Things to consider when opening a coffee shop

Starting a new coffee shop takes more than grinding and brewing coffee beans. Like owning any small business or restaurant, there are many different aspects to successfully opening a coffee or tea shop. We've broken down the process into nine categories you need to be mindful of when starting your new business.

  • Location: Consider the traffic flow, visibility, and demographics of the area when choosing a spot for your coffee shop. You want a place that is easily accessible, with good foot traffic and is convenient for your target customer base.
  • Concept and Menu: Determine your coffee shop's concept and menu offerings, including drinks, food, and pastry items. Consider factors such as the cost of ingredients, labor, equipment, market trends, and consumer demand.
  • Coffee Shop Equipment: Invest in high-quality, reliable equipment, such as espresso machines, coffee brewers, refrigerators, and ovens. Consider cost, energy efficiency, and ease of use when selecting equipment.
  • Legal Requirements: Obtain all necessary permits, licenses, and certifications to operate a food establishment, such as food service permits, health department inspections, and liquor licenses.
  • Legal Requirements: Obtain all necessary permits, licenses, and certifications to operate a food establishment, such as food service permits, health department inspections, and liquor licenses.
  • Marketing and Advertising: Develop a marketing and advertising strategy to attract customers and build brand awareness. Consider social media, flyers, local advertising options, community events, and partnerships.
  • Staffing: Hire and train a knowledgeable and friendly staff to provide excellent customer service and support your coffee shop's operations.
  • Financial Planning: Develop a budget and financial plan to ensure your coffee shop is financially sustainable. Consider your start-up costs, operating expenses, and projected revenue.
  • Suppliers and Partnerships: Establish relationships with suppliers and partners, such as coffee roasters, food suppliers, and local businesses, to ensure a steady supply of high-quality ingredients and services.
  • Customer Experience: Create a welcoming and inviting atmosphere that enhances the customer experience and sets your coffee shop apart from competitors.

What to consider when selecting a location for your coffee or tea shop?

Selecting the right location for your coffee or tea shop is one single most important decisions you'll make before opening. Carefully consider the following aspects when deciding where you'll serve your drinks.

  • Foot traffic: Choose a location with high foot traffic and visibility to attract customers and increase visibility.
  • Demographics: Consider the area's demographics to determine if it fits your target customer base well.
  • Parking: Ensure the location has adequate parking for your customers, or consider alternative transportation options such as public transportation.
  • Competition: Research the competition in the area to ensure your coffee shop stands out and fills a gap in the market.
  • Rent and Lease Terms: Consider the cost of rent and lease terms when choosing a location, and make sure the costs align with your budget and financial projections.
  • Space and Layout: Consider the space and layout of the location to determine if it is suitable for your coffee shop's concept and operations, including the kitchen, seating area, and customer flow.
  • Accessibility: Choose a location easily accessible for customers and employees, with convenient access to major roads, highways, and public transportation.
  • Utilities: Ensure the location can access adequate utilities, such as water, electricity, and internet, to support your coffee shop's operations.
  • Zoning: Ensure that the location complies with local zoning regulations, and obtain any necessary permits and licenses before opening your coffee shop.
Group of friends having coffee together in a cafe.Group of friends having coffee together in a cafe.

Your coffee or tea shop may be perfect in every other way, but you will only succeed if your menu appeals to customers. Develop the most appealing menu you can with the following tips:

  • Customer Needs and Trends: Consider customer needs and trends, including dietary restrictions and preferences, to determine which menu offerings appeal most to your target customer base.
  • Competitor Analysis: Research competitor menu offerings to ensure your coffee shop offers a unique and desirable selection of drinks and food items.
  • Cost and Profit Margins: Consider the cost of ingredients, labor, and equipment when determining menu offerings, and aim for menu items with high profit margins.
  • Specialty Drinks and Food: Offer specialty drinks and food items that set your coffee shop apart from competitors, such as specialty espresso drinks, baked goods, and pastries.
  • Sustainability and Local sourcing: Consider sourcing ingredients locally and using sustainable practices to appeal to environmentally conscious customers and support local businesses.
  • Branding and Image: Ensure your menu offerings align with your coffee shop's branding and image, and consider how menu items will be presented and marketed to customers.
  • Seasonality: Consider offering seasonal menu items, like iced drinks in the summer and warm drinks in the winter, to keep your menu fresh and relevant.
  • Food Safety: Ensure all food and drink offerings comply with local food safety regulations and guidelines and implement food safety procedures to protect customers and employees.
coffee extraction from professional coffee machine with bottomless filtercoffee extraction from professional coffee machine with bottomless filter

How to choose the right commercial coffee and tea brewing equipment

Whether you're opening a dedicated coffee shop or plan to offer coffee and tea at your bakery or restaurant, use the tips below to help you choose the right equipment to make the right brew for your customers.

