If you’re one of the 64 percent of Americans that drink coffee every day, you know how integral it is to your daily life. Everyone knows that a delicious cup of joe is a must-have for many to start their day. Coffee is also a great excuse to catch up with a friend or meet to chat about business.
Coffee shops, kiosks, and cafes are big business. They serve as remote work stations, meeting spots, and a regular stop on the morning commute. Opening one can be a smart decision and a way to tap into this popular industry.
But where do you start? How do you get your dream coffee business off the ground? Here is everything you need to consider when opening your very own coffee spot.
Your Coffee Business Location is Key
One of the most, if not the most, important decisions when opening any business is selecting the location. This is especially true in the food and beverage industry. Coffee shop customers often prioritize convenience and quick service.
Ensure Good Foot and Car Traffic For Your Coffee Shop Location
Finding a storefront with a decent amount of foot traffic can pay off big for your business. Not only will you be able to capitalize on impulse buys, but you’ll be an easy spot to stop in and grab a to-go order. Positioning yourself amidst a busy retail area can make your coffee shop the prime stop for shoppers to refuel.
It’s also a great idea to consider the working crowd. Grabbing a cup of coffee is a common part of many peoples’ morning commute routine. Look for a location that’s convenient to offices and corporate buildings. You’ll also be able to provide a meeting spot for employees at these settings.
Do Your Research on the Area For Your Potential Coffee Business
If you are looking to take over an existing coffee business, observe the traffic for a few days. Check out how busy it tends to be during key times. Make sure to do your research during a variety of times. You’ll want to have a decent flow during the morning rush hour, but also during lunchtime and on the weekends.
Maybe you are starting from scratch and need to find a building on your own. Make a list of what you want out of your ideal locations. Take a walk around prospective neighborhoods or drive around the areas you are considering. You’ll want to get a feel for the area to see if it would be a good fit for the business you are envisioning.
Set Your Budget For Your Future Coffee Business
Starting a business can be super overwhelming. Sitting down and creating an extremely detailed budget can help guide you in making wise decisions. Consider your funding options, cash investment, and perspective costs to set your business up with a solid financial plan.
Secureing Funding for Your Coffee Business
Funding can be one of the trickiest parts of starting a business. Luckily, there are a variety of ways to access capital. You can use one, or a combination of these, to get your coffee business off the ground.
Your Own Savings Is the Least Risky Way to Fund Your Coffee Business
Using your own savings is a way to fund your business with no obligations. Just make sure that you are able to cover the costs of six months to a year of operating costs (costs associated with running the coffee shop). This is often the best way to get started and the least risky but it takes hard work and time to get the savings you will need and you might waste valuable time accumulating it.
Family, Friends and Fools Can Fund Your Coffee Venture
If you have a network of people in your circle that have some savings built up, you might ask them to borrow you some money. Most times there will be little or no interest involved with borrowing from family, friends and fools. To make this work you are going to have to formulate a strategy to persuade the person you are wanting to borrow from and insuring them how they will get their money back. Maybe they will give it to you for free, but probably not. Always be trustworthy and don’t go back on your word.
Traditional Lending Can Be a Way to Fund the Coffee Business
You likely need to secure funding for your business. This can be done in a variety of ways. This first place to start might be the financial institution that you already have an existing relationship with.
Sit down with your personal banker and discuss your options. You can obtain a personal loan or a small business loan to borrow the capital to get your business off the ground. Your personal finances and credit score need to be in good shape to get the best possible loan.
Having a good relationship with the lender can earn you perks like a lower interest rate or longer repayment term. You also might qualify for a larger loan amount if you have a good history with the bank or credit union. Be careful about leveraging personal assets and make sure to weigh all of your options with your personal banker or financial advisor.
Crowdfunding Is A New Way to Raise Capital For Your Coffee Place
Crowdfunding has also become more popular in recent years. This allows you to source funds online from a wide range of investors via an online platform. Users have successfully raised $34 billion dollars using this method.
You’re going to need an innovative vision and solid plan to attract donors. Offer awesome perks to investors so they feel like they are part of something special. Market your crowdfunding efforts as an opportunity to get in early on something special.
