You will find a coffee shop in every corner of your city today. Most of them packed and bustling with the crowd. Cafés and coffee shops never go demand-less, if that is even a word. Be it school students, college graduates, freelancers, salesmen, workaholics, homemakers or even jobless persons, no can resist a cup of cappuccino and freshly grilled sandwich. You can open a coffee shop yourself and make it a hit without going bankrupt. Starting a coffee shop can be very fulfilling; it is no wonder the industry is booming with more than a 100 million coffee drinkers just in the US, let alone the entire globe.
If you have an entrepreneurial spirit, have an innate love for coffees and if you have been thinking of putting these two together, then opening a coffee shop is a sure shot. We shall tell you how.
Options You Have to Open a Coffee Shop
Basically, there are three ways to open a café:
- Youcould purchase a franchise of afamous coffee shop brand, like Star Bucks or CCD. In here, you will be providedwith a business location, business plan, business development strategy, and abrand name. However, you will be making the major business decisions.
- You could buy an existing coffee shop, refurbish it, promote it, and boost its brand value by introducing new elements. However, most shops that are for sale are usually victims of rundowns and lost cases, while getting hold of a profitable business for sale is not an easy feat.
- Or, you could start the business from scratch and become an entrepreneur. Although this option requires time, effort, business skills, comprehensive plans, strategies, and manpower, it has flexibility, growth, and more opportunities to maximize profits.
You should, however, start with a business plan, regardless of the choice you make. So, we will start with that too.
A Business Plan
A business plan acts as the engine of your vehicle or the hinges that connects two bodies of a train. It helps you to measure your success, your position in the business, and prepare you for the long-term.
Your business plan will define your customer base and the location of your coffee shop, will aid you in exploring the market and your competitors, will plan for growth, will plan for capital investment, will define your business mission and vision, will provide marketing and advertising strategies, will help create a brand, and will determine the additional responsibilities.
Since you are going to start a café, you will not require a traditional, over-powering long business plan. If at all you want to get a heavy loan from the bank, should you consider opting for a long business plan.
You should start with a lean plan that quickly outlines the market, the key selling point, and potential ways to reach your audience. You need to focus on two major things:
How Will You Differentiate Yourself from Your Competitors
You have to develop an idea about what to sell and why sell what you decide. For instance, Beanismo Coffee aimed to bring in the by-gone Italian Traditions and Recipes with their premium coffees.
How Will You Determine Your Budget
Depending upon your location, the size of your coffee shop, and the scale of your business, your start-up cost will be decided. We suggest you start small and expand once you start earning profits. There is no need to overload yourself with big investments and EMIs.
You cannot turn a profit in six months. Therefore, you will have to run a ‘no-profit’ show for six months or more. For the meantime, you will have think of ways to pay the rent, pay salaries and wages, settle bills, and save for contingencies.
Draw a plan for break-even and work towards it. Once you achieve the break-even, everything after that you earn is your profit.
Find Your Location
Your location plays a key role in determining the success or failure of your food and beverages business. The location should be easily accessible, probably in the heart of the city, and should be available to people your business means to cater. For instance, if your coffee shop is dedicated for teenagers, then it should be in the proximity of a school or college.
If it is for the pedestrian traffic, then it should be on a busy road or street. Coffee shops are the most preferred place for people to meet friends, to while away time, to surf the web, to write a book, to grab a quick meal before heading out for work and to have an informal meeting.
You have to do solid research to find out if a particular location is worth your investment or not. You have to do your groundworks about your competitors, vehicle traffic and parking, renting and buying, security and privacy.
Investing in the Place
Not every place is affordable. And, not every central location can be best for your purpose. Although malls see the highest traffic, they are expensive and often heavily loaded with competition. You should rather start with a storefront. They are cheaper to rent or lease, easily accessible and visible, and flexible, in terms of setting the hours. You could be the coffee shop that is open 24*7, serving freshly brewed coffee and home-like grills, just like Pops from Riverdale.
You have to also see if there is ample parking lot for your shop. Customers usually look for a convenient place, unless the area is for pedestrian traffic only. So, choose a location that is nearby to an office complex, a school, or factory, so that people can hop by on their way.
If you don’t wish rent or buy a place, you could lease it and save considerable start-up cost.
Figure Out Your Concept
You have to let customers know what to expect from your coffee shop. Basically, you will have to develop a concept or theme of your shop. Your vision of what your café offers should be presentably clear.
If you plan to bring in your family’s tradition, such as your grandma’s baked chicken recipes or home-made pasta along with creamy, scintillating, and strong coffee, your restaurant should centre around it no matter what.
