Choosing a Location for Your Coffee Shop

There are very few things in the world that come close to the fragrant smell of a coffee shop after a long day.

Finding the spot to open your coffee shop can be tricky since it determines every other choice you make, whether it’s the type of equipment you buy to the drinks and snacks on your menu.

If it’s a lifelong dream for you to run a cafe or restaurant, it can be really rewarding, so it’s all the more reason to choose carefully. You’ve probably already scouted some neighborhoods and areas with decent traffic, but there’s a little more to choosing locations than you think.

Here’s everything you need to know when searching for the perfect location for your coffee shop.

Choosing a Spot for Your Coffee Business With a Solid Customer Base

Location determines the kind of customer base you want to attract. Customers in different areas will likely have different preferences, and these will inform things like your beans and your selection of drinks, as well as the equipment you want to buy.

You can usually classify “customer base per area” into a few categories, such as the following:

Residential – Opening a business near a residential area means that you’re likely catering to families during the weekends, with slow weekdays and an atmosphere that advertises you as “family-friendly”.
Business/downtown – Downtown areas are usually bustling with foot and/or car traffic, but setting up shop in this area means that your business hours would adjust for this as well, leading to busy weekdays and slow weekends.
University – If you’re situated in or near a university, your main customer base will be students who need a place to study while drinking coffee. Setting up here likely means being open twenty-four hours and having power outlets to accommodate late-night study sessions.

Tourist – Coffee shops can be successful in areas with high tourist traffic, and they often are. Since tourists are likely to look for a place to sit down and rest, the trick is to draw them in with products made using local ingredients.

If you’re going to open a business to sell food, you need to think about who will want to go there, and what they’re looking for. Since you’re selling coffee, you need to know who’s going to buy it, and where they usually are.

People who drink coffee are more likely to be in need of a pick-me-up, which makes them more likely to be office workers or students in need of that extra energy boost to power through the day.

College students and universities are an example of a great target market for coffee shops. They need a place where they can do their school work after class hours, and they need coffee to stay awake during long nights.

Business districts are also especially attractive for a similar reason. Office workers may need quiet space to continue their work after hours, or they need a place to unwind and relax before going home.

If you’re going after the latter, you may have to consider the amount of car traffic, which in turn may necessitate choosing an area with an ample amount of parking space. This can drive up the cost of your lease and, subsequently, your rent.

With all this said, you don’t always have to look for these obvious locations. It really helps to do your own research and look at less obvious places, rather than counting them out because there already are existing coffee shops.

Ask around – if locals are looking for a particular product or atmosphere that isn’t necessarily available in the area, you might just be in luck.

Access and Visibility

Choosing the right location is crucial because your business needs to be seen. Ideally, you want an area that’s close to where people work or spend a lot of time. This is why it’s easy to find coffee shops and restaurants near busy places, like office areas or universities.

Ease of access is also another thing you want to consider. If customers can’t reach the restaurant quickly and easily, they may opt to go somewhere else entirely. The same goes for parking spaces in areas with a lot of car traffic.

You should consider comparing a particular location against the following criteria:

Street access – Can customers easily walk into the cafe or do they have to climb up or down a flight of stairs?

Public transport routes – Can customers get to your cafe via public transport, or is it an area that’s a little out of the way?
Disabled access – Is the location wheelchair accessible?
Supplier access – Is there an alternate way for suppliers to enter and drop in their beans in bulk?

When scouting locations, observe existing coffee shops and other establishments and think about why they’re situated where they are. Why are they on this side of the road? If you’re in a shopping mall, why the ground floor?

McDonald’s and Starbucks are great examples because of how easy they are to find and come by. These franchises know where foot traffic is more likely and where cars are more likely to pass, as well as which roads are more convenient for setting up shop next to.

However, while want to keep visibility and ease of access in mind when scouting locations, prime locations may not always be available. Sometimes, your only option is a corner store obscured by other establishments, in which case signage is a huge boon you should consider investing in.

In fact, here are a few tips to keep in mind when making your cafe as attractive as possible to potential customers:

Easy to read signage – Can passers-by read your message at a glance? Big, bold letters and contrasting colors, even something as simple as black and white, can go a long way in terms of grabbing attention.
Window displays – Tantalizing displays are the mark of effective shop design. Bakeries and butcher shops all use this to showcase their products to great effect, so there’s no reason why you shouldn’t.

Cozy lighting – Lighting is a subtle way to get customers through the door. While clear, bright lighting is crucial for all the tasks that go on in the back, you want the front to have ambient, soft lights that are easy on the eyes.
Attractive facade – Presentation is just as important as substance. Great shop designs are those that capture and express the concept of your brand and make people curious to see what you have to offer.

Select a Location with Coffee Supplier Proximity

When it comes to accessibility, you don’t just want patrons to reach it easily – you also want it to be accessible to your suppliers as well.

Since you’re opening a coffee shop that brews fresh coffee for your customers, you want to have a ready supply of coffee beans on hand. Your inventory space can only allow so many bags to be stored before you need to call a delivery in.

