One of the biggest factors when you’re trying to realize your dream of opening a coffee shop business is the location that you choose. The location of a coffee shop, or just about any type of business for that matter, plays a huge role in the success of the shop. Choosing the right location is key to any good business endeavor.
In terms of the 20 best locations to start your coffee shop business, here is what you need to look for:
- Demographics – the who
- Competition – the what
- Neighboring businesses – the where
- Traffic times – the when
- Cost of living – the how (much)
This is a general overview of what you’ll need to look into before you select your location for opening a coffee shop. Keep reading through to get a better explanation of what we mean and some specific suggestions for where you should locate your coffee business in order to have the most success.
Demographics – The Who
Let’s start with the “who” of where you should start your coffee shop business. You need to look into who is in the area you’re considering. There are certain types of people that likely will be looking for coffee more than others. So because of this, you should look for a location that has higher populations of the kind of people we’re talking about. Examples would be college students, parents, shoppers, and lots of workforces.
1. College Campuses – Universities, community colleges, trade schools, and similar places have lots of students who are always writing, studying, and working on projects that, oftentimes, cause them to get little to no sleep. A whopping 92% of students in this study consumed some form of caffeine during the school year, and coffee was the primary source.
2. Grade Schools – Other schools, such as preschools, elementary, middle, and high schools are good places to try to locate your coffee shop close to because of the parents and teachers who are around on school days. Parents will be dropping off or picking up their students most weekdays. Also, teachers (notorious for drinking coffee also) might like to stop by and put a little pep in their steps before taking on the day.
3. Shopping Malls and Centers – Big shopping areas are great locations for coffee shop businesses, barring that there’s not a lot of competitors there already. We’ll get to that in a minute though. Shopping and coffee, whether it’s for clothing, gifts, groceries, or other items, go hand-in-hand. It’s really a no-brainer to try and find a location that’s close to any kind of large shopping area.
4. Business Centers – Many hard-working people enjoy coffee and are usually very busy. If you choose a location that is convenient for members of the workforce to drop into and grab the caffeinated beverages that they love, you’ll be doing yourself a favor and giving your coffee shop business a better chance for success.
Competition – The What
What kind of competition there is in the area you’re looking at is very important for you to know. If you open a coffee shop or other type of coffee business in an overly saturated market then the likelihood that your business will succeed will be much lower. In this section, we’re going to look at locations in terms of what you don’t want to see in the area you select to start your coffee shop in.
5. No or Few Chain Store Coffee Shops – There are some big names in the coffee industry. We all know who they are so we don’t need to mention specific names, but we do want to mention that the heavy-hitters account for about 70% of the profits made across the whole coffee industry, according to chron.com. Choose a location that isn’t near to any of the big chain stores if you can.
6. No Close-by Drive-Thru Shops – Whether you’re planning to have a drive-thru window included in your coffee shop or not, you don’t want to choose a location that is close to other coffee shops that do have drive-thrus. If you’re going to have one in your shop, then it’s smart to be the only shop offering the drive-thru. If you’re not going to have one then it will be hard to compete with the shops that do. Drive-thru locations offer convenience, which is largely attractive to many people.
7. No Gas Stations – This might seem kind of weird, but just think about it for a minute. Most of us have stopped for gas and then gone inside to get a cup of coffee. Gas stations sometimes offer some good coffee choices and at a fraction of the cost that you’re going to charge. Don’t choose a location right next to a gas station.
8. No Existing Locally-Owned Coffee Shops – Try to find a location that doesn’t already have a bunch of locally-owned coffee shops in it. Privately owned coffee shops are attractive because they have their own personalities and offer unique menu items. If there are already coffee shops successfully operating in the area that are owned by other locals, you will have a tough time establishing your shop as the favorite.
Neighboring Businesses – The Where
So, we just talked about some specific businesses that serve coffee that you want to try to avoid setting up shop near to. Now let’s talk about businesses that if you’re close to, it can actually help drive your sales up more. These businesses are in locations where you do want to be operating.
9. Piggyback Businesses – Choose a location where your coffee shop business and a neighboring business will complement each other. Essentially, the two businesses will piggyback off of one another. Your sales will be boosted by the presence of another business nearby and vice versa. Good businesses for you to be close to are bakeries (if you don’t offer these items), sandwich shops, gyms, and boutique stores.
10. Bookstores/Libraries – Any kind of place where people will be reading or studying is a great place for a coffee shop to be near to. Usually, these types of venues will have people staying around for a while. There’s a chance that you might even get multiple sales from customers in the same visit. It’s a good opportunity for you to boost your profits. You might also consider creating a bookstore within your coffee shop. Click here to find out how.
11. Businesses With a Wait – Some types of businesses require that customers have to wait for something. This creates a huge opportunity for coffee shops to make money. Grabbing a coffee while we’re waiting for something is pretty common. Look for a location that is close to car service stations, salons, pet groomers, or transportation stations. These are places where there are going to be people who are waiting and will be happy that there is a coffee shop business easily accessible while they wait.
