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How To Open A Coffee Shop

How to open a coffee shop

UPDATED :  

How can a passionate affinity for coffee (lifeblood), a seeming immunity to caffeine, and a stirring desire to create something of your own manifest into a successful business?

After the smell of your favorite dark blend bean brewing drags you out of bed in the morning, you, the advantageous pioneer of a new coffee business, embark on your mission with wide eyes and determination to look past the sea of failed espresso enterprises and into a vision of happy, perhaps glasses-and-beanie wearing customers sipping their favorite beverages on plush loveseats.

If you're overwhelmed by the multitude of initiatives associated with building a new business and are looking for a step-by-step guide that breaks down everything you need to know about starting a coffee shop enterprise, you've come to the right place.

Consulting - DIY or Professional?

As with any start-up endeavor, the process of doing extensive research and listening to/absorbing testimonies will be your best friend. There are, of course, professionals that you can look to: a slew of fancy coffee consulting companies (i.e. Bellissimo Coffee Information Group) and consultants (i.e. gurus like Duncan Goodall) can offer a framework of advice on how to overcome the hurdles and which corners to cut, and which ones to definitely NOT cut.

However, consulting can be incredibly costly, and ironically, the number one thing that these consultants will all agree upon is that minimizing all costs possible is key.

If your funds are severely limited, hiring someone who charges $180/hour (even up to $1,500 a day) to do a job that can really be done internally through internet research and networking makes it an expense that falls into the category of "luxuries."

That being said, if you don't hire someone to do the work for you, you need to do the work.

Research, research, and more research:

Converse with the pros: The advice of your soon-to-be contemporaries is invaluable, as they have lived your struggle and triumphed.

Immerse yourself in the industry: Sign up for coffee periodicals (Batista Magazine, Coffee Talk, Specialty Coffee Retailer, Fresh Cup, and The Tea & Coffee Trade Journal, are some industry-centric, popular favorites) and attend tradeshows.

Get down to the nitty-gritty: Have a firm handle on the laws, relevant rules & regulations/necessary permits surrounding owning a coffee shop needed in your state.

Create a business plan: This will outline your financial needs, initial and future expenses, and a general timeline (one that includes how you will stay afloat when it could take anywhere from six months- to two years for your business to become profitable.)

When you've done so much research that you feel like you could probably become a coffee consultant, take your creative energy and begin to formulate the bones of your vision.

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Capitalize on your strengths & narrow your target clientele: Avoid the novice mistake of trying to capitalize on everything: A coffee shop that tries to do everything that a coffee shop can do, will likely crash and burn. It is much more salient to be exceptional at something than mediocre at everything.

Your regular customers will drive your business in the coffee industry: Your regulars, their loyalty, and their referrals will grow and sustain your business.

Differentiate yourself from other caffeine banks by honing in on what made you want to undertake this hefty task in the first place and link your passion to your target clientele.

Location:

Using a local broker: When it comes to finding suitable vacancies for your space, you're likely going to have to outsource to a broker if you want to avoid fruitless hunting.

How much you should expect to pay for rent: Your rent is a function of your budget, whatever your total budget is, and your rent should be around 6-8% of those funds.

The physical location of your business is essential: Choosing a space that was already a cafe-type business can alleviate much of the initial hassle of preparing for building renovations and obtaining necessary documentation (and in some cases, could even cut down some of those renovation costs).

The space is the physical manifestation of your dream: Don't cut corners in making what you built in your head a reality; your brand and your niche need to be clearly reflected here. Work hard to create an environment that will draw in your clientele and keep them coming back for more.

Customer service is everything and more:

This mentality is exactly what fosters loyal customers who will come back time and time again. You want your customers to know you and to feel both known and cared for.

So, work at your shop (if not always, at least at the beginning), learn the names of the customers who are regulars, memorize their orders and build friendships.

In the same vein, hire staff who understand the value of customer service and who will bring personality to interactions that would otherwise be mundane. The most well-trained barista is useless without equally fantastic customer ethic, no matter how phenomenal their latte art is.

