how to open a coffee shop

How to Open a Coffee Shop Business Infographic

Are you confused with the plethora of information on how to open a coffee shop? And they tell you not to trust anyone that has never opened, owned or operated one before. Should you?

opening a coffee shop business

Phil La Rosa, who work with Espresso Works in Perth, Australia emailed me an infographic on how to open a coffee shop. He thought it would be fun to look at the steps required to open your very own café and have it published on my site.

But Espresso Works do not own or operate a coffee shop. They specialize in the maintenance and sales of the finest coffee machines and associated products in Australia. They have been doing this since 2008. So I guess they must know the industry pretty well. 

If that's okay with you, let's look at their infographic on how to open a coffee shop.

How to Open a Coffee Shop

How to Open a Coffee Shop

Espresso Works list out ten essential steps on how to open a coffee shop. But it doesn't cover all aspects of opening a cafe. So I expanded on the list with more items. Check them out: 

#1. Find the Right Location

The location of your cafe plays a major part in the success of your coffee shop. Choose a location with lots of foot traffic. But good location can be expensive. Is it within your budget?

Do a comparison. Is it better to spend money on a better location that already has the foot traffic? Or cheaper to spend extra money on marketing to attract that traffic.

To learn more on this, read my article on finding the right location.

Remember that location is not everything!

You still got to put in your best practice restaurant marketing to work. You have to take control of whatever you can to bring in more customers. 

Understand your customer's need. Build a culture to care for your customers AND your staff.

'Don't think for one second the change of location will bring you success'
bedhad sami
Behdad Sami
Professional Basketball Player

#2. Do Your Business Plan and Choose Your Space

I assumed your Business Plan is in place. This is the road map from which your new coffee shop develops. That you’ve done your homework and serious about opening a coffee shop. 

To write a strong business plan that is relevant, read my article on How to Write a Business Plan that Stays Relevant.

Espresso Works suggest that you decide on your space. Do you plan to run your business on a mobile kiosk or truck or a full brick and mortar location? Remember that each has its own constraints. A smaller space means less variety of drinks and foods to sell. 

#3. Secure the Right Equipment

The type of coffee you want to sell will determine the equipment that you require. Do you need a cappuccino machine, French presses or drip coffee machines?

These depend on your space and budget (and what you had written in your business plan! Don’t divert from it as it will affect another aspect of your cost and margin).

You may also be tempted to buy the new and trendy brewing machine or other latest gears. Even if you have a deep pocket, you should not. Go for the trusted model that has gone through the test of time. This will ensure full support for parts and services even if it has less breakdown.

Besides coffee machines, you also have to look at the water filtration system. A good filtered water is a key to good coffee. Read my article on How to Make Coffee Taste Good to understand why water quality is crucial to good coffee.

Ice Making Machine is another important component to your cafe's equipment list. Read my review on Manitowoc Neo Ice Machine, the best compact ice machine if you are on a budget.

#4. Adhere to All Local Regulations

Different areas and local councils may have different requirements when it comes to opening a coffee shop. For example, in the US, all equipment must be NSF certified before they issue a business permit.

So check with your local government on their requirements. Put that in your business plan checklist.

#5. Do Your Groundworks - Research the Competition

Check prices of coffee selling in your area. Analyze all the local restaurants and food trucks that might compete with you.

Then look at what they offered, the design and ambiance for each of the establishments. 

Can you offer something different? Give quality coffee, food, and services. Be involved in the day to day operation. Be the head barrister. Be the best. 

Hone your skills, set standards and drive your team to get better and better.

And remember to keep your coffee shop clean all the time. Read my Restaurant Cleaning Checklist Infographic to guide you through the cleaning process. Keeping your cafe clean all the time is important. 79% of people will not return to a messy restaurant or with dirty toilets. Even if you serve the best coffee and food.

The following statistics are real. It shows how important are your first two years of your operations.

66% of small businesses will survive their first 2 years 66%
50% of all new businesses survive 5 years or more 50%
33% will survive 10-years or more 33%

Source: U.S. Bureau of Labor Statistics and Small Business Administration

#6. Hire Staff

For new cafes or small coffee shops, some of the duties of your staff will cross over from one section to another. For example, your waiter can double as host or bartenders. Hence, when you hire people, explain this to them. Employ only those that agreed to this flexibility in their duties.

Payroll costs account for about 25 to 35% of your total gross sales. If it gets higher than this, you either have to reduce your operating cost or increase sales.

