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Starting a day with a cup of coffee is becoming a very prevalent daily routine of many people nowadays. The fact is that there are over 2.25 billion cups of coffee consumed in the world every day. That is such great room for the rise of the coffee industry worldwide. In addition, the worldwide coffee market valued at USD 102.02 billion in 2020, with a 4.28% annual growth rate predicted from 2021 through 2026. So, running a business with the coffee industry is not a bad idea for those who want to make money on their own. However, the big question is: How much does it cost to open a coffee shop?

The average cost to open a coffee shop really depends indeed, ranging from $25.000 to up to $375.000. It is strongly influenced by the following criteria:

how much does it cost to open a coffee shop

Business plan

Opening a coffee shop necessitates a significant commitment of both time and money. You have to spend time today to learn how to set up and manage a successful coffee shop. Certainly, the first thing you have to do is make a clear business plan. It’s a way to make a list of the steps you’ll need to complete and determine: how much does it cost to start a coffee shop?

A coffee shop business plan may help you well-manage finance projection and get your firm off the ground by following a standard retail business management format. It consists of a single document broken into many sections including market research & data, competitive analysis, sales strategies & cost analytics, capital & labor requirements, and cost component.

Location

how much does it cost to open a coffee shop

The coffee location should be the next as it plays an important role in the way you run your business. It affects the items you offer, the number of customers you attract, and the monthly leasing cost. As a result, the cost might vary greatly depending on where and how you want to establish a shop.

Associated with the location, we have to remind these bellowing essential costs:

  • Rent: This will vary depending on your area and how you want to operate. Your yearly rent should not be more than 15% of your annual revenue.
  • Utilities: While you’re setting up your new store, you’ll need to turn on the gas, electricity, and water to ensure that your business functions well. These steps help to make other actions more effective.
  • Design & layout: The cost of designing and laying out your new room might range from $6,000 to $10,000. The concept, brand, and menu for the coffee shop are all included. The size, location, varieties of coffee, and customers all have a huge impact on the design of your cafe. You may hire third parties to get the greatest design possible. Alternatively, you may do it yourself to save money for other expenses as long as it is acceptable and catchy. That is entirely dependent on the variables mentioned. The layout of your coffee shop, in particular, should allow baristas to reduce the number of steps they take, boosting earnings and order fulfillment time. It results in happier customers, a more successful coffee, and, eventually, more successful baristas.
  • Furniture: Indoor tables and chairs often cost around $1,000. The same is true for outside furniture, assuming it is appropriate for your shop. A music system and a mop sink each cost around $400, including installation expenses. You should anticipate investing roughly $700 to install a dishwasher or sanitizer.

 Software, Equipment, and Supplies

how much does it cost to open a coffee shop

Some of the most significant coffee shop startup costs are the software, equipment, and supplies required. Because prices vary depending on quality, brand, and quantity, it’s critical to know which equipment or software is worth the money.

Equipment

Some typical pieces of coffee shop equipment are Espresso machines, grinders, refrigerators, freezers, ice makers, coffee roasters, blenders,… which are the core of your shop. Among these, a good quality Espresso machine is the most important investment that you need to make. A good automatic Espresso machine can cost anywhere between $5,000 and $20,000. Other equipment costs can range from $6,000 to $90,000. Besides, POS hardware is also very important. In a survey in 2020, 78% of retailers said that they were not capable of identifying their customers until checkout. POS hardware includes all the devices connected to the POS software to build a whole system for payment processing, order, and customer management. The total cost of a POS system is usually between $3,000 and $10,000. The typical devices are screen, bill printer, card reader, scanner, cash register,… The cost for each piece of equipment on the system may vary depending on brand and quality, you just need to find the one which is most suitable for your budget and your needs. 

