April 20, 2023 (Printed: April 19, 2023)
If you happen to’re considering of opening a espresso store, the primary query you almost certainly ask is, “How a lot does it value to open a espresso store?” The second one is, “How can I calculate espresso store startup prices for a industry in my local people?”
We’ve were given solutions! Our staff of espresso store startup experts has taught over 300 marketers in 30 states, maximum with very little espresso store revel in, how you can open a espresso store. Many were a success espresso store house owners for twenty years or extra!
Learn on to be informed how figuring out your startup prices is an important to a powerful espresso store marketing strategy that ends up in a a success industry.
The Overall Price to Open a Espresso Store*
The common value to open your espresso industry is dependent upon your location, the kind of espresso store you need to open, the cost of industrial actual property on your neighborhood, and different variables.
With that during thoughts, listed here are the associated fee levels for opening a espresso store or increasing an present one:
- Espresso store with seating most effective: $80,000 to $330,000
- Espresso store with a drive-thru most effective: $80,000 to $230,000.
- Espresso store with each seating and a drive-thru: $80,000 to $400,000
- Espresso kiosk/espresso stand/cell espresso cart: $60,000 to $125,000
- Cell espresso meals truck: $50,000 to $175,00
- Including a brew bar to an present espresso store: $1,500 to $30,00. The lower cost is for getting apparatus most effective.
- Including distinctiveness espresso provider to a bakery or cafe: $25,000 to $80,000
Your startup prices might fall inside those levels, however you received’t know till you calculate startup prices on your distinctive store. So let’s get began!
*In response to proprietary analysis of unbiased espresso stores opened the usage of the 7 Steps to Luck espresso store luck program and are present as of April 2023.’
The right way to Calculate Espresso Store Startup Prices
Beginning a espresso store is usually a rewarding and thrilling challenge, but it surely’s very important to believe the entire prices concerned earlier than deciding to open your doorways.
There are lots of bills to believe, from renting or buying an area to shopping for apparatus and provides, hiring and coaching baristas, and extra. Learn on for insights into how a lot your espresso store can value.
3 Keys to Espresso Store Luck: Location, Location, and Location
Location is very important for any industry, and unbiased espresso stores are not any exception.
Discovering the proper espresso store location could make or spoil what you are promoting, at once affecting the selection of consumers your espresso store draws.
Selecting the proper location can assist determine your café as a go-to destination for locals and tourists alike, leading to increased brand awareness and loyalty.
A visible location in a busy and popular area can help increase dive-by and foot traffic. A convenient location also can help to keep regular customers since it makes it easier for them to stop by for their favorite drinks and treats.
So what’s the best location for an independent coffee shop? In most cases, these businesses should be on the drive side of a road with heavy morning traffic.
Tailor your location search to the type of business you want to open. For example:
- A coffeehouse with a drive-thru needs up to 1,500 square feet in a retail strip or standalone building.
- For a walk-in coffee shop, you may need as little as 300 square feet in a high-density location of up to 1,800 square feet with easy access to an automobile or walk-up traffic.
- For a coffee drive-thru, 100-300 square feet will usually suffice.
As a rule, rent or mortgage should take up only 15 percent of monthly sales for your startup business. For example, a location generating $21,000 in monthly sales means a maximum of $3,150 in rent.
You must also account for build-out and equipment costs, which will be depreciated over time. Keep in mind that the more square footage, the higher the cost of your build-out.
Hiring an architect or contractor for the build-out is a good idea. These professionals can estimate the costs of plumbing, electrical, heating, and air conditioning systems. They can also help you negotiate to determine whether the landlord will finance any remodeling expenses.
Estimate Projected Sales
Once you’ve found potential locations, it’s time to run some numbers. Calculating projected sales weans out unprofitable options.
Count the number of cars passing during peak morning hours.
In a good location, you can expect about 1.5 percent of cars on the drive side to stop at your shop.
You can also expect visits by five percent of those passing by on foot. So if 10,000 cars and 500 pedestrians pass each morning, expect visits from 175.
For this blog post, we’ll use $4 as a conservative estimate for each purchase. (In reality, this figure varies by market.) Daily sales would be $700, with monthly sales averaging $21,000.
Choose Top-of-the-Line Coffee Shop Equipment
Don’t be tempted to cut startup costs by buying cheap or used equipment. Instead, your espresso machine and coffee grinders are the workhorse of your business, so invest in high-quality, reliable coffee shop equipment.
While high-quality equipment costs more, it will pay off in the long run with less downtime and higher-quality drinks.
Add a drip coffee maker and air pots if you plan to serve plain drip coffee. You’ll need a refrigerator, ice machine, and blenders to serve cold or frozen coffee drinks.
Since the quality of coffee depends on the water quality, you will want to test your water and purchase water filtration if needed.