Here, coffee company H.O.P.E. Essential Coffee has launched a Kickstarter campaign to purchase a roaster to launch their company. First, they share what is unique about their company.
Then, they offer rewards corresponding to the amount of funds invested.
Make sure if you go this route, that you create a campaign that’s unique and creative for the ultimate success.
Grants For Starting Your Coffee Business
Small business grants are an incredible funding source. These are usually offered by government organizations, and you can qualify in a wide variety of ways. They can be used to fund your business or as a supplement to other funding sources.
The Small Business Administration is an awesome resource. They match entrepreneurs with possible grant opportunities. They also provide loans to small business owners. You can reach out to one of their counselors to guide you in the process.
Private entities also offer grant opportunities. Companies such as Amazon and Verizon have budgets set aside to provide grants for small businesses. Applying for these can allow you to tap into these great funding sources. In fact, Back of the Yard Coffee was awarded a FedEx Grant in 2018.
Combined with crowdfunding, they were able to obtain the funds they needed to continue their mission. They employ young people and are committed to sustainability. This grant gave them the chance to expand their business and increase their impact on the community.
Think about the unique characteristics of your business when searching for grants. Many are demographically specific. If you are a minority, woman, or veteran, there may be additional grant opportunities out there for you. There are also many funding options for environmentally friendly businesses available.
Outline Costs and Expenses So That You Will Be Prepared To Launch and Run Your Coffee Shop
Part of securing finding is deciding how much you need to begin with. Create a comprehensive list of everything you will need to start and operate your coffee shop. This may need to be adjusted once you determine the amount of funding you are able to obtain.
The Tangible Assets Of Your Future Coffee Venture
Maybe you are taking over an existing coffee business. You might have all of the equipment needed to operate. It still might be a good idea to allocate some of your budget to servicing, repairing, or upgrading that equipment.
If you are starting from scratch, you’ll need a wide variety of equipment to serve a decent menu of drink offerings. Shop around when budgeting and look at a variety of suppliers. You might be able to finance through the company or get better pricing on a large purchase. Negotiate a great deal and compare vendors to find a good balance of quality and value.
A cafe or shop requires plenty of cozy, high-quality furnishings. A kiosk could also benefit from some nearby outdoor seating space. Include furniture and decorative accessories in your budget as well.
Think about the things you will need to purchase to make your coffee business stand out. Fun lighting, a quality sounds system, and unique artwork can bring a ton of ambiance to your space. Set aside some funds to give your business style and to boost the atmosphere.
Estimate Supplies and Operating Costs Of Your Budding Coffee Shop
The day to day costs of running a business can be unpredictable. However, it’s important to plan for them so you can shoulder them until you make a profit. You don’t want to open your business, only to find that you quickly can’t afford to operate it.
Obviously, you will want to budget for your product. How much do you need to spend on your beans, syrups, and other ingredients? It’s a good idea to line up your suppliers and work with them on a plan that fits your budget.
Remember that you will also have the ongoing costs of serving your coffee as well. Cups, stir sticks, and sugar packets can seem inexpensive. However, these costs can quickly add up. Make sure to budget for providing these and keeping them well stocked.
Know Your Overhead Costs Of Your Future Coffee Cafe
Overhead costs will likely be the most significant portion of your budget. Having a good handle on these will allow you to focus on running and growing your business. Make sure you have live items for each of these to avoid unexpected surprises.
Your lease or rent payment will probably be your largest overhead expense. This is important to account for and to predict for any increase. Work with your landlord on locking in a rate or signing a long-term lease to secure a consistent payment amount.
You will also need to plan for the insurance needs of your space. Not only will you require insurance for your property and equipment but there will be other policies that will cost you as well. Make sure to include liability insurance and business interruption insurance in your budget.
