How to Start a Coffee Shop: Costs & Considerations

“So You Want to Be a Rock ‘n’ Roll Star” is an old song by the Byrds explaining – and exaggerating in the process – how easy it is to learn guitar, get a record contract, and get famous as a rock and roll star, thereby attracting lots of girls.

In a similar vein, many people see a crowded Starbucks and think it must be easy to start a successful coffee shop. All you need is some space and some equipment and you’re set, right?

Not really.

We get plenty of calls from people who have decided to open a coffee shop. Usually, it is the fulfillment of a dream for them, and they are excited to be starting their own business and selling a product they love and believe in.

We’re not here to crush dreams, but it’s important to be realistic when deciding to take such a big step. Mainly, we say that because many of the calls we get are from people trying to start a coffee shop on a shoestring budget, and that’s a hard thing to pull off.

As a comparison, we get a lot of calls from people wanting to know how to start a coffee shop with a budget of $10,000 or less.

Things to budget for when opening a coffee shop:

1. The Space – including the construction and design costs for turning it into a coffee shop, and the ongoing rent, utilities, maintenance, and insurance. As a rule, rent should be no more than 15 percent of projected sales.
2. Costs incurred in setting up a business, including legal fees and licensing.
3. Equipment, including an espresso machine, both espresso and coffee grinders, coffee brewing equipment, blenders, a refrigerator, cooking equipment, POS equipment, etc.
4. Supplies, including drinks (coffee, milk, syrups, teas, and smoothie ingredients), food (any breakfast and lunch items that are going to be offered), and supplies such as cups, napkins, stirrers, etc.
5. Advertising costs.
6. Payroll costs.
7. Taxes.
8. Money to cover cash flow.

In our opinion, the most important items on the list are numbers 1 and 8.

Number 1 (revisited): Many people think they can skimp on number 1 by selecting a slightly cheaper location, or by not spending enough turning the place into a setting where people will feel comfortable and want to return. However, the setting and location of a coffee shop are vital to its success – Starbucks understands this.

Number 8 (revisited): It is often noted that a large percentage of businesses go out of business simply because they run out of money before they’ve had a chance to be successful. Business owners must make sure there’s a financial cushion that they can rely on until their business is on solid footing.

We’re not experts on opening coffee shops, but we are experienced in helping people source the equipment for their coffee shop. Having good coffee is vital to running a coffee shop, but we know that if we get a call from somebody with a budget of $10,000 to open a shop — they’re not going to have enough money to buy quality coffee equipment.

Here’s the coffee equipment we consider vital to a coffee shop:

• Espresso Machine – there are two kinds to choose from here – a super-automatic or a semi-automatic. Super-automatics are machine that make an espresso drink at the touch of a button. They can be found in places like Panera Bread and McDonald’s. The advantage to a super-automatic machine is that it is fast and it doesn’t take a barista to operate it – anyone can learn to press a button to make a drink pretty quickly. The disadvantage is a loss of the barista and his or her skills. With a semi-automatic espresso machine, the barista must grind tamp, brew, froth, etc. The customer feels like he’s getting what he paid for when he watches a barista making his drink. Most coffee shops use semi-automatic espresso machines. While a quality semi-automatic espresso machine will cost you $2,000 – $5,000, a super-automatic espresso machine can cost anywhere from $5,000 to $20,0000.
• Espresso Grinder – most baristas consider a quality espresso grinder a vital part of making a good espresso. A good grinder will usually cost between $500 and $2,500. If a super-automatic machine is being used, an espresso grinder is unnecessary because the machine will grind the beans.
• Coffee Brewer – a top-of-the-line coffee brewer is essential for brewing good coffee. Depending on volume needs, expect to spend anywhere from $500-$2,500 on a coffee brewer. Airpots or thermal dispensers will be needed to hold the coffee and will add at least $100 to the cost.
• Coffee Grinder – coffee grinders are different from espresso grinders. Espresso grinders grind smaller and grind directly into the portafilter. Coffee grinders, on the other hand, grind in a larger size and grind into the brew basket of the coffee brewer. A quality coffee grinder will run you anywhere between $800 and $1,500.

Total Cost: $4,000-$12,000 (for a semi-automatic espresso machine, espresso grinder, coffee brewer, and coffee grinder).

Don’t have that much money for coffee equipment?

There are a couple of options:

1. Buy used equipment. We can provide used, quality equipment that has been refurbished. As a general rule, it will cost about half as much as new equipment.
2. Consider opening a specialty coffee shop, such as one that serves only pour-over coffee using a Chemex or similar brewer. (Here is a good story about that).
   

   Pour Over Coffee Shops are Trendy These Days

3. Consider opening a kiosk or coffee cart instead of full store.

So, how much does it cost to open a coffee shop?

According to Bellissimo Coffee InfoGroup, it costs at least $200,000 to open a coffee shop. For a coffee cart, it costs roughly $20,000.

Truthfully, it’s much easier to open a coffee shop and succeed with $300,000 than with $10,000, but it’s not impossible to succeed with $10,000. It will take more work, more luck, and more risk, but it can be done. (Here is a good story about what it takes to open a successful coffee shop).

Good luck, and please call us for a quote on all of your coffee equipment needs.

Coffee Shop Photo by Clair Ceesford, Coffee Equipment Photo by windygig, Pour Over Photo by James Willamor.