Starting a coffee shop is a long and complicated process, which requires a lot of work, financial resources, and passion. However, if you cover the 15 essential steps to opening a coffee business, this process will be a much easier and rewarding experience.
1. Conduct Market Research
Getting a general overview of the coffee industry should be the first step to opening a coffee business. Since there are around 24,000 coffee shops around the UK, the competition is very high. Without learning what the needs of the coffee sector are and what target group would be the best to focus on, failure is highly likely. As the owner of an independent coffee shop, you must be well aware of barriers to enter the industry – such as a big chain of coffee shops in the area.
Talking to coffee shop owners and learning from their experience can spare you from mistakes.
2. Decide on a Coffee Shop Concept
Finding an interesting concept for your coffee shop is crucial because it is the foundation of your business. The concept will determine the business plan, the funding you will require, and the interior design. Most importantly of all, the concept might make or break your coffee shop.
The concept should be all about creating a unique atmosphere for your customers. It must stand out from among other coffee shops in the area and should make people come back.
Think about who your target group is and the location of your coffee shop. If you target students, a casual place close to a university might be a good idea. On the other hand, if your café is near a business centre, your customers might appreciate a space designed to have small, casual business meetings.
If you have a limited budget, and there are many unique coffee shops in the neighbourhood, think outside the box. For example, coffee carts are convenient for busy customers, and the cost of starting a coffee cart business is much lower than opening a conventional coffee shop.
3. Write a Business Plan
A business plan is a document that explains your idea and execution of opening a coffee shop. It demonstrates how much the coffee shop will cost, what funding you will need, and what profit you expect to make.
Although there are different business plan templates to choose from, a solid business plan should consist of:
- A summary
- The overview of business structure
- Market research
- Description of the products and services
- A sales plan
- A financial plan
- Operating and management plans
4. Find a Good Location
The success of your coffee shop will be determined by the location. However, finding a good location is not easy. Usually, it requires a lot of time and effort. There are several important factors to take into account while searching for a spot, such as demographics or proximity to places such as universities, train stations, business centres, or foot traffic.
You might search for a suitable location yourself or use the services of a commercial real estate broker, who will present you with the best locations in the area of your interest and guide you in the process of commercial property renting.
As in the case of finding a unique coffee shop concept, you should think outside the box.
5. Finance for Your Business
Finding ways to fund your startup business might be the biggest challenge for opening a coffee shop. You can expect the cost of starting a coffee shop to range between £30,000 to £100,000. Usually, the business starts generating profits between 6 and 12 months after opening, and you should secure enough capital to cover all expenses for that period, such as rent, equipment, inventory, and salaries.
One of the options to finance your business might be a startup business loan or finding an investor that recognises the potential in your business.
In either case, you should have a solid business plan to convince banks or investors that you know what you are doing.
6. Buy Proper Coffee Shop Equipment
When you find a good location for your coffee shop, your next step is buying proper equipment. Every café must be equipped with a coffee machine capable of brewing high-quality coffee for every cup.
Bear in mind that this equipment might be one of the biggest expenses of opening your coffee shop.
The cost of an espresso machine is between £299 and £12,999. However, if a new coffee machine seems too expensive, you might consider renting a coffee machine instead, which might cost you between £14.99 and £39.99 per week.
7. Select Coffee Beans
Selecting coffee beans is not an easy task. There are some aspects to consider before buying the beans. Firstly, the price you are going to pay for beans will determine the price of coffee at your coffee shop. That means you should consider the location of the shop and your customer base before you invest money in coffee beans.
In other words, you need to estimate what price you can pay for beans to generate profits from sold coffee.
For example, if your coffee shop will be located close to a university, your prices should cater to students.
Alternatively, you might consider preparing your own roast. However, this requires specific skills and experience. Moreover, commercial roasting equipment might be expensive, starting from £3,600, up to £30.000.
8. Design Your Coffee Shop
The interior design of your coffee shop should be consistent with the concept you select at the beginning of the process. Moreover, it should show your brand and mission.
There are numerous interior design ideas you could use as inspiration that can be adjusted to your initial concept.
