So you want to know how to start a coffee shop that makes money. Right?
Are you serious? I mean, do you know the pros and cons of having a coffee shop?
Before I tell you how to start a coffee shop, first let me outline some of the most important pros and cons, and then give you a suggestion. After that, you can learn how to start a coffee shop in detail.
The only advantage of having a coffee shop is that you will have your own business and you will be your own boss. I don’t think there is any other advantage in it, unless you go for running a famous coffee shop franchise outlet like Starbucks or Tim Hortons that can make lots of money.
1. Unless you have enough money to go for a famous franchise like Starbucks or Tim Hortons, you will have so many competitors, and you will have a hard time to survive. Think about this before you spend time and money to start your coffee shop.
2. Over 80% of the new small businesses including coffee shops will never reach the second year, because they can’t make profit. Get ready for this.
3. Although you will apparently have your own business and you will be your own boss, but in most cases you will be the slave of your business. It will be a 24 hours a day 7 days a week nonstop work.
4. It doesn’t make you rich. Even if you succeed to survive, you won’t make lots of money, unless you run a famous franchise outlet which is a different story and needs lots of money to start.
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How to Start a Coffee Shop
Are you gregarious, a good organizer, and in search of a business that will let you be your own boss? Then maybe you’d do well to consider starting a coffee shop. If you like the life and manage your cafe efficiently, you can make enough to support yourself and your family and you’ll have the additional satisfaction of providing an important service to your neighbors.
I’m serious. All successful coffee shops have one point in common: They fill the need for companionship which, in our mobile and impersonal society, too often goes unmet. People want to go to a place where they’re recognized and liked. The corner bar has served this purpose for years, and if you offer a similarly warm environment to a different clientele, you’re well on your way, as long as you observe certain rules.
Rules for a coffee shop?
That’s right! Such an establishment is a business, admittedly an unusual one, but still a business and subject to the same laws as any other. The many cafes that don’t make it fail because their owners refuse to recognize this fact.
The first rule for successful operation of a coffee shop is that you, the owner-manager, must like people. Sounds elementary, but I know of two places that foundered because the proprietors thought only of money and didn’t try to make their customers feel welcome, which should have been their main concern.
The second rule is that you should find out whether you really like starting a coffee shop before you make a large investment of time and money. One establishment I’m familiar with was sold by its previous owner because he wasn’t sufficiently businesslike to keep the place going, and because his efficient wife felt demeaned by working behind the counter.
Anyone who plans to open his own coffee shop first get at least a couple of months’ experience working for someone else. If you’re already handling n full-time job, try a weekend or night shift. Keep your eyes open while you’re on duty and form your own opinions about kitchen layout, menus, ordering, and other potential problem areas. If, after a couple of months as a part-time employee, you still like the business well enough to tackle it on your own, then, and only then, is the time to move onto the next step.
And that next step is mainly just thinking about the type of coffee shop you’d like to run. You’re going to have to spend a lot of hours there—especially at first—you know, so you’ll want to make absolutely certain your place is exactly what you want.
An essential part of this brain-work should concern the idea or concept that will set your coffee shop from the hot dog stand down the street. Your menu, decor, and music must blend to set a mood. When a patron steps through the door, he should get an impression of unity, a feeling that everything has always been just as it is. All successful coffee shops have this quality that plastic imitations do not.
Your own ethnic background—Spanish, Greek, Italian, or whatever—can give you the central idea you need, or you can build yow establishment’s atmosphere around one of your own interests. A lover of classical music, for instance, could call his place Beethoven’s Last, hang pictures of composers on the walls, provide constant classical music on a good stereo with the record jackets prominently displayed, post recital notices on the bulletin board, make scores available, run special programs of live chamber music, feature European specialties on the menu and so forth.
Other musical motifs could be country and western, English, Irish, Spanish, hard rock, or modern… anything that’s not too esoteric for your area. In a large population center there are sure to be enough people who share your taste. The only “must” is that you follow your central ideas closely. Give your customers credit for being able to spot a phony!
