How to Start a Coffee Shop

So you’ve made the decision to take the plunge and open your own coffee shop. Ultimately, running your coffee shop can be a satisfying experience. Your coffee shop can be the central hub where hundreds of friends can connect and relax. Here, at Business Name Generator, we provide you with a step-by-step guide to starting a coffee business to get you started on your route to success.

Choose your niche

In order to maximize your chances of success, your coffee shop will need to have a unique selling proposition (USP). There is strong and vast competition within the coffee shop industry. Therefore, you should aim to elevate yourself from the local competition in some way.

Consider the following:

What is the demand for coffee shops in your locality?

A city will have different needs to a small village. Visit a range of successful coffee shops in your area and consider how you can infiltrate the market successfully.

What are your skills and interests?

Are you a keen baker? Do you have an eye for interior design? Or, are you a coffee connoisseur? Ultimately, your USP should be based upon your competencies.

What are the current coffee trends and how can they be incorporated into your ideas?

Could you serve coffee ice pops? Or could you be the first to introduce novel flavored coffee? With the internet at your fingertips, you can find out and stay ahead of the current trends within the coffee industry. Consequently, you will gain interest and custom.

What type of coffee business would you like to run?

A kiosk at local events
Coffee roaster
Drive thru
Mobile coffee cart
A traditional sit in shop

Conduct market research

In line with identifying your niche, you will have already started your market research. Specifically, you should visit large chain coffee shops as well as local independent businesses to identify their strengths and limitations. Ideally, this will provide you with plenty of inspiration and ideas for you to build upon.

When conducting market research, consider the following:

Business name
Branding methods
USP
Interior design and layout
Menu options
Delivery options
Company website
Social media pages

Create a realistic business plan

A well-considered, thorough business plan is advantageous to both potential investors and your business. Subsequent to your market research, you will be in the position to outline your business plan comprising a cash-flow analysis and profit and loss account. Here, you will be able to calculate your start-up costs and explore potential funding sources. Additionally, you can access numerous business plan templates online.

Creating a business plan will be beneficial to you and potential investors. Outline your business idea and the market research you have undertaken. Include a preliminary cash flow analysis and profit and loss account. Specify your start-up costs and where you will get them from.

Calculate your start-up costs and plan your finances

The start-up costs involved in opening a coffee shop can be high. You will need premises, a ventilation system, ovens, and cooking equipment (depending on your menu).

Firstly, find the premises you want and negotiate the rent in your favor as much as possible. Gather quotes for a commercial ventilation system that the relevant authorities will approve. When looking for ovens and coffee machines, consider buying them second-hand. Many companies specialize in this, offering guarantees for all the products they sell. Then, you’ll have to add running costs like electricity, water, salaries, and transport to your monthly expenses. The business should start with enough capital to last at least three months.

Establish your objectives

Your company will need to set realistic goals and strive to achieve them to make a satisfactory profit. Research the market, the demand, trend and skills that you will need. Inevitably, it is best to over-calculate your expected expenditure whilst underestimating your growth and custom.

Consider licenses and legalities

Before you invest any money, meet with the relevant authorities and talk through the licensing process with them. They will inform you if your chosen premises are suitable for a coffee shop. Contrary to popular belief, they are not there to obstruct your application and you will regard their expertise as invaluable.

When you decide to proceed with your business, you should strictly adhere to the licensing guidelines. Consequently, there should be no problem in obtaining your license following the final checks of your premises. Remember that your license can be revoked at any time if the authorities believe you are not maintaining the required standards.

Compare your coffee shop options

There are three basic options for starting a coffee shop:

Purchase a franchise: You may decide to utilize a built-in business model. Purchasing a franchise means that many of the decisions are made for you. Consequently, this option means that you will have less control and authority but that you are relieved from certain responsibilities and stress.
Buy an existing business: Alternatively, you can invest in a shop that is for sale or one that requires refurbishment. Crucially, you will need to find a business that has potential and be prepared to compete against other buyers.
Start from scratch: This option requires a lot of effort. However, starting your own business provides you with the freedom to make all decisions and to put your business plan into action. Consequently, you can maximize your profits.

Choose a prime location

When selecting a location, make it close and convenient for the types of customers your coffee shop will draw. Ideally, it will be in a place that people can walk by on foot. Furthermore, consider parking availability. If a consumer struggles to park, they are more likely to stop elsewhere.

Once you have found a suitable location, find a premises. When viewing potential premises, consider the following:

Does the size suit your needs and expected demand?
How many people tend to walk past?
Is it affordable?
Does it need improving and how much will this cost?
What competition do you have close by?

Create your brand

Begin by naming your bakery. Brainstorm words that are relevant to your USP or products as well as researching names of competitors for inspiration. Once you have your name, you can create or assist in creating your brand’s logo and/or slogan. When choosing a name, it should be relevant to your business or USP, short, simple and memorable. For inspiration, try our different name generators here.

