We Answer: Is Coffee Roasting a Profitable Business?
Determining whether or not a business endeavor will be a profitable one is an extremely important aspect to consider before you dive in completely. Running any business, and especially a coffee roasting business will take a constant input of time, money, and energy. You want to be sure this input will be worth it.
Coffee roasting can absolutely be a profitable business. To make your coffee roasting business a profitable one, you need to plan, differentiate yourself, cut costs, increase income, and continuously market well.
Do these things and you will find yourself running a profitable business much like others who have gone ahead of you. Let’s dive into these important steps deeper.
How Profitable Are We Talking?
Before you start pouring in massive amounts of time, money, and energy, you may be wondering exactly how much you can make as a coffee roaster.
It may sound cliche, but the sky is limitless.
Some coffee roasting businesses will fail. They will not make enough money to cover their expenses, even over many years.
Other coffee roasting businesses have made $200,000 – $300,000 in a year, while still others sell their businesses for multi-million-dollar profits.
We recognize this is an extreme range, but we are here to help you take the right steps so you can become one of the successful owners.
Plan Ahead in Your Business
Now that you know it is worthwhile to move forward with your dream of owning a coffee roasting business, the next best step you can take in preparing your business plan.
Writing a business plan involves not only looking ahead at exactly how your business will operate but also actually writing these details down in an organized document.
The need to figure out some important details for your potential business may be just what you need to kick your business into gear.
It is very easy to procrastinate making decisions for your business. However, if you want to become profitable, you really need to get some of these details figured out:
- What will the business be named?
- Who technically owns the business?
- What type of legal structure will it have?
- What bank will it use?
- Where will it be located?
- What will it sell?
- How many employees will it have?
Each of these questions could take you days of research, conversation, and pondering, so you must start asking and answering them right away.
Another part of your business plan involves determining your profitability. Since you are reading this article, you obviously are concerned about making money in your coffee roasting business.
It’s better to have a profitable business that you can grow than one that never gets off the ground.
In your business plan, try to think about what price points you will sell your products and services at. Compare this to your costs and note how long it will take you to be profitable as well as how profitable you will actually be.
Sometimes, all it takes is sitting down with these numbers to inspire you to either do things a different way or get started.
Differentiate Your Coffee Roasting Business
As you write your business plan, you will want to think about how to differentiate your coffee roasting business.
This is where you brand yourself as a business.
Branding helps your customers remember who you are; it ensures you stand out in their minds as something special.
As a coffee roasting business, you might differentiate yourself by roasting only a specific type of coffee beans. This may mean healthy coffee beans, organic coffee beans, or coffee beans from a very specific location.
Branding could also have nothing to do with the coffee you roast and be all about how you market your products and services. More specifically, to whom are you marketing your products and services?
- Are you the coffee roasting business for elite athletes?
- Are you the coffee roasting business for business leaders?
- Are you the coffee roasting business for macho tough guys?
- Are you the coffee roasting business for classy millennials?
Your coffee does not necessarily need to change based on who you are targeting… but your marketing should. It must be focused on this specific demographic and why your coffee will help improve their lives.
Cut Costs Where Possible
If, after a few months or years, you find that your coffee roasting business is still not profitable, there are two things that you can do to increase profitability.
First, you can cut your costs.
Cutting costs will allow for more of your income to go towards you or the future of your business rather than your present-day expenses.
What expenses should you cut?
You have to determine what will make the most sense for your business. Obviously, you should not cut anything essential to you selling products or offering services.
However, deciding what is “essential” may be more difficult than it sounds.
For example, is an extra set of hands “essential?” Hiring employees may help you produce more product, but is the cost of paying your staff preventing you from being profitable?
It’s a fine balance and there may not ever be an easy answer. The important part is that you remain in tune with what your costs are and keep them down when possible.
Learn more of our budgeting tips and tricks HERE!
Once you have cut costs where possible, it’s time to raise that income!
Increasing your income is the second way you can increase your profits as a coffee roasting business owner.
What can you do to increase income?
- Increase your prices
- Increase the number of services you offer
- Increase the products you offer
- Offer discounts to increase the quantity of sales
- Rent some of your assets out
- Run a contest
Some of these methods of increasing income might seem a bit unconventional, but if your business isn’t running profitably, you need to try something! And that “something,” means you need to do some things differently so that you can fix this problem and move on.
Just Keep Marketing!
Finally, you need to market your coffee shop business.
You need to market before you are a profitable business and you need to market while you are growing your profitability!
The best way to market your coffee roasting business is by providing value.
Be more than just a company that sells things to people. Be an asset that they can count on.
You can do this by offering free value to them by teaching them all about coffee roasting.
This can be done online on social media platforms such as Facebook and YouTube or in in-person events such as fairs and festivals.
Teaching your ideal clients more about your niche will help them associate you and your company with that action or lesson.
This turns that specific lesson into an advertisement that keeps on giving. They don’t even need to see a flyer with your name on it and they will already be thinking about the gift you gave them through that teaching.
Providing free value to your ideal customers can also create a sense of imbalance for the relationship. This actually works out to your benefit.
When customers feel like you have given a disproportionate amount to your relationship with them, they will naturally feel like they need to give a bit more to balance it out.
This comes in your favor when you start offering products and services to them. They will actually want to pay for them as if they owe you for all of the help you have already provided them with.
If you’ve done a good job with your training, they will also feel good about supporting you in general. They will want to see you thrive in your business and be happy to be part of making sure that happens.
Frequently Asked Questions
Determining your ideal customer is best accomplished through market research.
When you complete market research, you research your community to determine what kind of coffee roasting business they want to see.
As you talk to more and more community members, you will likely start to notice a demographic trend in who is most interested in your business.
You can consider this pattern of interested persons your ideal client avatar. Pay special attention to their ideas and needs as you move forward.
There are a few different milestones that you will hopefully hit in your business.
First, just having a functioning business on your hands is an initial victory worth celebrating.
Next, you will find yourself covering your expenses. This is worth celebrating, but still not technically profitable since you do not actually make any money after covering costs.
Ideally, at some point, you will make enough money to support yourself. This may look like just paying the bills or perhaps a little bit of extra to invest, save, or play with.
Hitting this level of profitability is a wonderful accomplishment, but may still not be enough for your personal goals and plans. It’s best if you consider these goals and ideal lifestyle ahead of time.
Some people may prefer to work as hard as possible to make as much money as possible for themselves. Others may want to make enough money to hire employees to cover all of the strenuous work, that way they still make some income but without any effort.
As long as you know what personal goals you are aiming for, you will be able to stay focused on the process and easily determine when you reach them.
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!