How to open a coffee shop business

Before we dive into the pros and cons, it’s important to note that if you don’t have a passion for coffee and customer service, and the energy and time to throw at your new business venture, then opening a coffee shop probably isn’t for you. It’s a lifestyle decision as much as a business one, especially in the early days, when it might just be you serving your customers. You’ll be on your feet for most of the day, while juggling all the responsibilities and decisions that come with running your own business.

If that sounds like something you can handle, let’s look at some of the pros…

• Profit and expansion! With a smart business plan in place and an understanding of your target customers, you’re giving your new business the best chance to be successful and make a profit. Reinvesting a portion of this profit will help you increase this figure, gradually building your business and – for the ambitious – the opportunity to expand and open up additional coffee shops.
• Achieving your dream. If you have always wanted to own your own coffee shop, then there’s nothing like the feeling of achieving your dream.
• Flexibility. Once your coffee shop is off the ground and you have an employee rota in place, you can create your own work schedule that fits around other life commitments and enjoyments, whether it’s taking your nan for coffee and cake mid-week, volunteering at a school event or having some downtime on a Monday afternoon after a busy weekend at the shop.
• Being part of a community. Coffee shops play a vital role in bringing local people together and building a sense of community in your area.
• Open up new opportunities. Owning a successful business can transform your life. Leverage the success of your coffee shop, and you can go on to do many other incredible things.

How about the cons of opening a coffee shop?

• Full responsibility. Everything starts and ends with you. Business decisions, staff issues, supplier contracts, marketing – even the smallest details such as the style of mugs and plates you have! – You make every call. While many find this an ideal situation, you do need to assess whether you’re the type of person who can juggle a wide variety of responsibilities at all times and be able to make informed decisions under pressure. You won’t only be the coffee shop owner, you’ll be serving customers and managing a team (eventually!), and each of these roles require a special skill set. 
• Money. Until it’s profitable, sustaining your coffee shop can be a real challenge. Unless you have a financial plan in place when starting out, money shortages can plague you when it comes to rent, insurance, salaries, supplies, etc. Whether it’s your own savings, money borrowed from family, or other finance paths such as a business or startup loan, money worries will always be on your mind until your coffee shop is proving to successfully – and regularly – turn a profit.
• Staff management. While hiring your team can be a positive, enjoyable experience, there’s also the other side to managing people, whether it’s handling a specific issue that arises, such as lateness or inappropriate language in front of customers, to starting the dismissal process in line with the law. 
• You might fail. Starting a new business always runs the risk of failure for a multitude of reasons. For example, you might have had the best business plan in place, perfect location, etc, but then out of nowhere the world is hit by COVID-19 and your doors shut before you can establish yourself. You might even find that three more entrepreneurs open coffee shops down the road from yours, which your target market – for whatever reason – prefer.
• It’s extremely time consuming. From writing a business plan to sourcing equipment, hiring and managing staff to organising your menu, cleaning your shop to sorting your insurance and taxes, the hours will quickly add up. And that’s without serving your customers day-to-day, as you might not be in the position to hire a team at the beginning.

The below list is a useful place to begin when considering the equipment you need to make great coffee and run a tight ship:

• Automatic drip coffee makers – for standard black coffee.
• A high-quality espresso machine – ensure you do your research as you not only want quality but it needs to be fast, as many of your customers will be in a rush!
• An industrial coffee grinder. Unground beans make the freshest coffee possible so a grinder is important to have. Make sure to do your research as the right grinder can impact the flavour profiles of your coffee or espresso.
• Filtration system for your espresso machine.
• Coffee presses.
• POS system to track your inventory, monitor your sales, manage employees and take payments. Ensure you opt for one that is future-proof e.g. integrates with third-party delivery platforms or online ordering capabilities. You might not require these now but could down the line as you expand. A decent POS system can actually help you set up your website and build an email list
• Takeaway supplies. We’re still recovering from the COVID-19 pandemic, so you need to acknowledge that some customers aren’t confident to enter your coffee shop yet. Ensure you offer takeaway coffee cups and lids, drink holders, paper bags and napkins should they want to opt for takeaway. Other consumable goods can also include straws, plastic/wooden cutlery, paper plates and receipt rolls.
• Cups, crockery and cutlery – take time in deciding what you’ll be serving your coffee in/food on as this is all part of the coffee shop experience. While they need to look appealing, they should also be practical and easily replaced without breaking the bank. They need to cater to your menu e.g. are you offering cake or larger meals e.g. toasties? Ensure you offer a range of mugs that complement your coffee e.g. espresso, cappuccino, latte, frappuccino, as well as drinking glasses and food preparation utensils.
• Industrial blenders to capitalise on the blended drinks trend.
• Ovens and toasters (if you plan to offer hot food e.g. toasties, bagels, etc).
• Refrigerators and freezers to keep your food and dairy products fresh. Refrigerated display cases and counter fridges are a must-have.
• Sinks/dishwasher.
• Ice maker.
• Shelving to store and display your beans.
• Food storage containers.
• Containers, pumps and storage for syrups, toppings and beans.
• A security system.
• Menu boards above your counter so people can see what’s on offer while they wait to be served.
• Reliable internet network.
• Mobile card payment machine.
• Furniture – while technically not ‘equipment’ it’s also worth flagging this as an area to cost for as it can significantly impact your budget. Display cases, front of house counters, tables, chairs, sofas, stools, outdoor furniture, lighting, artwork, etc.
• Cleaning equipment is not only essential to comply with health and safety guidelines, but additional cleaning guidance has been set out by the government to reduce the transmission of COVID-19.

