So you want to open up your very own coffee shop. We're all here for it! Coffee shops can be so much more than a place to grab a cup of joe and a croissant.
They are places where friends and family gather, where ideas are formed and spread, and where important work gets done. At their best, they're an essential part of their community—a third place beyond work and the home.
In this guide, we'll go through everything you need to open a new coffee shop, from market research to buying coffee to hiring the best team.
Options for Opening up a New Coffee Shop
There are several different options one has when opening a new coffee shop. For instance, this could be by starting a brand new brand/coffee shop, franchising an existing brand, or buying a small coffee shop that is already running with sales.
Starting a new brand
|You can have full control over what goes on in your business. You also do not have to worry about losing any of your money because if it does not work out then you don't really lose anything at all.
|It will be more difficult to get people interested in your new brand because they do not know who you are and what you stand for. Also, if you start a new brand there may not be enough competition between other brands in the area. This can lead to fewer customers coming into your store than expected.
Franchising an existing coffee shop brand
|Franchising means you'll already have brand recognition. You know your market, and you know your customer base so it's easier to market to them and know what they like. It can also be easier to find good employees with experience in your business than it is to train someone new on the job.
|Coffee shop franchisees may not want to follow your business model exactly, which can be frustrating for you as an owner. Additionally, the franchisee may not be able to afford what you're asking for in terms of fees or royalties.
Buying a small coffee shop that already has some customers
|It's a lot easier to get started with a coffee business if there is already a customer base. You don't have to spend so much time and effort marketing your product, and you can focus more on perfecting the product itself. As a plus, you can buy an existing business for considerably less than starting from scratch. It may still take some capital to get the business going, but it will be much less than starting from scratch would cost.
|You may have to deal with some disgruntled customers who have been waiting for the shop to open for months and are upset about it being closed down. The coffee shop might have a bad reputation in the local community. This could be hard to overcome if you want to expand your business and open up more locations. On top of this, you may not get all of the equipment you need if you buy a coffee shop that has already been open for a while. So you'll still need more money for this extra investment.
Costs to Open a Coffee Shop
Opening a coffee shop costs money. Rent, equipment costs, supplies, marketing, and paying staff are among the costs you'll incur when just starting. Before you can obtain the funding you need, you should know how much to raise.
According to Crimson Cup, here are a few ranges to keep in mind, depending on the type of shop you want.
- Coffee shop with seating: $80,000 to $300,000
- Coffee shop with only a drive-thru: $80,000 to $200,000
- Coffee shop with both seating and a drive-thru: $80,000 to $300,000
- Coffee kiosk/stand/mobile cart: $60,000 to $105,000
Don't forget about the extra costs. Adding specialty coffee service to your cafe will cost you anywhere between $25,000 to $75,000 while a brew bar stands within the $1,500 to $25,000 range.
After you do your market research and determine how much you need, these methods can help you get there. Keep in mind that you don't have to lean on just one method—using a few money-raising methods can help mitigate risk and get you there faster.
How to Obtain Funding for Your New Coffee Shop
Consider starting with what you already have saved. While it may be tough to provide all of the funding, it can kickstart the money-raising process. But where using personal savings may come up short in value, it provides the benefit of no incurring risk from anyone but yourself—no banks or investors to pay back, and no fear of losing money from family or friends.
A common way for coffee shops to get financed is through business loan programs. For example, the small business administration has many options available from micro-loans to large-scale. Check out the Small Business Administration site for more details.
“Join your local chamber and research any small business grants or loans that might be available through the SBA or other agencies. Some locations or BIDs might have ongoing initiatives as they look to rejuvenate certain neighborhoods or blocks. Also, don’t be afraid to enter as many small business competitions as you can, even if they are for smaller amounts or for funding specific projects like building your online presence,” says Caroline Bell, Founder of Cafe Grumpy in NYC.
You may also choose to seek a loan through a more traditional bank. These can have low-interest rates but may take a longer time for approval.
Find an angel investor
It can be difficult to get an investor in the hospitality business, as it's an industry with a relatively low rate of returns. However, a solid business plan can ignite the passion within someone like-minded and equipped to help you. That person may be an angel investor, who often looks to support high-risk endeavors with their own money.
