how to start a coffee shop

So You Want to Start A Coffee Shop

Most Americans drink coffee; specifically, 89 percent enjoy it at least a few times a week.1 If you want to start your own coffee shop in this thriving market, you'll need a game plan. We've put together a list of tips below to help you learn how to start a coffee shop.

Opening a coffee shop doesn't take much overhead initially but it does take some prior coffee-serving experience. You can start by selling coffee at a small kiosk or street-side cart. No matter how you get it started, a well-executed coffee shop can be more than business; it can become a community cornerstone.

If you're starting from scratch, it will take time to get your operation up and running, and many new cafes end up failing a short time later. According to a 2019 independent survey, more than half of independent coffee shops fail within the first five years of opening. 2 So, how do you prevent your business joining that statistic?

Develop your Brand

To be successful, your shop needs a clearly defined brand. How will you create a unique menu and environment? You also need to define your target clientele. A poorly defined brand will have trouble building a strong following.

When it comes crafting a brand, begin by studying the demographics of your location. A large working-class population may have less interest in premium espresso drinks and just need a place for their morning coffee run, while wealthier clientele may seek out specialty coffee drinks like lattes and cappuccinos made from choice ingredients.

The United States Census Bureau provides a number of tools, including profiles on states, counties, and cities,3 that will enable you to find important demographic data, such as age distribution, income, and which industries employ the most people in that area. This data can help you understand the market you're entering, which can help you design your concept.

Curating the Perfect Coffeehouse Menu

Sourcing Your Coffee

The obvious first step in creating a coffeehouse menu should be finding the right coffee bean. You have several options when it comes to sourcing your beans. You could buy from local roasters, or, if you're running a large-scale operation, you can roast your own beans.

Many serious coffee drinkers desire transparency when it comes to their coffee's origins. Concerns over unfair trade practices and unsustainable growing techniques have led many roasters to emphasize that their beans are grown and sold through ethical practices.

Like wine grapes, coffee beans take on a distinct flavor depending on the climate and soil they're grown in. To help your brand stand apart, consider buying single-origin beans, which are kept together with beans of the same batch from a distinct region through the whole supply chain.

Food & Snack Offerings

Real profit potential can be found in offering sweet and savory snacks or even full meals. Since coffee is a morning staple, it makes sense to pair it with breakfast items. Pastries, bagels, biscuits, breakfast bars, and parfaits can be made in-house or sourced from local vendors.

If you think your business could see a strong lunch crowd, a simple panini press can enable you to offer grilled sandwiches that are a step above traditional cold-cut deli fare. Adding chips or french fries creates a fully-fledged lunch menu.

Don't forget cold drinks like juices or iced tea; soft drinks carry a high profit margin, especially when they're dispensed at a bag-in-box fountain. Chocolate and candy keep well without refrigeration and can serve as reliable impulse buys at the checkout counter.

Choosing the Right Location for Your Cafe

Location can make or break a business. Even operations serving the best tasting coffee in town can struggle to survive if they are saddled with a poor location. Start scouting your area by paying attention to daily traffic patterns. Contact state and local officials, who may be able to help with traffic counts.

To target morning commuters, find a location that's easily accessible for people going to work. If you're targeting a lunch crowd, find a spot that's convenient to local businesses employing your would-be clientele. Convenience, visibility, and safety should be your deciding factors.

Creating an Inviting Atmosphere

Another part of attracting and maintaining your clientele involves choosing your decor and furniture. Some people might prefer to frequent a shop with unique artwork and cozy furniture where they can gather with friends. Working professionals and students may want a place to plug in their laptops and work without interruption.

Organize Your Business

Coffee shops don't survive on innovative ideas alone. To create a viable concept, you'll need to conduct thorough market research, establish a plan, raise funds, and obtain necessary permits.

Create a Business Plan

Writing your business plan will take time, but it's worth the effort. A solid business plan should help you define your ideal customer and layout the steps you’ll take to reach them.

Licensing & Permit Requirements

After developing your business plan, it's time to turn your coffee shop dream into a legal entity. At a minimum, every type of business needs to apply for a general business license and an Employer Identification Number from the IRS.4

Foodservice businesses are required to apply for additional permissions, including food handling permits, approvals from the health department, and certificates of occupancy verifying a building is safe for visitors. Finally, you'll need several permits to legitimize your physical presence. A brick-and-mortar location will need to conform to zoning requirements, and a cart or kiosk will be restricted in where it can be set up.

you don't have to navigate the maze of red tape alone. The U.S. Small Business Administration5 is a good place to start educating yourself about the licenses required to open a business and your local chamber of commerce should have helpful information on requirements for your area.

