to learn a lot about starting a new business but also get the chance to build lasting relationships.
Networking also allows you to get new customers and sometimes even brand ambassadors who promote your business on your behalf. Most importantly, by connecting with people who share similar goals and purposes, you get much closer to achieving your own targets and attaining success.
Creating a Business Plan
This might seem unnecessary but you will be glad you took the time to create a business plan when you keep referring to it every step of the way.
Even though a business plan is not always a fixed document, you will find that it serves as a great roadmap when you’re wondering how to open up a coffee shop. You can make it as concise or comprehensive as you want. However, it should cover these areas:
- Business overview and description
- Management structure
- Target audience and analysis
- Competitor analysis
- Marketing plan
- Sales and revenue projections
Once you have a rough business plan ready, you have a much better idea of exactly where you stand and what you need to do next to open up your coffee shop.
It can help you pitch your business plan to investors, figure out the best locations that go with your business vision, figure out the ideal scale of your shop, and so on.
Additionally, with a business plan in place, you can start working on building a brand and concept for your coffee shop as well. As you must know, this is super important in the market today where consumers are already exposed to so many companies and businesses.
If you want to stand out, you need to have a unique brand and concept for the shop. This will also help you later on when you get to designing a website, decorating the shop, or even making business cards, and so on.
Choose a Location
When it comes to opening a coffee shop, it’s all about location, location and location! It can single-handedly determine the success of your shop. Accordingly, this is one of the toughest decisions to make, as you have to consider so many factors.
An ideal coffee shop location will be easily accessible by most people, it will be somewhere centrally located, it will have good shops nearby, and most importantly, it will be within your budget!
Keeping in mind all these factors, you will have to spend weeks and maybe even months, going through the whole city and looking for a good spot.
Once you shortlist a few places, you will have to consider their feasibility, how well they fit in with your shop concept, the amount of foot traffic it has, whether it allows space for easy parking, etc.
When considering a location, you really need to get into the mind of your consumer and think about how they would perceive a potential spot for a coffee shop.
Here are some other things you need to consider.
When deciding to open any shop, one of the things you need to really think about is which demographic you are targeting and how close and accessible your shop is to that demographic.
The good thing about a coffee shop is that it has a mass appeal. You will find coffee drinkers of all ages and backgrounds. So, all you really need to worry about is finding a busy spot where there is a lot of traffic.
Budget will obviously be a big factor in choosing a location. A shop within a mall will have lots of traffic and visibility.
However, shops within malls usually have to pay exorbitant rent as well. On the other hand, buying or renting a shop elsewhere can save you money and give you more freedom over business hours as well.
Once you have found a location, you need to work on creating a floor plan for the space. This is also another area where people tend to make a lot of mistakes and eventually end up driving away customers.
When designing a floor space, don’t just think about how cool the space will look, but also think about how convenient it will be for customers.
There should be plenty of areas in front of the counter to allow customers to browse the menu or form a queue.
Similarly, there should be plenty of places to sit for those who want to talk as well as for those who want to sit in a quiet place.
Along with the floor plan, you will also have to pay special attention to the interior design of the place.
In today’s world, everyone loves to put up aesthetic photos of themselves and if you can provide that opportunity through a uniquely designed shop, you are bound to attract a lot of customers.
Moreover, as they put up their pictures and tag your shop, you will benefit from free marketing as well. Other than that, it is also important to consider the interior design so as to create the right atmosphere and vibe of the coffee shop.
Customers don’t always come to a coffee shop just to get coffee. Rather, coffee shops have become a popular place for friends to hang out, people to conduct business meetings, and students to study on their own.
Therefore, the coffee shop has to have the right atmosphere that allows customers to relax and have a good time.
Along with the interior, you have to focus on the exterior design of the coffee shop as well.
Ultimately, it will be the exterior of the shop that will catch any passerby’s eye and make them curious enough to head inside. Therefore, according to your concept, the outside of the shop should be clean and inviting for consumers.
Financing Your Business
One of the biggest hurdles for start-ups is arranging the funds for their new venture.
Just like any other business, a coffee shop can also require a large investment to set everything up. It can depend on the type of coffee shop you are opening as well.
For instance, if you are planning to open a coffee stand or even a mobile coffee truck, it can cost you around $50,000 to $150,000.
However, if you are planning to open a proper coffee shop with seating, drive-through, etc., the cost can go up to $300,000.
Similarly, if you decide to roast your coffee beans in-house, a commercial roaster can cost you up to $50,000. In short, you will need to arrange a large sum of money for the coffee shop. Now the question is how?
A lot of people simply head straight to the bank for a loan and more often than not, they are refused.
If you are starting a business for the first time and don’t have a lot of experience, this is bound to happen. What you need to do instead is to approach your friends and family first.
Pitch your idea to them, show your business plan, and ask them to invest in your business. Similarly, as mentioned earlier, networking is super important and this is another reason why.
You can approach people within your network and gather ideas on how to raise funds for your business. Another great idea is to go for incubators or even start-up competitions. These are also great places to find investors for your business.
Coffee Shop Supplies List
Another important step is getting the supplies for the coffee shop. This includes a lot of things and it will also depend on the concept of your coffee shop.
Here are some of the things you will need:
- Coffee beans: At the end of the day, your customer will want an excellent cup of coffee and for that, you need high-quality coffee beans.
