The culture of coffee consumption is spreading more and more actively in the world. Sooner or later there will be coffee shops in all cities and countries. Coffee is gradually becoming an essential product, and coffee shops are opening more often than ever before. Last year their number increased by 10%, despite the active phase of the coronavirus. But how to open a coffee shop to run your business successfully?
Demand For Coffee
You can assume that with the crisis, people give up many pleasures. You probably expected that would happen with coffee during the COVID-19 pandemic. But this did not occur, revenue from many coffee shops continued to grow, and the number of new outlets increased. At the same time, the size of the average bill and the number of bills also increased. This happened in almost all formats of coffee shops in big cities.
It turns out that the solvency of the audience has fallen, but they did not stop drinking coffee. The fact is that in recent years, consumer behavior has changed: people bought together with other items on the menu, and now it is more independent or the only product in the order.
The crisis may have influenced that coffee shops with meager prices began to open. But these establishments did not become tough competitors, only contributing to the growth and development of the market. Such coffee points attract new customers with their attractive prices. Then people try new options and come to the more expensive coffee shops.
What To Learn Before Opening A Coffee Shop
How to open a coffee shop? Here are a few things to explore before you decide to run a coffee business or not.
Explore Competitors
This is the easiest way to learn the basic nuances of this business:
- menus
- prices
- interiors
- demand
- mistakes
- reasons for success or failure
Capture them in a notebook and consider them in the following steps. Read reviews about competitors on the Internet, learn what their customers like and dislike. Use Yealp.com to find out about other coffee shops in other parts of the world, such as New York, Paris, or London.
Learn The Stories Of Other Entrepreneurs
You can search for similar stories on the Internet. Pay special attention to the comments. There are also similar stories on YouTube.
Explore Coffee Manufacturers In Your City Or Country
Now there are roasters in every big city. You can order their products online if you are from a small town. Manufacturers often sell test kits. In the West, some coffee shops roast themselves, but this requires additional costs in the form of purchasing equipment, increasing space, studying manufacturing technology, and purchasing properly, hiring additional staff or training existing ones, finding suppliers, and so on.
Checklist Of What Is Important:
- Do not be afraid of the crisis – coffee has already become necessary.
- Study competitors and develop a unique trade offer depending on the area of the city.
- Choose the format of a mini-coffee shop, of course, if there is a choice between a coffee shop and a coffee point.
- Estimate the traffic at the point where you will open a coffee shop.
- Learn from practitioners and objectively evaluate failure stories – coffee shops are often closed due to the mistakes of the founders. So you can learn lessons from such stories, but do not think that your coffee shop is doomed.
If you want to know how to open a coffee shop, also pay attention to these efforts:
- Decide – a coffee shop or your own start-up;
- Make a financial model of a coffee shop;
- Register a business;
- Find a room, a place to place a coffee shop;
- Do a design project;
- Get permission to run a coffee shop, take care of compliance with sanitary norms;
- Purchase coffee shop equipment and furniture (coffee machine, coffee grinder, water purification system, refrigeration equipment, and showcases, scales, water heaters, dishwasher, microwave, mixers);
- Choose coffee suppliers;
- Make a coffee shop menu;
- Hire staff;
- Engage in the promotion of the coffee shop.
Franchise VS Own Points
In the beginning, you need to decide which business model you choose. Entrepreneurs have three main options:
- buy a ready-made business
- buy a franchise
- work under their brand
Many people prefer buying a franchise, as a ready-made business eliminates the need to start a coffee shop from nothing. It is really more accessible for beginners to work on the franchise. It may seem that the franchise is expensive and difficult: you need to pay royalties (percentage of turnover of the partner institution), follow the regulations.
But opening on their own, an inexperienced business person can make many mistakes: for example, choosing a bad location, buying poor quality equipment, signing a contract with an irresponsible supplier, organizing incompetent management, and sluggish marketing. This leads to lost profits, extra expenses, and often banal theft.
In total, such mistakes can cost much more than the money you’ll spend to buy a range of support from experienced market participants. And, yes, when receiving royalties, the network is interested in the franchise earning as much as possible, so the support does not end with opening the coffee shop. Another thing is that the franchise itself must be high quality.
But don’t think that working for a franchise is when the network does everything for the entrepreneur. The franchisor is a senior colleague who can suggest and show proven examples of doing it right and being profitable. Implementation falls on the shoulders of the franchisee – after all, this is not your start-up.