Consider your costs:

Hiring experts you may not realize you need: When you're imagining the people you need to get your coffee business off of the ground, a lawyer probably isn't at the forefront of your mind, but spending the money on legal fees now could end up saving you both money and strife later.

Not to mention, they can also assist in identifying all the necessary permits and documentation needed. An accountant is also someone who will be better at doing their job than you will be at trying to do it yourself.

Renovations: Professionals will get the job done faster and better. You are better off setting yourself back more monetarily by asking for more funding or taking out a larger initial loan than attempting to skimp here.

Barista training school: In training your baristas, it will depend on what exactly you need them to be capable of and your own level of expertise; if the quality of the coffee is the most important thing to you, you'll likely have to outsource to a training program.

However, if it's simply learning how to use the fancy espresso machine, you might be perfectly qualified to train your own staff (and to train your staff to train new staff).

Choosing your espresso machine: Another dangerous place to skimp on costs lies in the heart of your shop—the aforementioned fancy espresso machine.

There are 2 initial decisions you'll need to make:

  • Automatic or semi-automatic: the key difference between the two is that semi-automatic machines will require attention from start to finish and this will affect both how you train your staff' and efficiency.

  • How many groups do you need? Commercial espresso machines come with 1-4 groups, 2 usually being sufficient.

Water filtration: Its no coincidence that both the quality of the tap water and the quality of the bagels in New York are both some of the best in the country—good water filtration is possibly even more essential for making good coffee than it is for making good bagels, so spend the extra dollars on the better filtration system.

Minimize costs by maximizing your efficiency: Streamline your baristas' brewing processes from manual to automatic, and if you absolutely must maintain some manual brewing methods for reasons of quality (like pour-overs), eliminate bottlenecks and customer wait time by changing the process of ordering and receiving or by ensuring that the customer knows their coffee will take longer. Don't discount how much you can save by cutting back on the little things:

Be purposeful about ALL of your spending, and always look to expenditures that are invisible or irrelevant to the customer experience as smart outlets to cut back on and thus increase your overall efficiency.

Choosing a POS (Point of Sale) System

  • Breadcrumb: recently purchased by Upserve, there are two available versions of this mobile POS system: Breadcrumb Pro and Breadcrumb Payments. Both systems work exclusively with Apple Ipad 2. but setup and registration are super easy (takes all of 5 minutes).

  • Square: Also a mobile POS system that is compatible with Apple Ipad, Square allows you to swipe payments without an internet connection, print kitchen tickets, receipts, and order stubs, and also lets you customize taxes, tipping and discounts.

  • ShopKeep: ShopKeep offers 3 separate systems: retail, quick serve, and restaurant & bar. It also offers all the necessary bells and whistles of a successful POS system: detailed item modifiers for custom orders, offline payment ability, inventory tracking, analytics tools - you name it.

    Choosing your coffee beans: Spending an excessive amount on fancy big-brand coffee beans might seem like a great place to splurge, but realistically, local beans will often be drastically less expensive.

    (How much you pay for your beans will depend on whether you're dealing directly with local farmers for their green beans and then doing your own roasting, or outsourcing to local roasting companies.)

  • How much to charge for your coffee: When deciding how much to charge, return to your clientele. Your strategy for setting your price must, of course, take into account your own bean and overhead costs, but ultimately, you're not only charging for the cup of coffee, but also for the experience.

Marketing starts now:

Networking should predate the existence of your space: If you only start marketing after you open, you've already fallen behind. Attend local events and pass out free samples; try setting up a stand at local green markets and promote your grand opening feverishly by word of mouth and through social media marketing.

Begin to build your brand as early as possible so that by the time you open, you already have customers who are as excited about being a part of your business as you are about starting it.

Connect with influencers: Reach out to coffee & food blogs and Instagram accounts to start promoting your image; your marketing outlets will, again, need to speak to that ideal niche clientele.

If you're opening near a college campus, promote student discounts and hang fliers around campus.

Preliminary marketing can even be a way of gaining income if you have your own brand of coffee beans that you can sell at local coffee tradeshows or events.