Options for how to start a coffee shop

When opening a coffee shop, you typically have three options to choose from:

Buying a franchise

Opening a coffee shop franchise is a good low-risk option and a smart choice if you want guidance and support. The company that owns the franchise (the franchisor) makes many business decisions for you, including the products you sell, marketing strategies and interior design. Opening a franchise may require a large fee for the rights to the existing brand name though.

Buying an existing business

When you choose to buy an existing coffee shop, there’s less infrastructure work for the business. In some cases, you can buy a coffee shop with a fully stocked kitchen and furniture. If the current owner is eager to sell, you might get a good deal on the business. Likewise, they may be willing to train you on how to run the shop.

Starting from scratch

Starting a coffee shop from scratch is when you do everything, including buying all the equipment you need, creating a business model, finding a location, hiring staff and completing anything else that starting a business entails.

Factors to consider before opening a coffee shop

There are a number of factors that you should work through before you open your first coffee shop. Not all of these may apply to your exact situation, but you should consider each point and decide how it needs to be handled:

• Location: When choosing your location, have an inspector determine if it’s safe to operate a business there. You want to pick a location with reasonable rent and hookups for kitchen appliances.
• Menu: Create a menu that attracts your target audience. Decide if you want to serve both drinks and food or just drinks.
• Registration: The requirements for registering your business may vary by state. Most states have an online portal where you can fill in your information and pay any applicable fees.
• Business name: Create a name that represents what your shop has to offer.
• Regulations: Following local regulations is an important part of operating a legal business. For instance, you need to consider your jurisdiction’s food and safety rules.
• Employees: Start the hiring process well before you open your business so that you have time to fully train your staff. Creating an employee handbook is a great way to ensure that your staff is following the same guidelines.
• Interior design: Another major part of opening your coffee shop is setting up your space. Choose a design that creates an inviting atmosphere.
• Supplies: Figuring out who your suppliers are is crucial to your business. You need to decide who to buy your ingredients and other supplies from. Find a balance between quality and cost.
• Equipment: The type of equipment you need to prepare food and drinks depends on your menu. If you serve more complicated beverages or hot foods, you may need more specialized equipment.
• Business bank account: Creating a separate business account for your coffee shop allows you to keep track of all of your finances in one place.

How to create a business model for your coffee shop

Follow these steps to create your coffee shop business plan and model when starting this business:

1. Decide what type of coffee shop you want to open

The first thing you need is a vision for your coffee shop. For example, you can choose to open a coffee shop that encourages customers to sit down and stay awhile by providing free Wi-Fi, community activities and live music.

2. Determine what makes you special

Ask yourself what you can offer that no one else can. This could be special menu items, sustainable practices, a unique atmosphere or exceptional customer service. Your coffee shop needs at least one thing that helps you stand out from other cafes.

3. Find a success metric

Figure out how you’re going to measure your success. Find a way to keep track of your growth rate, profits and how cost-effective your spending is.

4. Set your prices

This part of your business model requires research. See what kind of pricing models other coffee shops in your area are using.

5. Talk to experts

Talking to other coffee shop owners is a great way to gain insight into the industry. Ask them what challenges they experienced when they first opened their shop.

Tips for marketing your coffee shop

Follow these tips to market your coffee shop and bring in more customers:

Create a social media presence

Creating a social media presence can help you connect with your community and keep them updated on your latest offerings. Share unique photos of the coffee drinks and food items you have to offer. One major benefit of social media is that patrons can geotag your coffee shop, which can provide free advertising through satisfied customers. Consider partnering with a local influencer who has a wider online network.

Build an easy-to-use website

Many customers expect small businesses to have a website. As long as your website is easy to use, you can keep it simple. On your website, include the following sections:

• About
• Food and drinks menu
• Photos
• Contact
• Reviews

Since many people browse the web using mobile devices, make sure that your website is mobile-friendly.

Pick your target audience

Identify your target audience, and cater your business to them. You can base this off of your location or what kind of business you want to run. Along with your marketing efforts, make sure that your interior design, menu items and company values align with the tastes of your target audience.

Start early

Start your marketing efforts before starting your cafe. Create your online presence, and spread the word through other advertising channels. You may want to purchase traditional advertisements in print, TV or radio. Choose where you advertise based on your target audience.

How to hire quality employees for your coffee shop

Follow these steps to hire qualified employees for your coffee shop:

1. Write an attractive job description

The first step to finding quality employees for your coffee shop is writing a job description that attracts candidates who share your values. Keep the tone of your job description upbeat and friendly while including job responsibilities and necessary qualifications.

2. Search for candidates

Post your job description on job websites to reach ideal barista candidates in your area. Share it on your business’ social media page and any personal social media accounts. Advertise your openings to people who visit your shop by hanging up help wanted signs.

4. Interview your top candidates

Before meeting for an in-person interview, save time by screening candidates with a brief phone conversation. During this phone call, ask questions that help you get a feel for their personality and interest in the position. After conducting phone screenings, schedule in-person interviews with the candidates you’re most interested in.

Here are a few questions you can ask during interviews:

• What kind of coffee drinks do you know how to make?
• Explain what good customer service looks like to you.
• What skills make you qualified for this position?
• How would you deal with a challenging customer?
• How do you stay calm during a sudden rush of customers?
• Tell me about a time that you had to use teamwork to solve a problem.
• What experience do you have keeping a clean and organized workspace?
• What is your greatest strength and weakness?
• Tell me about a time you had to use conflict-resolution skills to diffuse a tense situation.

5. Create a thorough onboarding process

One of the most important steps in building successful teams is training your employees well. Create a training handbook for your managers to use when onboarding new staff members. Make an effort to create a welcoming but structured environment for new employees.

Opening a coffee shop FAQs

Are coffee shops profitable?

A coffee shop can be profitable with the right business model. Start by choosing a location that has a high demand for this type of business. Major metropolitan areas and college campuses tend to be good choices although these markets can be oversaturated. You could also make a considerable profit, for example, if you open a shop somewhere that has no other coffee options. By sticking to your brand’s values and a specific niche, you can attract a loyal set of customers.

How much does the average coffee shop owner make?

The national average salary for a business owner is $80,284 per year. Your salary can vary greatly based on your industry, location and customer base.

How much does it cost to start a coffee shop?

According to Investopedia, the cost to start a coffee shop cost can range from as little as $25,000 to almost $675,000. These costs can fluctuate based on whether you’re opening a franchise, buying a business or starting from scratch and may depend on your location. Overall, you can own a coffee shop with a moderate investment.