Create Your Team

Your coffee shop will heavily rely on the quality of your baristas, so knowing who you're hiring is essential. While many coffee-making skills can be taught on the job, a friendly demeanor and a willingness to help must be innate.

Equip Your Location

Finding the right equipment to start your coffee shop depends on whether you're running a specialty operation or quick-service retail and will further help you set your concept apart. Although often located behind the scenes, your equipment is the backbone of your business. Investing in quality machines will let you spend more time focusing on the other details like customer experience and barista training.

Essential Equipment for your Coffee Shop

Commercial coffee equipment is different than what you have in your home, so do your research to make sure you get what you need.

Every coffee shop needs a reliable brewer. Two common options are pour over machines and drip brewers. These make what most people would describe as 'regular' or 'drip' coffee. They brew coffee into containers, often a glass decanter, but we recommend investing in coffee airpots, which can keep coffee fresh and piping hot for several hours while preserving its taste. Never rely on an electric element to keep coffee hot for more than 30 minutes, because it will quickly degrade the quality of the coffee and cause it to develop a bitter taste.

Size your brewer based on your expected volume. Different clientele will have different demands for one type of coffee versus another. The smallest brewers can brew about 1/2 a gallon of coffee an hour, while the largest ones can make close to 50 gallons an hour.

You'll probably need to invest in an espresso machine, too. These units can seem complicated for a first-time buyer, but we have a buying guide for espresso brewers to help you choose the best type for your business. The main difference between these models, other than output, is their level of automation.

Semi-automatic versions require a skilled barista to produce a consistent shot, while a super-automatic machine does nearly everything by itself and can reduce training time. Again, it's important to size your machine based on your expected output and the expectations of your customers. Making espresso drinks can be an involved process, and lines can back up quickly without an efficient routine and setup behind the counter. A good way to prepare for a rush is to have an espresso machine with two or more brew groups and at least two baristas operating it simultaneously.

coffee shop equipment checklist

It's important to invest in a good water filtration system to ensure your customers are receiving quality drinks and to keep your equipment working properly. You may also want an additional hot water dispenser if you're planning on serving hot or iced teas.

Additional Equipment

Below are some pieces you might consider in order to provide non-coffee offerings:

  • Whether you're sourcing them from a vendor or baking them in-house, show off your bakery items and keep them fresh with a bakery case. These can be self-service, full service (where only employees have access to the items), or dual service.
  • You'll need a way to keep your perishables cold, if only with a simple undercounter refrigerator for storing milk and cream.
  • Larger operations that need to hold a high volume of chilled foods will require a reach-in refrigerator. If you plan on offering an extensive menu, a walk-in cooler may serve you better.
  • Refrigerated snacks such as pies are best when stored in a wide-windowed deli case.
  • An undercounter ice maker will keep you stocked with cubes or nuggets for your iced coffees and soft drinks without taking up too much space.
  • If you want to offer sandwiches or wraps, you also need a way to keep perishable toppings refrigerated and fresh. The prep table is designed specifically for this purpose.
  • High-speed ovens are excellent for heating smaller batches of food quickly and with consistent results. They can bake fresh items, toast sandwiches, and reheat frozen foods for entrees and appetizers.
  • The panini press can toast its namesake sandwich as well as burritos and wraps.
  • Whether you choose a countertop or full-sized floor model, a deep fryer is a versatile piece to have on hand for preparing fries, chips, appetizers, and countless other fried items for snacks and entrees, while air fryers provide healthy alternatives.

From planning to execution, finding a coffee shop model that works for you and your clientele will help you create the best business you can and will keep customers coming back for another cup.

References

1How frequently do you drink coffee? Statista. Accessed December 2024.

2 Survey Results: Why Do Coffee Shops Fail? 232 Owners Share Top Reasons. Food Truck Empire. Accessed December 2024.

3 U.S. Census Bureau. Accessed December 2024.

4 Apply for an Employer Identification Number (EIN) Online. Internal Revenue Service. Accessed 17 April 2015.

5 U.S Small Business Administration. Accessed 17 April 2015.