Do you want to start a coffee shop and you want to know the cost breakdown? If YES, here are factors that determine how much it cost to open a coffee shop. One of the many reasons why aspiring entrepreneurs struggle to start a business of their choice can be attributed to lack of start – up capital or not knowing the estimated amount needed to launch the business either on a small – scale, medium – scale or large scale.
The cost analysis as it relates to starting a coffee shop business in the United States of America, Canada, United Kingdom, and Australia can be said to be almost the same except for few variations. For instance; most of the coffee bean brand that you are likely going to find in a standard coffee shop / bar are of international brand.
Hence if you are able to find a coffee bean brand in a coffee shop in the United States of America, you are likely going to find same coffee bean brand in a coffee shop in the United Kingdom, in Canada or in Australia. The truth is that, the price of such product can be same price all across these countries especially when you take into consideration the exchange rate of the country when compared to the United States Dollar.
Factors That Determine How Much It Cost to Start a Coffee Shop
When it comes to starting a coffee shop business, loads of factors influences the amount that will be required to successful launch the business. Factors like the location you intend starting the business, the type of coffee house you want to open, the size of the coffee house you want to open, and of course the state of the economy as at when you intend starting the business.
Other factors that may be slight different in terms of costing when it comes to starting a coffee shop / café / bar business in any of the countries listed above are cost of labor, cost of transportation and logistics, local tax, business incorporation fee and rent / leasing amongst other factors.
Over and above, when it comes to starting a medium scale coffee shop / café / bar, you should be prepared to either rent or lease a standard shop facility; this is going to be one of the areas where you are expected to spend the bulk of start – up capital, other areas are the amount required to purchase coffee making machines / equipment, coffee supplies, the scale / size of the business and also in paying your employees at least for the first three months of starting the business.
Table of Content
- Estimated Cost Breakdown to Open a Coffee Shop
- Cost to Buy a Coffee Shop Franchise – $100,000
- Financing Your Coffee Shop Business
Estimated Cost Breakdown to Open a Coffee Shop
No matter where you intend starting your coffee shop business in the Unites States, these are the key expenses you are expected to make when starting a medium scale but standard coffee shop business in the United States of America;
- The Total Fee for Registering the Business – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services totaling – $1,300.
- Marketing promotion expenses for the grand opening of your coffee house in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- Cost for hiring Consultant – $2,500.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
- Cost for payment of rent for 12 month at $1.76 per square feet in the total amount of – $52,800.
- Cost for Shop remodeling – $10,000.
- Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
- The cost for Start-up inventory – $16,027
- Coffee beans (12 regular brands and five decaffeinated brands) – $6,000
- Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. – $7,900
- Retail supplies (napkins, coffee bags, cleaning, etc.) – $1,840
- The cost for office supplies (one month) – $287
- The cost for Espresso machine – $6,000
- The cost for Coffee maker – $900
- The cost for Coffee grinder – $200
- Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) – $18,000
- Storage hardware (bins, utensil rack, shelves, food case) – $3,720
- The cost for counter area equipment (counter top, sink, ice machine, etc.) – $9,500
- Cost for serving area equipment (plates, glasses, flatware) – $3,000
- Cost for store equipment (cash register, POS machine, security, ventilation, signage) – $13,750
- Office equipment and furniture – $3,600
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $4,000.
- The cost of Launching a Website – $600
- The cost for our opening party – $5,000
- Additional Expenditure (Business cards, Signage, Adverts and Promotions et al): $5,000
Total Cost of a Small Scale Coffee Shop: $75,000 – $250,000
Going by the report from the market research and feasibility studies, you would need an estimate of about $75,000 – $250,000 to successfully set up a standard small scale coffee bar business in the United States of America. The amount includes the salary of all employees and the CEO (Owner) for 3 months.
Please note that despite the fact that it is a small – scale coffee shop does not mean that it is in same level with the average mobile coffee cart / coffee kiosk in the United States.
Total Cost of a Medium Scale Coffee Shop – $300,000
You will need an estimate of three hundred thousand dollars ($300,000) to successfully set up a medium scale but standard coffee shop in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 month of operation and it only applies to single coffee shop.
Total Cost of a Large Scale Coffee Shop – $1million+
When it comes to starting a standard and large-scale coffee shop / café / bar with several outlets in key cities in the United States of America, a company with the intention of selling franchise, then you should look towards budgeting well over one million dollars ($1million).
Cost to Buy a Coffee Shop Franchise – $100,000
In the United States of America, the Average Cost of Purchasing a Coffee Shop Franchise is $100,000. Examples of 3 Three Well – Known Coffee Shop Franchising Companies in USA are:
- DRNK coffee + tea / QWENCH juice bar
- Classic Rock Coffee Company
- Dunn Brothers Coffee Company
Can Coffee Shop Business Be Bootstrapped on a Lean Budget from Home?
Coffee shop business is one of many businesses that despite the fact that it can be started with a relatively learn budget, it can’t be operated from the home. This is so, because you would not want people to continue to knock at your door and invade your privacy just because you want to sell coffee to them. As a matter of fact, it is a security risk and you likely not going to get a clearance from the regulating department in your city.
Although in some countries, you can successfully launch a small – scale coffee shop / kiosk in your front yard. With that, you can indeed bootstrap your coffee shop on a lean budget within your residential apartment. Just ensure that you consult the required authority in your city to be sure you secure a permit to run a business in a residential area.
On the other hand, you can choose to start a mobile coffee business, operating a mobile food truck / cart is not capital intensive when compared to renting a shop, renovating the shop and maintaining overhead and running cost.
Financing Your Coffee Shop Business
It is often said that money is the blood of any business. No doubt raising start – up capital is perhaps one of the major concerns for entrepreneurs; it can be challenging raising capital to launch a business idea. Your idea must be workable and promising for you to secure finance from financial institutions or from angel investors.
The first thing to put in place before sourcing for start – up capital for your business is to draft a detailed business plan. With a good business plan, you can easily convince investors to invest in your business. The truth is that no bank can give you a loan if you don’t have a good and workable business plan. Besides, investors will not take you seriously if you don’t have a business plan on ground before launching out to source for start – up capital.
There are several options when it comes to raising money to finance a start – up business. Some of the options are;
- Raising money from personal savings and sale of personal stocks
- Raising money from investors and business partners
- Applying for loan from bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Sourcing for soft loans from family members and friends.