  • Purpose and Functionality: Determine the purpose and functionality of each piece of equipment, and choose equipment specifically designed for commercial coffee and food preparation. Equipment intended for at-home use won't be able to meet the day-to-day demands of a coffee shop.
  • Brand and Reputation: Consider purchasing equipment from reputable and well-known brands with a proven track record of quality and reliability.
  • Cost and Budget: Consider the cost of equipment and ensure it fits within your budget and financial projections.
  • Energy Efficiency: Look for energy-efficient equipment to help reduce operating costs and promote sustainability.
  • Maintenance and Repair: Consider each piece of equipment's maintenance and repair requirements, and choose easy-to-maintain and repair items.
  • Capacity and Volume: Choose equipment that can handle the volume of customers and orders you expect to serve in your coffee shop.
  • Space and Layout: Consider the space and layout of your coffee shop, and choose equipment that fits into the available space and supports efficient customer flow and operations.
  • Safety and Compliance: Ensure all equipment complies with local safety regulations and guidelines and implement safety procedures to protect customers and employees.

What licenses and permits do you need to open a coffee shop?

Making sure your coffee shop follows all the applicable laws and regulations for food service businesses in your area is important. Follow them to avoid being fined or forced to close. Use our list as a starting point for what you'll need to do.

  • Business License: Obtain a business license from the local government to legally operate a coffee shop.
  • Food Service Permit: Obtain a food service permit from the local health department to ensure that your coffee shop meets food safety and sanitation standards.
  • Alcohol Permit: If you plan to serve alcoholic beverages, obtain an alcohol permit from the local government.
  • Tax Registration: Register for state and local taxes, including sales and business taxes.
  • Health and Safety Inspections: Pass health and safety inspections to ensure your coffee shop meets all local regulations and standards.
  • Insurance: Obtain liability insurance to protect your business against lawsuits and claims.
  • Food Safety Training: Ensure all employees receive training and certification to understand food safety and sanitation procedures.
  • Building and Zoning Regulations: Ensure that your coffee shop complies with building and zoning regulations, and obtain any necessary permits and certifications.

Requirements vary by jurisdiction, and it is important to research and comply with the specific regulations and requirements of the local government where you plan to operate your coffee shop. Enlisting the help of a local business attorney can help you navigate the process.

Two cups of coffee on the table, latte artTwo cups of coffee on the table, latte art

How do you market and advertise a new coffee shop?

Once you have a location, licenses, and menu for your new coffee or tea shop, how do you start attracting customers? Follow our tips to help develop a basic marketing and advertising plan for your small business.

  • Know Your Target Audience: Identify your target audience and their preferences, behaviors, and needs to develop a marketing strategy that resonates with them.
  • Unique Value Proposition: Develop a unique value proposition that sets your coffee shop apart from competitors and highlights its unique selling points.
  • Social Media Presence: Establish a strong presence on social media platforms where your target audience is active and engage with them through regular posts and promotions.
  • Customer Loyalty Programs: Implement a loyalty program to reward and retain repeat customers and encourage word-of-mouth referrals.
  • Community Engagement: Engage with the local community by sponsoring events, hosting community gatherings, and supporting local causes.
  • In-Store Promotions: To drive foot traffic and sales, offer in-store promotions, such as discounts and special deals.
  • Menu Innovation: Continuously update your menu offerings to keep customers interested and engaged.
  • Collaborations and Partnerships: Collaborate with local businesses, organizations, and influencers to expand your reach and increase brand exposure.
  • Data and Analytics: Use data and analytics to track the success of your marketing efforts and adjust your strategy as needed.
  • Consistent Branding: Maintain consistent branding across all marketing channels, including social media, print materials, and in-store signage, to reinforce your brand identity.

How to hire and keep employees at a coffee shop?

A friendly, passionate, efficient, and knowledgeable staff is critical to retaining customers at your new coffee or tea shop. Use our tips to help you find and retain your perfect employees.

Barista Prepare Coffee Working OrderBarista Prepare Coffee Working Order
  • Determine Business Hours: Consider the operating hours of your coffee shop and the busiest times of day to determine the number of employees you will need.
  • Job Descriptions: Create clear job descriptions for each position in your coffee shop, including responsibilities, qualifications, pay scale, and expectations.
  • Staffing Requirements: Determine the staffing requirements for each position, including the number of employees needed, the number of hours each employee should work, and the schedules they should work.
  • Employee Skills: Identify the skills and experience required for each position and assess the strengths and weaknesses of your potential employees to determine the best fit.
  • Employee Training: Develop a comprehensive training program for new employees, including health and safety training, customer service training, and product knowledge training.
  • Employee Benefits: Offer benefits, such as health insurance, paid time off, and opportunities for advancement, to attract and retain quality employees.
  • Scheduling: Create a flexible scheduling system that meets the needs of your employees and allows for adequate coverage during peak business hours.
  • Performance Evaluations: Establish a collaborative system for regularly evaluating the performance of yourself and your employees to ensure everyone is meeting expectations. Work together to help identify areas for improvement, develop ways to improve, and how to execute improvement plans.
  • Succession Planning: Consider succession planning to ensure that key employees are trained and ready to take on leadership roles as your business grows.