Next, create a logo. Your logo should be linked to your name somehow. It can then be added to packaging, staff uniforms and signs to increase your brand’s visibility.

Plan your menu

So, now you are ready to plan your menu. Crucially, when starting out, simplicity is key. It is easier to deliver fewer high quality options effectively than trying to cater for the masses. Owing to the evolving demands of customers and the vast competition, you must plan your menu and consider the finest of details.

Additionally, your menu should reflect growing trends as well as delivering consistent high-quality. You should:

Keep up with industry culture
Invest in high-quality equipment (coffees machines, coffee bean grinders, water filtration systems, etc.)
Offer fresh and high-quality coffee and food
Employ and maintain an impressive and skilled team
Ensure that you provide traditional customer favorites alongside fresh and innovative ideas in line with changing trends
Cater for dietary requirement and allergies

Ultimately, your menu is an aspect of your business that is easily adaptable. As soon as you open your coffee shop, you will get to know what is popular and can adapt your menu accordingly.

Choose your suppliers

Next, identifying the right suppliers is critical. You need to source a supplier who has what you need and is within your budget.

Additionally, your suppliers should deliver good quality products regularly and punctually. They should also be able to keep up with growing demand. Furthermore, be sure to ask for samples of their products as well as asking them about their delivery procedures.

Buy or rent your equipment

As previously mentioned, there are lots of second-hand equipment options. Alternatively, you can look to rent equipment. Obviously, if you have sufficient funds, you can buy brand new equipment. You will also need to consider service and repair plans for all of your equipment to ensure that you have somewhere to turn when needed.

Design your interior

Obviously, this depends upon the type of establishment that you intend to open. Atmosphere is key to retaining custom. Consider the practicalities of your interior as well as the aesthetics.

Consider the following:

Layout: how many tables can you fit into the space? How much space is needed for the bar/kitchen area? Do you have a separate area or window for takeaways?
Lighting: how much natural light is there? Can you create added ambience with uplighters?
Comfort: What kind of seating are you going to have? Will you mix comfortable sofas with chairs and tables?
Convenience: Will you have plug sockets and chargers for those who choose to work from your establishment?
Outdoor space: Can you incorporate a patio and tables outside? This is very attractive to customers, during warmer seasons.

Hire a great team

The best coffee establishments are remembered for their staff. As a minimum, you will need to employ a manager, serving staff and a barista to make the drinks. Furthermore, according to your menu, you may need to hire staff to cook and bake.

Marketing your business

Subsequent to finalizing your business plan, begin marketing your business. Here are some marketing methods that will promote your coffee shop.

Use social media

Create Facebook, Instagram and Twitter accounts to post updates and generate interest around your business. You can post countdowns to opening dates, preview teaser pictures and promote competitions.

Put up posters

Displaying posters around the locality of your coffee shop will add interest to those walking by. Be sure to include the opening date and opening times as well as your location.

Implement a loyalty card scheme

Schemes that work via a simple stamp system, allow your customers to access discounts or free coffee. Additionally, they encourage return customers.

Sign up for coffee magazines

Signing up for coffee magazines, attending trade shows, and looking through materials supplied by websites like coffeshop startups’ “Coffee Shop Starter Kit” can all help you acquire solid recommendations.

Set up an app

Apps allow customers to preorder, prebook tables and access coupons.

Register as part of Google My Business

Subsequently, your coffee shop will show on Google Maps and within Google Search

Encourage reviews

Encourage customers to review your business and products via the various social media platforms. Display your social media handles inside your coffee shop and prompt your customers to leave reviews.

Sell merchandise

You can also sell merchandise, gift cards, coffee beans, pre-paid cards, and other items. Your website may help you establish your brand as one of the best in the market.

Create a website

As a future coffee shop owner, you should create a website so that your consumers can easily locate you. Ideally, your customers should be able to find you with only a quick search on a search engine. Ensure that your domain name links to or is the same as your business name.

Consider including the following features:

About page
Contact page
Menu and price details
Address, opening times, contact number and map
Booking options
Allergy and intolerance section, including ingredient breakdown

Open your coffee shop

Firstly, consider opening just for friends and family. Utilize this as an opportunity for honest feedback. Run checks to assess that everything works as it should.

When you are ready, open your business. Post lots of updates on social media and encourage custom with welcome deals.

Conclusion

With the increasing popularity of not just coffee, but high-quality coffee prepared by professionals, now is a great moment to explore launching a coffee shop. When opening a new coffee shop, the important thing to remember is to be organized and stick to your business plan. After that, work on creating a loyal customer base, and your brand new coffee shop will be on its way to success.