According to Perfect Daily Grind, an angel investor might put $25,000 to $100,000 into a business with the hopes to see it grow. To find an angel investor, look to the network you've already built, and to your family and friends. There's a chance someone knows someone who wants to support a new business.
Finding a lender or person willing to give you the necessary funding may be daunting—but finding a lot of people to give you a small amount is much more palatable. That's the idea behind crowdfunding, which has enabled many restaurants to open their doors.
Many food businesses have gotten their start through sites like Kickstarter, Indiegogo, wellfound, GoFundMe. Share the link with as many folks as you can, and consider offering them an incentive like a gift card when you open, a swag bag, or exclusive perks for helping you get started.
Choosing a Coffee Shop Concept
Below is a list of the potential coffee shop concepts and their pros and cons:
|Coffee bars tend to have high-profit margins. But these profits vary depending on whether you choose wholesale or retail pricing. Customer loyalty also tends to be higher. Customers who like your coffee bar's offerings are likely to keep coming back again and again because they're getting something they like (and paying top dollar for it).
|There's already a lot of coffee bars out there. So competition is fierce. Customers can be picky and you may not have enough capital to start up your business, especially if it's a franchisee or franchise joint.
Cafes tend to focus more on serving coffee drinks than anything else — although they can sometimes have a small selection of pastries available for purchase. In addition to food items like bagels or sandwiches, they may also offer beer or wine on tap or by the bottle, along with some small snacks like cookies.
|A cafe has less overhead than other types of restaurants or cafes because there's no need for expensive kitchen equipment or large dining areas — just enough room for customers to eat their meals while they're standing up or sitting down at one of your tables (depending on how much seating space you have). This means that your startup costs will be much lower than with some of the other alternatives.
|The competition! It's not easy to run a cafe as there are many factors that can affect your business in either positive or negative ways. For example, if there is an increase in competition in your area, then you may have to lower your prices or offer more discounts which may affect your profit margin negatively. The sales volume at cafes also varies from time to time; which means that they do not have stable cash flows which can make it difficult to pay off monthly expenses.
Mobile Coffee Shops (Carts and Trucks)
|You can go to events and festivals where people would love to have freshly brewed coffee! This should be a good enough reason to get you hooked but keep in mind you can always have pop-up coffee shops alongside your physical location. Having no fixed location though means you'll save money on rent, utilities, and insurance.
|There's just not much space for storage or prep area. This means you won't be able to scale your menu that easily. On top of this, you'll need extra permits. Each city has its own set of rules about where food trucks can park, how much they can charge for their food, and what kinds of permits are required to operate within city limits. Make sure you know what these regulations are before you start selling anything because it will save time and money if you know what's expected before you get started.
|This is an up-and-coming coffee store model that taps into a different target market with specific on-the-go purchase needs. This gives you plenty of room to be creative and create innovative menus or events. With no extra details to take care of like seating and interior atmosphere, you're only responsible for making delicious coffees.
|Despite potentially lower rent costs, you'll still need to invest in equipment and labor costs. Plus, drive-thrus require different customer service work. This means that the staff needs to spend more time training new employees before opening up their first location. Additionally, you'll have to deal with different types of traffic flow as well as potential parking problems.
|There is a large market for this type of service and not a lot of competition. So the money will likely flow in. This business model also leaves you room to stay creative and build a memorable business that can truly stand out. People love their pets and are always looking for new and innovative ways to spoil them. What better way to do this than by offering them a place to relax with their furry friends while enjoying a delicious cup of coffee or tea?
|One of the biggest drawbacks is the fact that animal cafes are subject to strict laws and regulations. In order to open and operate a successful animal cafe, you need to have a thorough understanding of the relevant legislation and make sure you are compliant with all relevant requirements. This can be a significant challenge, and failure to comply with the law could result in hefty fines or even the closure of your business. Another downside of starting an animal cafe is the cost associated with setting up and running such a business. You need to factor in the cost of food for the animals, as well as any necessary equipment or furnishings. Furthermore, you also need to take into account the costs associated with leasing suitable premises and obtaining all the necessary permits and licenses.
Recommended Reading: Successful Restaurant Concepts & Ideas to Inspire and Guide You
Researching the Market Before Starting a Coffee Shop
Before you can hit the ground running, it's important to understand the ground itself. This step and research component is the foundation behind your business, and should be taken seriously!