With your theme in hand, it’s time to start looking for a location. This is the most important decision that still remains to be made. Your coffee shop must be within a densely populated part of the city (or possibly in a rural area where there’s already a demand for this type of gathering place). Remember that people won’t make a long trip to visit you until you’re established, and your first regular customers will be walk-ins. So select your neighborhood carefully. Areas near colleges and universities, and other spots where there are large numbers of single adults, are the prime locations. Your choice of theme will influence your choice of location:
Beethoven’s Last, for instance, would do well near a music school, opera house, or symphony hall.
Check any general area you like for possible competitors. If there’s a well cafe nearby, can you live off its overflow, or will you attract a different type of clientele?
If you seem to have a clear shot in your chosen neighborhood, check with local realtors for a building. It’s wise to set up in an area of small shops and plenty of foot traffic or, if you expect your customers to be driving, make sure that parking is no problem. Also, be certain your place is easy to find. One of the best ways to fail is to locate on an obscure side street. A busy corner would be ideal.
Eventually, your search will narrow down to a couple of buildings. Best of all would be a former restaurant or coffee shop (which would already have gas, electricity, and officially approved restrooms).
That last point is important, by the way:
Before you sign any lease, make sure the Health Department will OK the johns! Plumbers are expensive, as we all know from Watergate, and if you have to bring in utilities and install toilets the costs can be astronomical.
Ask the realtor a lot of questions. Find out why your predecessor left the building. Check out the landlord and your future neighbors. Try to get a renewal provision on the lease so your rent won’t be bumped up substantially the second year.
In particular, be sure to get down in writing all the duties of each party to the agreement. Don’t try to rely on a verbal understanding, since the human memory can be conveniently weak at times.
A word about the law:
Good relations with the Health Department and the police are a must, and both can tip you off to possible problems in advance, if you ask. (Remember, the person who gives you advice feels a sense of involvement and identification with your business.)
Try to visit the local cops before you open. Let them know you aren’t going to stand for any drinking or dealing on the premises, and ask them for suggestions. If your neighborhood has a beat patrolman, it pays to be pleasant to him.
OK. You have your building. Now you can start turning the bare interior into the warm, inviting spot you see in your mind’s eye.
The kitchen is the heart of an efficient operation. It should be set up so that one person can both prepare food and do cleanup work in slack periods, but two or more can work at night when you’re crowded.
What kitchen equipment you need varies with your menu. As a coffee shop employee you will have formed a definite idea of the necessities. Accumulate your supply gradually, if you can, in the three to six months after choosing a theme and before opening. Be careful not to overbuy! You can add additional stock once you’re in full operation.
The company that supplies your coffee will usually provide burners free. . . so if you serve only sandwiches, soups, coffee, and pastries you won’t have to buy a stove. You should, however, have two refrigerators just in case one breaks down.
Used equipment is, of course, much less expensive than new. A small ad in the local newspapers may locate everything you need; maybe even a refrigerator or other major item free for the hauling.
Your cafe’s public area
Coffee shops are so infinitely flexible that almost any arrangement will serve, as long as live entertainment can be seen from all parts of the room. Tables should be small, and will harmonize with your theme if you cover their tops with pictures or sketches and then people-proof them with coverings of transparent fiberglass. Their lower pads should be painted an inconspicuous color. Try to place your tables in rows that point toward the kitchen so that your waitresses can get in and out easily.
Around the tables you’ll need chairs. . . fifty or more, depending on the size of your room. So many, purchased new or even used from a supplier, can be a great expense. . . but an ad asking for free chairs and a swing through your area’s garage sales should do the job.
You’re going to have to move your establishment’s seating a lot every time you sweep the place, so “light but sturdy” is the word. If the chairs you find are made of wood check them for loose parts, glue them carefully, and sand them well. Then rent a sprayer and paint the whole batch at once.
