Give your neighbors a taste of the café lifestyle by starting a coffee shop
Coffee shops have become an important part of communities in recent years, and maybe that’s left you wondering how to start a coffee shop in your neighborhood. There’s good reason to consider starting a coffee shop too: it’s a $12 billion industry.
How to start a coffee shop
Every morning, millions of Americans wake up, get dressed, and head to their neighborhood coffee shop for cup of coffee, a bagel, and a jumpstart to their day. The local coffee house also serves as a meeting place for friends, business associates, and pretty much anyone else in need of a quiet place to sit and have a discussion.
Visit any busy “big chain” coffee shop, and chances are your creative juices start flowing. Before long, chances are you’re like one of the 22,000 others in America who’ve decided, “Hey, I think it would be cool to start a coffee shop.” And guess what? It’s a pretty straightforward proposition.
Starting a coffee shop begins with planning
The first stage of opening any new business is planning. Starting a coffee shop is no different, and by taking the time to form a strategy, you can help yourself avoid many of the common mistakes new coffee shop owners maker.
Here are just a few of the areas you need to begin to consider before you decide to start a coffee shop:
- What kind of coffee shop are you hoping to open?
- Where do you think will be a good location?
- What’s the ideal atmosphere you want to achieve, and how much will that cost?
- Where will you get your coffee?
- What about equipment and fixtures?
- What licenses, inspections, and insurances will you need?
It’s at this point many people find starting a notebook can help keep track of the details and ideas as they come. That way, you’ll be able to better navigate the process.
How to start a coffee shop
Step 1. Decide if you want to start a coffee shop, buy an existing coffee business or jump in a strong brand
Coffee shops are hot these days, despite economic uncertainties in 2020. Experts look for the fast opportunities to adapt business models and move forward quickly in 2023.
When you choose the franchise route, you tap into an established business with plenty of support on how to open a coffee shop. You can leverage a tried-and-tested business model to get started, instead of going through the process alone.
A franchise coffee shop gives you an advantage to learn from those who have started a coffee shop from scratch. These business-minded folks understand the risks and know what it takes to manage them.
Franchisors with a well-established franchise program know how to guide you through many of the decisions you need to make on how to start a coffee shop. And you have plenty of support available before you open, when you launch and as you grow your business.
Learn how coffee lovers turned into coffee shop owners and built the destination of choice in their communities.
Step 2. Start your coffee shop with a well-defined business plan
Think of your coffee shop business plan like a road map. It keeps you focused on what you want to achieve, how to get there and how to overcome barriers along the way.
A clearly defined coffee shop business plan also defines your why. It spells out the purpose of your business, what matters most to you and what motivates everything you do. Your why gives you the energy to move forward, even when faced with challenges. It’s also what separates you from your competition.
Get to know a coffee shop founder who turned his why into a community-minded franchise business that gives back to its neighbors every day.
Here are essential sections to include in your coffee shop business plan.
- Description of your business concept
- Analysis of your competition
- Expected costs to open and operate your business
- Sales and marketing strategy
- Operations plan
- Financial plan with projections
Step 3. Put your plan in motion
With your business plan as your guide, it’s time to take action that moves you forward from idea to the reality of opening your coffee shop.
Here are key steps to start your coffee shop and keep your enthusiasm percolating at full steam.
- Define your brand – why your coffee shop stands apart from the competition
- Choose the right location to attract loyal customers
- Build out your space that sets the right atmosphere for your customers
- Recruit the right team to serve your customers
- Develop service standards and train team members
- Contract with suppliers and vendors
- Market your shop to your local community
- Identify potential revenue-generating streams
Step 4. Share the love of coffee and community
You can take the hassle out of starting a business on your own by investing in a coffee shop franchise. This approach offers plenty of opportunities to become part of a brand with an established reputation.
You can take advantage of support and training programs you need to launch your business. The right business model also offers avenues to tap into sustainable ways to build potential revenue streams or develop new ones.
