How to start a Coffee Shop in UK USA (Business Plan)

Coffee Shop Business

Do you have these questions in your mind?

  • How to start a Coffee shop?
  • How much does it cost to start a Coffee Shop?
  • How to find the best location to open a Coffee shop?
  • What are top-selling Coffee items?

     

In this article, you will find answers to all your questions. So please grab a cup of coffee, and let’s get started.

Table of Contents

What is a Coffee Shop?

With a global market value of around $48.6 billion growing at a CAGR of 8.1%. The Coffee Shop Industry is one of the biggest industries in the world right now. 

 

Starting a coffee shop business can be profitable for those passionate about coffee and customer service. A coffee shop business is a retail establishment that primarily serves coffee, tea, and other beverages and food items such as pastries and sandwiches.

 

However, starting a successful coffee shop requires more than just a love for coffee. It requires a solid business plan, a clear understanding of the industry, and a robust financial foundation.

 

By the end of this article, you’ll learn the steps you need to take to start a coffee shop business and the critical considerations for making it a success.

Market Insight: In the UK, the coffee shop market is valued at £8.9 billion in 2021, with a CAGR of 6.4% to reach £11.8 billion by 2026, while in the US, the market is valued at $46 billion in 2020, and it is expected to reach $55 billion by 2025, growing at a CAGR of 3.5% during the forecast period,

Coffee Shop Business

Types of Coffee Shop Business models?

The best way to choose the business plan is by checking the demand for your product in the area & how much you can invest.

 

There are several types of coffee shop business models, including:

 

1. Traditional coffee shop: 

A brick-and-mortar store that serves coffee, tea, and pastries.

 

2. Specialty coffee shop: 

It focuses on specialty coffee beans and often offers brewing methods such as pour-over and French press.

 

3. Drive-thru coffee shop: 

A coffee shop with a drive-thru window for customers to order and pick up their drinks without leaving their cars.

 

4. Coffee cart or truck: 

You can set up a mobile coffee shop at different locations, such as street corners, farmer’s markets, or festivals.

 

5. Online or virtual coffee shop: 

A business that sells coffee beans and brewing equipment online, with no physical storefront.

 

6. Franchise coffee shop: 

An established coffee shop chain that allows individuals to open their locations using the brand’s name, products, and business model.

 

7. Coffee roaster: 

A business specializing in roasting and selling coffee beans rather than brewing and serving drinks.

Remember, as a startup, your goal should be to keep your costs low and depend on your skills. If you push the process and try to go full-service from the very beginning, there is a good possibility that you’ll be overburdened and may get lost in the process.

Coffee Shop Business

Pros and Cons of a Coffee Shop

Pros of a Coffee Shop include:

  • High demand
  • People often visit coffee shops multiple times a week
  • Relatively inexpensive compared to other types of businesses.
  • Flexibility
 

Cons of a Coffee Shop include:

  • High competition
  • Short profit margins
  • Seasonal fluctuations
  • Government regulations
  • Labour cost is high in some location.
 

How much investment is required for your Coffee Shop?

The investment required to start a coffee shop business in the UK & the US can vary depending on many factors, such as the size and location of the company, the type of equipment and supplies needed, and the labor cost.

 

The average cost to open a small coffee shop in the US ranges from $100K – $250K. While in the UK, the average cost to open a small coffee shop ranges from £50K to £150K.

 

Some Common Expenses in running a Coffee Shop Business include:

 

  • Rent or mortgage payments for the building or space
  • Equipment and supplies such as coffee makers, grinders, cups, and utensils
  • Ingredients such as coffee beans, milk, and syrups
  • Employee wages and benefits
  • Insurance
  • Marketing and advertising
  • Maintenance and repairs for equipment and the building
  • Utilities such as electricity, water, and internet
  • Point of sale systems and software
  • Professional services such as accounting and legal fees.
Coffee Shop Business

How much will you earn in the Coffee Shop?

It is easier to estimate earnings in the coffee shop business with more information about the specific company, such as location, target market, and competition. In addition, factors such as overhead costs, sales volume, and pricing will all play a role in determining earnings.

The average US coffee shop revenue is around $700K annuallywith a The average payment in the UK is around £500K per year, with a profit margin of about 5%. 

Here are some approximate costs of Coffee Shop Items for you to do the calculations:

United States:

 

  • Regular coffee: $2.25 – $5.25
  • Espresso: $3 – $4.50
  • Cappuccino: $5.25 – $6.75
  • Latte: $6 – $7.50
  • Mocha: $6.75 – $8.25
  • Americano: $3 – $4.50
  • Macchiato: $4.50 – $6
  • Tea: $2.25 – $4.50
  • Pastries (muffin, croissant, bagel): $2.25 – $6
  • Sandwiches (panini, wrap, baguette): $7.50 – $12
  • Snacks (cookies, chips, chocolates): $1.50 – $4.50
  • Yogurt parfait and smoothies: $6 – $9

 

United Kingdom:

 

  • Espresso (around £3)
  • Latte (around £3.75-£5.25)
  • Cappuccino (around £3.75-£5.25)
  • Americano (around £3-£3.75)
  • Mocha (around £4.50-£6)
  • Flat White (around £3.75-£5.25)
  • Iced coffee (around £4.50-£6)
  • Tea (around £3-£3.75)
  • Hot chocolate (around £4.50-£5.25)
  • Chai latte (around £4.50-£5.25)
 

Seasonal Business:

The winter season is actually the busiest time of year for Coffee Shops Business. Customers travel home for holidays, and with their friends and family, they'll come to your shop to warm up, grab a drink and a bite to eat, while enjoying a conversation with their loved ones.