Get to know your future customers, before they even step foot in your door. You'll want to learn everything about their coffee preferences. From the most popular preparation methods to the most coffee-consumed time of day, this information will help you build a coffee shop perfect for them.
Don't stop there! Take it one step further by diving into their lifestyle habits and spending patterns. You may discover that your target customers enjoy an afternoon pick-me-up and are sensitive to price. This research will dictate your hours of operation and pricing plans!
How can you conduct this research? Reference secondary research studies or create your surveys and questionnaires to send out to a select group of people!
Secondary research example from NCA
But, don't limit your research to just that! Know of any local coffee shops? Visit them to learn more about what drives their business. Do they serve just coffee or small foods as well? Do they have indoor seating or are they takeout-only? This knowledge will help you answer these questions and more- helping you differentiate yourself from the competition and best cater your coffee shop to the community's needs.
When it comes to research, the more you have, the more knowledge you'll gain. So, make the most of this step- gathering this information will help you plan, operate, and run a successful coffee shop.
Find the Right Location
You could have the best coffee, tastiest treats, and the most innovative concept, but all of that can be easily compromised if your shop isn't in the right location.
But, now that you know the market, you can better understand where the right location is for you to reach your desired target market.
After analyzing your market research, you'll have a better understanding of who you want to target. Now, it's time to consider where that target market is located and how you can best integrate your coffee shop into its community.
To find demographic data on your target customers you can use US Census Bureau data. They provide data such as age, race, income, and other factors. The Census Bureau website also has a ton of information on how to use the data they provide.
Are the avid coffee drinkers University students? Then, having a location next to campus would be the perfect spot for you! Or, does your target market spend most of its time working from home? In that case, a local corner coffee shop might be calling your name.
Competition and neighboring businesses
You want your coffee shop to be the go-to spot around the block! How can you make that happen? Choose a location that has little-to-no competition.
When scoping out the zones, take note of which areas have already existing coffee shops. Keep track of how many are in each area and how busy they are. Chances are if there are two or more shops on one street, your barrier to entry will be much higher and it'll be a challenge to stand out.
As nice as it would be to have a rush of customers throughout the day, chances are, your coffee shop will be experiencing bursts of traffic based on where you decide to be located.
Coffee shops on one end of the city might be jam-packed before 8 am, while on the other side, they might notice a mid-day rush.
It's important to consider the peak coffee times in the different areas you're looking into, and base your decision on which one makes the most sense for you and your hours of operation!
Rental or land and building cost considerations
There are many factors involved in deciding whether to buy or rent. The cost of building a coffee shop can vary depending on location and size. In addition to opening costs, there are also ongoing expenses such as insurance, maintenance, and utilities. These costs will vary depending on your location and how much traffic passes by your store every day.
Starting small and renting the place is more affordable. You'll also get to learn what works and what doesn't so you can change locations or switch your coffee store's floor plan in case things don't work out.
Rent-to-own is an ideal way to get started in the coffee shop industry. It's suitable for both established and new businesses.
Just like leasing office space, you can rent a coffee store by the month so there's no long-term commitment involved. You can also choose to pay a higher monthly rent if you want to have more control over your financial spending. You don't need much capital when starting off as you'll only be paying rent on a monthly basis. This means that if your business doesn't turn out well, then it won't be too costly for you to shut down or sell off the equipment and fixtures once you've sold everything off.
Before you can truly decide where to locate your business, it is important to consider all of the options available, which include the following:
- Business centers
- Shopping malls
- Neighborhood shops
- College campuses/school zones
- Residential areas
Conduct a Feasibility Study
Your next step is to conduct a feasibility study. The purpose of this study is to analyze various factors that will help determine the likelihood of your coffee shop succeeding in the market.
Below you will find a high-level feasibility study outline:
Section 1: Executive Summary
This short section is the summary of your findings from the market research you conducted and can be written after the main feasibility study. The findings will guide you to best answer the following question: “Is my idea worth pursuing?”. The executive summary will also include crucial financial information (i.e. revenue projections) and will detail your coffee shop's unique selling proposition.
