How to open a coffee shop

Coffee shops are a ubiquitous sight, offering a haven for busy commuters, solo workers, and friends catching up. No matter the purpose, they’ve become an undeniable staple in communities across the country. Their immense popularity has fueled their rapid expansion, but to stand out, you’ll need a competitive edge if you’re considering how to open a coffee shop yourself.

Thinking about how to open a coffee shop? Remember, a successful shop requires a well-defined concept and a strong understanding of the market. Conduct thorough research and craft a compelling business plan to navigate the exciting, yet competitive, world of coffee shops.

Here’s our top tips for opening a coffee shop:

Pick the right location

Getting to know the local demographics of potential areas can give you an idea where the right spot to launch is. Areas with plenty of commuter footfall such as those near to train or bus stations are great to open a coffee shop as you can expect a lot of people to grab a quick drink before work.

Likewise, areas with lots of students or near a library are also a good hotspot. No one wants to sit down to read or work without a little caffine to keep them going.

Ensuring you have the right facilities is also key. If you’re intending on selling food too, you’ll need space for kitchen appliances. While you might not need a whole separate room, having enough space behind the bar is important.

Of course, you may not have to choose a bricks-and-mortar site at all. Plenty of coffee houses start out of mobile platforms such as trailers. These have a number of advantages; you won’t have to pay extortionate rents or business rates, you can attend high footfall events, and in quieter times of the year you can shut up shop to save on costs. It’ also a great way to assess the demand for your services before you make any permenant commitments.

Many of the same principles apply to choosing a spot for a restaurant, which we’ve written about here!

Know your finances

Knowing your finances in and out in advance can give you an advantage and ensure you’re ready to open. To work out if your business will be profitable, take your estimated income, and subtract your expenses.

Income can be estimated through multiplying your expected sales by the average price of each transaction, which should give you a idea of how much cash you’ll be pulling in.

Rent and business rates will be some of your biggest expenses, as well as staff wages and barista training. You can read more about the costs to consider when opening a shop here.

Coffee shops themselves require an expensive amount of equipment, which can be bought outright or sometimes leased. You’ll need to be able to afford an espresso machine, bean grinder, fridge/freezer, and a dishwasher. If you’re serving food; cooking appliances, a toaster/sandwich press, and a microwave will be needed. Those in areas with hard water will also need to consider investing in a water softener.

You’ll also need the technology to support you, including a POS (point of service) machine, as well as a WiFi router (no coffee shop will succeed without Wi-Fi – no matter how great the brew!).

Once you’ve determined you can turn a profit, or become profitable, the next step is to sort out the paperwork.

Check the boring legal stuff

As with most food service, there’s a lot of red tape to pass through.

Firstly, coffee shops require the correct premises licence. This has become a lot simpler since the introduction of the Use Class E license, which incorporates effectively all commercial uses.

You’ll also need to ensure that your health and safety paperwork is complete and up-to-date, however the Foods Standards Agency provides plenty of guidance for new businesses.

It’s key to ensure your business is properly insured, from both claims against your business as well as claims for damages such as theft, fire, or vandalism.

Market your brand

Once open, you’ll need to market your brand. This is one of the most important aspects to consider when you open a coffee shop and getting this right is crucial for the success of your business.

When your business is opening, this is the time where you will spend the most on marketing, as ensuring your potential customers know about your business early on will help you bring more people in down the line. Research suggests that new businesses should spend somewhere between 12% and 20% of revenue on marketing in the first year, before this number falls to somewhere between 6% and 12% after that.

Having a website and a social media presence is important, as well as ensuring your business can be seen on Google Maps.

It could also be worth launching some promotional deals when you get started, such as loyalty cards or free samples.

This can help you establish a loyal customer base. One of the best advertising tools is word-of-mouth. You want people to tell their friends and family about this great new coffee spot that just opened, and soon they’ll in turn tell more people and get your business’s name out in the open.

The world of coffee shops is busy and competitive, but knowing your stuff and being prepared is the key to success.

Ready to find your dream location for your coffee shop? Check out available properties with Completely Retail.