If you’re thinking of opening a coffee shop, two questions you’re probably asking yourself are: “How much does it cost to open a coffee shop?” and “Do I need a coffee shop business plan?”
We know how much it costs and the importance of a business plan because we’ve helped entrepreneurs open coffee shops all across the USA for more than 30 years.
How Much Does It Cost?
There’s no single answer to how much it costs to start your own coffee shop. Your costs will depend upon the type of coffee shop you want to open, the costs of retail space in your community, and other variables.
With that caveat, here are cost ranges for opening or expanding various coffee businesses.
- Coffee shop with seating: $80,000 to $300,000
- Coffee shop with a drive-thru only: $80,000 to $200,000.
- Coffee shop with both seating and a drive-thru: $80,000 to $300,000
- Coffee kiosk/Coffee stand: $60,000 to $105,000
- Mobile coffee food truck: $50,000 to $154,000
- Adding a brew bar to an existing coffee shop: $5,500 to $25,000
- Adding specialty coffee service to a bakery or cafe: $25,000 to $75,000
*Costs are based on proprietary research of independent coffee shops and are current as of January 2021.
Coffee Shop Start-Up Costs
Consider this list of startup costs for starting a coffee shop – or expanding an existing business to serve coffee:
1. Rent and build-out costs for your chosen location. Rent should be 15 percent or less of projected sales.
2. Coffee Shop Equipment Costs. Your espresso machine and coffee grinders are the workhorse of your business, so invest in top-notch, reliable equipment.
If you plan to serve plain drip coffee, add a drip machine and air pots. To serve cold or frozen drinks, you’ll also need a refrigerator/freezer and blenders.
Since the quality of coffee depends on the quality of water, you will want to test your water and purchase water filtration if needed.
Note: Customers who sign up for our 7 Steps to Success coffee shop franchise alternative program can save time and money with our recommended equipment packages.
Never buy used equipment! Any money you save up front will dribble away over time in repair costs and downtime. If you can’t make drinks, your business grinds to a halt.
3. Coffee, milk, chocolate, syrups and other drink ingredients, plus pastries, muffins, and other baked goods. These should be 40 percent or less of projected sales.
4. Professional fees for architects, attorneys, accountants, and business consultants.
5. Payroll costs. These include wages, benefits, payroll taxes, worker’s compensation, and costs of payroll processing. Payroll costs should be 35 percent or less of sales.
6. Principal and interest costs (if you plan to borrow money).
7. Income taxes (usually about 35 percent of operating profit).
8. Other expenses, including business insurance, supplies (napkins, stir sticks, porcelain cups, etc.), licenses and permits, office supplies, utilities, advertising, and repairs and maintenance.
9. Training. Unless you have previous experience running a coffee shop, you need to invest in comprehensive, hands-on training, and ongoing support. When choosing a training package, consider:
- Ideally, training should take place at your new coffee shop, using your espresso machine, grinder, blender, and other equipment – not at a remote classroom on random equipment.
- Having training come to you is often more economical, especially when you add in your travel expenses.
- You and all your team should train together, so you can deliver drinks of consistent quality.
- Training should take place over several days, leading up to your opening day.
- Your trainer should have extensive experience in coffee shop operations.
Hands-on training is one of the best investments you can make in opening a coffee shop. Over time, it can mean the difference between becoming a successful coffee shop owner and limping along or going out of business.
Expense Variables and Cash on Hand
No two coffee shop businesses are the same. Remember that costs vary depending on the region, state, city or rural area in which you operate. If you already own a suitable building or have a complementary business such as a bakery, your costs might be much lower. Besides start-up costs, plan to have cash on hand to cover your operating expenses for the first six months.
The Guide to Opening and Running a Successful Coffee Shop
You’ll find a more detailed explanation of how to calculate coffee shop start-up costs plus a complete coffee shop business plan template in 7 Steps to Success in the Specialty Coffee Industry, written by Crimson Cup founder Greg Ubert. Hundreds of independent coffee shops across the USA have used this book as their guide to how to open a coffee shop. (Don’t just take our word for it – read some success stories.)
Have Questions About How to Start a Coffee Business?
Since 1991, Crimson Cup Coffee & Tea has hand-roasted great-tasting specialty coffee in Columbus, Ohio. We’ve also taught over 250 independent business owners how to open a coffee shop using our Seven Steps process. We were honored to win the 2019 Golden Bean North America Small Franchise/Chain Champion and Roast Magazine’s 2016 Roaster of the Year award.
Want to learn more about our wholesale coffee roasting programs for specialty grocers, colleges and universities and restaurants and food service operators? Give us a call at 1-888-800-9224 or fill out this form, and we’ll get right back to you!