Business Is Brewing. A Guide On How To Open A Coffee Shop

The Joy Of Coffee  

Sometimes, a human without coffee is like a car without gas; they can't go anywhere, and it is recommended that you don't push their buttons. While it's common for people to make their coffee at home, many choose to go to a nearby shop for their cup of coffee. Shops in the coffee industry are often beloved by the coffee lovers in the area and are a daily trip for a dedicated fanbase who sees their patronage at their favourite coffee houses as part of their identity. Having such sentimental value to others makes the career choice of coffee shop owner very appealing to many. While this can be an exciting, fun, and lucrative business idea, there are a lot of challenges and hard work that go into opening an independent coffee shop, or any successful business for that matter. If you've ever wondered how to open a coffee shop, there are some tips below to help you out.  

How Much Does It Cost To Open A Coffee Shop?  

As you're likely to expect, there is no set cost for when you open a coffee shop. This is due to the fact that every coffee shop is different and will have variable costs. However, despite numbers being very different for each store, shops in the coffee business each have common costs that need to be paid. Due to the vast amount of startup capital you will likely require, you'll likely need to get a loan. The most common ongoing and startup costs when you open a coffee shop include:  

  • Paying for and maintaining equipment.  
  • Paying for the salary and barista training for your staff.  
  • Paying suppliers for coffee, additives such as milk, sugar and cream, and other items sold.  
  • Rent or lease a location.  
  • Utilities.  
  • Coffee shop insurance 
  • Advertising, special events, and other marketing costs.  
  • Cups, silverware, paper towels and other items used by customers.  
  • Tables, chairs, and related items.  
  • Software and equipment needed to keep track of orders.  
  • Costs of licenses and other administrative, executive and clerical work.  

Please keep in mind that there might also be other start-up and operational costs when you open a coffee shop. It is important that you look at what you, as a customer, would want in a coffee shop you would like to visit and which items the staff need to do their jobs. It is also best to leave some leeway in your budget for unexpected costs, as well as ensuring you're prepared in the event that some costs are higher than you anticipated. It is best to plan out a budget in advance and go over it carefully to get a good idea of what you will need.  

Steps Of Opening A Coffee Shop  

Roasted Paradise wasn't made in a day. It takes a lot of time to open a coffee shop, and in addition to cost factors, there are plenty of things to remember. These include the customer experience, the coffee products you want to sell, and your role in the coffee shop industry. It's also important to keep in mind that these projects aren't done one at a time or in the exact order listed below. You will often be doing many of these steps at once while also skipping over some and getting back to them later, and maybe needing to edit earlier work done to accommodate changes made. It is best to remain versatile and prepare for the fact that it's not if plans change but when.  

Prepare A Business Plan  

Although things will change when you open a coffee shop, before you start running with your idea, it's best to know the general direction of where the finish line is before you start running with your idea, and a solid business plan is the best first step in creating a successful coffee shop. It's best not to complicate things too much and have general answers to each of the following questions, as this allows wiggle room for when things change.  

  • Who is your target market?  
  • How will you reach your target market?  
  • What is your budget, and how large of a loan do you require?  
  • Who are your competitors?  
  • What is your niche?  
  • As an owner, how involved do you want to be with day-to-day operations?  
  • What is your marketing plan?  

Please note that there are many more questions to ask yourself when you open a coffee shop. If you are unsure of where you need help, your local chamber of commerce likely has resources that you will find useful.  

Structure Your Business  

This is often overlooked by people when they open a coffee shop. However, it is a very important decision, as it impacts every aspect of your business, including many legal areas. There are three main types of structure: sole proprietorship, partnership, or corporation, each with its own pros and cons.  

A sole proprietorship means that the business owner and the business itself are treated as the same legal entity, which is the easiest to open and make changes to but also exposes you to the most risks. A partnership means you and one or more other parties share risk and responsibility. A corporation gives the most protection but is more expensive to run and requires plenty of extra paperwork to set up and maintain. When you open a coffee shop, it is important that you get the right business structure for your situation.  