Section 2: Market Overview and Analysis
This section will cover relevant market research findings such as the demographics and competition in your area.
Section 3: Business Explanation
In this section, you will want to explain your concept, amplify your competitive advantage and detail the steps you'll take to satisfy the needs in your market. You may even want to include a mission statement.
Section 4: Financial Projections
This is the key section for determining the potential profitability of your business. The main sections to include are your break-even point, capital requirements, expenses, and income. A great tool for this is to use a projected profit and loss statement.
Download the free profit and loss template
The typical coffee shop costs anywhere from $200,000 to $375,000 to start. But, to determine the specific costs for your coffee shop, you'll need to establish your expected expenses. To do so, you will need to list all your costs. This includes but is not limited to your equipment, permits, menu, and marketing.
Beyond the equipment, there are other costs to consider:
- The rent or build costs of your location. As a general rule, rent shouldn't be more than 15% of your projected sales
- The cost of coffee beans
- Any fees for professional services, e.g. architect or accountant
- Payroll costs
- Income taxes which are roughly 35% of your operating profit
- Other expenses like insurance, office supplies, and business permits.
Given the above cost considerations, you're likely wondering: How much does it cost to open a coffee shop? Unfortunately, there's no exact answer— it depends on several factors including the cost of retail space, the equipment you decide to use, your marketing budget, and even the type of coffee shop.
That being said, there is a cost range you can use for guidance. Expect to pay anywhere from $60,000 to $275,000 to open your coffee shop, depending on the type:
- Coffee kiosk: $60,000 to $100,000
- Mobile coffee shop (food included): $50,000 to $100,000
- Coffee shop including seating: $80,000 to $250,000
- Coffee shop excluding seating: $80,000 to $275,000
Make conservative revenue estimates. You'll need to review various measures to pull these numbers. These elements include the following:
- Number of guests you expect to serve in a day
- Seating capacity
- Average check size
- Expected menu prices
- The average number of guests
- & other elements you see fit!
Break-even Point (BEP)
BEP is the point where your total costs equal your overall revenue. The calculation establishes how much coffee you need to sell to turn a profit.
Make this calculation using the following formula:
BEP = Fixed Costs / (Sales Price Per Unit - Variable Costs)
Section 5: Conclusion
Once you have completed the previous steps, it's time to decide whether it's worth starting your coffee shop or not.
Do the benefits and projected earnings outweigh the costs? Then that's your sign to open right up!
Recommended Reading: 15 Metrics to Know and How To Use Them
Write a Coffee Shop Business Plan
You don't need a lengthy, detailed business plan that takes forever to complete. These plans are usually only required when you need funding from a bank. Instead, create a short or lean plan of a few pages to help validate your idea without getting caught up in the details.
Sure, details are essential, but what's more important is a plan that will help you move along intelligently from the start. View your lean plan as an ever-evolving document you can revisit, and revise, as new information surfaces. Creating this plan will ensure you remain nimble and can quickly take advantage of new opportunities.
But how do you create this plan?
Imagine you're having a conversation with a friend about your business idea. Now, tell him or her about these key areas:
- Your unique selling proposition which details the value you're providing customers
- Market need: Examples may include customer desires for unique flavor profiles and personalized coffee experiences, obtained from your market research
- How you're filling the market need: You could offer alternative coffee brewing methods like pour-overs or batch brews
- The competition: Think about direct (other coffee shops) and indirect (bistros) competition
- Target audience: The demographics and psychographics of your audience
- Planned marketing strategies: Will you have a loyalty program? Will you use social media marketing? Are you planning on having an official launch
- Important milestones before and after the launch
- Your team: Who do you need to make this work? List all employees and partners
- Coffee startup costs: How much money do you need?
- Funding: Do you need funding? Options include family and friends, the bank, or outside investors (more on that below)
Restaurant Business Plan Template
Start creating you restaurant business plan with our free PDF template
Obtain Permits and Licenses
In the process of opening your coffee shop, it's important to mitigate the potential risks affiliated with permits and licenses. As with any business, there are permits and licenses that you will be required to claim and obey to run your cafe. This step will require a considerable amount of research, as it will pertain to your specific whereabouts, but we've listed the basic ones you will need to operate risk-free. You can also work with a registered agent to take care of the business registration and legal set-up of your coffee shop.