On top of this, you also never know when you need to make an emergency call for more beans, or even for ancillary items, such as cooked pastries or food ingredients. Emergency equipment repairs and maintenance are also factors you need to consider.

Take all this together and you can see why so many establishments are located in such convenient areas and have separate parking areas and access points for their suppliers. There’s nothing more awkward than seeing them pull over a narrow road and unloading supplies in the same entrance customers go in.

Having a place near a supplier also ensures a quick, and more affordable, delivery time. Setting up shop in a distant area hours away from the nearest supplier could very well mean paying extra for deliveries, or even just having a limited pool of suppliers overall.

Proximity also affects bean freshness and quality. Since they are roast-to-order, there’s only a limited amount of time for them to be delivered to your doorstep before the beans lose their flavor and turn stale. This can greatly affect the quality of your coffee.

Competition

Neighboring coffee shops in the area can affect your profitability. While this may seem like a drawback at first, there is a way that you can make your business work despite having competitors selling the same product.

While the obvious move is to do your research and find out how to make yourself stand out from the other coffee shops, keep in mind that they’re most likely not the only ones vying for customers.

For instance, if your target market involves busy people looking for a quick breakfast on the way to work, you should also be looking out for smoothie joints and fast food chains.

You can turn this in your favor by switching up what you’re offering.

One way to do this is by opening near universities or offices if you have ample space for studying while renting near a supermarket nets customers looking for a pick-me-up. If your target market doesn’t get out of work until after 6 p.m., consider adding coffee cocktails to your menu.

Another example is that if your main competition for customers is fast-food chains, artisanal brews and freshly baked pastries are the way to go – this is because their food is premade and their coffee is likely a lower grade, and customers will also want something different.

Even something as simple as changing your ambiance and environment is already taking a step ahead of the competition and is sure to give customers something different to try out and remember.

Stick Within Your Budget

Cafes and specialty shops can thrive whether it’s near a quiet neighborhood or situated in a business district. However, it’s all about choosing the right areas, and this will eat up a significant portion of your budget.

Once you’ve scouted a few locations you think would be ideal, it’s time to compare rent prices. It’s not enough to find the average cost of rent in a place and work from there – your place should match your budget.

You especially want to be on the lookout for areas that are previously quiet but are now on the verge of becoming busy. They are likely to have retail spaces at a more affordable monthly rate, which can help you save on costs in the long run if you get your timing right.

It’s especially important for first-time business owners such as yourself to not push for locations that are too expensive. All this essentially boils down to two questions:

Can you afford it? A small business loan is helpful if your budget is tight, so be sure to consult an accountant or business expert if you want to take one out for your coffee shop.
Can your customers afford it? High rent means higher prices. While this isn’t always a bad thing, you need to keep in mind whether your customers will be able to afford the prices you charge in order to cover costs.

Aside from the rent, you also want to leave enough to cover the cost of renovation, since there’s a good chance the place will need it. Designing a floor plan comes with its own challenges, and the expenses needed to cover it can add up if you’re not careful.

This is where even a bit of planning goes a long way. Other than research and planning, leaving a certain allowance for the budget to grow and change can save you a lot of work, especially when you consider things like permit fees and overall build-out.

If you’re not well-versed in planning a set budget, there’s no harm in consulting a financial or business expert to lend you a helping hand. Having them take a look at your books ensures that you can set goals for yourself that are both reasonable and attainable.

On top of that, consulting with an expert allows you to plan for the following when scouting locations:

Lease length – Leases for commercial use are legally binding, and it can be difficult to break or change the terms once the lease has been signed.
Security deposit – This upfront fee should also factor in since it can not only drive the initial cost when renting but can also be revoked if certain terms in the lease are broken.

Maintenance and repair – Who is responsible for maintaining the commercial space, and who shoulders the cost for repairs? These can add up the monthly costs, too.
Insurance – For commercial establishments, this is mandatory. Certain leases have specific coverages for insurance that you need to be aware of.

Before signing anything, be sure to talk to the landlord and see if you can negotiate a set price for the rent. There’s a good chance that they may just be willing to offer something lower on a monthly basis, which may be within your budget.

Consider Size and Space When Choosing Your Coffee Shop’s Location

This is another essential factor that you need to consider. Unless you’re planning to do a simple drive-through or take-out business plan, your coffee shop needs enough space to accommodate an ample amount of customers as well as your kitchen equipment.

While you can decide how to divide and allocate spaces for seating areas and the bar, trying to fit in too many customers regardless of size will only drive them away.

In fact, it’s actually easier than you think to misjudge how much space you really need. A good rule of thumb in the restaurant industry, for example, is to allow at least 12 square feet of space for every customer.

Smaller cafes can be profitable, yes. However, with a small space comes a limited number of customers, which limits the overall revenue. The best way to make larger sales and pay for larger salaries is really by choosing a bigger location.

With extra space also comes extra opportunities. Smaller businesses have lesser costs and lighter in terms of upkeep, but a larger coffee shop with more room lets you rent out that space, and draw different groups of people to your establishment.