Buy the best you can find, learn how to use it, and follow the suggested maintenance schedules rigorously.
Customers who sign up for our 7 Steps to Success coffee shop startup program can save time and money with our recommended equipment packages.
Note: Never buy used Coffee Shop equipment. Any money you save upfront will dribble away in repair costs and downtime over time. If you can’t make drinks, your business grinds to a halt.
Source the Best Drink Ingredients, Which Make Up Your Largest Operating Expense
Drink ingredients such as fresh-roasted coffee beans, milk, and syrups will be your most significant operating expense. In the scenario above, they will account for up to 40 percent of sales, or up to $8,400 each month.
Never scrimp on ingredients! Serving the best is the only way to attract and keep specialty coffee customers.
You can keep inventory costs low by partnering with a supplier that makes frequent deliveries.
Budget for Training
Unless you have previous experience running a coffee shop, you should invest in comprehensive, hands-on training and ongoing support.
In our experience, it’s not enough to take a class lasting only a few days, download an online coffee shop startup kit, or watch videos on YouTube or Instagram!
There’s no substitute for hands-on training in your coffee shop using your espresso machine, grinder, blender, and other equipment. Plus, having training come to you is often more economical, especially when you add in your travel expenses.
When choosing a training package, consider the following:
- Your trainer should have extensive experience in coffee shop management, drink preparation, and all aspects of running an independent coffee shop.
- You and all your team should train together, so you can all prepare drinks of consistent quality.
- Training should take place over several days leading up to your opening day.
- Your trainer should stay to support you on opening day to ensure all goes well and help you iron out any issues.
Hands-on training is one of the best investments you can make in opening a coffee shop. Over time, it can mean the difference between a successful coffee shop and going out of business.
At Crimson Cup, we believe hands-on training is so vital that we include it in every agreement with a new coffee shop owner. After one of our customers opens a shop, they can take advantage of additional training at the Crimson Cup Innovation Lab, an SCA-certified Premier Training Campus in Columbus, Ohio.
Estimate Payroll Expenses
Keep payroll costs, your next-largest operating expense, to 30 percent or less of sales.
These include wages, benefits, payroll taxes, worker’s compensation, and payroll processing costs.
For our scenario, you would budget no more than $6,300 – including your salary – if you plan to work in the shop.
Add Up “Other” Costs
Rent, drink ingredients, and payroll costs can account for 85 percent of expenses in the beginning coffee shop. This leaves 15 percent to cover all other costs, including:
- Professional fees for architects, attorneys, accountants, and business consultants
- Training costs
- Borrowing costs: Repaying principal and interest (if you plan to borrow money)
- Income taxes (usually about 35 percent of operating profit) and other local taxes such as property tax.
- Other expenses, including business insurance, supplies (cups, napkins, stir sticks, etc.), baked goods and other food, food service and business licenses and permits, office supplies, utilities, advertising, and repairs and maintenance
- Your profit
After you’ve done your homework, add up all these projected expenses. It would be best if you had cash on hand to cover your initial build-out and operating expenses for the first six months. So that’s what it will cost to open your coffee shop!
Cash on Hand and Variable Expenses
No two coffee shops are the same. Remember that startup costs will depend on your location – including the region, state, city, or area in which you operate.
If you already own a suitable building or have a complementary business, such as a bakery, your costs might be much lower.
Besides startup costs, plan to have cash on hand to cover your operating expenses for the first six months after opening.
Sources of Funding for Opening a Coffee Shop
There are almost as many ways to fund coffee shop startup costs as there are coffee shops! Current 7 Steps coffee shop customers have told us that the most common are:
1. Checking/savings and investment accounts (cash on hand or readily available).
2. Lines of credit and credit cards.
3. Business loans from a bank, including loans backed by the U.S. Small Business Administration. (Bonus: Learn how to wow your banker when you apply.)
4. Loans from family or friends.
5. Crowdfunding sources (Kickstarter, GoFundMe, etc.)
6. Partners or silent investors.
Learn More About Coffee Shop Startup Costs
You’ll find a more detailed explanation of how to calculate coffee shop startup costs in the coffee shop startup guide written by Crimson Cup Founder and President Greg Ubert.
Seven Steps to Success: a Common-Sense Guide to Succeed in the Specialty Coffee Industry also includes a detailed business plan template.
Hundreds of independent business owners across the country use this book as the basis for profitable coffee shop operations. An average of 20 new shops open through our 7 Steps program each year!
Read a few of their success stories. And check out the latest news on coffee shop openings and anniversaries.
Questions about Opening a Coffee Shop?
Our experienced coffee shop startup team is here to help! Call us at 1-888-800-9224 or fill out this form, and we’ll get back to you within one business day.