12. Family Fun Venues – There are a lot of different businesses that cater to families and having fun. Parents of all ages of children are often big coffee drinkers. Whether they’re taking kids to the zoo, the aquarium, the playground, or any of the trending playhouses that have become so popular, a caffeinated beverage is something many parents will want to grab on their way. This kind of location will certainly win you some sales.
Traffic Times – The When
The location you choose needs to be considered along with the times of the day that will be the most trafficked in that area. Not all locations are busy at the same time. If you plan to limit your business hours to only certain times, then you’ll have to choose your location based on traffic times that match up with your designated business hours.
13. Busy Morning Commute Routes – It makes sense for a coffee shop to be open early in the morning when people are getting out and about for their days. There are certainly people who drink coffee at all hours of the day, but the morning is, by far, the time when the majority of people have their coffee. Choose a location that is conveniently situated on a busy morning commute route.
14. Lunch Rush Areas – Anyone who gets out during the lunch hours knows that there is a lunch rush associated with areas that have good food options. Think about it though. This is also a good time for anyone who didn’t get much sleep, or for people who like to take in caffeine all day to re-up their energy with a hot cup o’ joe or a cold coffee beverage. Set up shop in a location like this to give those people what they want.
15. Night Shifters – There are some occupations with people who work around the clock. If you’re not opposed to being open in the off-hours, this poses a great opportunity for you. You could be the go-to coffee shop for anyone who works all night. Look for locations close to hospitals, warehouses, grocery stores, and big-box stores.
16. Busy Evening Routes – Sometimes the way people get to work in the morning isn’t the same way they get home from work in the afternoon or evening. Locations along the route home might be good choices too. People may have projects to work on after business hours, or they may want to enjoy a nice coffee with a colleague after work. There might be more work to do at home, so stopping to grab a tasty coffee on the way home may be very appealing. Make sure you look into this option, too.
Cost of Living – The How (Much)
When you’re choosing a location, you have to think about your budget also. Some areas will be more expensive than others. The cost of living in an area will also help to dictate how much you can charge for the items on your menu. These are location considerations that you’ll need to decide between because of how they will affect you financially, from your initial investment to your ongoing operations, and to your profit margins.
17. Urban Areas – Metropolitan and highly urban areas typically have higher costs of living. That means that you’re looking at a higher cost for entry into the market, higher operating costs, and higher rent or mortgage costs. You don’t want to bankrupt yourself from the get-go. If you don’t have enough money to keep up with what the area will require a business to be successful, then try looking at a different market. However, if you can hang in this type of market, there is major potential for high profits.
18. Rural Areas – Rural areas can be really very profitable for coffee shop businesses without having to spend a ton of money to get started, but not without proper assessment of the wants and needs of the community. Some rural areas are better than others. Consider if it’s a pass-through area on the way to cities where people go to work. You can also make your coffee shop stand out by offering menu items that aren’t offered in the urban coffee shops. Word will get around that you have something different that’s worth stopping for.
19. Suburban Areas – If you want to start a coffee shop in an area that has lots of traffic but doesn’t cost as much to open, then look for a location in the suburbs. Typically, you will find lower real estate prices and lower lease payments. You can still offer a style and menu that is appreciated in the urban setting. Suburbs are great places for coffee shops. Select your location wisely though, by taking into consideration all of the other location suggestions we’ve already talked about.
20. Small Towns – Small towns are known for everyone knowing everyone else. They’re also known to support small businesses because the people there take a lot of pride in keeping things local. Usually, the cost of living in small towns is pretty low too, so it shouldn’t be very expensive for you to start your coffee shop business in locations like these. There are also plenty of them that don’t even have a coffee shop so you could be the first.
It seems like a lot to consider, but we’re talking about your livelihood here. The more factors you consider when you’re choosing the location for your coffee shop business, the better off you’ll be. The locations we’ve discussed in this article are what we’ve found to be the best opportunities for this kind of business.
Locations need to be chosen based on what you want to have in the area, like lots of traffic, piggyback businesses, and coffee-drinking people. Additionally, keep in mind what you don’t want around, such as other types of coffee shops, alternative coffee sources, and more convenient coffee shop options. Be wise and choose a location that fits within these 20 best locations to start your coffee shop so that you give your business the best setting in which to generate success.
What are the different kinds of coffee shop businesses that I can open?
The coffee shop that you open is yours, so that means that you can be creative and open the kind of business that you want. You’ll want to assess the needs and wants of your customer base and open the kind of coffee shop that will be successful in the location you choose.
There are a few different basic options for you to choose from when you’re thinking about what kind of coffee shop business you want to open. Here are some examples:
- Coffee Bars – Usually these sell brewed coffee and some baked foods.
- Coffeehouses – These are larger than coffee bars typically. There are some comfortable seating areas and they are good gathering places.
- Cafes – This is likely the most expensive option. Most serve actual meals and have full dining areas. Read about how to set up your own cafe here.
- Mobile Coffee Shops (Carts and Trucks) – With these, you can go where the business is. You also can usually get started with less money.