Ultimately, being aware of space limitations and requirements allows you to calculate how many customers you can and need to accommodate. It also allows you to set a target for weekly and monthly sales to make sure your revenue meets your overhead costs.

On top of this, you also need to check if the commercial space has the requisite permits for things like food and alcohol. When scouting locations, consider checking in with a business expert for any of these that you might need.

Keep in mind, however, that this isn’t a hard and fast rule, and it can be broken depending on your goals and what you need.

Zoning Requirements

Zoning laws and permit requirements should also not be overlooked when looking for the best place to set up shop. Areas are often zoned for a particular use, which makes certain spots simply unavailable for you, no matter how easily accessible or how close it is to your supplier.

What makes them tricky is that they depend on the area or state that you’re in. Because there is no one universal ordinance regarding this, it’s important for you to check in with an expert to see if that area is available for commercial use, and what permits you may need.

This is all the more important for you if you’re considering roasting beans on-site – commercial roasting has its own specialized equipment (which can be quite huge!), and there are specific guidelines on how they’re meant to be used and in what capacity.

Available Amenities

While it’s not the first thing that comes to mind when opening a coffee shop, it’s something that your customers will definitely appreciate once they step in. These arguably small things can have a big impact on whether they will want to come back or not.

You may especially need to consider having the following amenities for your very first coffee shop:

Bathroom – There’s no telling when you or your customers will have an emergency that needs them to use the bathroom. In fact, it may even be required depending on your area.
Power outlets – Aside from having an adequate number of power outlets for your equipment, allowing your customers to recharge their devices is a great way to get them to stay for longer and order more coffee.

Power backups – Power interruptions are never a good thing for anyone, but the good news is there are newer ways to keep emergency power without units that make a lot of noise or need gasoline.
Wi-Fi – Internet these days is essential, not just an amenity, and nearly every establishment will have a decent wi-fi connection to draw customers in. You can charge per hour of use or require customers to purchase something for access.
Furniture – No one wants to sit in an uncomfortable or ugly-looking chair or sofa. While it can be an unexpected curveball, investing in the right furniture that matches your cafe’s aesthetics will work wonders in the long run.

That said, you certainly don’t need to have every possible amenity in your cafe just to attract customers. If you’re on a tight budget – or even if it just doesn’t fit your overall brand and aesthetic – you can skip out on installing certain items like TVs.

You don’t even need to have power outlets or food delivery options right away when you open your business. In fact, it’s always good to stick to the essentials first and make any additions along the way as you slowly grow and get the hang of running your shop.

Other Tips For New Coffee Shop Owners Selecting a Location

There’s more to running a business than just a product to sell and a place to sell it. Your target market, ease of access, and proximity to suppliers are all things you need to factor in, but you also have health regulations and zoning laws on top of them.

Once you have these squared away, the next challenge is to actually run your business to ensure its short- and long-term success. While it can be intimidating for any starting entrepreneur, this need not be the case for you.

Here are a few parting tips to help you successfully open your first coffee shop:

Don’t hire too fast – Hiring trusted staff is a delicate process. While you do need help managing the counter and serving drinks, it’s important to keep in mind that you’ll never know how well your employees will do until they’re on the floor.

Keep money separate for personal expenses – You will inevitably have to spend money for yourself during the planning phases for your coffee shop. Keeping your budget from your personal expenses separate ensures that neither will eat into each other.
Prepare your marketing plan in advance – Starting your marketing plan months before actually opening your cafe generates awareness and gets people excited to come in on the first day. Email campaigns, local events, and social media are all great tools you can use.
Network hard – A great product and a great location can only get you so far. The best way to advertise is still by meeting the right people who can get customers through the door, and this means being visible to the local community.

Streamline your business plan – Start your business plan by making a one-page pitch. Just like an executive summary, this is an efficient way to plan your business and lets you know who your market is, as well as who your competitors will be.
Reach out for help – Hiring an accountant to look over your books keeps you from taking time away from running your cafe, and either an in-person accountant, online service, or software can be a great way for you to manage your business.

Final Thoughts

Opening a coffee shop is a challenging process, and much like any other business, it should be approached slowly, methodically, and carefully. This is even more so when you’re choosing the location for your business.

Since so much hinges on your location, you should take the time to do your research and ask around. Knowing the place by spending time in it and checking for any existing coffee shops is a great way to get started.

When you do decide to set up shop in an area, don’t rush to rent the first commercial space you see – it may have its own drawbacks that you’re not prepared for, or even just miss a second location that’s much better and is closer to foot traffic.

Picking the right location also isn’t just about getting the most number of customers – it will also end up influencing the type of coffee you will end up serving, and if the coffee they want isn’t the coffee you’re offering, you’re better off looking for another place.

In fact, the more time you take doing your research, the better. You may not get the best spot the first time, but plan and weigh the various factors long enough, and you’ll eventually reach something that works for you.

Good luck, and all the best to your business!