What goes better together than a nice, warm latte and a freshly baked muffin? Coffee and bakery pairings go back so many years in history, they were practically made for each other.
Here are the 8 steps to follow to open a coffee shop bakery:
- Envision the business.
- Scout for potential locations as you sample the competition’s offerings.
- Write a business plan and open a business bank account.
- Pick a specific location for your shop.
- Check your local health department so that you aware of health regulations.
- Institute a marketing plan.
- Hire experienced staff.
- Evaluate your business practices within the first weeks of your grand opening.
1. Envision the Business
One of the first things you’d want to do is think. I know, I know it sounds like a no-brainer but you really need to think about what you want your shop to look like, when you’d like to open, how much money do you have to put into it and how much do you still need amongst many other things. If it seems like it’s overwhelming that’s because it is. Opening up your own business can be one of the biggest life decisions you make so it’s worth it to take time and really think all your decisions through.
2. Scout for Potential Locations as You Sample the Competition’s Offerings
Alright so you’ve sorted out your thoughts and the first big question I’d give you is where would you like your shop to be? Is a bustling city with a lot of foot traffic up your alley or is a corner store shop in a small town more your vibe? Whichever location you pick, go to all other coffee shops and bakeries in the neighborhood. Go in with a friend, business partner or even an investor (we’ll get to those later) and take notes. No, literally, write down notes. Grab a few different kinds of drinks they serve and try them out for taste. Pay attention to what equipment they use, the prices on the menu, the offerings on the menu even down to the mugs and the brand of milk. If they serve bakery items, pick up a couple and if they make them in store or if they have a vendor they use. Do this for as many coffee shops and bakeries as you can. I also suggest if you have any specific coffee shop bakeries near you to meet with the owner and as any potential questions you have about opening up your own shop.
3. Write a Business Plan and Open a Business Bank Account
Once you have a general idea of what you’ve learned from visiting shops, it’s time to write a business plan and open a business bank account. A business plan is something you will be showing to several people so make sure you have it finished before sharing it with investors and potential landlords. This will include your budget, menu options, marketing strategies, and a break-even point, just to name a few things. Your business plan is something you can refer to down the road as needed or use it consistently to stay on track. Now to open up your business bank account you will need to officially name your coffee shop bakery. This can be simply the name or something that has meaning to you or the business itself. Just make sure you have it picked out by the time you head to the bank and you’ll be in great shape.
On the same note, make sure your business bank account is separate from your personal bank account. When you’re owning your own business you have to draw the line and make boundaries about how much you’re willing to put into it. Having those accounts completely separate helps you stay within the boundaries a little easier. So if you’re new to business you might be asking yourself what is an investor and why is it so important to opening up my coffee shop bakery? Well, the simplest way to put it is an investor is someone who puts money into your company and expects a stake in the company in terms of receiving profit.
You obviously want the lowest percentage and the highest advance given to you. This can be hard to find, so don’t be discouraged from talking with multiple investors before choosing whomever you think is the right fit.
4. Pick a Specific Location For Your Shop
So the next step in opening up your coffee shop bakery is getting a space. We mentioned earlier about scouting out the neighborhood and stopping at the local shops. This time you’re looking at specific locations for your shop. Every time you find a place that has potential, look around.
Ask yourself these questions.
- Is there a lot of foot traffic?
- What businesses are around you?
- What’s the demographic in the neighborhood compared to the demographic of your future customer market?
Another element that can easily get looked over is the taxes, rent, and licensing can be priced dramatically different from one block to the next. If you feel comfortable you can talk with local business owners and be sure to ask landlords any questions while touring buildings. Though you should budget for unexpected things to happen, it’s best to know about the quality of the building and what you will need to put into it to have it up to code. The landlord you talk to while touring the place may also be able to answer questions about the neighborhood as well as other questions about the area specifically.
While looking at locations, make sure the space as enough room for things like refrigerators and freezers as well as display cases for bakery items. If you’re having the baking done in store make sure there’s a separate are that can house an oven, plenty of counter space and storage for all baking supplies.
5. Check With Your Local Health Department.
A step that’s absolutely necessary before opening doors is to check with your local health department and see what regulations are needed for you to legally be open for business. Make sure your staff has all the training required to excel at their job and be knowledgeable about what they’re doing and the products served. Sometimes heath and food departments will offer that training on behalf of the county. It’s something to ask about and can save you time and money in the long run.