Depending on where your business is located, you will need to register for a business license. This government-issued license varies in cost but is typically a requirement in the U.S. to run a business legally. Find more detailed information at U.S. Small Business Administration's website.
If you're considering serving alcohol at your coffee shop, you will need to get a liquor license. Once again, this varies by state, so be sure to check with your state's requirements!
Employer Identification Number (EIN)
The EIN is a required federal tax identification number that is associated with your business. Learn more about it and apply with the IRS.
Certificate of Occupancy
The certificate of occupancy (also known as the building permit) is issued by the local government building department certifying a building's compliance with applicable building codes and other laws.
Food Handler's Permit
If you're serving food at your coffee shop, your employees should complete a food handler's course. The course and certification are only valid for a few years and its cost differs by state.
The permits listed above are a few of many that may be required to open your coffee shop. Make sure to research the permit requirements for your state, to mitigate your future risks.
“Less is more. Rather focus on doing a few things well, than a 100 half-heartedly.” - Alrishka Macaskill, Terbodore Coffee Roasters
Menu engineer Gregg Rapp echoes this statement, mentioning that it's better to have a simple menu with no more than 7 menu items per category. The reason? Giving your customers more choice can overwhelm them, making it harder for them to choose a drink. And, when customers feel overwhelmed they'll likely revert to the familiar which can harm your profits if that familiar offering is a lower margin one (like regular coffee instead of a special drink).
A simple menu will help you whether you're following the full-service model or not.
Design the Floor Plan Layout
Visualize the Space You Want
An effective coffee shop floor plan lives on the delicate balance between getting people who want to grab-and-go through efficiently and being inviting to those who prefer to linger. It's important to use visual cues and leading lines, such as an exposed espresso machine or long counter, to guide customers and showcase your offerings as they do.
Put yourself in the customer's shoes and imagine the space you'd like to see. Visit busy coffee shops in your market and take notes on how it's laid out. Are tables close together or far apart? Are there high-top, bar-style tables, regular seating, or a mix of both? Couches and banquettes are also popular seating for coffee shops.
Another aspect to keep in mind is power outlets if you plan to offer your coffee shop as space for people to do work. Keep in mind that every coffee shop is going to be different, influenced by its location, size, and target market. Discover what you want yours to be, and you can create a floor plan to match.
Create a Floor Plan
As the owner of a coffee shop, you'll need to create a floor plan that accommodates both your customers and your staff. There are a few things to consider when creating your floor plan, such as traffic flow, customer experience, and ergonomics.
When it comes to traffic flow, you'll want to make sure there is a clear path for customers to enter and exit the shop. You'll also want to consider how customers will move throughout the space; for example, you may want to create a seating area near the front window so that people can enjoy their coffee while watching passersby.
It's also important to think about the customer experience when designing your floor plan. For instance, you'll want to make sure there's enough space for people to line up at the counter without feeling cramped. You may also want to create a specific area for people to wait for their drinks so that they're not blocking the flow of traffic.
Finally, you'll need to consider ergonomics when creating your floor plan. This includes things like making sure there's enough counter space for baristas to make drinks and ensuring that shelves are at a comfortable height for stocking and retrieving items. By taking all of these factors into consideration, you can create a floor plan that works well for both your customers and your staff.
Once you have an idea of how you want to lay out your coffee shop, you can design a floor plan. You can do this yourself with software like SmartDraw, or hire a coffee shop architect to help you devise it. The former will be more cost-effective, but it's hard to put a price on the expertise a professional can provide.
“We are also fans of taping out our design on the floor before finalizing,” says Caroline Bell, Founder of Cafe Grumpy in NYC.
Below is an example of a coffee shop floor plan with a counter, banquette, and table seating, as well as outdoor tables.
Source: Smart Draw
In 1992, the Department of Justice passed the Americans with Disabilities Act (ADA) to ensure that employees and customers with disabilities have the same access to basic services as other people. ADA regulations can affect everything from doors, general layout, countertop and table height, and parking.
Find Quality Suppliers
Make sure you're paying as much attention to what's in the cup as everything else.