Items deemed to be "controllable expenses" are:

  • Salaries & Wages 25%
  • Employee Benefits 4.5%
  • Direct Operating Expenses 4.5%
  • Music & Entertainment 1.0%
  • Marketing  2.5%
  • Utilities 2.5%
  • General & Administrative Expenses 4.0%
  • Repairs & Maintenance 0.5%

These add up to about 44.5% of your total expenses. If these are well managed, then you can control your profit.  "Controllable Profit" is a good indicator of how well you are managing your restaurant. There's a direct correlation between management's operating abilities and "Controllable Profit" (Controllable Profit = Gross Profit - Total Controllable Expenses).

This is one of the Key Indicator for restaurant owners to know where to focus their attention. 

Irrespective of these numbers and tools to track performances, it is no secret that good people are hard to find. So, as I had mentioned earlier, build a culture of caring for people. Not only for your customers but also for your staffs.

“Always treat your employees exactly as you want them to treat your best customers”
Stephen-Covey
Stephen R. Covey
Educator, author, businessman, and keynote speaker

#7. Source Specialty Items

One way to be different from other coffee shops is to create your own signature blend. 

Find a reputable roaster that can help you get that signature or your very own specialty blend.

But avoid the mistake of wanting to serve everything or do everything. You will likely fail. It is better to be good at something than second-rate at everything.

#8. Think About Food Items

Your coffee sales will not give you enough margin to pay for the controllable expenses.

Sure, coffee may be the reason why customers come to your shop. But to make enough margin, they must buy other stuff as well.

So think about food items to serve. Hot food and/or cold food such as sandwiches, muffins, cookies etc. Then place them close to your point of sale.

Research shows that 75% of customers look for food as well as coffee.

Don't forget cold drinks and mineral waters. This will ensure better chances of multiple sales. 

Will you prepare these yourself? This mean more staff to hire and extra equipment to buy.          Or will you source them from a good local bakery?

#9. Furnish Your Coffee Shop

Starting a new cafe can be expensive. Decorating and furnishing items can add up to your cost. But you can reduce them by buying things online, do bulk purchase or buy used furniture.

As the decor and furnishing will set the tone and ambiance of your cafe, choose well. You also want to create a comfortable environment for people to come back. 

For inspiration, check this book that features 33 eclectic coffee shop designs with good design aesthetics.

#10. Market Your New Business

It is tempting for new coffee shop businesses to overspend in their marketing efforts. Instead use low-cost marketing methods such as:

  • Leveraging on the Social Medias such as Facebook, Twitter, Instagram etc. Start a conversation or place ads on these medias.
  • Have your own website - start a conversation on your website's blog Click here to learn more on this.
  • Hand out flyers and network with the community.
  • List your coffee shop in your local F&B review website.
  • Use email and SMS to further expand your network.
  • Create a culture to care for your customers. Find time to meet them from table to table. This will create customer loyalty.

Begin to market your cafe as early as possible. By the time you open, you have excited customers ready to be part of your business.

The cost of marketing and Public Relation depends on your business plan and other factors that only you, the restaurant owner, know for sure. Do what's best but stick to your budget.

Other Marketing Ideas

Espresso Works proposed these other marketing ideas to help with your business launch:

  • Offer unique products such as specialized roasts, local ingredients etc.
  • Fee Wi-Fi (some establishments have now imposed a time limit to free Wi-Fi. This will free up the chair and table spaces for other new customers).
  • Have a customer loyalty programs. The best program is to give discounts or other incentives to regular customers.
  • Sell coffee related items 
  • Host or sponsor local entertainment, readings or book club events - only if it is within your budget
  • Train your baristas using online services

Conclusion

Starting a new coffee shop can be exhaustive. Despite good planning, you can still made mistakes and cost can go beyond budget.

Follow the above guidelines on how to open a coffee shop. It will at least reduce these issues.

Did I miss anything else? If you are a restaurant owner, love to hear your comments and tips for future coffee shop startup owners. Share it below!

Thanks.

16 thoughts on “How to Open a Coffee Shop Business Infographic

  1. Hi Mazlan

    Fascinating article with lots of information to absorb.

    Lighting is another thing to think about. A local cafe is small and narrow and the colour scheme they chose is a dark brown with brown lamps. From the outside the cafe looks dark and uninviting. So although their coffee and food are amazing they have trouble getting people through the front door!

    Amazing how cafe owners have to think about everything – it’s like a puzzle!

