How to Start a Coffee Shop: Your 2024 Checklist

An average of 400 million cups of coffee are poured every day in the U.S., and 79% of coffee drinkers admit to having at least one cup every day. That adds up to a whole lot of mojo. 

Coffee shops represent the fastest-growing segment in the food industry, with a 7% annual growth rate, contributing to the coffee market being projected to hit $237.6 billion by 2025. 

Identifying very positive figures raises the question, “Who wouldn’t want to open a coffee shop when there’s so much money to be made?” We get it, however, before you start bulk buying coffee beans and espresso machines, there are a lot of obstacles to overcome first. 

Opening and running a successful coffee shop takes more time, money, and resources than you think, which is why we are here to uncover essential tips and tricks to help you on your way. 

In this guide, we will walk you through the steps required to open a coffee shop, from startup costs to marketing to opening day. Learn more about how to start a coffee business with the best chance of success and profitability.

How Much Money Do You Need to Start a Coffee Shop?

In theory, being a business owner with your own café sounds like fun, but it’s not easy (or cheap). The cost of opening a coffee shop varies depending on its location, size, and design. 

According to the successful coffee shop chain Crimson Cup, the range of costs can be:  

• $80,000 to $300,000 for a coffee shop with sit-down service.

• $80,000 to $200,000 for a coffee shop with a drive-thru only.

• $80,000 to $300,000 for a coffee shop with both sit-down service and a drive-thru.

• $60,000 to $105,000 for a coffee kiosk or stand.

• $50,000 to $154,000 for a coffee food truck.

Since you are embarking on this exciting journey as an independent coffee shop, having a solid business plan and strategic pricing strategy will keep you on the right track for opening day. 

If you’re too relaxed with your spending, especially in the first few years, it will soon catch up with you and leave you with no choice but to close the doors for good. 

To avoid this worst-case scenario, you’re in the right place. Keep note of the average startup costs and budget them into your business plan. Keep in mind that coffee shop startup costs will vary a lot depending on your individual case. 

What Do Coffee Shop Startup Costs Include?

Coffee startup costs can be a bit daunting as there are a few things you’ll need to pay for upfront. You can do this by using your own capital, a small business loan, or even crowdfunding if you are particularly confident in your coffee shop concept.

Here are some essentials to factor into your business plan: 

• Real estate + utilities

• Inventory (namely, coffee!) 

• Equipment

• Tables, chairs, decorations

• POS system + other technology

• Marketing and promotions

Once you have factored in your individual needs when regarding the average cost of opening a coffee shop, you are ready to get into the nitty-gritty. 

Earning repeat customers is key to staying afloat as a local business. Don’t do the bare minimum, invest in high-quality coffee machines and interior design to give them a reason to keep coming back.

Opening a Coffee Shop Checklist

To help guide you on how to start a coffee shop, we have created a 20-step checklist covering everything you need for a successful business owner.

1. Create your coffee shop business plan.

Having a solid business plan for your coffee shop is essential for future success. Seriously! Without it, problems you never saw coming will leave you struggling to survive in the competitive coffee industry.

A thorough business plan will include (but not limited to) the following:

• A clear overview of your coffee shop concept and what makes it unique

• Details on who your competition is and your target market.

• Outline your marketing strategies and how they will attract customers.

• An overview of the workplace policies you plan to enact.

• Overview of startup costs, operating costs, and pricing strategy.

It’s good to be thorough, but don’t get too bogged down with the minor details. Chances are, as your coffee business develops, you will have to adapt to unexpected challenges or industry trends, it’s part of what makes it so exciting! 

2. Find your coffee shop location.

Finding the best place for your coffee shop, whether in a brownstone, a food truck, or somewhere in between, can be a long and arduous process. 

When choosing a location for your coffee shop, you’ll want to consider factors like: 

• Rent cost: Check if it’s within your budget and will make a profit.

• Competitor locations: Being near competition increases can help attract customers in your shared target market.

• Neighborhood trends: Is the neighborhood up and coming? If so, it bodes well for the future of your coffee shop.

• Where your target market is located: To increase reach and profits, place yourself in the natural path of your target market. 

• Visibility: Choose an area that is easily seen by the public with high foot traffic, e.g., a busy street, a tourist hot spot, or a shopping mall. 

• Size of the site: Is the site big enough for your coffee shop layout and operational needs?

• Previous tenants: Look into how previous tenants felt about the location.

• Gut feeling: Don’t ignore your gut feeling about a place, this instinct is there for a reason!

As you can see, there are a lot of things to think about when choosing a location. It’s important to consider all factors because once you’ve signed the tenancy agreement, there’s no going back. 

The best way to find the perfect location is to take your time and not rush the process. For a crash course in Restaurant Real Estate 101, check out this post: How to Find a Site for Your Restaurant.

3. Determine your coffee shop menu

A smart coffee shop menu can capture your unique brand, impress your target market, and drive revenue. All factors that can make or break your coffee business in its first years.

