If you are in the process of opening a coffee shop or dreaming about opening one, it will not be long before you need to consider what your employee structure will look like and how much you will pay these employees. As you are weighing options, it may be helpful to consider what the typical pay is for baristas as well as the many factors involved in deciding the exact dollar amount.
Baristas should be paid between $8.50 and $13.50 per hour based on pay averages. The exact dollar amount will vary based on their years of experience, the location of your coffee shop, the skills they bring to the table, your business budget, and local employee pay structure laws. It is also helpful to remember there are other ways to pay baristas beyond cash.
You may wish you had an exact answer, but that dollar amount will take a little work on your part. Read on to find out exactly what to consider within each of these factors.
Does Experience Really Matter?
To some extent, it should.
It is important to take into consideration how long an employee has worked as a barista before you decide on the amount you will pay them.
If a new barista comes to your coffee shop wanting a job, they deserve a different pay scale than a seasoned barista who has over twenty years working in four different coffee shops. By paying a more experienced barista a little more, you demonstrate to them the value of their years of learning and work.
Be careful not to let experience rule your pay structure though. It is quite possible that a new barista will be more motivated to provide quality service than the more seasoned barista who does not know what else to do with their time.
It is also possible that someone coming from a long-term stint at another coffee shop will be harder to train than someone who has never worked as a barista before.
It is truly a lot to weigh, but in the end, some sense of value should definitely be placed on someone with more years of experience as a barista. At times, the best way to show value is by offering them more money for the job they do. This may be one of those times.
Need some help hiring the best baristas around? Check out this article for more information.
Location, Location, Location
This is a sentiment often expressed in the profession of real estate. It is the concept that one house may look exactly like another house but cost four times the price, all depending on the location of the home.
The same concept can be applied to you and your coffee shop.
One coffee shop owner may have a completely different experience than another coffee shop owner, all based on location.
The prices will be different, the people will be different, the needs of the community will be different.
The biggest reason location should affect the amount you pay your baristas is due to the cost of living in the area.
Some states and cities have a much higher or lower cost of living than other states or cities. This will drastically affect both the costs of production as well as the amount you will be able to reasonably charge for coffee.
If you are in a state with a higher cost of living, it is going to cost you a lot more to establish your coffee shop, pay for supplies, and give employees a fair wage than it might in a lower cost of living area. However, this all balances when you sell coffee to customers as you will be able to charge a much higher price than you would be able to in a lower cost of living area.
Regardless of what the cost of living looks like in the community in which you establish your coffee shop, be sure to give your employees a fair living wage. When you demonstrate to employees that they are valued, they will be more inspired to give their all to their work in your coffee shop.
Going Up!
While it is important that you decide how much you will pay employees to start with, it is equally valuable to consider where their wages might go from there – hopefully, upward!
If you do not think about how your baristas’ pay might increase, you will never end up talking to them about how their pay might increase. If they never talk to you about an increase in pay, they might not believe it is ever possible to attain a raise.
Instead, be clear with your employees about where they need to grow for you to give them a pay raise based on skills alone. If you can find a way to make the work that they do measurable, you can give them guidelines for how to work their way up the pay scale.
Giving your baristas incentives for improvement creates a win-win arrangement. It will inspire your employees to give increased effort over time which will in turn make your coffee shop a more efficient, friendly, and enjoyable place to come for coffee.
Don’t Forget Your Budget
While it is nice to weigh the cost of living, skills, and employment history of any baristas you are hiring, the amount you pay them may actually come down to how much you can afford to pay them.
Many business owners focus on crafting the most beautiful coffee shop, serving the most spectacular coffee, or hiring the most experienced employees, but when it comes down to it, they forget to look at their budget.
Your budget should be at the top of your mind during every single employee wage calculation. You absolutely must make sure you can afford to pay your baristas what you agree to pay them. There is nothing more discouraging to an employee than not receiving what you were promised – not to mention, there may be legal consequences if you void a contract.
Do not make this mistake. Plan ahead and be prepared for any and all expenses, especially your employee expenses.
If, after your calculations, you discover that you can only pay your baristas an extremely low wage, it might be worth taking another look at your budget. Are there other areas where you can cut costs or increase income?
It may be worth it to cut a few expenses or take the risk on increased prices so that you can give your employees the best possible experience. When you value your baristas, they will value their work, which will only pour out to your customers in positive ways.
Follow the Laws of the Land
Above all, you need to make sure you are following the laws surrounding paying employees. These laws may vary by location or based on the person you are hiring.
Make sure you are paying your baristas at or above the minimum wage, so that you do not get into any legal trouble. It may also be helpful to look into any legal restrictions on hours per shift, sick pay, holidays, or other wage-related requirements.
Being certain that you have all of this information early will prevent you from becoming a problem with the authorities. One of the last things you want is a target on your back because you did not follow the rules.
Another added difficulty of facing legal trouble would be being known as the coffee shop who did not want to pay their employees the legal amount. Obviously, this is not a great thing to be known for.
Do yourself a favor and be on the right side of the law from the very beginning.
Show Value in Other Ways
While it is not the same as a financial wage, there may be other ways to demonstrate to your baristas that you value them.
If you are considering showing your employees you value them in some way, first check in about what is most important to them. You do not want to assume they would rather have a non-monetary benefit and then later find out that a monetary raise or bonus would have meant more to them.
If they are open to other methods of showing value, sending them to a class, conference, or certificate training for their personal development might be just the thing to do. This gives them valuable experience that they can take with them wherever they may go in their career.
Another potential benefit would be an employee discount on the products that you sell. Perhaps they get a larger discount on coffee or even a free pastry once a day. You will have to pay close attention to what you can afford to offer, but this type of offering may mean a great deal to them.
While there are many factors to consider when determining what to pay your employees, there are also many non-monetary ways to show their worth. Weigh the benefits of both along with the employee’s interests and needs.
With this intentionality, you are bound to give them an environment they can thrive in, thus, making your coffee shop one of excellence.
Frequently Asked Questions
If you find that you need to tighten up your budget, it might be helpful to look at how much food or drink you are offering and the return on investment in these products.
Sometimes, business owners believe offering more products will give them more income, but this is not always the case. They may try to expand from coffee to smoothies to ice cream to snow cones to essentially operating as a full-blown restaurant.
You may need to scale down a bit to cut costs. In doing so, you may actually find business pick up as people can better understand who you are and what you offer.
This question very much depends on multiple things:
● How busy is your business?
● Are you working in it as a barista or just as a manager?
● What hours can your current baristas work?
After looking at these answers, you may find that you have no one who is able to cover a specific shift. If you are not willing to work that shift, you will need to hire someone else!
Alternatively, if you are not very busy but you have three baristas working at once, you may need to scale back a bit during the less active hours.
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
