Hospitality

How To Set Up A Café Business | Coffee Shop Company

Wake Up To A New Life

North Americans love their coffee. Each day Americans drink 400 million cups of coffee, equivalent to 146 billion cups of coffee annually, making the US the leading consumer of this beverage. And to serve the needs of all those coffee drinkers, there are small-town coffee shops and coffee stands on almost every street corner in the nation. Starting a cafe or coffee shop and selling coffee and cafe-style food can be very lucrative; many people succeed by venturing into the coffee shop business. But what is often not revealed is that many coffee businesses do not make it past the first few months. Stiff competition is a significant factor. But that is not to say that opening a coffee business cannot be successful with good planning. You can overcome most obstacles and turn your ideas into a profitable business. Here we’ll provide you with some tips on how to set up a cafe business:

Coffee Shop For Sale

To succeed in the cafe business, you should know a great deal about your essential product- coffee. Learn where coffee is grown, how it is produced, the different types of coffee grown, how it is processed, and the various commercial varieties. You also need to speak to other cafe owners and try to learn from their experiences. You need to know what coffee drinkers like and what they do not. Americans may like their coffee, but they are also very fussy about their morning fix. The more you know about coffee and its consumers, the faster you will overcome any obstacles.

Coffee Shop Ideas

Once you have a vision, you’ll need to create a plan that should include the following?

What will your cafe be named?
What will it look like inside and outside? If you have no idea, visit 6-10 local cafes to check out the decor to get some ideas.
What type of ambiance do you want to create?
What do you want customers to feel when they walk into your cafe?
Visit other cafes and determine the type of menu they serve, which will give you some good ideas.
What kind of decor do you want inside?
What shape, color, and style of your cups do you want? To establish a brand, you need to have something unique.

Coffee Shop Licensing

Go to your local government office or chamber of commerce to determine what licenses and permits are required to operate your cafe. You must register your business with the IRS and obtain an EIN. Also, you will need to register for state and federal taxes. If you have more than two employees, you will also need to purchase workers’ compensation insurance.

You may be required to pick up a food safety certificate

How Can I Open A Cafe With Limited Funding?

If you have limited finances, some options for opening a cafe include the following.

Seek an investor but make sure you have a plan beforehand. No one is just going to give you money based on an idea.
Try crowdfunding
Start small and consider a food truck coffee business.
Join another cafe that is in operation

Small Business Administration

The Small Business Administration, SBA has a program to fund new startups and is worth a look

Here are a few other funding options

Coffee Shop Startup Costs

The amount of money needed to start a cafe depends on its size. If you want to build a small-size cafe with indoor seating, the cost can vary from $150,000-$300,000. Cafes with ONLY a drive-through can cost anywhere from $50,000 to $150,000. If you want a small coffee kiosk at a mall, the cost ranges from $10K-$100K.

Costs To Open A Coffee Shop

Cafes usually tend to be smaller than full-sized restaurants, so the average rent varies from $4,000 to $7,000 a month. One of the most critical features of a cafe business is its location. Before you lease or rent a place, you must scout the area for traffic. It will help if you pay attention to your foot traffic, available parking, rush hours, visibility, accessibility, and competition from other cafes and fast-food restaurants.

Before you sign a lease, have the contract checked out by a real estate lawyer. You need to understand the lease details, the duration of your lease, and the penalties for early discontinuation. You’ll also need to visit your desired location in the evenings and on weekends to assess whether your traffic is consistent.

Cafe Business Plan

The cafe business is intensely competitive. A key reason that many people fail is that they never bother to make a plan. A comprehensive plan is vital as it can help guide and navigate any obstacles. A good plan should include the following:

Where will you open the cafe?
Who are your customers?
Are there any other cafes nearby? Who is your competition?
Are there any other fast-food restaurants nearby? Fast food joints like McDonald’s also sell coffee and can quickly take away from your potential because they offer low prices and an inexpensive breakfast menu.
What are the demographics of the population where you plan to open the cafe? Younger people tend to be coffee drinkers.
How will you market your cafe?
What prices will you set for the coffee?
What size is your cafe?
What are your startup costs?
How will you fund the cafe business?
How many people will you employ?
What appliances and furniture will you need?
Will the cafe have an outdoor seating area? A drive-through?
How many varieties of coffee will you serve?
Where will you get your wholesale coffee?
What is the busiest time of the day?
What are your business hours?
What other foods will you have on the menu?
Is there parking available?
Is the cafe accessible? Is it visible?
Is the cafe located in a plaza, or mall, or is it an isolated store
What is the foot traffic like every day?

Making a business plan will help you understand what is involved in setting up a cafe. As you get acquainted with the numbers, you’ll better understand what will be required to make the business successful. A good business plan can be a road map and help you anticipate any potential issues.

There are some handy services available online

Some business plan templates that you should consider include:

Small Business Administration, SBA

SBA Website

You need to find the right employees to ensure efficient and excellent customer service. The staff you select must have a great attitude and understand team culture spirit. No matter whom you choose, provide adequate training to all who offer the same type of service.

Staffing agencies that you may want to use:

Cafe Business Incorporation

Check out these few companies that can assist you in getting your cafe business started.

Here are a few government links you might want to visit

IRS Website

This site by the IRS is a must-see when beginning your LLC.

Cafe Design

Once you know your customer demographics, You can consider a design for the cafe. Choices include retro, modern, art deco, or sophisticated. You also need to ensure that it is family-friendly. Many people now focus on their health, so the cafe should also cater to health-conscious individuals and vegans. The next thing to consider is the furniture, lighting, and privacy. The cafe should be functional, and your furnishings should not hinder customer flow and should provide a good atmosphere for the customer. Also, create a space where customers can form a line and reach items they need without bumping into other customers.

