Coffee brings people together; in fact, 66% of Americans drink it daily, so learning how to open a coffee shop may not be a bad idea. But there’s a lot to consider, like whether to incorporate a bookstore or bakery element. Success also depends on variables such as planning, costs, size, and location. Find out everything there is to know about how to open up a coffee shop from the conception stage to opening day.
How to Open a Coffee Shop in the U.S.
There are seven primary steps in starting your entrepreneurial journey as a coffee shop owner.
Define the concept
First choose what type of coffee shop you want to open. A small independent cafe, or a recognizable franchise brand? Other potential business models include:
- Bookstore café
- Coffeeshop and bakery
- Mobile coffee shop
- Coffee roastery
- Drive-thru café
Each concept has its own needs and will impact how much it costs to open a coffee shop in your area.
Create a business plan
Knowing how to create a business plan is essential. This document gives you a roadmap for your vision and how you plan to execute it. It also reveals how hard it is to open a coffee shop, so you can be sure you’re really passionate about it.
Here’s what to add to your business plan:
- Executive summary
- Business structure
- Long-term goals
- Competitive research
- Menu and pricing strategy
- Suppliers
- Marketing strategy
- Operations plan, including staffing and equipment
- Startup costs and financial projects
- Funding sources
Choose a location
Location is so important for a coffee shop. Areas with high foot traffic are ideal. But there’s flexibility in terms of whether you choose a residential area or one with lots of office buildings. No matter which type of location you choose, make sure there’s plenty of visibility from the road so people know to stop for their daily caffeine fix.
Secure permits and licenses
Every state and local jurisdiction has its own set of required permits and licenses you may need before you open your doors. In general, here’s what you can expect:
- Business license
- Food service establishment license
- Sales tax permit
- Health department permit
- Sign permit
- Certificate of occupancy
- Music license
- Alcohol license (if you plan to serve spiked drinks)
Each of these licenses and permits comes with a price, impacting how much it takes to open a coffee shop.
Source equipment
Unless you decide to buy an existing coffee shop or open a franchise, you’ll need to source your equipment. An espresso machine, grinders, coffee brewers, blenders, beverage dispensers, and refrigerators are all must-haves.
And if you plan to serve any food, you’ll need to add ovens and stovetops to your space. Reference your business plan to estimate exactly what equipment you’ll need to open a coffee shop (and bakery) based on what you plan to serve.
Hire staff
Even a small coffee shop needs more than the owner to keep it up and running. The number depends on how long you plan to stay open everyday. If it’s longer than eight hours, you need to account for two shifts of employees.
A small or mobile coffee shop could get away with one employee working at a time, but you may have a bottleneck if lots of customers arrive at peak times. If you plan to serve food, you’ll need a cook or baker in addition to your barista.
Find suppliers
Even if you just want to know how to open a small coffee shop, you’ll need to find a wholesale supplier for the coffee, creamers, sugars, cups, carriers, filters, and other items that power your café.
One way to make this process easier is to choose franchising. The established brand already has made the product decisions and supplier relationships that give you built-in operational support.
Types of Coffee Shop Businesses You Can Open
Now let’s dive more deeply into the types of coffee shops you could consider opening.
Small coffee shop
A small coffee shop, whether an independent version or a franchise, provides customers with a relaxing atmosphere that’s as much about hanging out as it is about drinking coffee. You’ll need tables and chairs, sofas, and even countertops to encourage remote working.
Coffee shop and bakery
Want to increase how much people spend at your cafe? Try adding a bakery. It takes more money to open a coffee shop this way because of the additional restaurant equipment required, but it could help you scale your revenue from the start.
Bookstore coffee shop
Encourage people to spend more time in your establishment by combining coffee and books. They can buy a cup of joe and then browse for a novel, or pick a good book and then purchase the coffee as they sit and read. How to open a bookstore coffee shop? You’ll need a bigger footprint, plus inventory so you’re always fully stocked with the latest reads.
Mobile coffee business
A mobile coffee business lets you pop up and sell coffee at events or busy parts of town. Plus, if you’re worried about how much it costs to open a coffee shop, this is a cheap alternative because you just need a truck or van that can be outfitted into a cafe. That can be a lot less expensive than leasing a space.
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How Much Does it Cost to Open a Coffee Shop?
The amount you spend on opening a coffee shop varies depending on factors like your business model and location. Broadly speaking, expect to spend between $80,000 and $300,000 for a brick-and-mortar coffee shop. The lower end applies to a food truck or a small kiosk, while the higher end will include seating and a drive-thru window.
Cost differences by coffee shop type
How much would it cost to open a coffee shop for each type of business model? Here are estimates from the Texas Coffee School.
| Coffee Shop Business Model | Startup Cost Price Range |
|---|---|
| Mobile Coffee Cart | $7,500 to $15,000 |
| Fixed Coffee Kiosk | $15,000 to $60,000 |
| Coffee Trailer | $15,000 to $55,000 |
| Coffee Truck | $35,000 to $100,000 |
| Drive-Thru or Stationary Trailer | $80,000 to $260,000 |
| Traditional Sit-Down Coffee Shop | $300,000 to $625,000 |
| Cafe Style Restaurant | $550,000 to $1 million |
Coffee Shop Franchises: a Structured Way to Start a Business
Opening a coffee shop franchise gives you a shortcut to how to structure your store, along with a proven business model. In addition to getting access to the branding and name recognition, a franchise also comes with training, marketing, sales systems, menu items, and more.
In addition to your regular startup costs, you’ll likely also need to pay an upfront franchise fee and continuing royalties in exchange for all the support you receive. There may also be a minimum net worth required to qualify.
Popular coffee shop franchises include:
- Dunkin’ Donuts franchise (large-scale coffee chain)
- Paris Baguette franchise (bakery café model)
- Travelin’ Tom’s Coffee (mobile truck)
- Aroma Joe’s
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Key Challenges and Mistakes to Avoid When Opening a Coffee Shop
Pay attention to the following operational areas that could cause challenges:
- Over-competition
- Poor location
- Staffing balances
- Profitabilty
Biggest mistakes when opening a coffee shop
- Underestimating costs
- Poor location
- Lack of differentiation
- Too many menu choices
- Low quality equipment
Opening a coffee shop can be a satisfying experience that connects you to the community while also fulfilling your dreams of being an entrepreneur. To streamline the process and have built-in support every step of the way, consider choosing a franchise model your future customers already know and love.
This content is provided for informational purposes only and does not constitute legal, tax, financial, or professional advice. Laws and regulations vary by state and individual circumstances and may change over time. Readers should consult a qualified attorney, tax professional, or other licensed professional regarding their specific situation. Nothing herein creates an attorney-client relationship.
