There are many reasons you might want to open your own coffee shop. With over 200 million coffee drinkers in the U.S alone, gourmet coffee is growing in popularity. This means the demand for quality coffee shops continues to go up.
As coffee grows in popularity, so does its cultural importance. Coffee shops are not only convenient places to grab your coffee on the go. Coffee shops have become community hubs. They attract friends looking to connect, students looking for space to study, and professionals who need a place to meet.
Whatever your reason, the question still remains…HOW DO YOU START A COFFEE SHOP? The process varies depending on where you live and what business model you want to follow but the steps are the same.
I got my start in the coffee business when my friend hired me to be an assistant manager and barista at the independent coffee shop he managed. Later I had the opportunity to work for a well-respected local franchise.
Between these two experiences, I was able to learn firsthand the intricacies of operating a successful coffee shop. Someday I hope to have a coffee shop of my own. Until then, I am happy to pass along the knowledge I have gained through experience and extensive research. So people like you can know HOW TO START A COFFEE SHOP successfully.
I’ve broken the process down into 3 stages.
Stage 1: Build Your Vision
Do Your Research
Before you do anything else…do your research! If you want to have a successful cafe, you need to do your research.
Research your area: You’ll want to look for who your competition is and who your customer might be and what they seek out. To do this you can look for patterns or trends amongst the popular and successful businesses in your area.
Research the business: It’s important to have a thorough understanding of the coffee business. You will want at least a basic understanding of the food service industry and business management. Ideally, this understanding comes with experience.
I recommend networking with other coffee shop owners in your area. Learn from their experiences and form lasting professional relationships.
Define Your Vision
Once you’ve done your research, it’s time to form a game plan. You’ll want to start by defining your vision. It is crucial that you do not skip this step! When challenges arise, which they evidently will, holding onto your vision will be what gets you through.
Ask yourself the following questions:
- Why do I want to own a coffee shop?
- What do I want to achieve?
- What kind of atmosphere do I want to create?
- What is going to set my coffee shop apart?
- What is your brand and your message?
- What will the name be?
- Who is your target demographic?
- What are your customers willing to pay?
It’s important to remember that plans can change as you move through the process, so stay flexible. The reason why you want to open your own coffee shop is by far the most important aspect of your vision that you will want to hold onto.
Find a Location
At this point, you’ve already researched your area so odds are you’ve come across a few potential commercial spaces for your new coffee shop. When looking for a location, there are a few things you’ll want to do.
You’ll want to complete a location analysis. It should take into account demographic, competition, proximity to your target demographic, distance from suppliers, crime rates, regulations, and zoning regulations.
When you’ve found a potential space, consider how or if it will fit your vision. Imagine how the front and back of the house will be laid out.
- Is there enough space for a kitchen or an espresso bar?
- Are the necessary gas, drain, and water lines in place?
- Is there a lot of foot traffic or parking?
- Will my coffee shop fit well into this neighborhood and community?
Write a Business Plan
Writing a business plan is an important step in any new business venture. Your business plan acts as a road map for how you will structure, run, and grow your business. Make sure it includes the following:
- Summary: Describe what this business stands for and how it will stand out.
- Local Market Analysis: describe who your regular customers are and identify who your primary competitors are.
- Your Team Structure: What is your role and how will you structure your management team? Who do you need on your team? Define their roles and responsibilities.
- Marketing plan: what is your point of difference? How are you planning on getting your brand out there?
- Expenses/Investment: How much money do you need to get started and where is it coming from?
- Financial Projections: Lay out your profit and loss estimations and cash flow predictions.
- Location and Lease Strategy: Where will you be located and what needs to be done to prepare the space for your new business?
Stage 2: Prepare
Line Up Finances
Opening a coffee shop is not cheap. On average, it can cost between $80,000 and $300,000 to open a sit-down coffee shop (more if you include a drive-through). The cost is significantly closer to $60,000 if you plan on opening a food truck or kiosk.
Before you can do anything else, you need to determine what your estimated cost will be. Then you can line up the necessary funds either through loans or investments.
Find a Source for Your Beans
You are opening a coffee shop and the actual coffee you choose to use is key to winning over and maintaining customers. Your coffee shop can look beautiful but if the coffee is not good, then people will move on to another esthetically pleasing shop.
It is important for you to find a wholesaler to purchase your beans from.
You need to ask yourself:
- How much am I willing to spend for quality?
- Do I want to buy local or imported?
- Do the beans need to be fair trade?
- How much is your customer willing to pay and will you be able to still make a profit?
- Do you need it roasted or are you planning on roasting in-house?
- MOST IMPORTANTLY…do you like how it tastes?
Remember…if you do not like how the coffee tastes, your customers won’t either.
File for Permits and Licenses
Whatever you do, do not take this step lightly! I have seen great coffee shops close down because of improperly filed permits and licenses. The required permits and licenses vary from region to region. Make sure you thoroughly research the requirements for your specific area.
Most cities will provide all the information you need online. However, you can also stop by your city or town hall and find what you need there.
You can’t make coffee without equipment. Put together a list and look for local or online sources for wholesale supplies. What you need will vary depending on what you are offering.
Are you only offering espresso-based drinks or will you offer drip and pour-over coffee? Are you planning on offering food and if so will you make it in-house? Will you be offering blended drinks?
