Running your coffee shop can be a rewarding experience. Many people desire to open a coffee shop or coffee house as a sign of hospitality in addition to a stream of income. They want to create a space for people to develop connections, whether that’s a routine business meeting or a first date.
But it’s not as easy as brewing up a quick pot in Mr. Coffee and pouring a few mugs for your customers. That might work for guests in your home, but if you are going to open a coffee shop you need to have a plan. The truth is that some of the equipment can be quite expensive. But the overall layout of your coffee shop does not have to run you into the ground financially. You don’t have to have 2,000 square feet to entertain people in your shop. Layouts range from small drive-thru stands to large tasting rooms in roasteries. But whatever size you choose, it’s important to know the costs.
Initial Costs
Espresso Machine
The first piece of equipment that you will need is an espresso machine. Yes, people still love drip coffee, but espresso is indispensable. If you have your own shop but can’t provide a quality latte, don’t expect to stay in business for very long.
However, not all espresso machines are created equal. It will be worth it for you to invest in a quality piece of equipment that will sustain you for years to come. If you are planning to open a small drive-thru coffee stand, you could probably get away with a smaller machine, since you are likely going to serve one vehicle at a time. But if you are wanting a larger shop with a sit-down lobby, you will want to spring for a larger machine that can pull multiple shots of espresso at once. But whether you get a small machine or a large machine, invest in new equipment, and you will almost certainly have less complications down the road. A new commercial espresso machine can range anywhere from a few thousand to $30,000.
Coffee Roaster
One of the best ways to spread your brand beyond the four walls of your establishment is by selling your own roasted coffee beans. But if you plan to roast your own beans for making your own drinks in-house or to sell by the pound, you are going to need a commercial coffee roasting machine. You can expect to spend anywhere between $10,000 to $35,000 depending on the size and quality of the machine.
Kitchen Equipment
While you probably won’t be cooking lobster or anything terribly complicated in your coffee shop, you will need to have some ability to heat up breakfast sandwiches, paninis, and pastries if you plan on serving anything along these lines. Many cafés order food that is made ready-to-eat, so you probably won’t want anything too complicated. Then you need a commercial refrigerator and freezer. A commercial size sink is also necessary. If you build this kitchen from the ground up, we’re talking about spending at least $50,000 from repair/renovation and equipment/appliances. It may be that your coffee shop was already partially equipped by the prior tenants and you’ll save some money.
Furniture
If you are planning to have a lobby where people can sit and enjoy their coffee and pastry, then you are going to need to furnish it for their comfort. This doesn’t mean you need to get La-Z-Boy couches or even close to that level of comfort. Having a few couches or armchairs will make some of your patrons a bit more comfortable but for the most part, you can probably peruse OfferUp or Craigslist for used furniture. It also depends on the vibe you are trying to capture with your interior décor. Many coffee shops like the slightly worn-down, antique vibe which is perfectly suitable for secondhand furniture. Of course, furniture includes not just seating, but also bar, lights/lamps, bookshelves, paintings, etc.
Fixed Costs
These costs include your rent, staff salaries, employee benefits, loan payments, licensing fees, and insurance premiums. All of these should stay consistently the same from month to month. Where you rent is also important. The actual location of the coffee shop should be strategically planned to attract traffic so that you will have a more profitable business. A location along the main street of a city is far more likely to bring in customers and passersby than a back alley hidden gem.
Variable Costs
These costs are going to include staff hourly pay, utility costs, and food and supplies. This isn’t just coffee beans and milk, it includes reusable cups, napkins, condiments, drink carriers, trash bags, and more.
Is Owning a Coffee Shop Profitable?
Opening a coffee shop will probably not make you rich anytime soon but it depends on a person’s definition of the word ‘profitable.’ Does ‘profitable’ mean that it can pay the owner’s base salary? If that’s the case, then owning and running a coffee shop can profit the owner. Does profitable mean that they will be able to become independently wealthy after only a few years of ownership? Not likely.
Why Do Coffee Shops Fail?
Coffee shops fail for a variety of reasons such as lack of consistency among employees, poor management, burnout, insufficient funds. As popular as the idea of opening a coffee shop is (it is often perceived as an easy business to start), many would-be entrepreneurs find themselves sorely disappointed when they realize how difficult it can be. It’s hard work. But coffee shops like other foodservice establishments don’t usually spring up and go away within months. About 50% of restaurant businesses that open last at least five years.
Conclusion
In the end, it depends on how big of an operation you’re planning on setting up. A coffee shop with drive-thru service and sit-down lobby can cost about $200,000 – $400,000 to set up. A small coffee stand might only cost $60,000 to set up. It depends on the vision you have and the kind of space that you want to create. Starting a coffee shop is not for the faint of heart. It will require long hours and give you headaches, things that are completely normal for any business owner. But if you work hard you can develop an enriching atmosphere while simultaneously putting food on your table at home.
Featured Image Credit: Nafinia Putra, Unsplash