First and foremost, you're going to need coffee. Look to see what local coffee roasters in your area are doing, and reach out to them. Joe's Garage, a wholesale coffee supplier, recommends “when seeking a supplier that will provide delicious coffee beans, let your taste buds do the work. Whenever possible, visit your supplier's warehouse and taste the coffee first-hand.” If you can't visit in person, request they send you some samples (some will even come to you).
It's not just about taste, either. Make sure you're diligent about asking what a wholesale supplier's order minimums are as well as their order turnaround time. The last thing you want to be out of is coffee (next to dairy).
Private Label or Not?
Some wholesale roasters, like Joe's Garage, will roast coffee for you and allow you to use your own coffee shop's branding. They'll often work with you to create signature blends and offerings that you can be proud of, too. Customers and coffee drinkers will choose a brand over taste, so putting your brand on the beans will only help your business thrive in the long run.
Dairy & Milk Alternatives
Six out of ten coffee drinkers add milk or milk alternatives to their coffee, and four in ten add some sort of sweetener, according to the National Coffee Association's study. Make sure you have a steady supply of both dairy (cow's milk) as well as options for milk alternatives. Almond milk remains the most popular milk alternative, closely followed by oat milk's soaring popularity. Other options include coconut milk, hemp milk, soy milk, and hazelnut milk. This may depend on your market—see what comes up in your market research to understand what the demand is.
Many coffee shops also sell pastries such as croissants, muffins, cookies, and brownies for guests to enjoy alongside their beverages. This can help increase check averages and provide another reason for guests to enjoy your shop. Most coffee shops partner with local bakers to provide them with items to sell. Follow the same strategy as you would for your beans—visit local wholesale bakeries, try out items you might sell, and chat with them about order minimums, delivery times, and more.
Coffee Shop Equipment
The list of equipment you'll need depends on the type of coffee shop you want. Will it be a coffee kiosk, mobile coffee shop, or a coffee shop with or without seating? Get your head wrapped around the concept to help you pinpoint your equipment needs, which may include:
- Automatic drip coffee maker to serve black coffee
- Espresso machine: You'll need this as many types of coffee will include espresso
- Industrial coffee grinder
- Refrigeration system to keep milk cold
- Containers and pumps to store syrups and other items
- Kitchen equipment (like ovens) if you're serving food
- Shelving if you're selling merchandise like hats or t-shirts
- Freezers you can, among other things, use to store employee food
- Industrial blenders for making smoothies and shakes
- POS system which includes both the hardware and software to process orders, manage staff and run your business
Sourcing Equipment: Should You Buy, Lease, or Rent?
When it comes to big equipment like an espresso machine or automatic drip maker, you have a few options for getting in your shop: buying, renting, or leasing.
When you rent coffee equipment, you pay a monthly fee to use it. This has the advantage of being able to try out different machines for your shop to decide what you like. Maintenance, too, is often included in rental agreements. The downside is that you have to return the machine and never end up owning it.
Leasing coffee equipment is similar to renting, but the monthly payments eventually give you ownership of the machine. This allows you to get brand-new equipment at a lower cost. The downside to this is that throughout the lease, you may end up paying more with interest than if you just bought the machine.
Buying the machine outright is the most expensive up-front option, but once you own it, it's yours. The downsides to this are that maintenance costs are also covered by you.
Coffee Shop Technology
Every hospitality business needs a reliable tech stack. That all starts with the brain of your operation—the Point of Sale system. Your POS should not just take orders and process payments. It should be flexible, allowing for integrations with restaurant tech like online ordering, scheduling, and inventory management. Look for companies that integrate with other tech platforms to streamline your business.
As an extension of your POS system, online ordering tech can help meet your customers where they are. According to the Specialty Coffee Association, coffee shops have seen a 5,380% sales increase in curbside and pickup orders—and when there's demand from the market, you can put yourself in a successful position by meeting it.
Team Management Software
A coffee shop is nothing without its team of baristas, and they have some of the earliest shifts in the hospitality business. Avoid any confusion (and 5 AM calls) by using coffee shop scheduling software for your team.
Team management software allows you to easily make schedules and track your employees' time and attendance for easier payroll. Team management software like 7shifts can also pull data from your POS to track labor against sales and get a more accurate picture of your labor cost—saving your coffee shop money and time.
