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So how to start a coffee shop business? To be honest, there are many answers to this because there are many types of coffee shops. Starting a non-profit coffee shop, drive thru coffee shop business, coffeehouse, etc - each requires a different set of steps. This how to open a coffee shop for dummies discussion will talk about what you’ll need to do to open a particular coffee shop business.
Before we begin talking about how to start a coffee shop, allow us to brief you on how difficult doing so might be. You see how hard or how easy it is to start and run a successful coffee shop will depend on your skills and experience as a businessman. Of course, financial resources and luck play a major role too.
So how to start a small coffee shop? You have to be very clear about which direction you want to go. There are many types of coffee shops. That said, in this how to open a coffee shop for dummies’ guide, what we recommend you do first before anything else is decide if what you want to start is a non-profit coffee shop, drive thru coffee shop, coffee shop bakery, or online coffee shop.
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Are you wondering how non-profit organizations pay employees and get funding for different programs and activities? Aside from donations, non-profit organizations get funding by setting up a social enterprise. A good example - and a very popular one - is a non-profit coffee shop.
So what is a non-profit coffee shop? A non-profit coffee shop is a type of a coffee shop business that garners funds needed by a charitable organization by offering free initiatives such as employment for the marginalized, barista training, coffee making, and more.
Unlike a for profit coffee shop, a non-profit coffee shop uses earnings to fund initiatives or programs that support social causes. Moreover, in terms of its services, non-profit coffee shops aim to promote solutions to crises. For example, you’ll find non-profit coffee shops that only source coffee from marginalized farmers locally or abroad and only use environmentally friendly food processing practices.
Since you want to start a non-profit coffee shop business, we assume that you’re already running or are at least a part of a non-profit organization ( a non-profit coffee shop is a business operating under a non-profit organization). With that said, here are the steps in how to start a non-profit coffee shop:
The first step in how to start a coffee shop business that’s non profit is to do research. Gathering information creates a roadmap so that you don’t get lost. As Eugene Cho, a famous non-profit coffee shop owner says, running a non-profit coffee shop is difficult. And starting one begins with arduous research.
Set up meetings with people, or at least send emails to gain insights in how to start a coffee shop that’s non profit. Ask about the most effective strategies, how to maximize funds, how to keep up with established competitors, and other relevant questions. Here are some places where you’ll find people ready to provide insightful answers about how to open a successful coffee shop for charitable purposes:
How-to start a coffee shop pdf such as magazines, research papers, books, etc.
The second step in how to start your coffee shop as a non-profit is getting funds. You need money to realize the non-profit coffee shop envisioned. Of course, we don’t mean you invest personal money. Even without a lot of budget, covering equipment, stocks, and other operational expenses in starting a coffee shop as a non-profit is possible so long as you know how to get funding.
First off, you can ask for donations from organizations that support the cause of your non-profit group. You can also ask members to allow you to use the non-profit organization’s money as a starting capital. Another method is to entice members and ask them to invest in your plan. Last but not the least, though the least recommended, is to get a loan.
Securing a commercial space is the third step in how to start up a coffee shop that’s non-profit. Having a commercial space means finding or creating the location of your non-profit coffee business. You have two options at this stage in how to open your own coffee shop that’s a non-profit - rent, lease, or buy a commercial space and turn it into a non-profit coffee shop. By the way, if you’re renting a space for your coffee shop, be sure to get general liability insurance with rented premises liability coverage for your charitable coffee business as the landlord will require it.
The fourth step you need to know on how do you start a coffee shop for a non-profit is creating a business entity. Create your coffee shop as a separate entity but one which operates for the non-profit organization you’re acting as a member or an officer. To do this, you need to prepare documents such as articles of incorporation, organization resolutions, and more. Afterward, you need to process state filings. Also, don’t forget to file a tax exempt status at the IRS.
How do I start a coffee shop that’s a non-profit? Here’s the fifth step - when your coffee shop is registered and its commercial space ready, it’s time to get supplies. First off, look for a coffee bean supplier. The best ones that offer beans of the highest quality are from these countries:
The Arabian Peninsula
Of course, you don’t only need coffee beans. You also need equipment too such as coffee grinders, brewers, etc. You can buy these in any local coffee supplies store in the US. However, top picks are Coffee Machine Depot USA, Seattle Coffee Gear, and Barista Pro Shop.