A franchise coffee shop gives you a chance to touch every piece of the business. You control everything from revenue generation and overhead expenses to shaping the right customer experience and building loyalty in your community.
Take advantage of the opportunity to connect with a brand that speaks to you and the community you want to serve. The right fit offers plenty of ways to mold your business into what you want it to be.
Check out why a long-time entrepreneur opened a coffee shop franchise instead of going it alone.
As you search for franchise opportunities, ask if you can see yourself bringing the franchise brand – its personality, product and customer experience – to your local community.
Watch former Tennessee Titan Keith Bulluck share the love he found in owning a coffee shop franchise.
Step 5. Know your numbers
Do your homework on the financials. Does the investment in a franchise coffee shop make sense from a financial perspective?
Low overhead gives first-time entrepreneurs an opportunity to make the most of their investment. Multi-unit investors can take advantage of well-defined ways to scale up the business to quickly boost potential returns.
Coffee shop franchise concepts that go beyond caffeinated beverages expand your potential revenue streams. That means a food program that works all day, delivery and catering services, loyalty programs, even swag sales.
Step 6. Stand out from the rest of the crowd
You invest more than money in a coffee shop franchise. It also demands hard work, dedication and perseverance. That’s why it’s important to look for a brand with a mission that aligns with your own values.
Your business is more than just a potential revenue generator. It’s an important part of your community. You have the chance to make your coffee shop the go-to destination for almost every demographic of coffee drinker – from Gen Zs to the older crowd and everyone in between.
How to Open a Coffee shop: Other key questions to ask
Types of coffee shops to start
Generally speaking, there are three kinds of coffee shops. This is true of locally owned mom-and-pops, national chains, and franchise coffee shops. Taking just a moment to familiarize yourself with the industry helps form a solid foundation for what comes next.
a. The Drive-Thru Coffee Hut
The drive-thru coffee hut is a fixture at many a busy intersection. These are the “snowball stands” of the coffee world. They occupy a single corner with a drive-through window, and they specialize in quick, hot coffee. The coffee hut model is perfect for people who want to avoid the demands of a larger operation because they don’t have seating for guests to come and linger.
b. The Coffee Bar
Closely related to the drive-thru coffee hut is the kind of coffee shop that used to be the most prevalent: the coffee bar. Coffee bars are similar to the old neighborhood watering hole bar that serves more adult beverages. They serve coffee, and that’s it. Maybe they serve a few fancy coffees—espresso, cappuccino, or even a macchiato or two are on the menu. But don’t come to the coffee bar looking for a light lunch. The best you may get is a stale donut left over from the barista’s breakfast.
c. The Neighborhood Coffee Shop
The neighborhood coffee shop is the establishment most people think of today when they say, “I want to start a coffee shop.” These are places that become the community hub. Fun, vibrant atmospheres where people can come, open a laptop and do some emails, meet up with a potential new employee, or just hang out with friends. Neighborhood coffee shops usually serve a selection of foods in addition to a wide selection of coffees in flavors and preparations.
That’s the coffee shop landscape in a nutshell. Whether you’re going the independent route and starting from scratch or exploring purchasing a franchise coffee shop, your shop will most likely fit into one of those three categories.
Where is the best spot to open a new coffee shop?
Assuming you fall into that last category and want to become the neighborhood hub for all things coffee, the next question on your agenda will be “Where?”
First, make sure you choose a location with ample parking. Coffee shops are places people like to linger. If you have ten tables but only four parking spaces, chances are you won’t be successful. While considering parking, it’s now you’ll also need to consider one other important aspect: do you want to provide an outside seating area for your guests?
Another key decision will be to find a location that has the kind of visibility that makes people notice while also providing them with the convenience of being able to get in and out quickly. But be careful! It’s a delicate balance between “ideal traffic location” and a lease that’s too expensive. Contact a commercial real estate agent in your area and inquire about leasing space. A qualified real estate agent can help you determine how much you can expect to spend on your new space.