What can 7shifts do for you?
- Add employees and shifts in just a couple of clicks
- Publish your new schedules and automatically notify employees
- Train your staff and facilitate team communication
- Find, track, hire, and onboard employees
- Manage the tip pool and pay out tips to employees’ debit accounts
- Integrate with your payroll provider and help you manage wages and tips
- Gather staff feedback and keep your team engaged
- Run payroll to improve data accuracy with a single source of truth
TouchBistro, Toast, and Lightspeed are all great POS options that can save you time and help you run your business more efficiently. With a POS system, you can track inventory, process payments, and generate reports - all from one central location. This can free up your time so you can focus on other aspects of your business. In addition, POS systems can provide valuable insights into your sales and customer behavior. This information can help you make better decisions about pricing, product selection, and promotions.
Inventory Management System
With an inventory management system, you can track what you have in stock at all times. You can set low-stock alerts so that you never run out of anything. And you can see exactly how much of each item you've sold, so you can order more when necessary. POS systems like Toast or TouchBistro both come with an inventory management feature so you'll only pay for one tool to handle similar operations.
Staffing: Find, Hire, and Schedule
Finding and hiring the right team helps you deliver on your concept, ensure customers always receive stellar service, and keep your coffee shop profitable.
But who exactly do you hire? How do you approach the hiring process? And, once hired, how do you schedule employees effectively, so you're never over or understaffed? Let's have a look.
Find Great Employees
Before you can hire great team members, you need to know where to look. Here are a few tips to find great applicants:
Determine the roles you need to fill
It's helpful to have all of the roles you need to fill before starting the hiring process. This will keep you organized and avoid overlap with roles. Common roles in coffee shops are baristas, cashiers, general managers, and if you're serving food, cooks, and dishwashers.
Write a great job description and post it on industry boards
If you're looking to attract awesome talent for your coffee shop, developing a great job description is key.
Here are a few tips to keep in mind:
First, be clear about what you're looking for. Do you need someone with barista experience? Or are you open to training the right person? Be as specific as possible so that you can attract candidates who are a good fit.
Next, focus on the benefits of working at your coffee shop. What makes it a great place to work? Is it the relaxed atmosphere? The opportunity to learn new skills? Be sure to highlight what makes your business unique and appealing.
Finally, don't forget to sell the job itself! Your job description should be engaging and exciting, so potential candidates get excited about the prospect of working with you. Use strong language and paint a picture of what an ideal day at your coffee shop would look like.
Take time to write a job description that reflects your business and what you offer a prospective applicant. In the current labor market, employees have a lot of choices. Make sure you hone in on what makes you stand out from the pack.
Here are two templates we've prepared for you to tweak according to your own preferences:
Once you're happy with your job description, post it on industry-specific job boards for better-quality applicants. Take advantage of 7shifts hiring tools to post jobs, track applicants, and make hires in one place.
But where should you list your job availability?
Start with the obvious: your storefront!
There's also loads of general and specialized websites to get in front of people who might not be familiar with your coffee shop:
Finally, you can also check with your local Chamber of Commerce or other business organizations. They may have a listing of available barista positions in your area as well.
Hire the Right Team
Once you have applicants for your role, it's time for real decisions: who will you offer the jobs to? Here are a few tips to make sure you're hiring the right team.
Prioritize fit over skill
Just because someone has the right skill set, doesn't mean they reflect the values of your business. Skills can be taught—but attitude can't. In his classic book, Setting the Table, Danny Meyer outlined his process for hiring at Union Square Hospitality Group—the 51% solution. The 51 percent rule is Meyer's personality-based hiring principle that he used to grow his business.
Ask great interview questions
When it comes time to interview candidates, make sure your questions reflect your values as a coffee shop owner. Don't ask someone if they're hard-working—have them demonstrate it through answers to your questions. Questions should leave room for explanation and storytelling—not simple yes or no answers.
Hiring and Onboarding
When hiring a new employee for a coffee shop, it is important to take the time to find the right candidate. There are a few things to consider when doing so, such as whether the candidate has experience working in customer service and if they have any experience with making coffee. It is also important to make sure that the candidate is friendly and outgoing, as they will be interacting with customers on a daily basis.
