Did you know that the first coffee shop opened in Turkey, dating back to 1475? The shop’s name was Kiva Han from the Turkish word kahvehane, meaning coffeehouse. Turkish coffee was usually served black and unfiltered. Read more about the history of coffee at dripped.
The idea of sweetening coffee with cream came into 1529 thanks to the Europeans. Since then, the coffee shop industry has been continuously growing and will become a $237.6 billion market by 2025.
Starting a coffee shop can be a great business idea. But how much does it cost to open a coffee shop? In this article, we give you a breakdown of the cost to open a coffee shop.
Table of Contents
Your Business Plan
Formulating a business plan is the first step to any business venture. A business plan functions as more than a funding proposal. Your business plan serves as a guideline of steps you need to take to open your business.
Wondering how much does it cost to open a coffee shop? A detailed business plan can guide you on the costs. When creating your coffee shop’s formal business structure, you can choose between an LLC or a corporation.
LLC stands for limited liability company. Many experts from the coffee industry recommend new cafe owners to establish their business as an LLC. An LLC can provide you with a cost-effective business structure.
Coffee Shop Location
Choosing a location for your cafe may be the most expensive part of starting your business. The location of your coffee shop will not only determine the monthly rental cost. Your location can influence the products you sell and customer volume.
When looking for your coffee shop location, consider the following. Understand the cost of buying or renting a commercial space. Opening a store in a sought-after area may improve sales but also increase your rental fees.
Gas, electricity, and water bills are additional factors to consider. Understand renovation costs if you want to upgrade your location. Consider the costs of decorations and other practical installations.
How Much Does It Cost To Open A Coffee Shop?
Build-out pertains to the implementation of your business personality. It refers to how you brand your location while creating the best layout for business operations. Here are some of the expenses associated with build-out.
Rent varies on the location of your business. It may also depend on your location’s popularity and the square footage of your new shop. The rule of thumb is that your annual rent must not cost more than 15% of your annual sales.
Design And Layout
Your coffee shop must have a design and layout that is visually pleasing. When it comes to creating eye-catching and effective signage for your coffee shop, partnering with a reputable sign provider like National Signs can ensure your exterior signage reflects the unique identity of your business. It must also be effective for daily operations and customer experience. Designing and creating a layout for your new coffee shop may cost between $6,000 and $10,000.
Your signage informs customers of your identity. It must attract new potential customers to your shop. Outdoor signage can cost around $1,000.
Second hand pallets make great outdoor furniture however Indoor tables, chairs, and stools can cost around $1,000. You may spend around the same amount if you want to add outdoor furniture.
Other costs may include a mop sink and a music system. With installation, it may cost around $400. Installing a dishwasher or sanitizer may cost you around $700.
Coffee Shop Equipment
Your equipment is one of the most valuable factors in starting a coffee shop. Prices may vary depending on your equipment’s brand, quality, and quantity. Choose only the best equipment to start a successful coffee shop.
Coffee prices may differ due to location, market changes, and where you buy your coffee. One pound of roasted coffee may cost around $7.50. Have a budget of $1,000 for coffee in your first month.
Expect to spend around $3 for a gallon of milk. Start with a $45 budget for 15 gallons of whole and nonfat milk each. If you want milk alternatives like almond and soy, add $100 to your budget.
Filtered water is essential in brewing espressos. Set aside a budget of $650 to $800 for your cafe’s water filtration system.
A high-quality espresso machine is the foundation of your coffee shop. A good espresso machine may cost around $10,000 to $20,000. A full drip coffee setup may cost you around $1,500.
Invest in two good espresso grinders for regular espresso and decaf. Two grinders may cost you between $1,400 to $3,200. A good drip coffee grinder for non-espresso drinks may cost around $1,000.
Other equipment expenses to consider include serving items and cleaning equipment. You may also add syrups, sugar packets, and others. Have an equipment breakdown coverage to protect your business.
Your coffee shop’s staff must consist of food service customer-oriented professionals. You may also need to hire professionals from other fields for services like equipment installation and legal assist. Here are some of the people to consider hiring.
Your operational staff consists of managers and baristas. The number of staff you hire may depend on your cafe’s customer volume. Baristas generally earn minimum wage excluding tips.
Contractors may help in build-out and equipment installation. These contractors may also help maintain your coffee shop utilities.
A lawyer can give you legal counsel regarding your business. Depending on the firm, you may end up paying $500 for initial costs. Hiring a skilled accountant for your financial tasks can cost around $150 to $400 an hour.
Permits, Licensing and Insurance
Before you start a business, you must first obtain the necessary permits and licenses. Opening a coffee shop requires several permits, licenses, and business insurance. Here are some of the required licenses, permits, and insurance policies.
- Business License
- Foodservice License
- Music License
- Sign Permit
- Building Permit or Certificate of Occupancy
- Building Health Permit, and
- General Liability Insurance
Cover all the needed permits and licenses before opening your coffee shop. These are essential for opening a legal and successful business.
Plan and Open Your Coffee Shop Within Your Budget!
How much does it cost to open a coffee shop? The initial expenses may intimidate new business owners. But knowing how much does it cost to open a coffee shop is an essential first step.
Of course, calculating your costs is only the beginning. Why not read more of our business guides right here to discover even more shop tips and tricks? Learn how to make the right coffee, how to market your business and more!