What kind of atmosphere do you want to create with your new coffee shop?
Like location, the kind of atmosphere of your new coffee shop is another important consideration driving costs. Some coffee shops are fresh and hip, while others focus on a more thrifty vibe. Do you want padded benches and booths? Or will a bunch of barn-board tables create a community dining atmosphere?
With coffee shops, the sky is the limit to the kind of place you want to open. You can be fancy or shabby chic, all chrome-and-metal or wood-and-burlap. It’s up to you. As you consider the atmosphere, though, be sure to keep notes about how much each of the elements you hope to add will cost.
When you combine the cost of décor with the price of your location, you’re more than half-way to establishing a budget for opening a new coffee shop. Now you can think about the important stuff – the coffee!
Where will you get your coffee from?
Sourcing quality coffee beans is one of the most important decisions you’ll make as a new coffee shop owner. The upside of this process is you get to sample a lot of coffee. After all, people come to coffee shops for the coffee, so choosing that coffee is an important decision.
Are there local roasters in your area who can provide beans to give your customers a unique coffee experience? Would you prefer to work with a large, national brand to develop your coffee shop? Can the roaster you’re considering provide you with consistent quality and in the quantities you’ll need?
Successfully launching a new coffee shop will require that you pick a coffee bean that tastes the same day after day and prepared in a manner that accentuates flavors. Like décor, cost is also a factor. Make sure the roaster you choose is affordable for your business’s budget. Once you have your beans in hand, you can start looking at the equipment.
What equipment do you need to start a new coffee shop?
Brewing the perfect espresso is a science that requires the right equipment. A simple Google search for “commercial espresso machine” provides thousands of options, ranging in price from a couple of hundred bucks to tens of thousands of dollars. Which is right for you?
You’ll also need refrigerators, warming ovens, display cases, and drip machines. Don’t panic, because there is a resource in your area that can help you decide what you need. Go to your local restaurant supply house and talk through your options.
While you’re there, you can also discuss the cost of tables, display cabinets, and other fixtures you’ll need. The result is you’ll have the final key component to determine the cost of opening a new coffee shop.
What licenses and insurance do I need to start a coffee shop?
Any establishment serving food will need the right licenses and insurance. You’ll also need a health inspector’s OK, as well as fire marshal visits and other inspections before opening your doors. But these requirements can vary wildly from community to community.
To help navigate your local laws and regulations, reach out to the Chamber of Commerce or local economic development agency. These groups specialize in helping businesses succeed, and they’ll know where to point you for the licenses, insurance, and inspections you’ll have to have. Many will even provide a handy checklist created specifically for the food service industry, complete with contact information.
With just a little guidance and some forward planning, you’ll be well on your way to opening a new coffee shop.
Consider Starting a Coffee Shop with Just Love Coffee
You can cut through a lot of the hassle and mystery by becoming the next Just Love Coffee franchise owner. Just Love Coffee is an ideal franchise for individuals who want that indie coffee house feel while enjoying the support and guidance of a larger organization. For more information, or to become the newest Just Love Coffee owner, request our free Franchise Information Report.
Ready to take action on your idea of owning a coffee shop?
Useful resources when opening a coffee Shop:
Useful Tools:
- Coffee Shop Business Plan
- Best Coffee Shop Locations List
- Best Coffee Shop Franchise lists
Useful Planning Supplies:
- Coffee Shop Franchise FDD Document
- Coffee Shop Opening Inspiration Ideas
- Coffee Shop Community minded brands
Average Coffee Shop Opening duration time:
- 6 months
Low-cost franchise opportunity investment with high potential returns
A Just Love Coffee franchise is easy to open, simple to operate and right-sized to scale. That means it’s a low-cost franchise opportunity with a proven business model.
Franchise opportunities are available in communities across the country. Find out what it takes to open a Just Love Coffee Cafe in your coffee-drinking and food-loving community.