- Espresso machines: Depending on the size of the shop, expected customers, you can get commercial espresso machines with two, three of four group heads.
- POS System: A point of sale (POS) system will come in handy for many purposes like inventory management, sales, etc.
- Fixtures and fittings: You will need appropriate seating arrangements, as well as all the right fittings behind the counter so that baristas have everything within reach to serve customers quickly.
- Coffee grinders: A good cup of coffee starts from grinding the coffee beans correctly.
- Drive-through supplies: For takeaways and drive-throughs, you will need disposable cups, lids, straws, cup holders, etc.
Other things you will need include aprons, mugs, pitchers, blenders, dishwasher, refrigerator, thermometers, and much more. Check out this list of coffee shop supplies for all things you need to consider buying.
Create a Winning Menu
As mentioned earlier, most of the time, people who visit coffee shops don’t always just want coffee. They might also want a quick bite to eat with their coffee or they might want some other type of coffee.
Therefore, you need a diverse menu with lots of different kinds of coffee beverages, other hot and cold beverages, and other food items as well. You could have a display full of bakery items such as pastries, cupcakes, mini-pizzas, etc., and other things that could tempt customers.
Similarly, for something more filling, you can offer sandwiches or smoothies. Make sure you have gluten-free, vegan, dairy-free options as well to cater to all types of customers.
You don’t need to have a lot of items on your menu. The idea is to serve limited yet good food and beverages rather than a lot of mediocre items.
Once you have decided on your menu, you have to think about whether you will make everything from scratch in-house or will you get these items pre-made from somewhere else. Again, this will depend on the concept of your coffee shop and your budget too.
Find the Right Suppliers
In any kind of business, the supplier plays a big role since the kind of raw material they provide can directly impact the final output and consequently, the customer experience as well.
Therefore, you need to find the right suppliers that not only supply all the items and ingredients you need in good quality, but they should also offer it a good price that’s within your budget and in a timely manner.
Take your time in talking to different suppliers and evaluating how each of them works and who will be best suited for your business.
You can also change your supplier down the road, but it’s much more beneficial to stick to one as you can form a good relationship and receive certain perks later on.
Other than the coffee and food items, you also have to find the right supplier for your coffee shop equipment.
Avoid buying used espresso machines or other equipment as any savings you make now will be covered by the excessive repair costs down the road. You can check out all the different equipment you will need for your coffee shop at CafeLast.
Hiring the Right People
If it’s a small shop, you could probably manage it all on your own. However, if you are planning to open a big shop with long hours, you will need to hire help. However, this is another crucial decision that you cannot take lightly.
As mentioned earlier, the atmosphere and vibe of a coffee shop are quite important for attracting and retaining customers. Well, the atmosphere is not just made by the interior décor. It also includes the kind of customer service you are offering.
And who will be responsible for interacting with your customers every day? Your baristas. Therefore, make sure to hire the right baristas.
This not only means that they should have the right training and experience in making great coffee, but they should also be great at dealing with customers. Other than that, you might need a general manager to overlook the shop and other baristas.
You can play this role yourself as well as a way to stay on top of your employees, get involved in managing the shop and putting in the hours yourself.
Other than that, it can also be beneficial to hire an accountant for your business. These can sometimes act as a consultant and help you make the right decisions for the future of your business.
Marketing Your Coffee Shop
As your coffee shop starts coming together and you now have a much better idea of how to open up a coffee shop, it’s time to start marketing your shop. This is quite crucial.
Don’t just rely on people to stumble inside accidentally or decide to start marketing your coffee once it is entirely up and running.
Instead, you need to start marketing several weeks before your shop even opens. Start promoting your shop on various social media channels, run paid ads, get in touch with influencers, and so on.
Similarly, you can talk to some of the other businesses nearby and collaborate with them to promote your business and get more exposure for your brand.
The marketing has to begin before the shop opens and has to continue long after it as well.
One great marketing strategy is to offer loyalty programs. It is always much easier to retain old customers than to get new ones. Through a loyalty program, you can reward your regular customers and tempt others to become regulars as well.
Other Factors to Consider
There are a few other factors you need to consider as well.
Free Wi-Fi in the Coffee Shop
A lot of coffee shops offer free Wi-Fi and a lot of them don’t either. This certainly has its benefits and drawbacks. Free Wi-Fi can attract a lot of customers who stay in the shop for a while and when they stay for a while, they are bound to order more too.
However, sometimes, you can get annoying customers who only order one thing and sit around all day, using your Wi-Fi and not leaving room for other paying customers.
Therefore, it all comes down to what kind of atmosphere you want to create and the kind of customers you are dealing with.
Permits and Licenses
Depending on which state or city you are in, you might need to go through different processes to register your business and obtain the necessary permits and licenses. Therefore, make sure you look into this during your research phase.
Other Coffee Shop Options
Opening a coffee shop from scratch is not your only option. You can also open a franchise or take over another coffee shop or restaurant. Of course, these come with their own set of benefits and drawbacks.
Perhaps the most important thing you will need to figure out how to open up a coffee shop is a positive attitude. As with any project or venture, you are bound to face a lot of hurdles and challenges.
However, as long as you maintain a positive attitude, you will be able to overcome it all. Just remember to take everything one step at a time.
So, with your positive attitude, this comprehensive guide, and all the equipment you need from CafeLast, your coffee shop will be all set to open in no time!