It's time to put your math skills to work. If you want to keep your coffee shop's doors open, you need to turn a profit. That means creating budget and a list of coffee shop expenses.
Coffee Shop Startup Costs
What are the costs of starting a coffee shop? This is a difficult question to answer, as there are so many variables that need to be considered.
Along with the shop itself, you also need to consider marketing and branding costs. We're not even going to discuss overhead costs in this section (we'll dive into that later on), but these should also be considered.
Let's take a closer look at some of the costs that are associated with launching a coffee shop.
Shop and Furniture Costs
The cost of the coffee shop itself can vary greatly and will largely depend on what type of shop you want to open.
A stand at a farmer's market may cost as little as a few hundred dollars to rent the booth (sometimes the cost is higher if space at the market is in high demand).
If you're opening a coffee kiosk, the cost may be as little as $5,000-$6,000 to get started.
For a mobile coffee shop or truck, the cost can be anywhere from $10,000-$46,000 or more, depending on how elaborate you want to get.
Starting a coffee bar, the cost can be as little as $45,000 or as high as $160,000.
If you're opening a coffee shop and bakery, the cost can be upwards of $150,000 or more.
It's important to remember that these are just ballpark figures. It's important to do some research to determine how much your costs will be.
Generally speaking, the smaller the venue, the lower the price. It's significantly less expensive to start a drive-thru coffee stand than it is to open a coffee shop and bakery.
If your coffee shop will offer guests a place to sit down and relax, you will also need to consider the cost to furnish the shop. Furniture and décor items can easily add thousands of dollars to your budget to open a coffee shop, but they're also essential parts of your establishment. Make sure you include these items in your budget.
A coffee shop cannot function without equipment. The equipment you need will largely depend on your menu, but nearly all shops will need the following items:
If your menu includes espresso drinks, you'll need to invest in at least one quality coffee machine. There are two main types of espresso machines: semi-automatic and super-automatic.
Super-automatic machines are ultra-fast and can be operated by anyone (no barista required). Just press a button, and the machine takes care of the rest.
Semi-automatic machines are still fast at brewing, but they require a barista to take care of the grinding, tamping, brewing, frothing, etc.
Most coffee shops use semi-automatic machines, which can run anywhere from $2,000 to $5,000.
Drip and/or Pour-Over Brewer
If your menu also includes regular coffee drinks, you'll need a drip and/or pour-over brewer. Maybe you want to offer both types. Pour-overs take more time and produce a better-tasting coffee, so you can generally charge more for them.
Expect to spend anywhere between $500 and $2,000 or more on brewers.
A good quality grinder is essential, and you'll likely need two different types for your shop: espresso and coffee.
A high-end espresso grinder (the best-of-the-best) can easily run you $1,000. Brewing espresso requires a very fine grind, so you'll need a special grinder. These also grind directly into the portafilter.
A regular coffee grinder is different from an espresso grinder. They grind in a larger size and into the brewing basket of the brewer. Burr grinders are considered the best option. A good quality model can run you nearly $1,000.
Coffee shop equipment costs can be reduced if you purchase used equipment. You can also save on costs by simply opening a specialty coffee shop. Pour-over shops, which have minimal equipment requirements, are trendy and more affordable in the equipment department.
Branding and Marketing
Along with the actual shop itself, you'll also need to consider the cost of branding and marketing your coffee shop.
These costs can vary greatly, depending on who you hire to do the branding. Here's a brief breakdown of branding costs:
Logo Design: $200+
Website Development: $500-$3,000+
Outdoor Signage: $150-$400/square foot
These are just a few of the costs associated with branding and marketing.
Legal Fees, Insurance, Permits, Licenses, etc.
Many budding coffee shop owners overlook legal and administrative costs when budgeting their start-up costs. But these fees can easily send you over-budget if you don't account for them early on.
Legal fees might include:
Forming your business: $1,000-$1,500 if you hire a lawyer. If you do it yourself, you normally only have to pay the state filing fee.
Health Department Permit: Costs will vary depending on your location, but it may cost you $1,000 or more.
Business License: Most states will require you to have a business license to open a coffee shop. This can cost you between $50 and $400 or more, depending on the business type.
Other permits and administrative costs: These will vary depending on your location.
Coffee shop insurance costs also need to be considered. While costs will vary depending on the insurer and location of the business, here's a brief breakdown of the average insurance costs for a coffee shop:
General Liability: $600
Business Owner's Policy: $1,000
Worker's Compensation: $2,500
Your state and/or city may have other insurance requirements, so check your local regulations to find out if you need additional coverage.
Labor costs must also be taken into account, and may include:
Costs to hire plumbers, electricians, etc.
Any costs associated with labor and related services should be included in your coffee shop budget.
Coffee Shop Overhead Costs
After considering the one-time costs of starting your coffee shop, you need to figure out your overhead costs. There are two main types of costs here:
Fixed costs of a coffee shop
Variable costs of a coffee shop
Coffee shop fixed costs are the expenses that will be the same month-to-month, such as your:
Variable costs are the expenses that will fluctuate each month, such as:
It's difficult to give even a ballpark estimate with overhead costs, as they vary greatly and will depend on the suppliers you use and the cost to lease your space.
Average Profits of a Coffee Shop
How much do coffee shop owners make? That's impossible to estimate, as there are so many cost variables to consider. But we do have some data on how much managers earn:
NYC: $66,000 on average
Miami: $54,000 on average
Phoenix: $45,000 on average
Seattle: $54,000 on average
After accounting for overhead costs, you can expect to take home about $60,000 – maybe more if you're one of the only employees.
What is the average revenue for a coffee shop? On average, shops bring in annual revenue of $215,000. This figure could be higher or lower, depending on how much you charge for your drinks, your sales and your location.
Learn more on how to open a coffee shop:
- Starting A Coffee Shop. Step 1: Choose Your Concept
- Starting A Coffee Shop. Step 2: Create A Business Plan And Find Insurance
- Starting A Coffee Shop. Step 4: Find The Right Spot For Your Shop
- Starting A Coffee Shop. Step 5: Supplies And Equipment
- Starting A Coffee Shop. Step 6: Local Regulations And Licenses
- Starting A Coffee Shop. Step 7: Hire The Right Staff
- Starting A Coffee Shop. Step 8: The Menu And Food Safety Issues
- Starting A Coffee Shop. Step 9: Marketing And Promotion
- Starting A Coffee Shop. Step 10: Maximize The Revenue