A coffee bar has a lot in common with a regular coffee shop. One main similarity is that they both serve coffee drinks. A coffee bar, however, is much smaller than a regular coffee shop- more like a coffee cart, but without wheels. While this type of coffee business may be small, you also need to make adequate plans before setting up shop.
I have listed below, 7 steps that you should take in starting your coffee bar. These steps will also help increase your chances of success out of it.
- Find your target market
- Prepare your business plan
- Set up your business entity
- Secure a location
- Design your store
- Set up shop
- Build a team
Find your target market
If you are starting a coffee bar, you’ll generally find your market among the morning coffee crowd. This includes people rushing to work or running errands like dropping their kids off at school. Your target market could also be among people who just want a warm and comfortable place to relax and have long conversations over a steaming cup of coffee.
Within these two broad categories of people, find your ideal customer by conducting some research. Factor in your proposed location in your research. For example, if your coffee bar site is near an office building, your ideal customer will probably be a middle-aged professional looking to start their day on an active note with a cup of coffee and a fast breakfast.
Understanding your target market will help you make decisions about the personality of your coffee bar and its general design. You’ll also find it easier to draw up a business plan and decide on the appropriate marketing campaigns.
Prepare your business plan
Once you have decided on your target market, you must draw up a business plan- whether you intend to seek funding or not. If you find it difficult to prepare your business plan, remember that you can get templates online, at the chamber of commerce or government business information center in your community.
If you will be seeking funding from investors or the government. Your business plan will play a major role in the process. However, make sure that you pay extra care to prepare it. Look out for grammatical or spelling mistakes. Also, include graphs, tables, and images if possible. You also want to present your business plan in a manner that shows your professional image. For this purpose, you may decide to get a presentation folder.
Make sure you have your figures right. Prepare a start-up budget, profit and loss projections, break-even point, projected return on investment if you’ll be sourcing funds from private investors. Support your projections with realistic case scenarios.
If your business plan is for personal purposes, keep it safe on your computer such that you can refer to it when making business decisions. A business plan is not set in stone as it can be updated or modified as your coffee bar business evolves.
For a sample business proposal, click here.
Set up your business entity
Choosing a name for your coffee bar is the first thing to do before the business registration process. Your company name will probably stick with your business for a long time. Therefore, choose carefully. Choosing a company name doesn’t have to be as difficult as it is usually portrayed to be. Let your vision for your coffee bar be your guide. If you don’t mind being the face of your business, you can simply name it after yourself. Otherwise, choose a name that best shows the character of your coffee bar.
Your coffee bar business doesn’t become legally recognized until it is registered. You’ll be required to choose a business structure for your coffee bar. This could be a limited liability company (LLC) or a sole proprietorship. Business registration involves some paperwork and payment of fees. Reach out to your state’s secretary of state office to know the requirements and regulations required to register your business.
Secure a location
There are a number of factors to consider when choosing a place to site your coffee bar. You may decide to use a location within easy reach of where you live so you don’t incur a lot in transportation costs. Your competition is another factor to consider. An area with similar kinds of coffee bars is an indication of high demand and shows the promise of good foot traffic. However, you also don’t want your coffee bar in an area where the competition is too stiff. Primarily, closeness to your target market should be the major factor in determining your location.
Consider securing a space in an office building, college, hospital, or shopping mall to reduce lease costs. Although this means you will have to tailor your services to the ideal customer type that visits such locations, it also puts you in close proximity to your target market.
Design your coffee bar
The design of your coffee bar will give your customers their first impression of your identity. Note that the general outlook of your staff (i.e. their uniforms) also contributes to this impression. There are endless ways to design your coffee bar so that it stands out from the crowd. Adopt a concept that resonates with your brand. If you are at a loss for what concept to choose, hire a professional. Let them know what your objectives are so that they can be guided in coming up with appropriate design options.
You can also go the DIY route. Look at music, books, or games for inspiration. Play around with color schemes. Whatever you do, ensure that your target market is your primary focus.
Set up shop
Crafting a menu is an important part of setting up your coffee bar. Your menu doesn’t have to be as diverse as that of a regular coffee shop. If you’re located in an office building, for example, you can offer menu items that can serve as a grab-and-go breakfast in addition to coffee drinks.
Purchasing equipment can be capital intensive, therefore, make sure you buy quality items that won’t break down easily. Also, purchase the initial batch of coffee beans, ingredients and supplies that you’ll need based on your projections. Visit local bakeries and suppliers of bottled water and juice to arrange for bulk purchases. Establish a working relationship with each supplier to make it easier to order for supplies.
Purchase furniture such as bar stools and tables to complement the design of your coffee bar.
As a food serving business, you’ll be required to get certain permits or licenses. Your coffee bar will also be subjected to periodic health inspections. Ensure you maintain hygiene standards according to the requirements of the health department and obtain the necessary licenses.
You can then begin to put word out about the opening of your coffee bar.
Build a team
Decide how many people you want to hire based on your business needs and budget. During your hiring process, look out for candidates whose interests align with your business values. Look out for traits like the ability to work under pressure, multi-task, and good interpersonal relations.
It is important to train your new staff so that they are on board with your business goals and are educated on how to help you achieve them. Get them trained on how to relate with customers and create an inviting atmosphere at your coffee bar. You can also organize refresher courses from time to time.
A coffee bar is relatively easier to start than a regular coffee shop because of its low start-up costs and size. Before you set up shop, do a research of your target market and draw up a business plan. Fulfil the legal requirements of owning a business in your area and secure a location for your coffee bar. You can then begin to design your coffee bar and prepare towards opening your doors for business. You can then start to employ staff when or just before your coffee bar is operational. With these steps, you’ll be well on your way to running a successful coffee bar.
Frequently Asked Questions
Depending on your location, size, and equipment; a coffee bar costs between $25,000, and $75,000 to start up. In preparing your start-up budget, include running costs for a couple of months so that the pressure of your business expenses does not affect your personal finances.
The use of online marketing is not only cheap but can be effective if done properly. Sign up on social media platforms with your business name and post engaging materials on a consistent basis. Gradually build an online community by sharing helpful coffee-making tips and fun posts.
You can take it a step further by paying for sponsored ads that target people in your locality. Monitor the results you get using analytic tools and make strategic adjustments where necessary.
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!