Now before you go and buy all the equipment needed prior to opening, I suggest hiring your baker and one lead barista. Both will have had to have prior experience but they could be essential to helping you pick out the right equipment. If you’re not a baker or barista yourself, you may not know the difference between this hand-mixer compared to the cheaper version, or this french press compared to that Chemex.
Having experts on hand with not only help you get the correct equipment but will also help in making them feel more involved in the process. I know if I were in their shoes, I would feel more than just your barista or baker and actually feel like part of the team.
6. Institute a Marketing Plan
One thing you absolutely want to make sure you start before opening doors is marketing. Marketing can cost you a pretty penny or could be close to free depending on how you do it. Keep in mind nearly all social media networks are free and are an incredible use of marketing.
Create your companies brand with specific colors, styles, and themes to garner more online traffic. People like things that are aesthetically pleasing to the eye which in turn, once they’re in the shop itself will lead them to want to photograph in there, post on social media and-boom-you have gained yourself more free marketing.
Something I’ve learned from my personal business (and was shocked by) was that it only cost $1 to run an ad on Instagram for 24 hours. You can’t find cheaper marketing that’s free or $1! It will tell you your predicted engagement with the advertisement and you can pause it if you’d like as well. You’re also able to look at the analytics after to see how it performed and decide if you should use it again in the future.
Along with social media, there’s something called a “soft open” that’s generally done anywhere from a week before to the eve of opening to the public. A soft open is where you invite friends, family, investors, and your landlord to your shop to try everything out and give you feedback. This day-and-age, with the accompanying free marketing, I suggest inviting local social media influencers. Sometimes, just a picture or two from them can make your opening day a nearly guaranteed success. During your soft open, offer free espresso beverages and tea flavors along with a few staple bakery items such as muffins, almond croissants, and doughnuts. Get customers’ thoughts on if they would change anything about the flavors or the options available. Make sure they think the furniture is comfortable and the lighting isn’t too bright or too dim. There should be plenty of outlets available for people to work at their laptops when you’re actually open.
7. Hire Experienced Staff
One of the last steps before you open your coffee shop bakery is hiring a staff. You have the option of hiring general staff that can both take care of the coffee bar and the baking or the option to hire separate people for baristas and bakers. Whichever avenue you go towards, make sure to hire a great team that is ready to work. Your baristas and bakers are often the first human contact your guests will experience in their day, and who better than a friendly barista or a baker offering fresh-baked cookies? It’s also important that your staff not only works well with the guests but with each other. You’d be surprised how fast a drama-filled work environment can drag down the atmosphere. Make sure to clearly communicate that you (or the hired managers) are there if needed.
8. Evaluate Your Business
The first day of opening, focus on sampling. Have some cut up banana bread near the register paired with whatever drip brew you have going that day. Samples are an easy way to make a sale that maybe wasn’t even a thought before. I know after trying a delicious piece of banana bread, I’m much more likely to buy a slice than without the sample. You could also designate a barista to go up to customers and hand out samples individually, which makes it a more personable experience. It might seem shocking, but on your opening day, expect people to come in, order a drink and sit on their laptops for a few hours, especially if you’re in a big city. There are few things more popular amongst 20-somethings in the city than being one of the first ones to try the cool new coffee shop.
After the first week, you can look at sales and see if you need to adjust the hours you’re open, the amount of staff on a shift at once, and see if you’re making enough or too much product for the number of customers visiting at a time. Check with your closing barista each night and ask how many of the bakery items are becoming expired to see if too much is being made. If you find yourself with a lot being expired, offer it for donations to shelters, your baristas to take home, or even allow your baristas to give out whatever is expiring that night to customers in the shop around closing time. Same goes for topping off a drip brew at the end of the night. If it’s going to go down the sink anyway, offering it to your guest will put a really nice impression out there and could help them decide if they’d like to come back or not.
If you did your budget correctly and had a small overhead, you should hit your break-even point before you know it. Like you read earlier, there are unexpected things bound to happen when owning your own business, but it’s all part of the journey.
Frequently Asked Questions
Here are the reasons why owning a bakery can be profitable:
● Many people have an affinity for sweets. Bakeries provide confections that are extra special treats for any occasion.
●Office personnel will want refreshments during meetings. If you are located near an office building, expect representatives come to pick up snacks.
● Everyone has a birthday and celebrating a birthday means the tradition is to get cake or cupcakes for a party. You can personalize everyone’s order.
● Offering catering services can increase profit
Some coffee shop business ideas include:
● Mobile coffee shop
● Sit-in and drive-thru coffee shop
● Online coffee shop
● Sell coffee and pastries at a farmer’s market stand
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!