Why a Coffee Shop is a Good Business to Start
Why a Coffee Shop is a Good Business to Start
Do you love coffee? One of the first things you think about before you start a coffee shop is to consider whether it will be profitable. For most, a coffee shop startup is profitable and can be a transformative addition to your life.
Let’s consider the question: Is a coffee shop a profitable business to start?
Coffee shops are embedded in American culture – from the beatnik cafes, jazz cafes, and Americana diners of generations ago. Americans – as well as most of the world – share a love for coffee.
For many of us, coffee is the first thing we think about each morning. After all, could you imagine starting your day without coffee? Nope! While the majority of Americans enjoy their first cup of coffee before heading out to work, many will stop by their local coffee shop. Coffee shops capture the need for caffeine and the need to have a sense of community. Great coffee shops do that. We have found that the most successful coffee shops offer convenience, excellent service, and fresh, delicious coffee – along with other tasty snacks and food.
There are many great reasons to own and start a coffee shop business:
- You are the boss
- Enjoy the profits
- You will enjoy financial freedom
- Develop a sense of community
- Coffee enjoys steady growth
Why a Coffee Shop is a Good Business to Start
1) You are the boss
Being your boss is the dream of many people. By being the owner and boss of a coffee shop, you call the shots. You determine whom you work with. The buck stops with you. But you also reap tremendous benefits too.
As a coffee shop owner, you determine who gets to fits in your company (of course, you need not discriminate based on race, nationality, gender, etc.) However, for the most part, you decide who is on your team – and who is out.
Have you ever loved your previous jobs but didn’t enjoy the people you worked with? Well, as the boss of a small coffee shop business, you make these decisions of who you get to work with. The hiring and training of baristas will be an essential part of your job as a coffee shop owner.
As the boss, you get to decide which days you work. Have you ever needed to ensure that you are off certain days for your kid’s birthday or your parent’s anniversary party? Now you decide what days you take off. Need a vacation? The option of when you get to enjoy your vacation is all yours. You call the shots.
Now, does this mean that your business shuts down when you take a vacation or time off? Not necessarily. You will need to plan for your vacation days by ensuring you hire responsible baristas to open and manage your coffee shop while you are gone.
Still, while you can take your vacation, you can manage your inventory and see your sales in real-time with a robust coffee shop POS system.
Why a Coffee Shop is a Good Business to Start
2) Enjoy the profits
Successfully operated coffee shops can enjoy high-profit margins. Per cup of coffee, you can reap over 200% of your costs for coffee and milk with a popular espresso-based drink. There is a tremendous potential to enjoy high-profit margins per item sold.
That is not to say that there are not any risks of starting a coffee shop. In fact, there are risks – as there are for any business. However, generally, coffee is not the reason for most coffee shops’ failure. For information on why coffee shops fail read this article.
Gross profit margins can depend on several variables that you have much control over. You will have several costs to take care of, leaving you with a net profit margin for you to enjoy. Subtract your fixed and variable costs against your gross margin will leave you with your profit margin.
Coffee Shop Revenue
I have seen small coffee shops generate significant income and completely transform the lives of their owners. Why can’t this be you? Why can’t you have a successful coffee shop and a profitable business? It should be you!
The truth is that even with a product that is around $4.00, you can generate quite a bit of sales per day.
For example, if you are open for 12 hours a day – say, 6 am to 6 pm. And you have an average customer rate of 12 per hour (that is only one customer every five minutes!). If you tally those numbers, that would be 144 customers per day. Let’s say they spend, on average, $7 (not including gratuity) on a receipt ticket. (Some customers may only order a coffee, while others order three lattes and muffins. In the end, this could average to $7 per order)
Let’s do the revenue math: $7 X 144 customers = $1,008 per day. If you are open 6 days a week, that would be $6064 in revenue per week or about $24,000 per month.
Depending on your costs, including rent, utilities, labor, coffee, and cups, you will have the remaining balance as personal income.
