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Coffee shop
10 min read

How to open a coffee shop business

We drink 95 million cups of coffee in the UK, every day. On the high street, café culture continues to boom, with 80% of people who visit coffee shops doing so at least once a week, while 16% of us visit on a daily basis. So what does it take to open a coffee shop? And how can you increase its chances of success?

What are the pros and cons of running a coffee shop?

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?

  • 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 your 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.

What skills and experience do I need to run a coffee shop?

You don’t need any specific qualifications to run a coffee shop; however, courses that will improve core skills that are most suited to running a successful coffee shop would be worth strong consideration. For example:

  • General business skills
  • Barista training
  • Bookkeeping
  • Marketing
  • Catering 
  • Food hygiene

And as always, first-hand experience before making the leap is worthwhile. Is there a local coffee shop you can gain some experience in? 

Other attributes of a successful coffee shop owner:

  • Passion for coffee (and tea for that matter!)
  • Aptitude for hospitality 
  • Resilience
  • Ambition 
  • Self-motivation

In addition, the below skills will also be relied upon to make your coffee shop dream a long term reality (click the dropdown to reveal more):

  • Research skills

    It’s essential you spend time at the very beginning conducting research into the coffee industry, and what it takes to run a successful coffee shop:

    • While online research can be helpful, you can’t beat hearing what works and what doesn’t from those already running their own coffee shop. Reach out to coffee shop owners and see if they’d mind discussing their experience and learnings with you. (It goes without saying but avoid speaking to your local competitors as that would be a bit cheeky-!) 
    • To keep things a bit further afield, is there a coffee shop on social media that you follow and love the philosophy/style of, which wouldn’t mind chatting with you? Hearing about the industry first-hand is going to give you the most realistic understanding of the day-to-day running of your business – not just the highs but the lows as well, ensuring you go into your new venture with your eyes open.
    • Expand your research from the viewpoint of a customer. Visit a number of coffee shops to help you gain an insight into what you want your business to be like. What inspiration will you take forward with you, and how will you make your offering different so it stands out?
    • Learn about your customer base. Knowing your customers will help you plan the look and feel of your shop, its location, your menu, price points as well as shaping your marketing strategy.
      • Who are they?
      • Why do they visit coffee shops? To socialise? Work? Have some time out?
      • Do they bring their children with them?
      • What time of day would they most likely visit a coffee shop?
      • What do they order?
      • How long do they spend there? 
    • Research the area you intend to base your shop.
      • Is there much competition?
      • Is there a type of customer that your area doesn’t currently cater for?
      • Are there any small business associations and networking groups that you could become part of for support and advice?
    • Get a firm grasp of the UK coffee industry. The British Coffee Association is a great place to start, which offers networking and training opportunities for its members.
  • Smart business planning

    A business plan is a document that details all the future plans and predictions for your business. It will explain your ideas, map out how they’ll be put into practice and provide relevant information and facts including the business details, management plan, operating plan, marketing and sales strategy, financial projections, and operational and team specifics. Your coffee shop concept, your target customers, your menu, competitor analysis, marketing plan, financial forecasts, overheads and how much funding your coffee shop needs are all important elements that must be covered in your business plan. 

    A well researched business plan will help you secure funding and help launch and grow your venture. Commitment to making a business plan is a commitment to the business. It’s vital you have the skills to create this essential document, or have a business partner that does.

     

  • Strong finance skills

    Knowing how to effectively manage your business’s finances, even if it’s in conjunction with an accountant, will be a crucial skill in making the best decisions that will speed up the growth of your business. What costs and expenses need to be recorded? Will these impact your tax liability and, ultimately, your profitability?

  • Barista training

    Knowing how to craft the perfect cup of coffee is an essential skill in running a coffee shop. Even if you plan to hire someone else to make your coffee, understanding coffee, brewing, beans and the whole coffee making process is the bread and butter of your business. The better tasting your coffee is, the more return customers you’ll receive. You should have these skills in place when opening your doors.