For example, industrial design is based on factories and warehouses styles. A modern coffee interior is all about simplicity and functionality. Danish ‘hygge’ design is focused around comfort and cosiness. Rustic interior includes natural elements such as wood, plants, and flowers.
9. Install a Suitable POS System
A good coffee shop should not only have delicious coffee and a nice atmosphere; it should be equipped with a suitable POS system that can help with counter sales, order tracking, and reporting.
Consider whether you want to set up a POS system that includes a cash register, or if you would prefer a simpler approach, such as an iPad POS system.
Moreover, evaluate whether you would like your customers to be able to pay at their tables, in which case you may want to invest in an mPOS system too, which will enable your staff to bring a card machine to each table.
Whichever solution you opt for, ensure it is the right one that will make your customer’s experience the smoothest.
10. Create a Website
A website is a must for any kind of business to create an online presence. More and more consumers search for a product or service online before buying, and not having a digital presence might lead to the loss of potential customers.
11. Create a Marketing Plan
Increasing the number of customers might be difficult, but there are different marketing strategies you can use to attract potential customers.
Firstly, get active on social media. Instagram, Facebook, and Twitter have a huge potential without investing a lot of money on advertising. One of the best advantages of a platform like Instagram is that your customers might add photos of your business on their own accord, which helps to increase presence.
Secondly, since you have already created a website, use it to write a blog and showcase the special character of your coffee shop.
Moreover, there are a few things you can do in a coffee shop itself. e.g. offering special drinks to increase sales. Do some research on similar businesses’ offers. You might also offer loyalty cards, which might increase the retention of your customers.
Finally, focus on local businesses. Surprising them with a free coffee might encourage them to explore your coffee shop in the future.
12. Hire the Best Employees
The size of your coffee shop will determine the number of employees. A barista is a person that a coffee shop cannot do without. However, if you plan to prepare food, you will also need a chef.
Choosing the right employees should be aligned with the culture and atmosphere of your coffee shop. You should always look for someone that can represent your brand well and build a positive connection with customers.
In general, you should look for candidates that are friendly, easy-going, organised, team players that have excellent communication skills.
13. Build a Menu
Coffee is your staple drink in your coffee shop, but it doesn’t have to end there. To increase sales, you might introduce pastry and breakfast selections.
However, think about different food preferences and remember to include vegan and gluten-free options.
A good idea might be to visit different coffee shops and read their menus. You can easily notice trends worth following. For example, matcha drinks are one of the biggest trends nowadays.
At the same time, you can adjust your menu to the seasons. Coffee lovers are always into pumpkin spiced lattes, hot chocolates, or salted caramel mocha lattes.
Nevertheless, whatever you put on your menu, you should always have your target group in mind. Customers in suburban areas might have different demands than students around campuses.
14. Get Permits and Licenses
To start your coffee shop, you will need the relevant permits and licenses. Firstly, you must register your business with local authorities. You are obliged to do this within 28 days before the official opening of your business.
Keep in mind you might be visited by the local authorities for a food hygiene inspection. Moreover, you should get all necessary permits and licenses, such as pest control, food premises approval, public liability insurance, and PRS for a music license.
15. Become a Coffee Nerd
Coffee lovers know a lot about coffee, and they expect the same from coffee shop owners. Becoming a coffee nerd might take time, but there are many different easy ways to become one.
For example, if you are new to the coffee industry, you might sign up for a course with coffee experts. You will learn about the beans, different flavours, roasting, grinding, and brewing methods.
On the other hand, use the information offered by coffee associations in the UK. For example, the British Coffee Association represents the UK coffee sector and educates about coffee and provides training. Moreover, the association organises Coffee Shop Innovation Expo for coffee shop owners. This kind of event is a great opportunity to meet other business owners and learn what is new in the coffee industry.
Starting a coffee shop might be a great idea taking into consideration the growing coffee culture in the UK. The process might be long and complicated, but when you know what the essential steps are, you can turn opening a coffee shop into an exciting experience.
Article contributed by Patrycja Hala Saçan, Communication Assistant at Market Inspector