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.
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.
Estimated Cost Breakdown for Opening a Coffee Shop
No matter where you intend starting your coffee shop business in the United 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
If you are looking towards opening a coffee shop in the United States of America, it is important to point out that there several factors that can influence the actual cost of launching this type of business. The truth is that some of the factors may not apply to you, because the business model and of course the picture of the kind of business a person wants to build would also affect the overall cost of the business.
These factors are unique to each individual and this article may not cover such. Having said that, here are some of the factors that can influence the cost of opening a coffee shop in the United States of America;
Factors That Determine the Cost of Opening a Coffee Shop
The Type of Coffee Shop
A major factor that will determine the overall cost of opening a coffee shop in the United States of America is the type of coffee shop the owner of the business wants to build. There are different types of coffee shops such as The Grab-and-Go Café, Upscale Coffee Shop, The Normal Coffee Shop, and Coffee Kiosk.
For example, an upscale coffee shop which is also known as a high-end coffee shop is expensive and it is a coffee shop niche that offers an upscale setting and service while featuring unique and often more expensive menu options, with a price range averaging over $50. It is less competitive, especially when compared to the average coffee shop.
The Choice of Location
Another major factor that will determine the cost of opening a coffee shop in the United States of America is the location you want to locate the coffee shop. In business, location is a key part of what determines the success of the business.
As a matter of fact, there are business consultants who are specialized in helping people choose an ideal location for their business; a location that will guarantee them to profitability and to break even within the shortest time frame. So, you will now agree that location can influence the cost of starting a business not just in the United States of America but anywhere in the world.
For example, renting or leasing a facility in a location that is off – the city center or off a major road will be less expensive when compared to renting or leasing a facility in a highbrow area; a location along a major road with high vehicular and human traffic, a location in a metropolitan city with the right demographic composition of people with the purchasing power.
The Required Licenses and Permits
In the United States of America, you cannot open a business such as a coffee shop without first applying for the mandatory license and permits. Of course, you would need a food and drinks handling license, building license, zonal permits, and kitchen permits amongst others that may be unique to different cities and states.
As expected, these license and permits cost money and it will influence the overall cost of opening a coffee shop in the United States of America. Please note that there may be several inspections you must pass before you can be issued your licenses and permits and begin operation – this will also cost you money.
In order to get the overall cost of licensing and permits, we will advise that you reach out to your city government to find out what you need for your coffee shop. You also need to consider state and federal requirements, so do your homework long before you set a date for your grand opening.
The Type of Facility
The type of facility you want to run your coffee shop business in is also a major factor that will determine the overall cost of opening a coffee shop business in the United States of America. As regards the facility, you have the options of renting a coffee shop facility, leasing a coffee shop facility, or designing and constructing your own coffee shop facility from the scratch.
With renting and leasing a facility, you might just have to spend extra cost to modify the facility to fit into the picture of what you have in mind, but there is a limit to how far you can go and it will be dependent on what the landlord of the facility wants. Let us assume that you want to construct your coffee shop from the scratch.
It means that you will buy the land or property, bring up your design and of course construct and equip the coffee shop facility to fit into the ideal picture of a coffee shop that you have in mind. With that, you will agree that you are going to spend more compare to people that rent or lease a facility. This indeed will greatly influence the overall cost of opening your coffee shop.
Menu and Services Offerings
Another key factor that will determine the cost of opening and operating a coffee shop in the United States of America is, of course, the menu and services offerings of the coffee shop. The fact that there are different types of coffee shops means that these coffee shops are designed to serve different menus.
You will agree that a coffee shop that serves all types of coffee beverages such as cappuccino, espresso, iced coffee, decaffeinated coffee, alcoholic coffee (Irish Coffee and Brandy Coffee et al), filtered coffee, cold brew coffee, Turkish coffee, coffee with milk, coffee or espresso with whipped cream, and flavored coffee et al. will be more expensive to open than a coffee shop that serves just one or two cheap coffees.
Aside from the different types of menus that have a way to influence the cost of opening and operating a coffee shop, the services offerings of the coffee shop are also a way of influencing the cost of opening the coffee shop. For example, a coffee shop that offers delivery services will be required to budget for delivery bikes and vans, and even drones due to the recent advancements in technology.
This means additional cost for opening a coffee shop, especially when compared to a causal or drive-through coffee shop with delivery options.
Hours of Operation of the Coffee Shop
In business, the longer your door is opened, the high the cost that you are going to incur especially as it relates to paying for utility expenditures and paying the workers. This is so because, in the United States, people are paid based on the number of hours they put at work.
For example, the cost of opening and operating a coffee shop that operates 24 hours a day and 7 days a week will be far different from the cost of opening and operating a coffee shop that only operates 12 hours a day and 6 days a week.
The Cost of Hiring and Paying a Business Consultant and Attorney
As expected, if you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney.