  • Thorough understanding of food safety regulations

    You’re serving the public food and drink – the above is an absolute essential (further details in section 6).

  • Marketing

    You need to be clued up on the best channels that will encourage customers into your shop. You must also know how to turn a one-time customer into a loyal one who returns regularly and recommends you to their local network.

  • Attention to detail and communication

    Regular customers love being remembered and appreciated – you can’t beat your local coffee shop knowing how you like to drink your coffee! Listen carefully and tailor their coffee shop experience to them. Socialising and human connection is at the heart of a thriving coffee shop, so ensure you and your team communicate empathetically with your customers. (There’s a reason why the sitcom Friends was largely based in a coffee shop!)

  • Multi-tasking

    You’ll have lots of plates to spin. You need to work calmly and efficiently under pressure. Service without a smile could be the make or break decision factor for a first-time customer.

  • Negotiating supplier contracts

    Be confident and well informed when negotiating your supplier contracts to ensure you get the best deal.

How do I choose a location for my coffee shop?

The location of your coffee shop is absolutely fundamental to its success. Slide through the carousel to look at eight key considerations you’ll need to take into account when picking your coffee shop location. 

  • Man watching at business center
    Convenience

    Picking business premises close to train stations, offices and shops will provide a good level of footfall to give you the best opportunity to make a profit. But a prime location often comes with a premium rent. When shopping for premises, keep your projected sales figure in mind. If your rent and rates are more than around 15% of projected sales, then it will be difficult for you to make a profit. If negotiations don’t work in bringing rent down, you must be realistic and look elsewhere.

  • Busy high street
    Neighbouring businesses

    Which ones offer coffee? They might not be a specific coffee shop business, but could be offering similar products as part of their business, e.g. a hair salon that offers beverages as part of the customer experience. Also keep in mind businesses close by that offer your target customers an alternative refreshment choice e.g. a juice bar.

  • Book store coffee shop
    When customers might need a coffee

    For example, a midday coffee break would be popular nearer to shopping centres and offices, while early birds will be better served nearer to train stations and schools following a busy school drop off. If you’re situated near a university and offer decent study space/WiFi, later afternoon/early evening opening hours could prove profitable.

  • kid standing near sofa while mother working with laptop
    Type of customers in your area

    Can you offer a menu, or part of your menu, that would appeal to their lifestyle choices? E.g. veganism, organic, gluten-free? Are there lots of young families nearby? Could you offer child-size healthy flapjacks, and some children’s books to keep them entertained while parents have some time out? Make sure there is customer demand in an area before settling on a location.

  • young disabled man in wheelchair walking park
    Accessibility

    It’s important that your coffee shop is easily accessible to customers with limited mobility. A shop without steps is important to wheelchair users, as well as those with pushchairs and elderly relatives.

  • Inside coffee shop
    Space

    Depending on your interior vision, you need to bear in mind that customers like a mix of seating options. From comfy sofas and armchairs to tables and chairs to counter stools. They also don’t like to feel overcrowded as many like to work or have private conversations over a cuppa. You also need to give your team enough space behind the counter to work their magic.

  • Coffee shop business
    Correct licence

    Ensure your commercial space allows for the correct licences e.g. some don’t allow food permits on the property. Enquire when viewing the premise and ensure you speak with a legal expert before signing any contracts.

  • Businessman signed a contract agreement to invest together
    Terms of the lease

    If your rent is too high, so will your coffee prices. You also need to assess whether your location requires any renovation, and whether you can afford these costs. Commercial leases are legally binding contracts, so are difficult to break or change the terms. Don’t sign anything until a solicitor reviews it. Keep an eye out for the length of the lease, rent increases (is it up for review just after you open?), insurance requirements, security deposit and conditions for its return, as well as maintenance and repair obligations for the premises.

What equipment do I need?

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.

Where can I source coffee shop supplies?

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.

Coffee shop produce

How do I get people to come to my coffee shop?

Acquiring new customers can be one of your biggest hurdles when launching your new business. 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.

Can I open up a coffee shop franchise instead?

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.

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