How to start a Coffee Shop in the US: Everything you need to know

Did you know that coffee is the leading worldwide beverage after water and its trade exceeds US $10 billion worldwide?¹ The number of Americans drinking a daily cup of coffee is at the highest level since 2012² and about half of the people in the United States over the age of 18 drink coffee every day. On average, each coffee drinker consumes three and a half cups each day.³

While that tells you that there’s a great stream of investment opportunities in the coffee industry, let’s answer some of the biggest questions one should ask before starting a coffee shop.

Is A Coffee Shop Profitable?

Due to a high demand for coffee, one can quickly succeed in a coffee business that generates a lot of profit if marketed right. And it goes that you can easily change your life if you're running a successful coffee shop. Some have managed to change their day-to-day life completely. However, it is a tough market to break due to a large volume of competition.

In order to become successful in this endeavour, you need to optimize your processes from finding the best location to choosing the right resources to minimize the overall operational cost and give more room for a higher profit margin without compromising on the quality.

This article will guide you through the process of opening a coffee shop from the ground up and introduce a fast and secure financial solution, Wise, that will help cut the cost on global payments to your suppliers especially if you are planning to import your supplies.

Let's get started!

How much do you need to start a Coffee Shop Business?

Before we answer this question, here’s a quick rundown of all the things you’d need to budget for:

1. First and foremost - Space – This includes the construction or renovation costs, rent, utilities, maintenance, and insurance. As a rule, rent should be no more than 15 percent of projected sales.⁴
2. Equipment, including an espresso machine, both espresso and coffee grinders, coffee brewing equipment, blenders etc. 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 $20,0000.³ If this is a lil hard to pull off, there’s an option to buy used and refurbished equipment which can cost about half as much as new ones.
3. Legal fees and licensing
4. Supplies which includes coffee beans, milk, tea and pastries
5. Advertising, promotions and gift cards
6. Payroll
7. Taxes
8. Money for cash flow

Ideally, you should have at least $300,000 to open a coffee shop including the cash flow to use while trying to establish the business.⁴ However, you could also start with a smaller amount but it’ll require more work and luck to become successful.

Location and cash flow are the most important among the above list. Finding the right location is vital to your success as well as having enough cash flow to push through your day to day operation until your business is fully established.

What Equipment Do I Need For A Coffee Shop?

There are some crucial devices you need to run a successful coffee shop business. Some of this equipment includes:

1. Automatic Drip Coffee Makers

Here, there are several things you need to consider when choosing the best automatic drip coffee makers. First, you need to ensure that you buy a coffee maker that is durable enough so that it can produce the quantity of coffee that can serve all your customers from one day to another. Other than this, the best coffee maker is the one that is capable of meeting demands during busy times. Also, the perfect coffee maker needs to be large enough so that you can reduce the number of times you brew coffee every other day.

For some coffee makers, they prefer coffee machines that can make several blends at once. However, this does not mean that you need to stretch yourself so that you can be on the same level. As per the successful coffee shop operators, it is crucial to keep around two to three coffee blends available at once. The reason for this is maintaining variety and simplicity.

2. Espresso Machine

Next, you need a top-notch espresso machine. The reason for doing this is that some of your loyal customers will ask for an element of espresso. Therefore, it is crucial to shop for a high-quality machine.

3. Coffee Grinder

You need an industrial coffee grinder so that you can grind your beans before you make a new pot. Ensure that you choose the best coffee grinder that can meet all your needs.

4. Milk and Water

Yes, milk and water do not fall under equipment, but you need this to make and mix with your coffee drinks.

5. Refrigerating System

You need a refrigerating system so that you can ensure that your meals remain fresh. Also, this system is crucial for your dairy products.

6. Other Equipment

Also, there are other crucial equipment you need for your coffee shop. These include shelving, security system, devices you will use for cooking, toasters, containers, assorted miscellaneous, ovens, and pumps. Others include blenders, freezers, POS systems, and more.

Choosing the best coffee beans

Brewing the best cup of coffee is the most important thing to consider when starting a coffee shop. It’s a general rule to always buy whole beans instead of ground. As soon as the coffee is pre-roasted or pre-ground it begins losing flavor and freshness.

It is also important to know the source of the beans as different geographic locations produce different flavors and characteristics.

US imports most of the coffee beans from these top suppliers⁵

1. Brazil (24 %)
2. Colombia (22 %)
3. Vietnam (15 %)
4. Guatemala (6 %)

Importing coffee beans for your coffee shop can be a great advantage in terms of price and quality and to save even more time and money, use services like Wise to pay your overseas supplier to avoid hefty bank fees and poor conversion rate.

Wise also offers a great deal of financial solution for your business that is integrable to an accounting software called Xero. This reduces your paperwork and helps you keep all your financial transactions in one place. You can also hold, send and receive funds in different currencies which will simplify the process of paying your suppliers on time.

Set up Wise Businessfor free, and start saving money today!