You don’t only need to know about the steps in how to start a non-profit coffee shop but also how much the capital will be. You’ll need at least $120,000 to start a small non-profit coffee shop.
Not all have the time to enter a coffee shop, sit around while drinking coffee, and then head out to continue with the day’s activities. There will always be busy people who only want to sit in their automobiles while waiting for the barista to hand over coffee right through the car window.
And so, drive-thru coffee shops (also known as coffee stands) are getting traction in the USA. In fact, big companies such as Startbucks and Dunkin Donuts own a lot of these.
With that said, a drive-thru coffee shop is a solid option as a startup coffee business. You can operate one with only 2-3 employees. Here are the steps to starting one. By the way, we’ll already assume you have the appropriate funds to start one.
As usual, in how to start a drive thru coffee shop business, everything should begin with research. Without information, to start a drive-thru coffee shop is like entering a dark forest without a lamp. That said, you’re not sure where to go and will stumble before accomplishing anything.
So what information should you look for? You need to know the minimum capital needed, what marketing plan works and what doesn’t, which type of coffee sells well, how long it takes for a drive thru coffee shop to prepare coffee, where to get coffee beans and supplies at the cheapest price, etc.
Creating a business plan is the second step in how to start a drive-thru coffee shop. Just like any other coffee business out there, your drive-thru coffee shop needs to have a business plan. A business plan isn’t only for formality. Instead it establishes the following:
What kind of business entity is your drive-thru coffee shop (sole-proprietorship, cooperative, partnership, etc.)
Organizational structure (Will there be an HR department, a CEO, a manager? Or will it be very straightforward where you, as the owner, see all things through?)
Products and services offered
Vision and mission statement
The third step in how to start a coffee shop that’s drive thru is finding a location. You can opt to rent a space but the best option is to have a drive thru coffee shop built. You will not spend a lot of money as drive-thru coffee shops are small. In fact, you’ll do fine with one having an area of 23’x10’ (230 square feet). A drive thru coffee shop with this size can house 2 - 3 employees and has a brewing capacity of 100 - 250 cups per day.
All drive-thru coffee shops have a concept. Visit Pinterest and you’ll see that no two drive thru coffee shops look the same unless they’re owned by the same person or business entity. Don’t think of concepts lightly. Make your coffee shop look enticing and airy and you’ll easily see cars come by. Do the opposite and no one will visit.
Now, let’s talk about an ideal location for your drive-thru coffee shop. Look for an area where cars are sure to pass by. For example somewhere near a:
E.V. charging station
Important landmarks (e.g. parks, museums, government offices, etc.)
Looking for supplies and suppliers is the final step in how to start a coffee shop that’s drive thru. In terms of the raw ingredients in making coffee you have two options - coffee beans and coffee powders. It’s up to you which of the two to use. But know that using coffee powders is ideal because it drastically decreases the amount of time needed to make coffee, which most customers appreciate as they’re in a hurry. As for equipment, what you’ll absolutely need are water heaters, decanters, cold brewing systems, hot water dispensers, drip coffee brewers, and espresso machines.
A drive thru coffee shop having a brewing capacity of 60 - 250 cups per day and employing 2 - 3 employees costs $86,000. You’ll see profits within 6 months to one year of business operations.
25% of coffee lovers make their orders through an app and since COVID-19 broke out, this number has only increased. To leverage the growth of orders through food delivery and take away apps and start your own delivery & take away coffee shop, list your drive thru coffee shop business on the most popular food delivery services and apps for take-outs, DoorDash, UberEats, GrubHub, PostMates, and Cups App.
Cafes unlike coffee shop offer a variety of delicacies that pairs well with caffeinated drinks. We don’t mean to say that coffee shops don’t offer food. It’s just that compared to the former, the latter is more focused on brewing coffee and the variety of dishes isn’t as numerous. A cafe is also a good way to make money out of your love for coffee. Here are the steps in how to start a cafe shop.
Always learn the trend before making a move. Look at statistics and connect with existing business owners so that you know what works and what doesn’t. You need to know which time of the day customers are more likely to come, what dishes always sells, what kind of drinks make the most profit, and so on.
All cafes have a concept. It’s the concept that will make your cafe unique from others. Ask yourself:
What design should my cafe's building follow?
What unique services should my cafe provide?
Who should I focus my products on? Local professionals, expats, or tourists?