Here are a few design companies that specialize in the cafe

My Coffee Shop Location

Here is a list of some popular commercial real estate companies:

Coffee Shop Profits

If your cafe’s location seems perfect, you should expect to serve anywhere from 200-300 customers daily. This can amount to $2,000-$3,500 in gross profit daily.

A Good Coffee Shop Should

Offer high-quality coffee
Consistently excellent and fresh produce
The decor is inviting and warm
The staff are pleasant and courteous
Excellent menu selection
Reasonably priced
Always clean and tidy
Playing the right music.

My Cafe Furniture

Here is a list of furniture stores in the USA

Here is a list of online furniture companies

Will My Cafe Succeed?

If you have done your homework, there should be no reason why the cafe won’t do well. But do not expect to hit the jackpot in the first month. Building a business from scratch takes time. You will need patience. Be present at your business and correct any deficiencies that customers report. Regularly assess your prices, services, and food. The most important thing is to maintain good quality; if you give it time, you will succeed.

Offer a discount when customers bring their own mug.
Going green is the new trend, and most people approve of it. So as much as possible, reduce the use of plastic utensils and plastic straws. Use biodegradable plastic cups and wrapping.
Partner with a local shelter or soup kitchen so that no leftover food is ever wasted
Make your cafe pet-friendly as more people tend to venture outdoors with their four-legged friends.
Regularly consider community gatherings at your cafe of local comedians and musicians.
If time and personnel permit, offer catering services to local events.

Coffee Shop Menu Ideas

The world of coffee is continually evolving; customers always want something new and different. So you will have to keep up with the latest industry trends. Some of the offerings you should consider include the following:

Dairy-free milk (e.g., almond milk, oat milk, etc.)
Cold-brew
Affogato
Americano (or Espresso Americano
Caramel Macchiato
Cafe Mocha
Caffe latte
Cafe au Lait
Cafe Cubano
Cappuccino
Double Espresso
Frappuccino
Irish coffee
Turkish coffee
Variety of add-on syrups
Whipped cream as a topping

Keep your beverages versatile by offering 12 oz and 16 oz options.

If you are unsure about pricing, visit a few cafes and determine what they charge. Most cafes charge extra for dairy alternatives. Also, there is an additional charge for syrups and iced drinks that cost more than hot beverages.

Cafe Menu Design

Here are a few menu design services available online

Cafe Restaurants Menu Ideas

Keep things simple, and avoid complicated menus. This will increase efficiency and consistency in the foods you offer.

Salads
Sandwiches
Soup
Baked foods like donuts, desserts, cake slices, pastries
Breakfast foods like cereals, fresh juice, toast

Try not to have more than a dozen food options, as this will increase your workload but ensure that you have vegetarian and vegan options. You must purchase the coffee and related supplies from a manufacturer or supplier. You will also need to access a wholesale bakery and a sandwich catering service. Make sure that you have vegetarian, vegan, and gluten-free options.

Here are a few wholesale coffee supply companies

How Should I Price My Coffee?

Even though millions of people buy coffee every day, people complain that $5 for coffee is expensive. It is essential to have reasonably priced coffee. To price your coffee, deduct all the expenses like the cost of the cup, sugar, milk, coffee ingredients, labor, utilities, etc., then add a few percentage points as your profit. The best advice is to draw a small profit if you are starting out. By attracting more customers, you will enjoy more sales and higher yields. Most customers will not frequent your cafe if you offer high-priced coffee.

Coffee Shop Marketing Ideas

Before you open your cafe, marketing should be on your mind. Create a webpage and participate on social media platforms like Facebook and Instagram. When communicating online, be pleasant, personable, and helpful. Engage regularly with coffee drinkers and post photos of your establishment. Make sure your website has a map showing the location of your cafe. Do not let your webpage go stale, and update the information regularly.

My Cafe Website

Building your own website can save you some money. Start by choosing and registering a domain name. You can register your domain name with the hosting company you decide to buy it from.

Some of the common domain registrars include:

Here is a list of options for building a regular website.

Here is a list of drag-and-drop page builders for WordPress.

How Can I Attract More Customers To My Cafe?

Attracting more customers requires undertaking multiple approaches that include:

Competitively priced
Be active on social media
Initiate a loyalty card program
Participate in local community events
Offer branded supplies like coffee mugs
Give away T-shirts, stickers, etc
Offer free wifi
Sponsor social and school events

What Are The Risks Of Opening A Cafe?

Some of the common risks faced when opening a cafe include the following:

Poor location
High rent
Poorly designed cafe with difficult access and no parking
Difficulty hiring reliable staff
Poor customer services
Poor quality coffee and menu
High operating costs
Poor management
Lack of marketing
A high price of raw materials

Do Cafes Fail?

Yes, cafes fail all the time time. The primary reason for failure is unpreparedness. Most owners had no idea that there was much more to the business than selling coffee. There are cafes worldwide, and many fast-food chains also serve coffee at reduced prices. Because of the intense competition, having a plan is vital. It would help if you had a plan to beat the competition.

Opening Your Cafe – The Grand Opening

There are a few things to consider before opening your cafe. First, ensure all the staff is ready and you have ample supplies. The next thing is to ensure no other events are nearby, as it will be a significant distraction. Before the grand opening, consider a gentle introduction that will work as a dry run. This dry run will let you know if any issues or kinks need to be ironed out. If all is well, then have your grand opening. On this particular day, offer everything at discount prices, encouraging customers to return.

Coffee Shop Equipment

When starting out in the cafe business, leasing equipment is an option for those with limited finances. Today many appliances like coffee machines are available on a short-term lease, which is more practical and realistic. You pay rent on your expensive equipment every month. Once the business is up and running, you’ll be able to buy new appliances.