Write A Business Plan
Trying to learn more about how to open a coffee shop, don’t forget to write an effective business plan. Calculate all costs, possible profits, describe the menu of the coffee shop, the list of equipment, opening hours, marketing strategy, etc. If you cannot do this on your own, contact a marketing research and planning specialist in your country.
Choose The Right Place
These should only be passable points:
- business districts
- busy sides of the streets, their intersections
- near metro stations
- near railway stations, markets, shopping centers, universities
- airports
Uptowns, despite low rents, are not favorable for the coffee business. Remember that traffic on one side of the road may be different. Coffee shops do not generate traffic – people will not go to remote places, cross major central roads just for a cup of coffee.
Design The Exterior & Interior
The customer passing by your coffee shop must immediately understand that coffee is sold here. You are lucky if you have good taste and are confident in it, but it is often better to turn to professionals – design studios with relevant experience.
Buy Furniture
Investigating the question of how to open a coffee shop, don’t miss the question of furniture. The furniture and finishing materials of the coffee shop must have high-performance characteristics. Tables and chairs, armchairs, sofas, bar, doors, floor coverings with a high degree of wear resistance will not lose their appearance for a long time, despite the high attendance of the coffee shop and any similar institution.
Buy Equipment
The main list includes:
- coffee machine
- coffee grinder
- water purification system
- refrigeration equipment
- showcases, scales
- water heaters
- dishwasher, microwaves, mixers
The rest of the list depends on the menu of the institution. It mainly concerns baking and cooking.
Coffee equipment is the most expensive part of your plan. The price of a professional coffee machine can be 1-1.5 million or higher. Therefore, keep in mind the option of finding a supplier who, under the contract for the supply of coffee beans, will provide the use of a coffee grinder and a coffee machine – free of charge.
You will also need to buy interior items (tables, chairs, sofas, etc.) – here, the list will be individual depending on the concept of the coffee shop and the idea of the entrepreneur.
If the coffee shop is opened under a franchise, the franchisees will provide a list of proven partners and specifications for the equipment, so you do not have to look for anything yourself.
Create A Menu & Coffee Card
There are coffee shops that sell only coffee, sandwiches, various cakes, cookies, and pastries. And there are those where you can eat well. When designing a menu, consider traditional preferences in your country, region, or city, including pastries. Some coffee shops and cafes prepare everything themselves, while others buy from bakeries or from producers of semi-finished and ready-made frozen pastries.
Find Product Suppliers
Study commercial offers and choose the most profitable for you. It is better to find several suppliers at once not to disrupt the coffee shop’s work.
Hire Staff
You can find people with experience or without it, but with subsequent training. You can either search for staff yourself or entrust it to professional agencies. When hiring employees, you must always remember that success depends on people. Only a skilled barista makes good coffee, sells, and communicates with people – so it is worth looking for such a person in advance.
At the start, you have a lot of work. If you really want to know how to open a coffee shop, it makes sense to save on assistants and help barista on your own. As a bonus, you get an idea of all the processes in the coffee shop and understand how to build a job.
Think About Marketing & Advertising
This item should include the name of the coffee shop, its concept, exterior, and interior design, promotion on the Internet, social networks, and offline. Do not forget about the distribution of leaflets, discounts, bonus cards, etc. Declare yourself already at the stage of renovation of the cafe – on the windows, walls you can write about the imminent opening of the coffee shop.
Now you need to attract the first customers. If you do not save, the promotion can be done by an advertising agency. But you can also print flyers at a discount, run targeted advertising on social networks, make announcements and hold contests and raffles. On an opening day, organize a lottery and invite neighboring companies as partners.
Don’t Listen To Beginners In The Coffee Business!
How to open a coffee shop? Entrepreneurs with no experience in business often enter the coffee market. To study the market, they search for blogs and lectures on the subject and often come across amateurs and business lecturers.
If you choose to learn from someone’s business, make sure that person has many years of experience in the coffee business. Listen to their true stories, absorb their experience. You can often see hidden advertising – in this case, leave immediately. They try to lure you to the business courses. You often hear that coffee shops close after a couple of working months. But in reality, as in any business, those who made a lot of mistakes and did not carry out preliminary work are closed.
Finally, let's add an important point: to open a coffee shop from scratch, write a business plan on paper or electronically. Be sure to calculate the cost not only of equipment and rent and also the purchase of products for the near future, at least non-perishable. A carefully written list will save you from many troubles in the future.
Despite the many difficulties and pandemics, it is possible to open a coffee shop from scratch everywhere. Hope, these tips will help you run the business of your dreams!