For example, a business consultant will help with drafting a workable business plan document for the coffee shop, a marketing plan and strategy, a comprehensive SWOT analysis for the business, and other advisory or things that will help you with opening the business.
So also, an attorney will help you with registering the business, drafting contract documents, and offering you all the legal expertise that will help you start the business on the right foundation. Of course, you will agree that these services will cost you money and it will indeed influence the overall cost of opening a coffee shop in the United States of America.
The Cost for Branding, Promotion, and Marketing of the Coffee Shop
The cost for branding, promoting, and marketing the coffee shop is yet another key factor that will determine the overall cost of opening a coffee shop in the United States of America. Trust me, if you need massive results as it relates to competing and winning a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion, and marketing of your new coffee shop.
As a matter of fact, it is not cheap to come by an expert in branding, promotion, and marketing that will help you compete with brands that are already determining the market direction of the coffee shop industry in your city. So, if you add the cost of paying a branding and marketing expert, it will surely increase the cost of opening your coffee shop.
The Cost for Furnishing and Equipping the Coffee Shop
Another factor that will determine the cost of opening a coffee shop is, of course, the cost of furnishing and equipping the coffee shop. You will quite agree that aside from the basic things that are expected to be found in a coffee shop, an entrepreneur that wants to open a coffee shop may decide to spend more than expected to furnish and equip the coffee shop to look unique.
As expected, before you can open a coffee shop, you should budget and buy chairs and dining tables, a commercial espresso machine, automatic drip coffee maker, industrial grinder, refrigeration system, pumps and containers, toasters, ovens and other cooking equipment, freezers, commercial blenders, storage hardware (bins, rack, shelves, food case), counter area equipment (countertop, sink, ice machine, etc.), (Flat Screen TVs, sound system, DVD players, Pianos, Satellite dish and decoder.
Others include furniture (table, stools, and sofas), telephones, filing cabinets), store equipment (cash register, security, ventilation, signage), serving utensils (plates, ash trays, glasses, flatware) and fancy lightening amongst others. All these will cost money and it will influence the overall cost of opening a coffee shop in the United States of America.
The Cost for Insurance
The cost for paying for insurance policy cover is yet another important factor that will determine the overall cost of opening a coffee shop in the United States of America. Interestingly, in the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that is required by the industry you want to operate from.
Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your own coffee shop business.
The Cost for Registering the Business
The cost of registering the coffee shop is yet another cost that will influence the overall cost of opening a coffee shop in the United States of America. As a matter of fact, you cannot legally operate any business in the United States or most countries of the world.
Although the cost of registering a business and obtaining all the needed documents that will give you the leeway to operate without any obstacle is affordable, it will no doubt add to the overall cost of opening a coffee shop in the United States of America.
Source of Your Ingredient
Another major factor that will determine the cost of opening a coffee shop in the United States of America is the source of your ingredient. The fact that there are different types of the coffee shop means that the ingredient (coffee beans, milk, and sugar et al) they use in preparing their coffee will be different.
For example, a coffee shop that serves high-end coffee, a coffee bean not found in the United States but needs to be imported will sure require to budget more on ingredients and that of course will influence the overall cost of opening the coffee shop.
Cost of Recruiting and Training Your Staff
The fact that you are opening your coffee shop as a new business means that you are expected to recruit and train your staff to conform to the picture of the kind of coffee shop you want to operate. The training will help you sell the corporate culture of your organization to the new employees.
As expected, it will cost you money to hire expect trainers that will help you train and bring your new hires up to speed, and that will add to the overall cost of opening a coffee shop.
The Cost for the Purchase of Uniforms, Napkins, Table and Chair Covers
Another factor that will determine the overall cost of opening a coffee shop in the United States is the cost for the purchase of uniforms, napkins, table and chair covers amongst others. As expected, waiters, waitresses, chefs, other kitchen staff, delivery guys, and security personnel all have different uniforms and they are expected to put on these uniforms when they are on duty.
All these uniforms will cost you money which is why it must be part of your budget if you are looking towards opening a coffee shop in the United States of America.
The Cost for Grand Opening of the Coffee Shop
No coffee shop opens its door for business without first organizing an opening party to officially launch the business. This means that the cost of the grand opening of a coffee shop is part of the factor that will determine the overall cost of opening a coffee shop in the United States of America.
You can choose to do a soft opening if you operating on a low budget or you can choose to go for a grand opening party for all and sundry in the location where your coffee shop will be located. The bottom line is that it is a cost that must be part of your budget and this cost will influence the overall cost of opening the coffee shop.
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.
These are some of the factors that will determine the overall cost of opening a coffee shop in the United States of America.
Please note that there are other factors not listed above that will surely influence the overall cost of opening your coffee shop which is why we will advise that you work with a result-driven business consultant in your city to give you the needed guide and info as it relates to the unique factor in your location that will influence the overall cost of opening your coffee shop in the United States of America.