- Drive-Thru Only – It’s exactly what it sounds like. This type of shop serves coffee to those who are on-the-go, so it will thrive on a heavily traveled route.
You can choose to open one of these kinds of coffee shop businesses or a combination of them. Or get creative in figuring out some other way to present your coffee shop. Maybe you just want to sell packaged coffee. Whatever it is you see yourself doing, just make sure to start with a good business plan and put in the hard work it takes to get any business up and running successfully.
Ready to take the plunge and start your coffee shop? Click here to get started.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Frequently Asked Questions
While we stated above that you want to look for a location that doesn’t have a lot of competition, for some, that won’t be an option. Coffee shops are popular and are somewhat easy to open up. So, the next best thing to having no competition is to stand out from it.
There are a few different basic options for you to choose from when you’re thinking about what kind of coffee shop business you want to open. Here are some examples:
● Offer unique items on your menu.
● Provide an atmosphere that is different than anywhere else around.
● Price your products lower than the competition.
● Consistently exceed the quality of any other competitors in the area.
● Be more active in your community than your competition.
Your coffee shop can be so much more than just a place that sells caffeinated beverages. And if it is, it will stand out amongst any number of competitors. Give customers an experience rather than just a cup of coffee. Make sure you still run the business in a professional and efficient manner but add the extras that will make people remember your coffee shop.
Yes, there definitely are. There is an article on smallbiztrends.com that lists the top 50 cities to open a new coffee shop. If you look at the top 10, you’ll find that most of them are small cities because there isn’t a market that has been flooded with coffee shops there yet. Bigger cities are obvious choices for opening businesses and there are more people in them to open the businesses.
Smaller cities might seem less appealing to someone who wants to get into the coffee shop industry but they actually offer a lot of opportunity to an aspiring coffee shop owner. It’s not that there aren’t potential customers there to buy the coffee that you serve. There certainly are. You could be the person that comes into the small town or city and gives them an option that they haven’t already had.
If it’s an option for you, choose from the list of cities that are on the list we mentioned above. A lot of research went into making that list. Experts examined how much it will cost you to start the business, what the rent is like in the city, what the locals there spend on their coffee, and other financial factors like labor expenses and supply costs.
Large cities like Seattle, New York, Chicago, Denver, Los Angeles, and countless others might have tons of people who could be your customers, but they also have coffee shops on almost every corner. Choose to be different and cater to a customer base that doesn’t already have too many options to choose from. You’ll find that your road to success with opening a coffee shop business will be a little bit smoother if you don’t have to vie so much for attention.
The coffee shop that you open is yours, so that means that you can be creative and open the kind of business that you want. You’ll want to assess the needs and wants of your customer base and open the kind of coffee shop that will be successful in the location you choose.
There are a few different basic options for you to choose from when you’re thinking about what kind of coffee shop business you want to open. Here are some examples:
● Coffee Bars – Usually these sell brewed coffee and some baked foods.
● Coffeehouses – These are larger than coffee bars typically. There are some comfortable seating areas and they are good gathering places.
● Cafes – This is likely the most expensive option. Most serve actual meals and have full dining areas. Read about how to set up your own cafe here.
● Mobile Coffee Shops (Carts and Trucks) – With these, you can go where the business is. You also can usually get started with less money.
● Drive-Thru Only – It’s exactly what it sounds like. This type of shop serves coffee to those who are on-the-go, so it will thrive on a heavily traveled route.
To learn more on how to start your own coffee shop checkout my startup documents here
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Hi! I’m Shawn Chun
My adventure in coffee began when I first launched my first coffee shop back in the early 2000s. I had to figure out so many things on my own and to make it worse within 2 years of opening two large corporate coffee chains moved in just blocks away from me!
As I saw smaller and even some larger coffee shops in the neighborhood slowly lose customers to these giant coffee chains and slowly close up shop, I knew that I had to start getting creative…or go out of business.
I (like you may be) knew the coffee industry well. I could make the best latte art around and the foam on my caps was the fluffiest you have ever seen. I even had the best state-of-the-art 2 group digital Nuova Simonelli machine money could buy. But I knew that these things alone would not be enough to lure customers away from the name brand established coffee shops.
Eventually, through lots of trial and error as well as perseverance and creativity I did find a way to not only survive but also thrive in the coffee/espresso industry even while those corporate coffee chains stayed put. During those years I learned to adapt and always faced new challenges. It was not always easy, however, in the end, I was the sole survivor independent coffee shop within a 10-mile radius of my location. Just two corporate coffee chains and I were left after that year. All told the corporate coffee chains took down over 15 small independent coffee shops and kiosks and I was the last one standing and thriving.
Along the years I meet others with the same passion for coffee and I quickly learned that it is not only “how good a barista is” that makes a coffee shop successful, but the business side of coffee as well.
Hence why I started this website you are on now. To provide the tools and resources for up and coming coffee shop owners to gain that vital insight and knowledge on how to start a coffee shop successfully.
Stick around, browse through my helpful blog and resources and enjoy your stay! With lots of LATTE LOVE!
Shawn
