How to Start a Coffee Shop? The Steps You Should Know!

Barista making a cup of coffee in machine

Coffee is an integral aspect of the lives of Americans and all over the world. Coffee shops are great places for business deals, dates, and catching up with friends and family. 

It’s the place that injects positive feelings and enthusiasm for the day. In the evening it is full of laughter and helps to wave off the stress of the day. 

Undoubtedly, opening a coffee shop is a rewarding career with experts projecting that the sector to rise to 237 billion dollars

This post will give you a step-by-step guide on how to start a coffee shop.

Conduct Research

Research is the most critical aspect to provide you with facts and help you in developing a business strategy. Through research, you will get insights into what makes a coffee shop venture successful and the major challenges. 

You will have a better understanding of the demography in your target location and their coffee uptake.

Competitor research is vital to know who you will be competing with and their market share in your area. Researching your competition will help you identify the missing gaps and come up with your main selling point. Industry research will also help you choose the most suitable business entity for your coffee business, whether it is a Sole Proprietorship, an S-Corporation, or an LLC.

You will also get valuable advice from those already in the business and get useful contact persons in the process.

The coffee industry has gone far in the last decade, make sure your coffee knowledge is up to date to address those coffee snobs as well look into coffee blogs for knowledge about Speciality Coffee, alternative brewing methods, etc.

Come Up with a Concept

After finishing the research you should clearly define your business concept. It is the idea that will give you an edge over your competition. From branding, target demography to a secret signature product.

The following questions will help you in formulating your business concept:

Who is your target group?  

Are you interested in students, office professionals, or the elderly? 

What snacks will you offer? 

Many people would like an accompaniment with their coffee. Identify things you will add to the menu and how you will get them.

How much are people in the area willing to pay? 

The pricing is an essential element to determine the number and type of customers you will attract.

Develop a Business Plan

The business plan is your strategy for the new venture. It entails many aspects from the brand name, organizational structure, business model, marketing techniques, market analysis, and financial matters. 

The plan is the instrument that explains your business philosophy and what will make it set apart from the rest.

The plan helps you to understand how much you require and the sources of your funds. In the event you do not have sufficient capital, the plan allows you to create a list of possible financial options you can explore such as loan facilities. 

It will also highlight the financial projections and timeliness when you can break even.

Cost of Opening a Coffee Shop

There is no fixed amount of money in operating a coffee shop. The location, stock, type of equipment, renovations, and furnishings are among the aspects you need to consider. The size of the shop will also affect the capital requirements.

Depending on the location and magnitude of your business it will cost you between $100 – 600K. The price will vary greatly depending on whether you are buying the building or updating the place after a vacancy. 

However, the average cost for most entrepreneurs ranges between $275- 300K. If you are opening a franchise you may need to pay a fee of $10-50K.


A critical analysis of the potential location where you will host your business is key in determining its success and sustainability. Be keen on the traffic of people and the main mode of transport they use. 

For example, in a place where the majority of the people use vehicles, you need to think of the parking space if you are considering a seating arrangement.

Frequenting the potential areas will help you assess the availability of your target market. The proximity of suppliers is worth consideration as it will determine the promptness of deliveries. 

You also need to consider water pipes, drain, and gas installations. Ensure you involve a retail lawyer when leasing a premise to avoid unnecessary disputes and other inconveniences.

Select Quality Coffee

The biggest selling point for your coffee shop is the quality and consistent taste of your beverages. The right blend of the coffee beans will determine the texture, color, and flavor of your coffee. It is this combination that keeps customers coming back.

Your coffee suppliers will affect the quality of every cup and it is crucial to vet them thoroughly. Inquire about the processing procedures and how fast they roast the beans after harvest. Fermentation is common in overstayed beans leading to a rotten taste. A local coffee roaster with different flavors and fair trade certification is the gold standard for coffee suppliers.

Utilities and Equipment

Your coffee shop will need equipment for creating beverages, refrigeration, washing wares, measuring quantities, water filtration, and other utilities such as disposables. 

Transforming the coffee beans into cappuccinos, latte, mocha, macchiato, Americano and other beverages requires the use of special coffee machines

These machines include espresso machines, coffee grinders, coffee brewers, hot water dispensers, airpots, and coffee roasters, among others.

You need light cooking equipment such as ovens for making the bread, sandwiches, and cookies. 

High-quality refrigerators help in the preservation of milk, smoothies, and ice cubes for iced tea or coffee. A display case will help to showcase the variety of baked goods as snacks for the coffee. 

An underbar sink and compartment sinks will help in washing and sanitizing the dishes and fresh fruits.

Coffee Shop Interior

The decor, furnishing, and theme colors of your business need to be unique and top-notch. You will have different types of people visiting your outlet and doing different things. Some people will be working from their laptops, reading, catching up with friends, or conducting business deals.

It is paramount to ensure that all kinds of people visiting the shop are as comfortable as possible. Ensure the seats are soft, comfortable with a practical seating arrangement. The lighting should be warm and as inviting as possible. Choose wall paint and artwork designs that evoke excitement and inspiration for your customers.

Hire the Right Personnel

The qualifications, training, skills, and work ethics of your employees will go a long way in advancing your business. 

However, the right culture and attitude will sustain your company despite its competition and business challenges. Ensure that you have a training program for all new staff to acquit them with the necessary skills and for efficient workflow. 

Be keen on the tax and regulatory requirements for your employees.

Permits and Licenses

The government requires individuals to register their businesses. Permits and Licenses are legal documents that you will use to remit taxes. 

It also serves as proof to customers that you are a credible business. It is thus essential that as you plan to set up a coffee shop you visit the necessary authorities and enquire about the procedure.

Final Thoughts

The coffee shop business has been on an upward trajectory ever since and will not likely decline any time soon. 

The venture will give you a chance to make a living as you contribute to making conversations that shape families, friendships, and businesses to a higher scale. 

The above guide will help you to actualize the dream into reality.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.