“Take [your] time hiring your staff. Although this may be harder in some places as you may not have a huge pool of applicants to pick from, try your best to interview and trial as many people as possible. You are entrusting your business to these people so you want to make sure you get it right when you start. As you inevitably lose staff through the high turnover in hospitality you will get better at identifying who is the best fit,” says Tom Saxon, Co-Founder of Batch Coffee.
Once you have found the ideal candidate, make sure you onboard them properly. This means giving them a thorough tour of the shop and explaining all of the procedures and policies. It is also important to introduce them to the other employees and let them know what their roles will be. Finally, provide ongoing training and support so that the new employee feels comfortable in their role and want to get better at their job.
After hiring the right employees, it's time to create your shift schedules. You'll need to:
- Choose the right mix of work schedules. For example, your mix can be a combination of fixed schedules where employees work a predictable amount of hours each week and rotating shifts, where they switch with other employees on a set schedule
- Choose your scheduling method. Methods include no formal method, pen and paper, spreadsheets, and scheduling software. Each method has its pros and cons, but if you want to spend less time scheduling and better optimize your schedules, consider investing in restaurant employee scheduling software
- Ensure your schedules factor in staff and business needs. For example, staff will want advance notice about schedule changes while your business balances this need against having the right mix of schedules to maximize efficiency
Want to learn more about creating optimal shift schedules to reduce labor costs? Then read our complete guide to shift schedules.
Opening Day: Marketing and Promotion
Now that you've got all your bases covered, it's time to hit the home run and score tons of customers!
There is no right or wrong formula for marketing and promoting your coffee shop. The strategy you create will be unique to your cafe's goals and allocated budget.
Let your creativity run wild with this one! But, in case you need a kick start, we've included 14 initiatives that you can choose from to promote your coffee shop's opening day!
- Keep your friends and family in the loop
- Build a clean and easy-to-follow website
- Extend invites to local businesses for your opening day
- Create a press release for local journalists and industry-websites
- Generate a buzz on Instagram [even if it means setting up some initial ads]
- Get an agency or marketing consultant to help you with local SEO
- Set up a website and start an email list you can later use to send special offers or event notifications
- Make a TikTok account to reach a wider audience
- Send personal flyers, letters, or invites to residents in your community
- Partner with influencers to spread the word about your business
- Consider starting a YouTube channel to vlog about your business or a day in the life of a barista
- Host a soft opening to test out your operations
- Create a digital menu to share with your customers
- Share items from your digital menu on social media to generate interest
Providing Quality Coffee
“We roast our beans in small batches in Portland, which is extremely important to us. Our freshness and quality are always at the highest level—small batches allow more control over temperature and flavor profile.” - Clay Geyser, Black Rock Coffee Bar
It goes without saying: You need quality coffee.
Some coffee shops, like Black Rock Coffee Bar, will have their own roastery. Others will get already-roasted beans. In either case, you need to find a supplier that has quality beans or understands the roasting process.
You also need to understand that the roasting process and how suppliers treat their beans impact the flavor profile of your coffee. Why? This understanding will help you find the right beans for the flavor profiles you want. Consider these examples:
- Light acidic roasts give you fruity flavors
- Medium to dark roasts provide nutty and caramelized flavors
- Lighter roasts are better for pour-over coffee
- Darker roasts are more versatile and better for espresso-style coffee
Frequently Asked Questions
Can you make money running a coffee shop?
Yes! It is possible to make money by running a coffee shop. However, the success of a coffee shop depends on a variety of factors, such as the location of the shop, the quality of the products being sold, the level of customer service provided, and the overall market conditions.
By diversifying the revenue streams and being creative with the products and services offered, a coffee shop can increase its chances of financial success.
What are the weaknesses of a coffee shop?
There are several weaknesses that a coffee shop may face:
Competition: There may be other coffee shops in the area, which can make it difficult for a new coffee shop to attract customers.
Cost: Starting and running a coffee shop can be expensive, especially if the shop is located in an area with high rent or property values.
Limited menu: Coffee shops typically have a limited menu compared to full-service restaurants, which can make it difficult to attract a diverse customer base.
Dependence on foot traffic: Many coffee shops rely on foot traffic for business, so a location in a low-traffic area can be a weakness.
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