Software

There is some needed software to run a retail business including inventory management software, POS software, eCommerce CRM, accounting,… It is hard to achieve all those software together to support your shop since the price is not favored. Luckily, nowadays some suppliers have developed an all-in-one software and system that can help you solve all the headache issues about inventory, payment, customer service. Moreover, this software is also open for easy integration with other needed software to run a successful business. Some outstanding names can be listed as Megastore, Vend, ConnectPOS,…The all-in-one software cost normally ranges from $50 to $200 per month.

Supplies

It is essential to determine the food cost percentage before running the coffee shop. This data can help you determine the suitable ingredients which meet your cost requirements and your expected profits. You should start by getting precise estimates from suppliers and figuring out how to negotiate better costs. On the other hand, the reputation of your coffee store will be strongly influenced by the quality of your offerings. You will be more likely to amaze your consumers with delicious and healthful meals if you offer distinctive recipes produced with fresh, sustainable, high-quality ingredients. Therefore, you have to make a good balance between the cost and the quality.

Hiring staffs

how much does it cost to open a coffee shop

One of the most difficult aspects of running a coffee business is hiring and managing employees. You’ll need independent, hardworking, and friendly staff who can represent your image to the customers. In addition, hiring a good barista staff is a key factor for your coffee shop’s success. To find good staff, you have to pay a suitable salary and provide proper training which will cost some budget. Besides, you also have to pay other added benefits and allowances. Therefore, when calculating the cost of hiring staff, you have to consider all those factors to have a closet number.

Marketing

Marketing is necessary for a new coffee shop. It can be on-time or ongoing costs depending on your development plan. However,  you should spend 10% of your net revenue on marketing and promotion. Marketing costs will mainly focus on designing posters, uniforms, opening ceremonies, and website development. You can choose to ask for outside service or hire a marketing specialist to be in charge depending on your budget.

License, Taxes, and Insurance

how much does it cost to open a coffee shop

Starting a firm necessitates the acquisition of the necessary permits. You’ll need many different sorts for a coffee shop, as well as insurance.

  • License: The cost of registering a business is $50, plus a business license is between $25 to $7,000. It is determined by the business’s type.
  • Insurance: It is a critical and required investment for any company. Coffee businesses spend an average of $500 to $1,200 a year for $1 million in general liability coverage.
    Workers’ compensation and commercial property insurance were typically included in the insurance.
  • Taxes: Getting to know which taxes apply to your coffee shop will not only make working with a tax professional easier but will also lower your chance of forgetting anything vital. This information will specifically assist you in protecting your assets and simplifying your annual tax file.

Among the taxes that may apply to your firm are:

  • Income Tax
  • Value Added Tax
  • Withholding taxation
  • Tax for Unemployment Insurance

Related coffee shop cost questions

How much does it cost to run a coffee shop per month?

Besides the cost of opening a coffee shop, you have to pay the average total monthly expenditures involved with running your coffee business. They include labor costs, rent, utilities, maybe loan interest, coffee and condiment charges, delivery costs, and so on. They are determined by the size of your coffee business and a variety of other considerations.

How can I open a store with no money?

There are two ways to open a store if you don’t have money. The first way is to borrow a loan from banks. You will need to pay bank interest every month for these borrowings. However, not everyone can borrow from banks. You have to present your property to guarantee the loan. The 2nd way is finding investors who are interested in your store plan. Usually, they will get back the investment when your store runs successfully, plus some added cash on top of the initial investment.

What qualifications do I need to run a coffee shop?

You don’t need any specific qualifications to run a coffee shop. However, it is better that you have some knowledge about the industry, the service, and the products. When you understand the products you sell, you can make the right decisions. Besides, you will need some management and hospitality skills to better control your operations and service.

Conclusion

To sum up, the question “how much does it cost to operate a coffee shop?” has a variety of answers. There are so many elements that influence costs and each answer has its explanation. However, regardless of your financial limitations, this is a highly adjustable business. You must figure out all the suggested criteria and adequately arrange your budget for whichever form of coffee business you wish to start.

Kate N.

Author Kate N.

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