Utilities and services are another expense to consider. Make sure these are all accounted for in your budget:
- Water and Sewer
- Electricity and Gas
- High-Speed WiFi (a must for a coffee spot)
- Landscaping and Snow Removal
- Alarm System Subscription
- Cleaning and Janitorial Service
Staff salaries are another large cost. However, your team members will be the face of your business and most valuable asset. Make sure to budget enough to provide them with competitive wages and benefits if possible. It might be tempting to skimp in this area, but a more attractive pay scale will appeal to higher-quality candidates that will best serve your customers.
Marketing costs are a budget category that includes a lot of components. Be careful to consider all aspects from web site hosting to printing coupons. It might be a good idea to divide your marketing budget area into digital and traditional categories.
Set a Pricing Strategy For Your Coffee Business
Now that you have a good handle on your expenses, it’s a good time to set a sales and pricing strategy. You need to find the perfect marriage of quality and appealing prices. It’s also a good idea to have a wide range of price options on your menu. In each product that you sell, it needs to provide you with revenue and a portion of it should go towards paying your costs. Supply and demand play a large role in what will work here. If there is a lot of foot traffic, you might be able to lower your prices, knowing you will sell more coffee and other things you will offer. An example of a place with a lot of foot traffic would be an airport.
Use Break-Even Points To Price Your Coffee Products
It might seem tedious, but it’s important to figure out exactly how much it costs to make every single menu item that you offer. You can then decide how much you want to make on each purchase and price the items accordingly.
Typically you can figure out how much people are willing to pay by researching competitors’ prices. If your coffee is much better than your competition (you have a unique selling point), would your customer be willing to pay more? You might have to do a survey offering people free coffee in your area to see if this is true. If it’s true, raise your price to what you think will work based on your research.
This amount or percentage doesn’t need to be the same across the board. You might be willing to make less on an expensive drink that costs more to make to keep the price more appealing. Instead, you can up the cost on an easy to make drip coffee to make up that profit elsewhere.
Stay current and aware of your breakeven costs. Supply price increases may require you to take another look at your prices. Adjust them accordingly to keep your margins at a steady rate.
Upselling and Providing Options To Your Future Coffee Shop Customers
Set your pricing up for effective upselling to encourage customers to spend more. You can do this by tempting them with larger sizes at a slight increase in price. They may be willing to shell out that extra thirty cents for a large instead of a medium
You can also accomplish this by offering upgrades on your menu. Charging an additional fee for a premium can boost the amount of profit you earn from each customer. Check out how Smoothie King allows customers to enhance their drink for a fee.
This allows customers to customize their drinks to their exact liking while the business maximizes the profit on each smoothie.
Plan for Discounts and Promotions
Sometimes a good discount can get someone in the door. Make sure your pricing strategy outlines the discounts you plan to offer. These discounts are essential for growing your business and staying competitive. They can also help you develop a large and loyal customer base.
Nearly every business these days offers a loyal customer discount. Whether it’s a simple punch card or a complex reward program, it’s important to develop a plan to offer discounts. You’ll want to reward repeat customers to keep them coming back again and again.
It’s also important to offer discounts to the community, especially when you’re first starting out. Coupons and promotions are a great way to get customers in the door. Plan to offer some low prices in the beginning to get customers to try your amazing coffee at lower risk to their pocketbooks.
Create Your Coffee Business’s Marketing Plan
Once you have all of the financial plans locked down, it’s time to develop your marketing strategy. You could have the best coffee around but no one is going to check it out if they don’t know about it. A well-planned marketing campaign will get the word out about the new great coffee spot.
A Coffee Business Branding
Creating a brand for your business is important. You need customers to be able to recognize your spot immediately. Building a clearly defined brand will help all of your marketing efforts more effective.
First, decide what’s special about your brand. This can give you an idea of where to start. Are you a green business? Make your branding revolve around your eco-friendly practices. Maybe you source beans from all over the world. Consider a global twist on your branding scheme. Figuring out why someone would buy from you rather than a competitor will help you compete.
A memorable logo is an essential component. You’re going to be placing it everywhere from your employees’ uniforms to the outside of your cups. Make sure it’s attractive, eye-catching, and represents your brand. The goal is to have your brand pop up in your customer’s minds when they think of coffee.