A few examples of what you might need are:
- Automatic drip maker or pour-over station
- A high-quality espresso machine
- An industrial coffee grinder, knockbox, and scale
- Hot water dispenser
- Counter rinser
- Industrial blenders
- POS System and website
- Ovens and toasters
- Refrigerators (reach-in and bar)
- Ice machine
- Frothing pitchers and thermometers
- A security system
- Dishwasher or 3-compartment sink
- Mugs and plates (espresso, 8oz, 12oz, and more if you choose)
- To-go supplies
Stage 3: Set Up
Design the Front of the House
The front of the house is all about the customer’s experience! Consider what kind of atmosphere you want to create and how you want people to move through the space.
At the counter, you do not want your customers to be confused. They need to know where they need to place their order, how they should form a line, or where they should pick up their drinks. In my experience, this can be communicated with simple, clear signage and an intentional layout.
If you plan on providing seating, think about how you want your customers to use the space. If you want to provide a space for people to hold meetings, make sure you have larger tables and quiet space. The more comfortable the seating, the more at home your customers will make themselves. Providing variety will allow for a variety of patrons.
Finally, you need to be intentional about your decor. If you want an open space, designers recommend using lighter colors, bright natural lighting, and minimal decor. Whereas, if you want a more cozy atmosphere designers recommend darker colors, soft warm lighting, and lots of texture in your decor.
Design the Back of the House
The back of the house is all about the employee experience. The priority here is organization and workflow. Consider what work needs to be done in the space and what you can do to make it easy and fast.
As someone who has worked in multiple coffee shops, I can attest to the importance of workstations and clear organization. Workstations ensure that everything needed to do a specific job is within arms reach. And clear organization makes it easier to keep the space clean, and stress-free.
Note: You can make adjustments over time. In the early stages of opening, get feedback from your team and adjust the space to improve workflow.
Hire and Train Your Team
You have a vision and plan for your coffee shop but you can’t create it alone. The team you hire is vital to achieving and maintaining that vision. The number of employees you need will depend on what you plan on offering and how active a role you plan to play in daily operations.
It’s recommended that you start by determining your team and management structure.
- What roles need to be filled?
- What areas are you lacking?
- What are the responsibilities of each role?
- What makes someone qualified for each role?
- What are you going to train and what should they already know? (This will vary for each role)
Once you have done this, it’s important for you to start by hiring from the top down. Find managers with a management style that fits well with you and your cafe.
Are you a coffee expert? If not, consider hiring a head barista. Look for someone with a great deal of experience and knowledge who can help you with the training process.
Speaking of training, one thing I learned working at Dutchbros Coffee is the importance of thorough training. They have a well-known intense training process that involves multiple stages and testing. It results in every employee being able to fill any role and maintain consistent quality service.
You do not need to model Dutchbros, but, whatever you do, do not cut corners when it comes to training. It may seem like an unnecessary personnel expense, but consistent, quality service from every employee is what ensures repeat business and positive reviews.
Market Your Cafe
There is no point in opening a beautiful cafe where you make delicious coffee and serve tasty pastries if no one shows up. How are people going to show up if they don’t know you exist? Marketing is what introduces the public to your coffee shop and keeps your name in their brain.
If this is not an area of expertise for you, don’t be afraid to hire someone to help you with this. In some cases, I’ve seen managers provide support in this area but just make sure they have experience.
You should have made a marketing plan as part of your business plan. It should include stages, the first starting in the month leading up to opening day. Build a network and spread the word about your new cafe. Invite them to opening day.
You will need to do the following:
- An online presence. Choose 1-2 social media platforms where you consistently post and interact with the public.
- Claim your google maps listing. This will allow people to find your coffee when they look for cafes in the area.
- Create a website or landing page. A way for people to learn about your location online. That’s where people look for things now and you need to be where the people are. Using a simple platform like wix or squarespace allows you to do this without technical knowledge.
- Connect with your local community. Look for ways you can participate in community events or even host your own.
- Create promotions and incentives. Popular options are Giveaways, BOGO (buy one get one offers), Happy Hour (a discount on drinks during select times), and Stamp Cards (get a stamp for every drink purchased, and when the card is full you get a free drink).
Note: giveaways do not need to be elaborate; they just need to fit your target demographic. Dutchbros coffee attracts a lot of younger customers and they have a very cheap and effective promotion they do monthly.
On the first of every month, each location gives away a free, one-of-a-kind sticker that they only have a limited supply of. Once they are gone, they are gone. Because the designs are quality and the supplies are limited, these stickers have become almost collector’s items. People rush to their local Dutchbros every first of the month to get one and it drives in a lot of repeat business.
Once you have your marketing plan in place, it’s just a matter of executing it consistently.
Then, it’s time to open!
Whether you plan to open a coffee cart, coffee truck, or coffee shop, the steps are the same. You need to build your vision, prepare, and then set it up.
The most important stage, however, is the first one, building your vision. Once you have a vision, every step that follows is designed to bring that vision to life. If your vision is clear and full of passion, deciding who to hire or how to design the space will be almost easy.
Second to building a vision is understanding your customer. Form a clear picture in your mind of who you want to make themselves at home in your coffee shop. Then you can create a space for them.
As someone who has visited coffee shops all over the world and worked in a fair share of them, I can tell you that the best coffee shops are the ones that have a clear identity. The ones where you walk into the space and you feel like you know the person this space was designed for. Not only that but you can picture how you would use the space.
A little bit of advice: Create a space where you would want to work and spend time. If you love it, others will too.