There’s nothing better than a warm latte, handmade by a talented barista. And that’s why millions of people flock to coffee shops every morning to get their daily fix.
If you want to open a coffee shop of your own, there are so many factors to consider. The biggest one, of course, is the price tag. Keep reading for a breakdown of what you can expect to spend when starting a coffee shop, and what you’ll be spending that money on.
What it Costs to Open a Coffee Shop
There is no exact amount you can expect to spend when beginning your coffee shop business. It can cost you anywhere from $60,000 to several hundred thousand.
That range is so large because there are a lot of different things that contribute to the overall cost of opening a coffee shop. The first thing to consider is what type of shop you want to open.
If you’re interested in opening a full-scale brick and mortar cafe in a bustling part of town, your total costs will fall on the higher end of the above spectrum. But if you want to start out with a small coffee stand, you can expect to spend much less.
With those general ballparks in mind, let’s break down exactly what you can expect to spend your money on when opening a coffee shop.
First things first, you need a place for your shop. Let’s assume you are looking for a brick-and-mortar space. Monthly rent for a nice spot can be up to several thousand dollars.
Naturally, you can expect to pay more in busier parts of town. But the trade-off is that you are likely to get more business in highly trafficked areas.
If you happen to find a space that is already outfitted for a coffee shop, you can save yourself a lot of money on renovation. Otherwise, you will have to spend several thousand dollars outfitting the space to suit your needs. This means electric work, plumbing for your espresso machine, and building out the space to accommodate storage and seating.
You should also note that during the time you spend renovating, you will be paying rent but not making any money. Renovations can take months.
Next up, you should expect to devote a significant amount of money to equipment. A high-quality espresso machine costs thousands of dollars.
And this is one case where more money does buy you a higher quality. So, if you want people coming back day after day, you should invest in a good piece of equipment.
You will also need coffee brewers and carafes, an industrial grinder, and dishware and serving utensils. If you are considering serving a light menu, you may also need portable grills or a microwave to heat things up.
Altogether, these things will cost a lot upfront. But the idea is that once you buy them, it will be a while before you have to replace them.
An important step to save yourself money, in the long run, is to get coverage for your more expensive items. That way, when they do eventually suffer technical failures, they won’t break the bank.
There are some things that you’ll need to buy to open a coffee shop that will become recurring costs. These things are known as inventory.
These items include disposable cups, straws, lids, napkins, etc. Your guests will always need these things, so you need to factor them into your monthly budget.
The same goes for edible inventory. As a coffee shop, you will always need milk, espresso beans, tea bags, and any baked goods you want to stock in your shop. Form good bonds with your vendors, as they may become lifelong business relationships.
Point of Sale System
You will need a method of accepting payment from your customers. This equipment is known as a POS, or “point of sale” system.
Many companies will lease you their equipment when you use their system. So, this will also become a monthly cost for your business.
These days, digital POSs also allow you to access scheduling apps for your staff, making it easy to see who is working on any given day. That brings us to our next price breakdown: labor.
Labor, or paying your staff, is a big expense. That’s why a lot of coffee shop owners spend their early days running their shop by themselves.
But eventually, you will need to hire a coffee shop manager, as well as some baristas.
For the manager, your price estimate should account for a competitive salary. If you lowball this salary, you will only be able to hire inexperienced managers. But if you appoint the right person to lead your cafe, it will save you money in the long run.
For the rest of your staff, consider what the minimum wage is. But then do some research and see what other coffee shops in the area are offering. You need to offer a competitive wage to attract a stellar staff.
Also, keep in mind that training is a big labor cost. The happier your employees are, the less turnover you will have. This will save you money in the training department.
These days, marketing is a full-time job. You may be able to go it alone for the first couple of months, but eventually, you’ll want to consider hiring a full-time marketing expert for your shop. This means factoring another salary into your opening costs.
But the benefit of doing this is that a marketing professional can grow your business exponentially. In today’s digital marketplace, nothing draws customers into a coffee shop like a well-placed Instagram ad.
Happy Opening Day
Getting ready to open a coffee shop is an expensive venture. But fortunately, there are ways to break down the cost and plan ahead.
Start forming vendor relationships now and looking for deals on equipment. Before long, you’ll be drinking lattes at your very own cafe.
Looking for more advice on how to plan for your next investment? Browse our Business section for helpful tips.