In terms of food, should I feature local dishes or copy the food cafes in foreign countries offer?
Once you have the concept and gathered enough information, it’s time for you to make a commercial space. Make sure to consult an architect so that the building follows the concept you envision. As for building, there’s no need to worry about who to hire as there are a lot of contractors willing to provide services at reasonable rates. By the way, when choosing a location, make sure to look for a place where your target customers are frequently found.
Be sure to look for cafe suppliers. Of course, you can work with many. In fact, this is the best route we recommend you to take. You can source ingredients from local farms and markets. Get in touch with different companies to source coffee beans, coffee powders, and ready-made beverages. Also, don’t forget to look for a distributor that sells the needed coffee-making equipment in a packaged deal.
Owners or managers have different techniques when it comes to how to start a successful cafe. But still, most agree that the following are the best practices every aspiring cafe business should do.
The menu that you offer will be essential for your success. In general, it's best to keep your menu relatively simple. A long menu list can overwhelm customers, which can cause them to walk out the door ultimately. For instance, your bagel menu could consist of plain bagels, a few different flavors, and cream cheese or butter. Offering meats, salmon lox, and uniquely flavored bagels are not always necessary. It may increase your operating costs and lead to waste, which can reduce your profits
The atmosphere of your coffee shop will play an essential role in your success, so you need to create an environment where people will be encouraged to stay for a long time. You'll want to make sure that the environment is pleasant and relaxing. Research has shown that a cafe’s products only account for 48% of the emotional connection that customers have with a business. The other 52% has to do with variables such as the atmosphere of the shop. Here’s what you can do to ensure that the cafe has a good ambiance:
Fill your cafe with either of these comforting colors such as brown, dark yellow, magenta, green, blue, orange, pink, and red
Nostalgia can help - get your hands on iconic items associated with a particular year in the past
Music is magic - a little jazz or mellow piano will comfort customers and might encourage them to stay longer
Keep the temperature of your cafe comfortable. Keep the interior very cool during hot summer months and very warm during winters
Ensure that your parking lot has enough spaces for your customers. You don't want your customers to have to walk a significant distance to get to your shop
It's important to have an effective branding strategy for your coffee shop. This is best done through digital marketing. And so, invest on a website and upload content that’s valuable and helpful to visitors. In addition, feature your cafe in Tiktok, Facebook, and Youtube.
Small cafes need a capital of $90,000 to cover operational costs such as supplies, commercial space, employee wages, and more. Large cafes, on the other hand, require a starting capital of $125,000 - $321,000.
So how to start a coffee shop provided you don’t have enough funds? We encourage you to try getting a business loan. There are two types - fixed rates loans and adjustable-rate loans. The interest rate of adjustable-rate loans can increase or decrease over time based on the economy, but fixed-rate loans will maintain the same rate. As a result, coffee shop owners who get an adjustable-rate business loan may find their monthly payments difficult to manage. So, if you're wondering how much does it cost to open up a coffee shop provided you have no money; the answer to that question, in the long run, will partially depend on your business loan's interest rate.
But what if you don’t want to get a loan? How to start a coffee shop if this is the case then? There’s an alternative route you can follow. And that is to start an online coffee shop.
So how to start an online coffee shop? Will the steps be different?
Starting an online coffee shop from scratch is a bit different from starting a brick-and-mortar coffee shop. You don’t need to stress about business location and building. Coffee can be made at your home and delivered to customers through food delivery businesses. You only to do the following:
Have a website built - You can pay freelancers or web design companies to do this for you. If you want to do the legwork yourself, there’s Wix and WordPress which already have website templates that can be added with plugins to match your needs
Register your business - Register your online coffee shop as a home-based business. Documents you’ll need are a home and occupation permit, health and safety permit, general business license, and sales tax license
Buy equipment and supplies - Equipment and supplies you’ll need aren’t very different from that of a brick-and-mortar coffee shop. But note that you’ll have to spend more on plastic cups
There are two things that determine how much does it cost to set up a coffee shop online - cost of building a website and cost of equipment and supplies needed. On average, expect to pay $2,500 - $9,500 for your online coffee shop’s website to be built. Equipment and supplies, on the other hand, will cost $15,000. Taking all of these into account. The answer to how much money does it cost to open a coffee shop online ranges $17,500 - $24,500.