Benches placed around the wall are excellent for handling overflow crowds at peak periods, and are out of the way the rest of the time. Build them yourself or look for old church pews at a wrecker’s warehouse.
“Light and clean” is the rule for the toilets. Your whole establishment should be well kept, of course, but the restrooms must be spotless. Nothing turns people off faster than dirty johns. Make it a policy to check them every hour. Paint the walls of these rooms a light color: That will make them easier to clean. . . and let you collect a number of interesting graffiti in no time at all.
With the physical part of your operation in hand, you can start thinking about the entertainment. People will leave the tube only if you can offer them something better. . . and although records and tapes appropriate to your theme are adequate during the day, only live attractions will draw well at night.
Vary your programs as much as you can, while frying to remain true to your theme. For example, Beethoven’s Last could appropriately offer opera, Lieder, classical guitar, chamber music, or traditional English folk songs. . . but should still try to work in an occasional ethnic night— flamenco, fado, or Greek—to add a change of pace. A regularly posted weekly schedule is a must, to help your customers plan ahead.
Notices at the local schools, music stores, and conservatories will help you find performers at the outset, and the musicians’ grapevine will do the rest once you’re in operation. Set aside one afternoon or evening for auditions, get the best people you can, and pay them what they’re worth. You won’t regret it. Nothing clears out a place of entertainment faster than a lack of talent.
When you’re just beginning, of course, you’ll probably be strapped for money. Tell the musicians what you can afford to pay and why it’s not more. If they draw well, increase their rate. . . if not, get someone else.
A tip to remember when you hire musicians: A single is always preferable to a group, because the costs of the act are lower. Further, you should have a spare who can come in on short notice if a scheduled entertainer fails to show.
Coffee shops that can’t afford live music every night can schedule other events. Poetry readings, funky old movies, radical theater, or puppet shows can all attract audiences at varying costs to you.
Whatever entertainment you offer, the rule is “Keep it short”. Run a twenty- to thirty-minute set and break for a record. This period gives your customers time to talk, order, visit the John, etc., and the result is a quieter house during the performances. Also, try to set up the coffee shop tights so that they can be turned down for the show and raised for intermissions.
Now we come to an area that can break you: employees.
At first you won’t be able to afford many, but at least two are a definite necessity. The first—a bookkeeper—is a must so you’ll know where you stand, and so you won’t have trouble later with the IRS and local tax agencies. Hire one before you start and he or she will save you more than his/her salary the first year.
Your second employee should be a five-nights-a-week cleanup man. You Just won’t have time to scrub the place down every morning and still do all the ordering of supplies and other work your coffee shop will require. Two nights a week, however, you should handle the cleanup detail yourself. This gives your helper a five-day week and lets you see what the place looks like after a full evening.
Later on, once your business merits them, you can hire waitresses. Until you reach this point, however, you should arrive at your place about ten in the morning to do the ordering and get the food ready to serve at lunch. If you open at 11:30 for the lunch trade, you’ll have a busy period until about 2:00. In the stack time until 5:00 or so you can get caught up on paperwork, take deliveries, and audition new talent. Then you’ll have a busy period that will slack off about 6:00 and build after 7:00 to closing.
This is a brutal schedule for one person. I know, because my friend ran a cafe this way all one summer. Nevertheless, these are what your hours will be until your gross is high enough to let you hire more help. You’ll get tired and bored with the menial labor. . . but stay cheerful and remember that to run the place efficiently in the future you must be able to do each of your employees’ jobs well.
When business does pick up, you can have a day man and one waitress to run the place during the afternoon, and several waitresses and a kitchen helper at night. The people who serve your customers must be spotless, gregarious, and dependable. Check them carefully and replace any that aren’t first rate.
You may find it hard to discharge the help that doesn’t work out, but remember that your first duty is to your customers and your long-term employees. If you go out of business, everyone loses. Remember, too, that only faithful, experienced helpers make it possible for you to leave your coffee shop for any extended period of time. Weed so the flowers may grow!
