We can all agree that coffee shops are widely popular nowadays. In fact, according to the Small Business Development Network, the coffee shop industry boasts of more than 22,000 stores in the United States alone.
The popularity of coffee shops can be related to the increasing number of consumers in the US (and other countries) who are willing to spend money for a cup of coffee. This upward consumer trend likely inspired entrepreneurs to break into the industry, thus prompting the mushroom-like growth of coffee shops in the country.
If you also want to ride on the industry’s popularity, here’s an overview of how much a coffee shop start-up will cost you.
First Things First: Average Start-up Cost for a Coffee Shop
You may think that the needed price to open a coffee shop will not be that much expensive given the sheer number of people breaking into the business. Well, your presumption can be right or wrong. Why? That’s because the average start-up cost for a coffee shop depends on what type of store you wish to establish.
The Bellissimo Coffee Infogroup gave a rough estimate on the start-up costs of four different types of coffee shop. If you want to start small, you can opt for a coffee cart business that costs around US$20,000 to US$25,000. A bigger option is a coffee kiosk which will cost you around US$25,000 to US$75,000, depending on its size and your planned menu.
Another option is a drive-thru coffee shop. It’s a lot bigger than the cart and kiosk and is popular with on-the-go customers. For small units, an average US$35,000 will usually cut it. Large drive-thru coffee shops, on the other hand, will have a start-up cost of US$80,000 to US$200,000.
The most expensive option is a sit-down coffee bar (think of Starbucks) that can cost you around US$200,000 to US$375,000 in start-up alone.
A Closer Look at Expenses: Building Costs for a Coffee Shop
Turning your unique concept of a coffee shop into reality will be fun, but before that, you have to formulate a business plan. Part of this will be the hiring of consultants who will help you create a plan that’s tailor-fit to the given capital. A business plan alone will only cost you around US$500. Including the consultants, the expected cost will be at least US$2,000 and above.
After planning, you have to make sure you have acquired the right to start your coffee shop by registering your business with the concerned government agencies. Based on this sample estimate, permits and licenses will cost you up to US$2,000.
The cost of other requirements needed to build your coffee shop will depend on your business plan. Some of the expenses include the design of the store, construction or remodeling, electrical installation, plumbing, air-conditioning, and insurance, among others. With equipment and supplies excluded, building a coffee shop will cost around US$20,000 and above.
Aside from the total start-up cost, you should also secure a contingency fund. This fund will serve as part of your fallback plan if ever your total sales for a particular period falls short of the ideal. With a cash-on-hand ready, you will be able to cover fixed costs or monthly dues such as rent and coffee supply.
A Closer Look at Expenses: Costs of Equipment for a Coffee Shop
According to Coffee Maker USA, the equipment they consider essential to a coffee shop includes the following:
- Espresso Machine – There are two types of espresso machine- the super automatic that costs US$5,000 to US$20,000 and the semi-automatic that costs US$2,000 to US$5,000. The super automatic machine may be expensive, but it’s a lot faster and doesn’t take a barista to operate it. The semi-automatic, on the other hand, still requires a barista’s skills to produce a cup of coffee.
- Espresso Grinder – If you opted for the semi-automatic espresso machine, you need an espresso grinder to complement it. A good grinder costs around US$500 to US$2,500.
- Coffee Brewer – Depending on volume needs, a coffee brewer may cost you US$500 to US$2,500. After brewing, you should pour the coffee in air-pots and thermal dispensers. These items cost at least US$100.
- Coffee Grinder – Lastly, you need a coffee grinder to grind into the brew basket or the coffee brewer. A quality grinder’s price starts from US$800 to US$1,500.
- If you’re looking to cut costs on the purchase of the said equipment, you can resort to buying second-hand ones.
On the other hand, procurement of food service equipment such as a refrigerator, microwave, and toasters will cost you US$18,000 and up.
Coffee and food aside, you need to allocate another US$15,000 to US$20,000 for other equipment essential to the business such as a cash register, computer, fax or printer, phone, furniture, and cabinets.
A Closer Look at Expenses: Cost of Supplies for a Coffee Shop
First in the list of supplies is, of course, your coffee. The cost of coffee will vary depending on your choice of a roaster and desired quantity. The cost you’d likely spend on your initial coffee supply will amount from US$1,000 to $6,000, depending on your choices.
While a lot of start-ups prefer roasters to provide coffee for their shops, some stores nowadays prefer roasting their coffee beans themselves. If you want to start that way, you need to prepare US$10,000 or higher to be able to purchase an industrial coffee roaster.
Other items in your start-up inventory may include food and beverages such as teas, wine, pastries, desserts, and sandwiches; plates, glasses and flatware; and miscellaneous supplies such as napkins, cups and coffee bags. A rough estimate for all of these will range from US$15,000 to US$20,000.
After the Start-Up: Running Cost of a Coffee Shop
You now know that the price to open a coffee shop will cost you hundreds of dollars, but it doesn’t end there. Once your coffee shop is up and running, you will see to another list of expenses that are necessary to keep your business afloat.
Included in the running cost of a coffee shop are “fixed costs.” These are monthly expenses such as rent, payroll taxes, payroll accounting services, and employees’ benefits. The average of these costs will greatly depend on your choice of location, agreement with the building owner and the number of your employees.
As a rule of thumb, the rent cost should not exceed 15 percent of your monthly sales. The staff costs, on the other hand, should not exceed 35 percent of the sales. Also, you should only use your contingency fund if the total sales for the month won’t be sufficient to settle the shop’s monthly running cost.
A Piece of Advice: What to Remember If You Own a Coffee Shop
If you feel that you can finance the total start-up cost for a coffee shop, then by all means, start that business! But remember, your money is not the only thing important to be successful in the industry. Just like every successful entrepreneur, you have to have the passion for excellent service. Be a gift to the customers, so they will not only be sure to return but, ultimately, they will bring others along.
We wish you good luck on your coffee shop business!