The local coffee shop: it’s a fueling station, a gathering place, and a small business perfect if your passion is coffee.
But how do you go from loving coffee to making it your life’s work?
This guide takes you step-by-step through how to open a coffee shop so you can make your caffeinated dreams a reality. Follow along and you’ll be holding a cup with your cafe’s name on it in no time.
# 1 Do your research
Strong business plans begin with research. While you’ve probably spent plenty of hours in coffee shops, there’s even more percolating behind the scenes. Learn how a coffee shop runs first-hand by working in one, or through research, focusing on the:
- Cafe operations – Your coffee shop business plan will need to include everything from customer interactions to bathroom cleaning protocol. Learn what works at cafes you’re a fan of to create the foundation for your own plans.
- Equipment – Find out everything there is to know about the tools of your trade, like commercial espresso machines, steamers, and coffee brewers. When the time comes to invest in them, reference different features and pricing.
- Sourcing – Where your coffee beans come from is an essential part of your coffee shop’s story. Research bean importers and roasters, and investigate any local companies you can work with. Look for local suppliers of cups, napkins, and all of your cafe’s essential items.
- Branding – Refine the vision for your new coffee shop by collecting images and notes on cafe interiors, menus, websites, and social media. Get inspiration from cafes and any local and national businesses you love.
Clarke Cadzow, the owner of Highland Coffee in Baton Rouge, Louisiana, has been roasting his beans for over three decades, giving local customers another reason to love his coffee. In-house roasting can attract the most discerning coffee lovers and ensure a high-quality product that you own every step of.
#2 Determine your budget
A potential wake-up call to your coffee shop dreams is the financial reality of opening any small business.
So, how much does it cost to open a coffee shop?
The short answer: somewhere between $20,000 and $300,000.
If that seems like a wide range, that’s because several factors determine the overall cost of opening a new coffee shop, including:
- The location of your coffee shop – Real estate costs, business licenses, and business taxes vary widely across the country. Where you open your shop will have a large impact on how much capital it will take to bring your business to life and make it profitable.
- The type of business you plan to open – Coffee businesses can take on a variety of forms. You might be interested in opening a coffee cart, a drive-up window, or a full sit-down cafe with a bookstore, or event space. Offering food, like breakfast sandwiches and pastries, may open more opportunities for profit, and also added costs.
- The coffee shop essentials — Consider everything you need to flip that sign from “closed” to “open,” from equipment and supplies to staffing and utilities.
No matter what the above adds up to for you, opening a coffee shop is a significant financial investment that may require a small business loan or private investment.
#3 Develop a business plan
After brainstorming and researching, it’s time to put your coffee shop idea on paper with a business plan that details the concept of your cafe and its path to profitability.
An effective business plan includes:
- An executive summary – Your overall business idea, from top to bottom, with value propositions, mission statements, and clear goals.
- Demographic research – Who are your customers and what are they looking for from your business? Detail target neighborhoods, as well as key information about age and income.
- Marketing plan - How will you reach your customers? Share your coffee shop advertising ideas and promotional plans to bring as many neighbors through your door as possible.
- Financial data – Investment costs, overhead expenses, operating costs, taxes, and insurance should all be accounted for. This information is essential to show potential investors that your coffee shop business is viable and well-positioned.
- Daily operations – This includes employee structure, roles, and responsibilities, as well as store policies, emergency protocols, and customer communication strategies.
Writing a business plan is an undertaking on its own. You need to detail every aspect of your business, with the data and projections to back up your ideas. Consider hiring experts, like a lawyer and an accountant, especially if they have advised other local businesses in your area.
#4 Secure your location
After you’ve secured financing, it’s time to find your dream place.
What to consider for your coffee shop’s future location:
- Neighborhood features
- Nearby parking
- Necessary renovations
- Storefront potential
Ideally, you’ve done some location research in creating your business plan. Whether leasing, renting, or buying the space, once you’ve secured your coffee shop’s location, bring your brand to life with any needed renovations and decor.
#5 Establish your brand
Your business plan should include an outline of your coffee shop’s brand, or the messaging and visuals unique to your business.
Your brand’s voice and messaging convey the value propositions of your business creatively and effectively: think of it like how your coffee shop would speak to customers if it was a person. Branding helps you stand out among competitors and should be felt in person when neighbors visit your coffee shop, or when they see your shop advertised or on social media.
Developing the right brand messaging and design will appeal to your customer base and support your business’s short- and long-term success. Consider these tips when establishing your brand:
- Work with a graphic designer – You may like to doodle or even design in your free time, but a trained brand or graphic designer will help bring your ideas to life. Hiring a graphic designer to create a logo, and choose fonts, a color palette, and imagery for your business means more professional, eye-catching marketing, advertising, and even products. That means your logo on signage, cups, a bag of beans, t-shirts, merchandise, magazines, and more.
- Build your digital brand – Your coffee shop needs social media and a website to drum up business before and after it opens, plus a consistent voice that speaks to customers seamlessly everywhere. Create a free business page on Nextdoor to reach your most valuable customers, and neighbors, with free monthly posts and hyperlocal advertising. 88% of neighbors here frequent a local business at least once a week. Make one of them your future cafe.
- Connect with neighbors – Coffee shops are meeting places for the community, where neighbors catch up over cups of joe or favorite local treats. Before even starting your business, you can post as a neighbor on Nextdoor to ask what others want in a nearby cafe. Once you’re open or getting ready to, use your free business account to post job listings, share events, and even find someone like a local artist to create a mural or a chalkboard menu.
Your coffee shop’s brand should be a reflection of your community, too. As Joe Lopez, co-owner of Sip House of Coffee and Tea in Palmview, TX said, “When we created this, we were thinking, 'We want something that’s going to be very inviting, that the community can go out and just be able to get out of their houses and have a spot to go and chill, have a conversation, a cozy cup of coffee.'”
#6 Train your team
Unless you’re planning on running your coffee shop solo, you need a team to keep the espresso flowing and the milk steaming.
During training, educate your new staff about:
- How to make your signature drinks
- Where your coffee is grown and roasted
- Different beans and roasts
- Proper health and safety protocol
- Bonus: Latte art, or anything unique to your shop
A holistic approach to training will help you build a team of knowledgeable baristas who deliver top-notch service you’ll soon be known for in the neighborhood.
#7 Prepare for your grand opening
Show the neighborhood what you’ve been brewing with a celebration on opening day. Make it special by:
- Advertising on Nextdoor to generate buzz in specific ZIP codes or a radius up to 30 miles around your shop
- Running a neighbor-exclusive promotion on Nextdoor, like offering the first cup on the house
- Starting punch cards to give new customers more reasons to come back
- Inviting local musicians to play
- Teaming up with fellow neighborhood businesses
- Donating a portion of the opening day or week’s proceeds to a local charity
- Sharing the story of how you got here on Nextdoor. Neighbors love supporting local businesses; add yours to their neighborhood favorites
Share a celebratory cup with neighbors on Nextdoor
Nearly 1 in 3 households are on Nextdoor, which means there are a lot of coffee drinkers sharing local business recommendations. Find out if your neighbors prefer light or dark roasts, gauge interest in weekly events, and share your story as a neighbor starting a local business. With Nextdoor, you can connect with your community and share what you're coffee shop has to offer. Claim your Business Page to get started today.