A menu should be more than a list of specialty coffee and baked goods, it needs to be:

• Simple, favoring quality over quantity.

• Aligned with your brand to resonate with the target market.

• On par with competitors in terms of pricing and offering items they aren’t.

• Tried and tested with smaller groups to find out what works and what doesn’t.

4. Choose your coffee

After all, coffee is the star of the show, isn’t it?

The coffee industry is full of buzzwords and passionate caffeine lovers, so choosing your coffee can be much more complicated than buying any old bag of coffee beans. 

As well as the type of bean, your budget will play a big part in where you get your beans from and how you will meet your customer's preferences regarding drinking habits. 

For example, some may only want to support independent coffee shops that source their beans ethically or only serve gourmet coffee. Don’t panic, as a new coffee shop, it will take some time to work your way up to sourcing only the best of the best. 

Before choosing which coffee you will be offering, take the time to sample as many roasters as you can in order to choose the coffee that speaks to you and your brand. 

Here’s a tip: consider going local. Cafe-goers love buying local! And when you decorate that lovely local coffee with latte art you will be instilling a sense of pride in your baristas, while ensuring your customers remember the care you put into your product along the way.

5. Order your coffee shop equipment

With coffee as the foundation of your business model, you’ll need the right equipment to turn beans into profit. 

When ordering coffee shop equipment, be willing to invest but don’t feel the need to break the bank for brand name’s sake.

Here is a rundown of the types of kitchen equipment required to open a successful coffee shop:

• Espresso machine

• Coffee grinder

• Coffee kiosk

• Blender 

• Refrigerators and coolers

• Coffee roaster

• Dishwasher

• Restaurant POS System

6. Manage your coffee shop inventory

Be proactive about inventory management from the start. Even better, set yourself up for success by choosing a POS (point of sale system) with inventory management software. 

One of the most important aspects of running a successful coffee shop is monitoring your food, beverage, and materials costs. 

Before opening day, familiarize yourself with this Glossary of Restaurant Inventory Management Terms.

Here is a quick overview of the specific inventory you’ll need: 

• Coffee-related paper and ceramic products

• Coffee beans, as well as additional food supplies like various creamers and sweeteners

• Various other products, including napkins, straws, and stirrers

7. Determine your coffee and food pricing

A strong pricing strategy is crucial to your coffee shop’s survival. You’ll want to ensure all of your product costs are covered while offering fair prices to your customers. 

Use menu engineering to determine the performance of your products in terms of profitability and popularity. Remember, it may take some time for you to create the right coffee shop menu pricing strategy that improves your cash flow. The easiest way to get a feel for the pricing standards in your area is to check out the competition.

8. Form your coffee company’s values and culture

Some coffee shops tend to believe coffee is the only thing that influences success as a business, but that’s only the tip of the iceberg.

People connect with brands they resonate with. Show your target market that you genuinely care about their experience with you, and they will pay you back tenfold by becoming repeat customers. 

Your business plan is the place for identifying your unique company culture and the values it holds. Knowing this, and most importantly sticking to it, will result in a loyal customer base, happier employees, and high profits. 

9. Craft your unique coffee shop brand.

As we mentioned, your brand really matters. The foundation should be built on your core values and company culture as a coffee business. 

Once established, make your brand consistent and recognizable. There is a lot of competition in the coffee industry, so having a unique, authentic voice is refreshing.

To craft a brand that is a true representation of your values, ask yourself:

• Who you are

• What you’re doing

• Why you’re doing it

To help you determine the coffee shop brand that is right for you, check out Restaurant Branding Ideas: How to Build Your Restaurant Brand.

10. Choose your accounting strategy

When you open your own café, one of the first decisions you will make is whether to outsource your accounting or hire an in-house accounting department. 

Don’t rush this step; there are many things to consider before making a decision. There are a lot of elements that come with opening a coffee shop, your finances are one of them. Unlike other areas that have room for trial and error, when it comes to money, it’s best to call in the professionals. 

11. Create your coffee shop’s marketing strategy

Don’t fall into the “build and they will come” trap. The key to building a loyal customer base and increasing cash flow is through a strong marketing strategy. This can include:

• Offering free coffee samples

• Dropping BOGO coupons in nearby businesses

• Strategic Email marketing

• Getting people talking with word-of-mouth marketing

• Partnering with local restaurants or businesses to share promotion

• Creating a memorable, well-designed brand for your coffee shop

• Developing a comprehensive social media marketing strategy

• Creating video clips to add to your displays, social media, and website

Download Toast’s Restaurant Marketing Plan to get started creating your coffee shop marketing strategy today.

12. Choose a POS system

When you open a coffee shop, a POS system is an essential tool for keeping your entire operation running smoothly. 

The POS system is used for many important things, like taking payments, so it needs to be reliable. Once this is taken care of, you can focus on customer service and thrive as a local business.

Finding the right POS system to handle your coffee shop’s needs can be tricky, as there are many options. 

Check out Toast's Cafe and Bakery POS system to learn more about how a POS tailored to your business type can help your cafe.