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Coffee Shop Business

Checklist of Equipment needed for a Coffee Shop

Here is a quick checklist of equipment and supplies you will need to start a coffee shop:

 

  • Coffee brewing equipment (coffee grinder, espresso machine, drip coffee maker, etc.)
  • Refrigeration equipment (refrigerator, freezer, ice maker, etc.)
  • Kitchen equipment (oven, stove, microwave, etc.)
  • Tableware (cups, saucers, plates, utensils. etc.)
  • Glassware (coffee cups, mugs, and glasses for other beverages)
  • POS system (cash register, credit card reader, inventory management system, etc.) 
  • Seating and tables (chairs, tables, booths, etc.)
  • Decor and lighting (artwork, lighting fixtures, plants, etc.)
  • Cleaning supplies (cleaning solutions, paper towels, sponges, etc.)
  • Marketing materials (menus, brochures, business cards, etc.)
  • Insurance and licenses
  • Coffee beans, syrups, milk, and other ingredients.
  • Paper products (napkins, cups, to-go containers, etc.)
  • Staff uniforms.
  • Music and sound system.

 

Note: This list is still ongoing, as you may need additional equipment depending on the specific needs of your coffee shop. It’s essential to consult with professionals to ensure you have everything you need.

A typical day in a coffee shop business includes:

1. Opening the shop
2. Preparing of the coffee and ingredients
3. Serving customers
4. Managing inventory
5. Cleaning
6. Closing the shop
7. Paper work and administrative tasks
8. Maintenance

Coffee Shop Business

Types of themes to choose for your Coffee Shop!

There are many different types of coffee shop themes, such as:

 

1. Artisanal: 

These coffee shops focus on handcrafted, small-batch coffee and often have a rustic or vintage aesthetic.

 

2. Industrial: 

These coffee shops often have a modern, urban feel with exposed brick and ductwork and may feature local art or rotating exhibitions.

 

3. Modern: 

These coffee shops often have a sleek, minimalist design focusing on clean lines and neutral colors.

 

4. Traditional: 

These coffee shops often have a classic or old-world feel, with warm colors and vintage decor.

 

5. Nature-inspired: 

These coffee shops often incorporate natural elements such as plants, wood, and natural light to create a relaxing and calming environment.

 

6. Specialty: 

These shops often focus on a specific type of coffee, such as pour-over, cold brew, or espresso, and may display unique brewing methods or equipment.

 

7. Community-driven: 

These coffee shops often host events and gatherings and may have a cozy and welcoming atmosphere that encourages socializing and connection.

Trends and Challenges in the Coffee Shop Business

Trends in a Coffee Shop Business:

1. Specialty coffee
2. Demand for Plant-based options
3. Sustainability
4. Mobile ordering and contactless payments
5. Online delivery services
6. Workshops and classes

Challenges in Coffee Shop Business

1. Increasing number of coffee shops
2. Rising costs
3. Food safety regulations
4. Seasonality
5. Labor shortages
6. Meeting the environmental standards
7. Brand differentiation

Coffee Shop Business

Employees to hire for your Coffee Shop

When hiring employees for a coffee shop business, You should fill several key positions to run the business smoothly. 


Here are some types of people you may want to hire:

 

  • Baristas
  • Cashiers
  • Kitchen Staff
  • Managers
  • Barista trainer
  • Maintenance staff
  • Marketing and Social Media Specialist
  • Customer service representative

 

Hiring the right people is crucial to the success of your coffee shop. Find employees with a good attitude and a good fit for your business.

TIP: People like coming to clean & hygienic places, keep premises neat & clean. If you are operating from home or counter-selling, make the area clean & safe. Unhygienic products can make your customers fall ill. It will again make you lose your customers.

Coffee Shop Business

Licences needed for your Coffee Shop 

While the basic licences such as Business Licence, Health and Safety regulation, Sales Tax Permits are applicable to almost all business (To read more about the licences ‘Click Here to read our Mini Guide’). 

TSome specific licenses and permits might be needed to open a coffee shop business in the UK and the US. Those licenses are as follows :

1. Food Hygiene Rating: 

A food hygiene rating is a score given to a business based on an inspection carried out by the local council’s food safety team. The industry will be rated from 0 to 5, with 5 being the highest rating.

 

2. Premises Licence:

This document issued by the local council allows a business to sell alcohol, provide late-night refreshments, and put on regulated entertainment. 