One of the best ways to form a loyal, efficient staff is to pay the going rate. Let your employees know what you’re making and give them a share of the rewards of good business. But don’t let your profits be eaten up in salaries, especially during those first critical months: Once your business slacks off each night, let your help go on home and finish up yourself.
The Food and Drink You Offer
So far, I’ve said nothing about the items that pay the freight in a coffee shop: the food and drink you offer. The appeal of this fare starts with the printed menu itself, which should reflect your theme. Beethoven’s Last, for instance, might offer various traditional coffees and dishes named after composers. If your decor allows, you can also post daily specials on a wall blackboard to help your patrons make a decision at the counter.
The specialties you serve should be part traditional and part a unique reflection of your tastes. Coffee, tea, Italian sodas, and cider are all top sellers and should be available in several varieties. My favorite coffee shop—The New Unicorn at Hayes and Ashbury in San Francisco—offers ten types of tea, several coffees, eight sodas, and a special spiced cider. Whipped cream, rum and vanilla extracts, and a selection of spices will let you add variety without a huge inventory.
Soup—especially homemade—served with a slice of buttered bread is both easily prepared and a popular item. More extensive hot dishes require a stove with a ventilated hood, which could cost more than you’re likely to take in. Most cafes, therefore, are better advised to make sandwiches and cheeseboards the backbone of their menus. Salami, corned beef, tuna, and cheeses are standards. . . and the raw ingredients are easy to store, prepare, and serve.
Pastries and cakes—if you can get good ones—are also profitable items for a coffee shop to handle.
Supermarket-quality goods, however, won’t do. This is true of all your offerings: People won’t buy more than a cup of coffee, if they can get the same sandwiches, cake, etc., in a store. In food, as in entertainment, search out the special and charge a fair price for it if you want a successful operation.
The rates you list on your menu depend on the prices of your raw materials, which vary regionally and seasonally. You may also want to check what your competition is charging. Just be certain not to under-price! All your costs must be covered or you’ll soon be out of business.
The effort and energy you expend setting up your cafe, of course, is wasted if potential customers don’t know you’re there. . . so start your publicity campaign with a good location and a big sign. If you set up near a school, run off some circulars and post them on campus. Perhaps you can think up an effective stunt to let people know your coffee. house is open.
When you do start attracting business, move around among your guests and ask them what they like and dislike about the new establishment. You’ll get lots of free advice, some of it quite useful. The old saying is perfectly true: Your best advertisement is a satisfied customer.
That, in fact, is the secret of coffee shop management:
You can be as independent as you like in the running of your place if you just make your customers feel welcome. If you and your employees treat the chance drop-in as a guest, he’s yours for as long as you’re open. When he’s asked about your cafe, he won’t say, “I’ve been there”. . . – he’ll say, “I go there.” Once you reach this point you’re set up for good as your own boss in surroundings designed to your own taste. What better way is there to earn your daily bread?
How Much Money Does It Take to Open a Coffee Shop?
That depends, to a large extent, on you. The New Unicorn—the San Francisco establishment you see in the illustrations—was set up for less than $1,000. . . but the owner did most of the work himself and bought all his equipment used.
If you have to hire professionals to fix up your building, you may need upwards of $3,000 to open its doors. If This sounds expensive, remember that—on top of fixtures and stock—you’ll have the costs of repainting and installing water, gas and electricity. The lease, the state and federal taxes and the deposits for phone and utilities wilt also eat up a lot of cash. . . so it’s wise to have a cushion.
Remember, too, that it takes time to build up a clientele (and that also means money). You can try to stretch your start-up bankroll by keeping your daytime job and operating your new coffee shop only at night in the beginning. . . but you’ll really feel the strain if you do. A couple can manage such an arrangement much better than a single person.
The best method of weathering your cafe’s early period is to have enough money on hand to run. The place for the first couple of months after you open. Keep the costs down. . . but don’t try to save by letting your bookkeeper go. He’s the only person who can tell you how you’re really doing.