How Much Does it Cost to Open a Coffee Shop?November 8, 2022 (Published: January 28, 2019)
(Photo: Grand opening of Bing’s Bake & Brew in Newark, DE)
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’ve got answers!
Our team of coffee shop startup consultants know all about coffee shop startup costs and the importance of a coffee shop business plan because we’ve taught more than 300 entrepreneurs (most with little or no coffee shop experience) how to open a coffee shop in 30 states over the past 30+ years.
The Total Cost to Open a Coffee Shop*
Total cost will depend upon the type of coffee shop startup you want to open, the cost of commercial real estate in your community, and other variables. With that in mind, here are cost ranges for opening a coffee shop or expanding an existing one:
- Coffee shop with seating only: $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/mobile coffee cart: $60,000 to $105,000
- Mobile coffee food truck: $50,000 to $154,000
- Adding a brew bar to an existing coffee shop: $1,500 to $25,000. The lower price is for buying equipment only.
- Adding specialty coffee service to a bakery or cafe: $25,000 to $75,000
*Costs are based on proprietary research of independent coffee shops opened using the 7 Steps to Coffee Shop Startup Success program and are current as of January 2022.
Coffee Shop Startup Costs Breakdown
Consider this list of costs for either starting a coffee shop or expanding an existing business to serve coffee:
1. Real estate/rent and build-out costs: For your chosen coffee shop location, rent should be 15 percent or less of projected sales.
2. Coffee Shop Equipment: Your espresso machine and coffee grinders are the workhorse of your business, so invest in high-quality, reliable equipment. While high quality equipment costs more, it will pay off in the long run with less downtime and higher-quality drinks.
If you plan to serve plain drip coffee, add a drip machine and air pots. To serve cold or frozen coffee drinks, you’ll need a refrigerator, ice machine, 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: Never buy used Coffee Shop 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. Customers who sign up for our 7 Steps to Success coffee shop startup program can save time and money with our recommended equipment packages.
3. Supplies: 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. Furnishings: indoor and/or outdoor seating, wall art, etc. If applicable to your coffee shop, this could add $5,000-$7,500 to your start-up expenses.
5. Professional Fees: For architects, attorneys, accountants, and business consultants.
6. Payroll Costs for Staff: These include wages, benefits, payroll taxes, worker’s compensation, and costs of payroll processing. Payroll costs should be 35 percent or less of sales.
7. Borrowing costs: Principal and interest (if you borrow money).
8. Taxes: Income taxes (usually about 35 percent of operating profit) and potentially local taxes like property taxes.
9. Other Expenses: Business insurance premiums, supplies (napkins, stir sticks, porcelain cups, etc.), licenses and permits, office supplies, utilities, advertising, and repairs and maintenance.
10. Staff Training: Unless you have previous experience running a coffee shop, you should 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 someone else’s 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 a successful coffee shop and going out of business. It’s also important to be familiar with coffee shop terminology.
Cash on Hand and Variable Expenses
No two coffee shops are the same. Remember that startup costs will vary depending upon the region, state, city or 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 after opening.
Sources of Funding for Opening a Coffee Shop
There are almost as many ways to fund coffee shop startup costs as there are coffee shops! Current 7 Steps coffee shop customers have told us that the most common are:
1. Checking/savings and investment accounts (cash on hand or readily available).
2. Lines of credit and credit cards.
4. Loans from family or friends.
5. Crowdfunding sources (Kickstarter, GoFundMe, etc.)
6. Partners or silent investors.
Learn More About Coffee Shop Startup Costs
You’ll find a more detailed explanation of how to calculate coffee shop startup costs, plus a complete coffee shop business plan template, in Seven Steps to Success: a Common-Sense Guide to Succeed in the Specialty Coffee Industry, written by Crimson Cup Founder and President Greg Ubert.
Hundreds of independent coffee shops across the country 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 and be sure to check out the latest news on coffee shop openings and anniversaries.
Since 1991, Crimson Cup Coffee & Tea has hand-roasted great-tasting specialty coffee in Columbus, Ohio. We’ve also taught over 300 independent business owners how to open a coffee shop using our Seven Steps process. We were honored to win 2020 and 2017 Good Food Awards, the 2019 Golden Bean North America Small Franchise/Chain Champion and Roast Magazine’s 2016 Roaster of the Year award.