Mobile coffee shops are all over the USA. This can be a coffee truck, coffee trailer, or coffee cart business. So how to start a coffee shop as a mobile business? Here are the steps:
The ideal trailer for your mobile coffee shop is a 6x12 trailer that costs $6,000. If you’re planning to use a food truck, consider buying a Ford Stepvan or Ford Transit Van. But if you want to start small and simple with a cart, get one that’s at least 4-7 feet long and 2-6 feet wide.
When you have a trike, trailer, or truck ready, it’s time to buy equipment and supplies. The table below shows that equipment you should purchase depending if what you want to run is a coffee truck, coffee trailer, or coffee trike.
|Coffee Truck||POS, espresso machine, coffee grinder, drip coffee maker, airpot brewer, etc.|
|Coffee Trailer||Same as equipment for a coffee truck business|
|Coffee Trike||Decanters, gas heaters, and other equipment for preparing coffee that’s small and portable|
You need to look for a shop that customizes the trailer, trike, or truck into a mobile coffee business. The table below shows the cost and how long the work will be.
|Cost||Length of Work|
|Truck||$62,000 - $121,000||3 weeks - 1 month|
|Trailer||$53,00 - $100,000||2 weeks - 1 month|
|Trike||$3,000 - $10,000||1 - 2 weeks|
Just like any other business, you have to register your mobile coffee business in the state where you wish to operate. Documents you’ll need are business license, employer’s identification number, driver’s license, food handler’s permit, and health and safety permits. If you’re using a cart or trailer, this is the final step in how to start a coffee shop as a mobile business. If your mobile coffee business is a coffee truck, you need to register with your state’s department of motor vehicles also.
So is a mobile coffee shop better than stationary coffee bars and kiosks? We can’t say. But note that these are the advantages of running one:
Cheap operational costs - you don’t need to invest on a commercial space or spend money on renting one
Not hard to find customers - a mobile coffee shop can easily find customers because it can transfer from one crowded area to another, provided that such locations are those which mobile businesses are allowed to operate
Depending on whether you’re using a trailer, trike, or truck as a mobile coffee business, the required starting capital will be $6,000 - $200,000.
Research about what coffee sells well to the populace. In fact, you even need to figure out if the inhabitants prefer buying coffee from a coffee shop. Second, think about what coffee business you want to start. Most of the time, what works is a small coffee shop having a sitting capacity of 6 - 15 people or a drive-thru coffee business. The final steps are getting supplies and registering your business.
Expect to invest $50,000 - $150,000 for a small rural coffee shop. The cost of opening a coffee shop in a rural area will depend on whether you’re renting or owning the commercial space used as a coffee shop, the supplies needed, etc.
The steps involved in how to start a coffee shop with a bakery aren’t different from starting a small coffee shop dedicated to only serving caffeinated drinks. But note that, you will need to invest in making your own bakery or sourcing supplies for bread, cakes, and pastries. So how much to start a coffee shop bakery? Starting capital is $98,000 - $115,000 on average.
Buying a coffee shop franchise works all the time, especially if you buy from Dunkin, Scooter’s Coffee, The Human Bean, and Biggby Coffee. Starbucks doesn’t have franchising but you can obtain a license to operate an outlet. While franchising works, the catch is that it requires a lot of money. For example, a franchise from Dunkin Donut will require a $97,700 - $1.9 million investment, and an initial franchise fee of $43,000 - $92,000.
Overall, the cost of living in urban areas tends to be quite high compared to other regions. The average rent for a commercial space in an urban area is $1,848 per month, but it's only $1,269 per month in suburban areas. Therefore, you can expect to pay around 1.5 - 2 times as much to rent space for a coffee shop in an urban area as you would in a suburban region.
Seattle is the best place for starting a coffee shop business. This state is the coffee capital of the USA. While competition is fierce, the population of the state is mostly made up of coffee lovers. So how much money to start a coffee shop in Seattle? Required capital will be $150,000 - $300,000 to cover all operational expenses.
Very much. Insurance will see to it that your business won’t be disrupted and incur financial losses if exposures happen. Coverages you need to get are general liability insurance, workers compensation insurance, commercial property insurance, and business interruption insurance. Note that all of these are included in tailored coffee and cafe insurance.
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https://www.irs.gov/businesses/small-businesses-self-employed/business-structures#: ~: text=The%20most%20common%20forms%20of,into%20selecting%20a%20business%20structure.
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