How do you finance opening a coffee shop?

When opening a new tea or coffee shop, you must ensure you can afford to run it. Our tips will help you start figuring out your coffee shop's financing.

  • Business Plan: Develop a comprehensive business plan outlining your coffee shop's goals, strategies, and financial projections.
  • Start-Up Costs: Identify all start-up costs, including equipment, supplies, licenses, and rent, to determine the amount of capital you will need to launch your business.
  • Sales Projections: Establish realistic sales projections for your coffee shop, taking into account your target audience, competition, and the local economy.
  • Operating Costs: Identify all ongoing operating costs, including rent, utilities, employee salaries, and marketing expenses, to determine the operating budget for your coffee shop.
  • Cash Flow Projections: Develop detailed cash flow projections to ensure that you have adequate funds to cover expenses and maintain positive cash flow.
    Pricing Strategy: Determine a pricing strategy that balances costs, customer demand, and competition to maximize profit margins.
  • Break-Even Analysis: Conduct a break-even analysis to determine the point at which your coffee shop will cover all of its costs and begin generating a profit.
    Financing Options: Consider financing options, such as loans, grants, and investments, to secure the capital you need to launch and grow your coffee shop.
  • Financial Statements: Develop accurate financial statements, including balance sheets, income statements, and cash flow statements, to monitor the financial performance of your coffee shop and make informed decisions.
  • Financial Advisors: Consider working with a financial advisor or accountant to help develop and implement a sound financial plan for your coffee shop.
Charming woman with beautiful smile reading good news on mobile phone during rest in coffee shop.Charming woman with beautiful smile reading good news on mobile phone during rest in coffee shop.

How do you develop partnerships with suppliers for your coffee shop?

Creating partnerships with suppliers, including businesses like local coffee roasters, bakeries, and reputable equipment suppliers, can help you expand your customer base. Follow the step below to help build these vital relationships.

  • Research: Research potential partners and suppliers in your area to identify the best products, prices, and services for your coffee shop.
  • Networking: Attend industry events, join trade organizations, and connect with other coffee shop owners to build relationships and identify potential partners and suppliers.
  • Evaluate Quality: Evaluate the quality of the products and services offered by potential partners and suppliers to ensure they meet your standards and your customers' needs.
Barista in apron is holding in hands hot cappuccino in white takeaway paper cup.Barista in apron is holding in hands hot cappuccino in white takeaway paper cup.
  • Negotiate Terms: Negotiate terms and conditions with potential partners and suppliers, including pricing, delivery schedules, and payment terms, to ensure they align with your business goals and financial requirements.
  • Contractual Agreements: Establish clear and detailed contractual agreements with partners and suppliers to protect your business and provide a positive working relationship.
  • Communication: Maintain open and regular communication with your partners and suppliers to resolve any issues and ensure you receive the best products, prices, and services for your coffee shop.
  • Continuously Evaluate: Continuously evaluate your partners and suppliers to ensure they meet your expectations and support the growth and success of your coffee shop.
  • Build Strong Relationships: Build strong relationships with your partners and suppliers to secure their ongoing support and facilitate a mutually beneficial partnership.

How do you create a customer-friendly coffee shop?

There are, broadly, two types of coffee and tea shop customers: the one who comes in, grabs their order, and leaves, and the one who spends hours working or relaxing in the shop while drinking several cups of coffee. If your store has room for customers to enjoy their beverages, ensure it's an enjoyable and comfortable experience. Follow our tips to create an inviting space for both types of customers.

  • Identify your target audience: Understanding your target customers' needs, preferences, and values is critical to creating an atmosphere that resonates with them and meets their needs.
  • Create a warm and welcoming atmosphere: The design, decor, and ambiance of your coffee shop should create a friendly, welcoming, and inviting atmosphere that encourages customers to stay and socialize.
  • Offer quality products and service: Offering high-quality coffee, tea, and food, along with friendly and attentive service, is essential for creating a positive customer experience.
  • Personalize the experience: Personalizing the customer experience through customized beverages, unique menu offerings, and personalized attention can help build loyalty and repeat business.
  • Emphasize comfort: Providing comfortable seating options, free Wi-Fi, and a peaceful atmosphere can help create a welcoming environment that customers will want to return to.
  • Foster community: Encouraging customers to interact with each other and building a sense of community in your coffee shop can help foster a positive atmosphere and create a sense of belonging.
  • Incorporate technology: Incorporating technology, such as mobile ordering, digital menu boards, and electronic payment options, can enhance the customer experience and streamline the order and payment process.
  • Get customer feedback: Continuously solicit feedback from customers to identify areas for improvement and ensure that you are meeting their needs and delivering the best customer experience possible.