    Thanks
    Alisa

    • Hi, Alisa. You just raised an important item that any coffee shop owners should note. Yes, lighting plays a very important part in creating the right ambiance. In the case of your neighborhood cafe, maybe it was their intention to create that soft lighting and ‘dark environment’ which some people find soothing. What I would add on to that are nice big potted plants at the entrance and inside the cafe. Then have spot lights that focus on these plants. I think it will help. (without the owner having to repaint or change the existing lighting – only add more focus lights for the potted plants). Other additional item can be scented candles for all tables.

      Thanks Alisa for sharing this important point.

  2. This is a great post! All the important factors are spelled out clearly both in words and in visually, so it was very easy to follow. Even though I’m not planning to open a coffee shop right now, I’m sure those who are would benefit from reading your post. I think the most important thing of all is that you’re a coffee and food lover and you like to talk about it with customers? I always enjoy going to restaurants and cafes where the owners are passionate about the drinks and food they serve. When they are passionate, it’s reflected in the taste I think.

    • Yes, Ayako, I agree with you. That is why it is important for the coffee shop owner or the restaurant manager to personally see the guests and ask if everything is okay or, as suggested by you, talk about the food and drinks etc. This simple interaction will translate to a good customer service and customer loyalty. The customer will even, by word of mouth, tell their friends and relative of their nice experience and will give good review of your cafe. This is an invaluable and free advertising for you!

      Thanks Ayako for dropping by and commenting.

  3. Hi Mazlan,
    Great info, thanks for that. It’s something that I have been considering for some time and may well do this with a friend as a partner. Loved your infographic. Do you have any article that give a breakdown in the initial investment for opening a coffee shop? I know they must vary depending on your location etc. but it would be nice to have a rough figure. Also, do you think I would be better taking a franchise, opening a brand new coffee shop or buying an existing established one?

    • Hi Craig thanks for dropping by and asking those important questions. Right now, i have not written any article on the investment cost breakdown. But you can refer to a similar article at restaurant owner website.

      I hope this helps.

      Personally I prefer to open a brand new coffee shop rather than buy a franchise or buy into a established shop. There are advantages and disadvantages to each of these options. If you are new to the business and prefer taking the ‘easier route’ then the franchise is best. It is like going for tour of Europe and instead of doing it your self, you join a tour group. More expensive but all planned for you. Buying into established shop is like flying there on your own and taking the local tour as you as you please. Starting on your own is only for those who have done a very thorough research, do all the ground works and immersed deeply into the industry like joining the local coffee shop association, subscribing to industry journals etc. Similar to you planning, booking flight, hotel, car rental, train, museum entrance etc. all on your own. More exciting but can be risky and time consuming.

      So Craig, good luck and best wishes in your coming coffee shop business. Do drop by again and post or share your experience here for others to learn. Thanks once again.

  4. I had thought about opening a coffee shop with my daughter a couple of years ago. We had the perfect location, but we did not factor in many critical things mentioned in your article. So glad we decided not to, but it’s still something I might pursue in the future and your site is something I will reference. I thought your business plan information was extremely helpful. What is an average profit point for a coffee shop?

    • Hi, Linda. Opening any business and that includes a coffee shop, need some serious research. I am glad this article is of some assistance. So before you embark on that coffee shop, read and do lots of research. Time spent on this is worth it in the long run. Average profit point for a coffee shop? Well, it depends on a lot of factors but generally try to aim for at least 10 to 18 percent of your sales. If your shop is family owned, you can keep the profit margin as low as possible to decrease business tax expense (not applicable if you are taking a loan for your shop), But draw your salary and benefits as part of your operating expenses.

  5. While I agree giving free WiFi will create seating problems, you have to give this as your competitor is doing it.

    • John, you are right otherwise, people will go to your competitors. However, if your coffee is better than theirs, they will still prefer your coffee shop. Don’t forget, most people subscribe to a data plan anyway and free WiFi may not be an issue.

  6. I don’t care too much for location and decor but I must get good food and drinks. So it is important for would be owner to come out with good recipes for their foods and drinks.

    • Yes, Ricky. Even if location and decor are not the best, good food and drinks are important to drive people back to your coffee shop. But there are also other issues that need to be looked at. Such as cleanliness and customer service. In fact, cafe owners have a tough job at monitoring many issues. I hope to cover all these in this website.

  7. I like this checklist and while there are other small things that you also have to consider, this contain all of the important things that you must go through.

  8. The quote by Behdad Sami reminding us that changing of location doesn’t necessarily bring us success is smack on. Very often we think that by tweaking one problem will solves all. Running a coffee shop may sounds simple but it isn’t. You have to put in lots of effort and that include lots of research. Just my two cents worth.

    • Yes, Simon. Running a coffee shop or any other business for that matter is not easy. You have to do a lot of research and monitor your operation continuously.

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