Decide On A Menu, Atmosphere And Niche  

This is where the fun begins! Deciding on things like the atmosphere, what you're serving, and the type of coffee shop you're choosing to run is likely the part of the business you'll enjoy the most, as it's generally where people's passion for the business comes from when they open a coffee shop. Ask yourself questions about the feel of what you are going for and the type of potential customer you are trying to entice.  

Do you want to serve your customers quickly, or would you rather create a lounge or cafe-type place where your customers can mingle? Do you want a place that's expensive with gourmet coffee or cheap and easy with a simple menu? Do you want to have specialty coffee? Are you focused on being a place where people meet for business or pleasure? Make a decision that is best suited for both your passions and what works in the current economic realities.  

Research Your Competitors  

Your competitors can be a goldmine of ideas but also let you know what to be wary of. For example, a handful of coffee shops in a single area could indicate that the market there is oversaturated. Or maybe it means there's plenty of demand, and a new coffee shop will flourish. A bunch of similar shops could mean when you open a coffee shop of the same type, it will thrive in that location. Or maybe it means a large customer base that wants the exact opposite of what's available and is practically begging for something different, opening the door for your coffee shop startup. See which places have the most customers and best reviews, and go off there. Find out what needs customers have that are going unaddressed, and work that into your business.  

Pick A Suitable Location Based On Your Niche  

Choosing a coffee shop location is often tied to the niche that you want to fill when you open a coffee shop. If you have a certain niche in mind that you're passionate about and won't budge on, perhaps it's best to choose a location where that niche is in real demand. If there's a certain potential space that you feel would be perfect, you're going to want to choose a niche based on what's in demand in that commercial space. Competitor research, your niche, and your location are intrinsically tied together.  

Choose A Supplier  

When you open a coffee shop, your coffee, as well as anything else you serve, doesn't just magically appear when the coffee fairy waves her wand; you need to buy it from coffee suppliers. Luckily, there are plenty of places you can buy your coffee beans, as well as other coffee shop staples like donuts and muffins. It's best to keep the feel of your coffee shop in mind when choosing a supplier. If you're going for convenience, don't get too fancy. On the other hand, if you're looking to create a hearty atmosphere, don't cheap out. Pick a supplier that does a good job and is a good fit for the style you're after.  

Register Your Business  

If you're running a business that's anything other than one in your own name that makes less than $30,000 of income annually, you're going to need to register your business. Registering a business allows you to give the business a distinct and unique legal name that will allow you to have it build recognition and trust within your community. You will almost certainly have to do this when you open a coffee shop.  

Get The Right Insurance  

Any clever entrepreneur will want to protect their business with the type of business insurance that is best for them. For those who want to open a coffee shop, that would be coffee shop insurance. This will provide protection from legal liabilities and lawsuits such as slips and falls, allergy-related incidents, and other situations where you are deemed responsible or at fault. It can also provide reimbursement in the case your building, equipment, or even any vehicles under the company name are damaged and need repairs. It can even cover the temporary costs of needing to change location, ensuring that a single incident blindsiding you doesn't destroy your whole business.  

Decide On A Layout  

A good layout of your physical space can make a big difference when you open a coffee shop. A place designed for convenience will want to dedicate some extra room to having multiple counters and a bunch of extra staff so that they are better able to keep up with the vast quantity of orders. They're also more likely to have a place where customers' order forms are as accessible as possible, likely near the entrance. A more relaxed place with a lounge can dedicate that extra space to extra tables where customers can relax. This type of place is more likely to have their order counters near the back, ensuring customers are aware of the area where they can sit and chat with their friends. Somewhere that focuses on being family-friendly will have plenty of larger tables that can fit a large number of occupants, whereas a place dedicated to a younger crowd that presents itself as a place to have a date probably has plenty of small tables with only two seats each. If you were lucky or proactive enough to have a nice view of something like a lake, forest, or beautiful town, having plenty of places to sit there is likely a good idea. Keep little things like this, as well as your square footage, in mind when you open a coffee shop.  