13. Start the staff hiring process for your coffee shop early

As your independent coffee shop grows, so will your team. Since you can’t possibly man every station yourself, having well-trained, skilled employees is essential.

Referrals are a great place to start for baristas and cooks. Job boards are also a good source of experienced candidates.

When conducting interviews, ask questions to gauge whether they hold the same values as you do as a business owner. After all, the future success of your coffee shop relies heavily on keeping a loyal team long-term.

Potential employees should understand your coffee shop concept and understand how to deliver a customer experience that mirrors it. During this step, keep your budget in mind. Don’t hire a new employee unless you know for certain you have the consistent cash flow to cover their wages. 

14. Train your staff

In addition to finding an efficient POS system, your POS partner should also offer comprehensive and regularly updated employee training content to keep employees up to date on how to use the technology. 

A well-trained team can efficiently (and safely!) operate coffee shop equipment such as espresso machines and manage inventory while contributing to a positive customer experience. 

To create a comprehensive training schedule that upholds all onboarding best practices, take the time to create a thorough training manual that can be distributed to employees upon their hiring.

15. Stay educated on industry trends

The coffee industry is always evolving, so to stay competitive, you must keep up to date with what’s going on. 

The coffee market is full of innovative, creative people who continue to push boundaries. It is also continuously growing, which means there’s something new to learn almost every day! 

To stay educated, you should be:

• Following industry trends: Social media is a great place to learn what’s trending in your area or even worldwide.

• Attending trade shows: Hear from thought leaders and innovators in the coffee industry. 

• Networking with other coffee shop owners: Simply talking with others in your line of business will give you lots of valuable insight into industry trends.

16. Establish a coffee shop layout and design

The layout of your coffee shop should allow baristas to minimize the number of steps they take to comfortably serve as many customers as possible, contributing to the future success of your coffee business. 

Think about the atmosphere you want to create in terms of lighting and color schemes. To attract customers and encourage them to regular basis, establishing a comfortable place that aligns with your band is key.

To help with interior design, consider researching industry trends or potential competitors on social media for inspiration. However, let your unique vision shine through and create a commercial space no other coffee shop has done before.

17. Get all necessary licenses and permits

Getting the proper licenses and permits is one of the most grueling parts of opening a coffee shop. It involves a lot of paperwork and patience. Coffee shop owners don’t do it for fun, though. These documents are mandatory if you want to operate a business legally.

To execute your business plan smoothly, we heavily advise that you research and start the process of getting all necessary licenses and permits as early as possible.

With an abundance of permits and food licenses required to open a new coffee shop and some taking up to 4 weeks to obtain, it’s smart to start these processes early to avoid any of them postponing your opening day.

18. Offer online coffee ordering

The ability to order online encourages a lot of people to grab a coffee they wouldn't bothered to initially. It’s an easy, convenient way to get your caffeine fix. 

Providing customers with online ordering shows that you are up to date with industry trends and technology, making you a trustworthy go-to when they want your specialty coffee or delicious baked goods.  

19. Create a coffee shop rewards and loyalty program

To encourage customers to come back on a regular basis, harness the power of rewards and loyalty programs. This strategy will boost sales and awareness, it will also give you an advantage over potential competitors. 

20. Offer coffee gift cards

Spread the love of coffee culture with gift cards! Your loyal customer base encourages friends and family to use their gift cards to purchase your services, which provides a great opportunity to acquire more regular customers. 

When people make a purchase with a gift card, they almost always spend more than the initial value. A POS system with integrated gift cards can make the whole process much easier. 

Are You Ready to Start a Coffee Shop?

Starting a coffee shop is a risk and an investment with the power to become a place for community, a go-to neighborhood spot for people’s daily (or twice daily) coffee run, or a staple for remote workers. 

Start-up costs like choosing a location, obtaining permits, and hiring staff are just some of the expensive steps to being a coffee show owner. However, with a strong business model, you can prepare for these costs and emerge with a booming coffee business and a loyal customer base. 

FAQs

How profitable is owning a coffee shop?

Even after taking all the right precautions, profiting from your coffee shop isnt exactly guaranteed. However, even though it varies widely depending on numerous factors, the average profit margin ranges from 15% to 25%. 

How much money should you have to open a coffee shop?

You can gather funds together to cover startup costs either from your own pocket, through business loans, or other funding methods. 

Either way, you’ll need a decent amount, specifically around $80,000 to $275,000, for a sit-down service coffee shop which is typically the most expensive kind. For a coffee kiosk, you can expect to pay around $60,000 to $100,000.

Is it hard to run a coffee shop?

Put simply, being a small business owner in any industry is hard. There are many moving parts that rely solely on you to keep them running smoothly. 

Creating a business model and marketing strategy, as well as managing operating costs, is a big responsibility that doesn’t leave a lot of free time - particularly in the first few years of launching. 

However, with problem-solving and hard work, running a coffee shop is a dynamic, rewarding job, and millions of people do it worldwide. Why don’t you join them?

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