To increase your profits and your ultimate coffee shop owner salary, you need to suppress your costs. This responsibility falls on you by managing your inventory or scheduling your baristas. The last thing you want is to have three baristas sitting around during slow times. In addition to walking the fine line of barista scheduling, you will need to keep your waste down. There are a variety of ways to generate more income and reduce costs. These two elements will boost your coffee shop revenue.
Why a Coffee Shop is a Good Business to Start
3) Having Financial Freedom
Besides enjoying your profits, there is something even more significant to owning your own successful coffee business. That is, enjoying your financial freedom.
Financial freedom is what so many of us long for. That doesn’t necessarily mean that every day or every season will be rosy. Owning a coffee shop can be challenging at times. Bills can pile up, and things happen. But having the freedom to create your financial destiny is in your hands. This is what so many of us dream of.
There is nothing like having the financial freedom that your own successful coffee business brings. Serving coffee, offering your customers the best beans, fresh pastries, and wonderful service can open a positive financial situation.
4) Socializing While Making Money
Having a successful coffee shop means developing meaningful connections throughout your neighborhood.
A coffee shop is all about building connections and creating a sense of community with each other. Welcoming coffee shops often serve as a conduit to building neighborhood culture – and this is exciting!
When your coffee regulars come in to buy a coffee and say hello, to local organizations using your space for their meetings, all of this brings a fun and memorable atmosphere that you are a part of.
Consider hosting events or having special open mic nights (outdoors and masks on, of course!). Community events and partnerships can help strengthen ties, repeat business, and customer loyalty. Invite local coffee bloggers or local media to participate as well.
There several different things you can do – from small to larger. Put up pictures on your well of customers attending your events or just visiting your café. Also, why not put the views of your employees up. It would be a great way to show your appreciation to your staff and members of the community.
5) Coffee enjoys steady growth
More people consume coffee in the United States than soda, juice, and beer combined. That means you have many coffee drinkers that aren’t going anywhere. Over 70% of people in the United States drink gourmet coffee at least once a week.
In general, coffee consumption has experienced steady growth and, so has the consumption of gourmet coffee. This means that your coffee business is located in the right place. You will have a great chance at success.
6) Allows You to Express Your Creativity
A coffee shop business allows you to express your creativity – right from the beginning. From the development of your concept, your branding, and your marketing effort, your imagination will be allowed to shine!
If you have ever been stuck in a dead-end job, you know that being in a position to express your creativity professionally is priceless. Owning a coffee shop will allow you to utilize your creativity in a way that impacts not only your business but also your community.
Coffee Shop Design Tip:
When you design your coffee shop, ensure that your workflow is positioned for speed and safety. After you lock rate and safety down, you’re good to go. Use colors and space to design a room and layout that satisfies your concept. Your design can really set your business apart from your competitors and leave a lasting, positive impression.
Why a Coffee Shop is a Good Business to Start
Related Questions
1) How Much Does It Cost to Open a Coffee Shop?
Your coffee shop costs depend on a number of different elements, including your overall concept, location, menu, etc.
However, a small to medium-sized coffee shop could cost $150,000 to $200,000. The cost of a coffee shop depends on a variety of variables that are specific to your region. This may include your location, your coffee concept, the coffee equipment you purchase, and ultimately how big of a coffee shop you want. Starting a mobile coffee business like a coffee truck is also a great opportunity.
2) How much money does a coffee shop bring in per year?
A small coffee shop can bring about $200,000 to $300,000 per year, but it depends on your sales volume and average price ticket.
Of course, your revenue needs to pay for your costs. Nevertheless, a small to medium-sized coffee shop could generate a healthy return year-over-year.
2) Is it Better to Start a Coffee Truck Instead?
There are plenty of great reasons to start a mobile coffee business. Lower overhead, access to customers, greater flexibility, and lower barrier costs to entry. Starting a coffee truck, coffee trail, or coffee bike business can be a great start to an even larger business concept. Mobile coffee business are great opportunities to generate significant revenue. Today, more than ever, mobile businesses are looking more and more attractive as the cost of real estate increases across the country. That’s why starting a food truck business is also very appealing to many entrepreneurs.