You have to consider your ingredients too, such as organic coffees, fair coffees, quality maker coffee. If you want to be a boutique coffee shop, you shouldn’t include the regulars, such as doughnuts. Either way, you have to create an identity and stick to it.
Secure Financial Support
Once your business plan is done, your location is identified and your concept is set, you should think of securing funds for your business. You can spend from your savings or personal resource; you can work this up with a partner, get a loan from a bank, facilitate crowdfunding, or seek an Angel donation.
You can also look up the US Small Business Administration for lenders or other programs that support small business start-ups.
Before you start the business, you should be backed up by professionals, including a lawyer, a business expert, an accountant, and a cook or chef.
Establish Your Business
Your business attorney will help you figure out what kind of business structure is best suitable for your coffee shop. He will also guide you in obtaining the licenses and permits to run a food based business. You could also look up your state’s corporation website to understand your obligations.
According to us, the best type of business structure for a coffee shop is a Limited Liability Company or LLC. An LLC protects your personal assets from your business liabilities, lest your business is legally sued.
Your business accountant will explain the tax terms and your role as a business taxpayer. He will also help you with auditing and bookkeeping.
Moving on, you have to acquire the local zoning permits and other documentation to operate within a commercial zone. For instance, most commercial zones allow sales of food and beverages if the company has a commercial kitchen on site, which means home-business owners, cannot operate in such zones.
Food and beverage is a critical industry and since your products will be consumed by customers, you have to follow the local food safety laws. For instance, you have to obtain a special permit if you want to sell hard drinks or have a bar attached. You have to essentially talk to the local food and environmental health department to find out what is needed to be done for a coffee shop.
Purchase an Insurance Policy
Restaurants and coffee shops are the most vulnerable businesses that have the potential to open up to many liabilities. Some include consumer liability, food safety, liquor safety, worker safety, natural calamities, and any other liability from wrongdoings, such as misbehaved worker, alcohol consumption during business hours and so on.
You need to protect your business from such liabilities or lawsuits with an insurance coverage. Property insurance, general liability insurance, and worker compensation insurance will keep your business safe and your sleep sound.
We have covered everything that sets the foundation of a coffee shop business. Now it’s time to set up the shop, and we do have some valuable tips for it.
Tips to Open a Coffee Shop
- Don’t always go with what’s trendy and what is ‘must have’s. Go with your gut instinct. Focus on proactive and friendly service and aim for excellent food quality.
- Don’t take in too many ideas from business owners from different industries. What works for others will not work for you. Be original and base your decisions on research and not on free bits of advice.
- A coffee shop with a table service is something that we definitely don’t find these days. However, having a table service opens door to more opportunities and many chances of one on one interaction with customers. You might want to consider it over self-service.
- Surveys suggest atmosphere plays the biggest attraction when it comes to coffee shops. The right ambiance is the key to lure in customers from all walks of life. Make the place bright, spic and span, comfortable, and not overly crowded seating arrangement. The place should have natural lights, outdoor couches, and music and entertainment.
- Include an excellent selection of accompaniments. Your coffee shop cannot survive on coffee and tea alone. Prompt multiple sales. Give combo offers by displaying an assortment of munchies that blend excellently with customers’ coffee. Use visual appeals.
- Come up with a crazy, fun loving, short and sweet name for the coffee shop, with a fabulous tagline. India’s biggest café brand, Café Coffee Day or CCD has the coolest tagline, which says, “a lot can happen over a cup of coffee”. And, it actually does, from proposals to rejections to signing epic business contracts. Think something similar.
- Offer loyalty cards and introduce fun loyalty programs to retain old customers and attract new ones. Ensure that your loyalty rewards end up in more food and fun, and nothing less.
- Hire staff if you feel you need extra hands. Quality service and quality food should be your prime goal. Do not compromise it with minimal manpower.
- Find great suppliers for your everyday ingredients. Don’t compromise on this. Great quality ingredients will enhance the taste of the dish, which will lead to happy customers. Check each ingredient yourself before it is used for cooking unless you are able to put complete faith on your supplier.
- Start with no Wi-Fi and see the response. Based on customer needs, introduce these ‘communication spoiling’ amenities, as we like to put it.
- Serve in the frontline of the coffee shop, so that your customers and your employees see this as a great sign of involvement as an owner and appreciate it. Don’t hesitate to greet customers, take orders, serve food or suggest menu. Ask for customers’ as well as staff’s feedbacks and reviews or complains and work towards improvising or correcting it. Be a leader and motivate your staff to follow suit.
Set high standards and work towards achieving them. Enjoy, entertain, and smile. If our article helped you in opening your coffee shop, do share the post and help others achieve success. All the best!