It goes without saying but always make sure that your equipment and food preparation areas adhere to regulatory guidelines.

You can’t beat a good recommendation when it comes to finding quality, reliable suppliers. Reach out to other shop owners and spend time researching reviews online to work out the most trustworthy choice for you.

Let’s start with the most important supplier – your coffee supplier. You need to choose a coffee that fits with the taste of your customers, suits your type of establishment and works with your budget. Reliability is key. Deliveries must be on time and the quality must be consistent. Shortlist a number of options and contact them individually. Just because their advert appears on the top of Google search results, doesn’t mean they’re the best. Ask for samples and focus on the taste, not the packaging. Which fits best with your vision for your coffee shop? Could you ask others to try the samples so you’re getting a variety of views? Talk to customers of the suppliers you’re looking at to really understand the service and product they provide.

While this isn’t always possible, seriously consider buying from a local coffee supplier first as you can easily visit them if you need to, and form a strong relationship with them. Offering customers local coffee is also a fantastic selling point, as consumers are becoming increasingly interested in and aware of the importance of supporting local suppliers and businesses. That said, buying from a well-known supplier (Monmouth, Illy) may also provide some welcome familiarity and brand-reassurance to your customers. It really will be a case of testing your market and seeing what works.

The above can also be applied to the food you plan to provide – whether it’s toasties using a local cheese or tasty baked goods. You must ensure throughout your research that your suppliers have the correct training certificates, etc, in place, and that they’re a registered business with their local authority. They must have had their premises inspected by an Environmental Health Officer, understand regulations around food allergens and food labelling and how to implement them, and much more. Selecting quality, capable and compliant suppliers is crucial in ensuring your products taste amazing, arrive on time, while ensuring the safety of your staff and customers.

Dig into your supplier’s record – are they FairTrade, organic? Have they been recognised in any industry awards? Check your contract/s carefully – are you looking for an exclusive supplier or would you prefer to use beans from a variety of roasters?

As well as recommendations, trade shows and industry events are also a great way to discover and meet potential suppliers.

Take your time when choosing your suppliers, as the quality of your coffee will determine whether customers come back to your establishment.

Acquiring new customers can be one of your biggest hurdles when opening a coffee shop. And it takes even more to turn them into regulars! Your marketing plan should be considered at the very beginning as part of your business plan. Who are you marketing to? What are they like? How will your business appeal to them? Here are some suggestions:

• Referrals: These are hugely powerful for local businesses. Incentivise your local customers with a recommend-a-friend offer. Once their friend visits your shop, your customer receives a free coffee! Go one step further and offer a loyalty card – a free coffee with your 8th stamp! Turn your happy customers into brand ambassadors and let positive word of mouth increase your customer base.

• Reviews: Ensure you’re in control of your listing on sites such as TripAdvisor and Yelp. Not only will positive reviews and exposure on these sites encourage customers to visit, but any negative reviews could prove extremely useful feedback for improving your offering.

• Get online: Ramp up your visibility on key online platforms including search engines and social media. Have you set up your Google My Business page so search results immediately present to searchers your key business contact info, and where to find you? Have you set up your company page on Facebook? Are you utilising Facebook ads to promote your shop to locals? Are you using local hashtags in your Instagram posts? 

• Local marketing: As well as local advertising targeting online, there’s still great success in leafleting your local area to let people know you’re there! Why not run an introductory offer to entice a visit? There are lots of techniques you can try – here are 17 local marketing ideas. 

• Collaborate with non-competitive businesses: A number of small businesses in your local area will have similar target customers but offer a completely different experience or product to you. It pays to collaborate! For example, is there a beauty salon across the road that doesn’t have a refreshment facility, which could recommend you? You could offer 15% off coffee at your shop after they’ve had a treatment at the salon (and vice versa! 15% off a salon treatment if they spend a certain amount in one transaction at your coffee shop). Could you advertise on a reception pinboard at the local soft play or leisure centre in exchange for a leaflet in your window?

• A creative A-board! Stripping marketing back to basics, it’s quite easy for a customer to walk by without noticing your coffee shop is right next to them. An A-board not only slows down pavement traffic but places a marketing message right in front of them. The more creative you can be, the better.

• Events: Can you run a coffee and cake stall at local events to get your brand out there? From summer fetes to Christmas markets – step outside your shop window and take your coffee to your customers! If you’ve focused on perfecting the quality of your products then it will speak for itself. If you’re lucky, your location might even run its own coffee festival! (Always worth a Google!) And if not… Why not start one?

• Offer freebies: Customers might like to try before they buy! Offer small coffees or free cake samples outside your shop to entice new customers, especially if your location has good footfall.
• Free WiFi: If you have seating areas that can cater to laptop use or comfy sofas for customers to enjoy a mobile scroll, free WiFi is a huge draw to coffee shop dwellers. Promote it in your shop window, A-board and online platforms.

If setting up your own independent coffee shop sounds daunting, you might want to consider a buying a franchise instead. Many big brand coffee chains including Costa and Starbucks operate as franchises. For a franchise fee and ongoing royalties, you can buy the rights to use the established business’s name, trademarks, business model and products. With the support of a known brand and training on how to set up your coffee shop, deal with suppliers, hire and manage staff, a franchise can offer a less risky entry into the coffee shop business.