Understand Brand Management  

While you don't have full control over how the public perceives your company, when you open a coffee shop, there are subtle things that you can do to stand out to your target audience as much as possible. Don't just arbitrarily choose a logo, name, colours or slogan just because you personally think it looks cool; keep in mind that branding is critical to many marketing strategies.  

For example, colour theory states that 'hot' colours like red and orange help something stand out and create the feel of something fast, which can suit a place that focuses on convenience. On the other hand, 'cool' colours like blue, green and purple give a more relaxed feel that would better suit a lounge. A younger crowd, as well as families, might appreciate your name and slogan being puns, but business executives likely won't. Each decision has pros and cons, so be sure to remember what your target customer wants.  

Get The Licenses You Need To Open A Coffee Shop  

You might not think you need a bunch of licenses to open a coffee shop, but you'd be surprised. While you don't need to worry about getting a doctorate in caffeination, there are a few things that you do need to take care of. As mentioned earlier, you need to register your coffee shop as a business and get the right insurance. Below is a list of licenses you may need and why you'll need them.  

  • A Retail Food Service License is needed to sell food and beverages.  
  • GST/HST for anyone who wants to sell anything in addition to coffee.  
  • A sign permit is required to promote your business with signs.  
  • Food handler's permit to show you can properly handle food.  
  • Building health permit to show your location is sanitary.  
  • Canadian Food Inspection Agency to show you've properly packaged and distributed food.  
  • The Ministry of Health to ensure you're following all sanitation regulations.  

Please note that depending on what you choose, more certifications might be involved. Please ensure that you research the prerequisites for any additional items you sell so that you have all the licenses you need before you open a coffee shop.  

Buy The Right Equipment  

As much as it seems like coffee has some magic to it, it doesn't get made magically. In addition, there are plenty of other pieces of equipment you need to have to open a coffee shop. Some of the coffee shop equipment you will need is as follows:  

  • A coffee maker.  
  • An espresso machine.  
  • A coffee grinder.  
  • A coffee roaster.  
  • A point of sales system and computer to run it on.  
  • Blenders.  
  • Ovens.  
  • Toasters.  
  • Fridges, Freezers and ice machines.  
  • Storage.  
  • Tables.  
  • Chairs.  
  • A Sign.  
  • A security system.  
  • Uniforms for your staff.  

Please note that more coffee equipment may be needed when you open a coffee shop, as each business is different. It is best that you think about what is needed in detail for everything you want to do in your dream shop and carefully consider all equipment needed.  

Hire The Right Staff  

Baristas are the people that your customers will see and associate with your business. When you open a coffee shop, it is important that you hire the right people to act as the faces of your business. In addition to traditional customer service skills, social skills, and the ability to be polite regardless of a customer’s temperament, a good barista has as many of the following qualities as possible. Please keep in mind some very good baristas may be missing one or two of these qualities, so don’t dismiss someone for missing a point or two:  

  • Good listeners with attention to detail.  
  • Can quickly learn menu items and how to use equipment.  
  • Good teamwork skills.  
  • Good mathematical skills.  
  • Enough stamina to be on one's feet all day.  

Please note that there are many more skills that make someone a good barista. Make sure you have an ideal type of employee in mind when you open a coffee shop, make job postings that appeal to these types of people, and know how to identify them when they apply.  

Have A Grand Opening  

Grand openings on opening day for a small business can be very exciting. There are often one-time events that can be fun for people in the general area, turning them into potential customers. This is a great way to build excitement for your business when you open a coffee shop. Promote it on social media, physical media such as flyers and posters, as well as traditional media. Keep in mind your target audience, and pick events and activities that appeal strongly to them.  

Love Your Business  

One of the important things to remember when you open a coffee shop is that passion is important. No matter how skilled you are at the business end of things, you can only keep going the extra mile so many times before you burn out. However, when you love what you do, you're going to want to keep going the extra mile and enjoy many of the little moments. 

This content is written by our Morison Insurance team. All information posted is merely for educational and informational purposes. It is not intended as a substitute for professional advice. Should you decide to act upon any information in this article, you do so at your own risk. While the information on this website has been verified to the best of our abilities, we cannot guarantee that there are no mistakes or errors.

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