Traditional Marketing Plan For Your Coffee Venture
Your marketing plan should have several components. Much of marketing is meeting the audience where they are. Traditional marketing efforts can help a ton in reaching out to your new community and shouldn’t be forgotten.
Flyers can get your information out to your new neighborhood. Include your menu and tantalizing pictures of your best menu items. Customers love a good deal. Add a coupon as an enticing way to get them to try your product. The key is to make sure your promotion was effective. Don’t send out the flyers if your target demographic won’t read them.
Signage is another way to let your target market know you exist. Post signs in community areas and places like libraries and parks. Ask other local businesses to post a sign about your grand opening.
Digital Marketing Plan’s Are a Must For Any Budding Coffee Business
In this day and age, a solid digital marketing plan is a must. You aren’t competing if you don’t have a website or a social presence, whether it is global or local. This can all start with a great website then can branch out to other channels. Online marketing can be a super cost-effective way to reach a large audience. It often just requires a bit of time and know-how to manage them effectively.
Create a stunning website and mobile app. It needs to be easy to use, appealing, and include the tools that customers want. Online ordering, nutritional information, and current offers are ideal items to include. Make sure your mobile app is well designed for customers on the go.
Social media is another super powerful marketing tool. Create an awesome account for your business on as many platforms as possible. With over 3.5 billion users, the social media world is the place to be, especially for a new local business.
Use your Facebook page to share new menu items. Your Instagram and Pinterest pages are a great way to post videos of that new delicious pastry offering. Use YouTube to share videos of your new beans roasting. These platforms all also have awesome ad tools that are low cost and allow you to target your specific geographical area. It is important that you effectively target this all to your target audience. If your audience is over 60 years old, make sure you reach them online where they are.
Make Your Menu Special For Your Coffee Customers
Hopefully, you know your coffee by now and have carefully curated the very best beans. Obviously, your menu is everything since you are thinking of starting a coffee shop, kiosk, or coffee house. Designing your menu should be thoughtful and deliberate. Offer something others don’t, to beat out the competition. Additionally, make sure that your menu appeals to your target customers. You can figure this out by doing a survey.
Provide Great Coffee Drinks That Resonate With Your Target Customers
Make sure you are clear about what makes your coffee special. Are your beans fair trade and sustainably sourced? Do you have a collection of organic options? Be transparent about your menu offerings so customers know why what they are getting is special. Maybe you offer the quickest cup of espresso around. Just make sure that whatever you do, your customer will value it.
Sure, you’ll want to offer the classics like cappuccinos and vanilla lattes. However, developing signature drinks can give your customers something they can’t get elsewhere. Get creative and come up with some interesting and unique recipes. You can even get your new baristas involved in brainstorming some innovative concoctions.
Decide on Food Items To Add To Your Coffee Kiosk’s Menu
When it comes to food at your coffee spot, there’s no right or wrong answer. The type of business that you have can help guide your menu decisions. A little trial and error can help you discover the preferences of your customer.
If you are opening a kiosk, your customers are likely grabbing a cup on the go. You also probably won’t have a ton of storage space for food inventory. Consider a small selection of easy to snack on options. Things like dried fruit or granola bars can be a good choice.
Maybe you are opening a coffee shop or cafe. It would probably benefit you to offer a decent selection of food items. The size of your space and the capabilities of your kitchen can help you develop your menu.
Light breakfast items like oatmeal and muffins are great options to offer. You can also add some heartier items like soufflés and breakfast sandwiches. Of course, you can throw in things like crepes and donuts for customers with a sweet tooth.
If your spot doesn’t have the equipment to make food, you can source it from elsewhere. A nearby bakery is a perfect way to stock your shelves with fresh pastries. You can also work with a local farmer to get regular deliveries of fresh fruit to sell.
Provide Something for Everyone, Giving Priority to Your Target Coffee Shop Customers
Make sure your menu has something for everyone. Dietary restrictions and preferences are everywhere these days. You also want your spot to appeal to customers of all ages. You want to make sure to appeal to your target demographic, but also have a few options for others outside of what you are targeting.