 

3. Personal Licence: 

A personal license is required by anyone responsible for selling alcohol on the premises. This person is often called the Designated Premises Supervisor (DPS).

 

4. Food Service Permit: 

A food service permit is issued by the state or local health department and verifies that the business meets state and local food safety regulations.

Some tips to help your coffee shop business grow:

1. Offer quality products
2. Have a unique atmosphere
3. Make use of social media
4. Provide excellent customer service
5. Offer a variety of food and drink options
6. Use technology to your advantage
7. Continuously innovate
8. Partner with local businesses
9. Keep an eye on your competition

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Find a good location for your Coffee Shop

Tips on finding a good location for your Coffee Shop:

 

  • Look for high-foot traffic areas, such as busy streets or shopping centers.
  • Consider the demographics of the area and make sure there is a demand. 
  • Try to find a location that is not saturated with other coffee shops.
  • Consider the cost of rent and utilities in the area.
  • Think about the visibility of the location
  • Research the local regulations and permits.
  • Look for a location with enough space to accommodate everything.
  • Make sure the location has good parking and public transportation access.
  • Look for a location that has a unique character or charm. 
  • Consider the long-term potential of the area.
  • Look for a location that is easily accessible to your target customer base.
  • Make sure the location is compliant with any health and safety regulations. 
  • Think about the outdoor space available to you
  • Check for any restrictions on signage or outdoor displays.

 

A good location will determine whether your business will succeed in the future. A perfect place with your tasty coffees will always bring profits to your business in the future. 

Coffee Shop Business

Shall I go for a Coffee Shop franchise?

Buying an existing Coffee Shop Franchise of a recognized brand is a good idea; however, it is expensive also.

On the other hand, the franchisor will benefit you will all the existing brand image, customer loyalty, advertising, market research & strategies.

In addition, you will get guidance from the franchisor about training the workforce & ambiance of the premises. 

Some of the top Coffee Shop Franchises in the UK and USA:

  • Costa Coffee
  • Starbucks
  • Caffe Nero
  • Dunkin’ Donuts
  • Tim Hortons

Conclusion

In conclusion, starting a Coffee Shop Business in the UK and the US can be rewarding and profitable. However, conducting thorough market research, creating a solid business plan, and securing the necessary funding is crucial. 

It is crucial to find the right location, choose the right equipment and suppliers, and create a unique and inviting atmosphere for customers. 

Following these steps, you can set your coffee shop up for success and build a business that customers will love for years.

Want to Save Time in your Business Launch?

  • How to Create a Business Plan
  • What is Market Research, USP, Niche & Positioning
  • How to find a suitable name for your business
  • How to create your brand image (Logo + Branding)
  • How to Register Your Business
  • How to Register for Taxes
  • How to get Licenses / Permits
  • How to Open a Business Bank Account
  • How to Get Business Insurance
  • Which Payment Processing Terminal (POS) to buy
  • How to get Funds for your Business
  • How to do Sales & Marketing – Offline & Online
  • Why have a Website / Blog / Social Media
  • How to build & train your Dream Team
  • How to provide Excellent Customer Service
  • Buying an Old Business Vs Franchisee Vs Own Brand from Scratch

Handpicked inspirational Youtube videos for you

This Actress Turned Entrepreneur Left Broadway To Bring Vietnam’s Coffee Culture To America | Forbes – YT Channel ‘Forbes’

THE BEST COFFEE SHOPS IN NEW YORK CITY! | The Global Coffee Festival Coffee Cities World Tour (4/11) -YT Channel ‘Global Coffee Festival’

How He Started a Coffee Business (With $1,800) – YT Channel ‘UpFlip’

A. Starting a coffee shop can be an expensive endeavor, as there are many costs to consider such as rent, equipment, supplies, inventory, marketing, and staffing. The exact cost will depend on factors such as the location, size, and type of coffee shop you plan to open, as well as the equipment and supplies you will need.

Some estimates suggest that the cost of opening a small coffee shop can range from $50,000 to $250,000 or more. 

A. Yes, it is a profitable business. On an average, a well established Coffee Shop earns a six figure yearly.

A. The coffee shop industry in the United States is a large and growing market. According to data from IBISWorld, the coffee shop industry in the US is valued at over $45 billion in 2021, and it’s expected to grow at an annualized rate of 2.4% over the five years to 2021.

A. The coffee shop industry in the UK is also a large and growing market. According to data from the UK Coffee Market Report 2021, the coffee shop market in the UK is valued at over £10 billion in 2021. The industry is expected to grow at an annualized rate of 2.5% over the five years to 2021.

A. Here are a few well-known coffee shop chains in the UK:

  • Costa Coffee
  • Starbucks
  • Caffè Nero
  • Pret A Manger
  • LEON

A. Here are a few well-known Coffee Shop chains in the US:

  • Starbucks
  • Dunkin’ Donuts
  • Tim Hortons
  • Dutch Bros. Coffee
  • Caribou Coffee
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