In a growing trend, 60 percent of Americans have some sort of dietary restriction. Make sure you don’t lose their business by not having something to offer them. Fortunately, it’s possible, even easy, to create a menu that accommodates nearly everyone.
Offer a variety of plant-based milk choices like oat and almond for those that avoid dairy. Include a few gluten-free pastries for customers that are wheat adverse. Make sure you stock sugar-free versions of syrups and toppings for those that opt for low-glycemic choices.
It’s also important to add a few things for those that don’t drink coffee. This is especially true if you are located in an area that’s popular for families. Make sure your menu is diverse so there is a choice that works for everyone.
Add some teas, sparkling water, and lemonade for those that aren’t feeling like a cup of joe. Juice pouches and chocolate milk boxes are great for your littlest visitors. If your area allows, consider adding alcohol to your menu to expand your hours and audience.
Think of an Amazing Coffee House Atmosphere
When setting up your coffee business, it’s important to create an atmosphere that customers want to immerse themselves in. This is especially true if you are opening a coffee shop or cafe. Be thoughtful about your interior and make sure you design a space that’s inviting.
Find an Inviting Coffee Shop Theme
Decide on a theme for your space. This will allow you a foundation to make all of your design decisions. It will also give your interior components a look and feel that they belong together.
Maybe you want to keep it clean and minimalist. White walls, streamlined light fixtures, and furniture with sleek lines can create a neat and modern look. Brighten your space with plenty of light and add a few plants for a welcoming vibe.
You might want a cozier feel with plush sofas and comfy couches. Warm wooden surfaces and unique light fixtures create a more relaxed aesthetic. Add a few personal touches to help customers relate to your space and your business.
Perhaps you want to mix it up and go for an eclectic look. Works by local artists, mismatched chairs, and reclaimed wood tables make a unique statement. Add a few global decor items and fun lighting for a truly creative space.
Appeal to All of the Senses of Your Coffee Cafe Customers
Whatever theme you decide on, remember that creating an atmosphere is about much more than just visuals. You need to think about all of the senses to give customers a great experience. This approach will allow you to create a space that they return to again and again.
Background music is essential to your space. Set the tone with relaxing jazz or upbeat pop or whatever your target customer values. But remember that many coffee shop goers are there to work or chat. Keep the volume at a level that’s perfect for both enjoying the tunes and ignoring them if need be.
By nature, your coffee spot is sure to be filled with delightful scents. Make sure to let the coffee smell shine and eliminate other odors. Pay special attention to restrooms and make sure to use cleaning products that won’t overpower the scent of your delicious beans.
Keep the temperature perfectly set for relaxing and working. It might be tempting to give your HVAC system and budget a break. But customers won’t be able to enjoy your space if they are freezing or sweating. Keeping the thermostat between 69 and 72 degrees creates a space that everyone can enjoy.
Offer Convenience For On The Go Coffee House Customers
Coffee customers often need convenience. Many are on the go and looking for a jolt of caffeine to fuel their fast-paced lives. This may not be the case for every coffee location, so make sure to do your research and provide what your customers need and want. But if you have found that convenience is something you need to offer, make it easier for them to grab a drink from your business and they will be more likely to choose you for their needs.
Offer online ordering on your website and mobile app. This will allow them to preset their favorite drink preferences, pay online, and skip the line. With a 50 percent increase in mobile app payments over the last year, this trend in dining is sure to become a major one. Depending on your customers, not having an online option may deter them.
Delivery is another option that is super appealing to customers. The ultimate convenience of having their food and drinks come to them eliminates an interruption to their day. Partner with a third party delivery service for easy implementation. You could even see a 10 to 20 percent increase in your sales volume!
Your Successful Coffee Shop, Kiosk, Or Cafe
All of your careful planning will allow you to get your coffee shop up and running. From finding the best location to creating the perfect menu, you’ll see your customer base growing in no time. You’ll find new ways to make your spot special and get customers coming back again and again.
Embarking on your adventure in coffee can be scary. But arming yourself with knowledge can make your venture a successful one. Your know-how will give you just the jolt you need to be serving your delicious java for years to come.
