You have this dream of opening your own coffee shop business but not a lot of money to do it with, so you can’t make that dream a reality, right? Wrong.
Want some low-cost ideas for starting a coffee shop business so you can get started with very little money? Here they are:
- Start an online coffee business
- Open a coffee cart
- Establish a mobile coffee shop
- Piggyback your coffee shop
- Open a coffee shop drive-thru
It’s true that opening any kind of business can be an expensive endeavor. But, with many kinds of businesses, and especially with coffee shop businesses, there are some pretty good ideas for ways to open a business without very much money. In this article, we’re going to discuss how you can open your own coffee shop business when you don’t have a ton of funds.
Getting Started
Getting started with anything is sometimes the hardest part of the process. A big thing to consider when you’re trying to plan out your coffee shop business is that you can start small with the seed of something that eventually you can grow into something bigger.
Let’s say that your dream is to have a full-blown café where you serve the tastiest coffee drinks and delicious food to go with them. This kind of coffee shop will cost well into the six-figure range to get started. Nothing wrong with that, you just don’t have that kind of dough.
That’s ok. Of course, you have the option to just start saving or trying to raise more funds so that you can open the shop of your dreams, but you can also just start smaller. Starting smaller will be much cheaper and also has some other benefits.
You’ll have the time to perfect your craft. A coffee shop needs to be really good at making gossip-worthy coffee drinks, right? Opening a coffee shop business on a smaller scale will allow you to focus on the part of your business that needs to be as close to perfect as possible, the coffee. Then when you’ve saved the money to go bigger with your business, you’ll be able to build the rest of it around the amazing coffee drinks you’ve already developed.
There are some things you can only learn by doing them. You’ll gain the experience you need to make a larger business thrive in the coffee industry. Experience is something you can’t get except through doing. You’ll start learning what does and doesn’t work for the customers in your area so you can take that with you into your café when it’s time.
You can even be testing the waters of the market you’ll be in. You might find that a different location would be more profitable for you. Starting your coffee shop business small makes things less scary and gives you somewhere to go with the business. You’ll still want to have a good business plan laid out, and you can just make sure to include the possibility of growth in the future into the business plan.
Now let’s take a look at some of the low-cost ways you can start a coffee shop business with little money.
Start an Online Coffee Business
This is probably the cheapest way to start a business. It does cost some money, but not much, according to SmartPassiveIncome.com. The biggest cost to you with an online business will be in terms of time, not money.
All of the same things apply to start an online coffee business when it comes to planning. You still need to have a well-thought-out business plan. You need ideas for marketing your products and services. And you’ll need to provide good customer service, including timeliness, providing for customers’ needs and wants, and competitive pricing. This isn’t going to be a shop where you hand a freshly made coffee over to your customer, obviously. You’ll be selling packaged coffee beans and grounds, and other products that can go along with the coffee. If you’re really creative though, you might be able to start a coffee delivery service online.
Starting your coffee business online is a great way to spend time building a customer base around your products. Basically, you can start popularizing your brand of coffee. Get people excited about your coffee for a while. Then, when you’re ready to, you can open a physical location. When your customers hear about it, they’re almost certain to want to come experience what they already love about your coffee in a more personal space.
You’ll want to keep your online space too, though. It’s a low-cost piece of your business that you can continue to make money with. Plus, it’s a part of your coffee business that can reach people in a much wider market.
Open a Coffee Cart
A coffee cart will cost you more than starting a business online but is still pretty inexpensive. There’s a range for coffee cart startup costs, but on average it’ll take you somewhere around $20,000 to get it up and running.
The great thing is once you are up and running there isn’t much that you’ll have to pay for after that other than your consumable supplies. You’ll have the cart or kiosk, you’ll have gotten any permits that you need, and you’ll have already purchased the equipment you need.
A coffee cart will thrive if you have the right location. There’s really no end to the kinds of places that you can look into for stationing your coffee cart. You’ll just want to make sure there is plenty of traffic where you are on a continuous basis. Places that are good to set up shop close to are:
- Colleges and universities
- Shopping centers
- Theaters
- Event centers
- Business and technical centers
- Large stadiums
- Hospitals
- Airports
- Train stations
- Family entertainment attractions
You need to make sure that you get permission from a business or government entity that owns or regulates the location you are setting up on though. In some cases, there may be permits you need to obtain or licenses that are required to do business there.
Just make sure to do your research when you’re choosing a location. You want to have all your ducks in a row, as they say, so you don’t encounter any hiccups when you’re trying to get your coffee shop business off the ground.
Establish a Mobile Coffee Shop Business
Mobile coffee shop businesses can look very different from each other. This kind of business can be as small as a single transportable espresso machine and plastic storage bins full of ingredients and utensils needed to make tasty beverages. Then you can simply put the items into your vehicle and set up on available counter space or a table at the venue you’ve made an agreement with.
Mobile coffee shop businesses that operate this way often market their services to other local businesses that stand to benefit from having coffee served in their shops. Something like a cigar bar, a book store, a children’s play place, or a car repair shop might be a willing participant in a deal with you to allow you to sell your coffee drinks at specified agreed upon times.
Agreements will vary. You might have a business owner who just sees your presence there as a help to his or her business, so they won’t charge you anything for letting you use their space. Others might feel that they are doing you a favor so they might charge you some sort of rental fee. You just need to assess the deal and make sure that you’re getting enough out of it to warrant any fees or commissions that are built into the agreement.
Another way to have a mobile coffee shop is by using a food truck concept. This option will obviously cost you more than just traipsing around with your equipment in your car, but it still doesn’t cost as much as opening a café or sit-down coffee shop. You’ll likely be looking at around $30,000-$60,000 to start a food truck coffee shop.
You’ll have to consider the cost for the truck, the equipment to outfit it, the licenses and permits you’ll need to obtain, and all of your supplies. Also, you need to decide if you’re going to hire anyone to help you run your operation. You can operate your food truck coffee shop all on your own. It just depends on the amount of business you intend to do and how many hours you plan to be open.
Food truck coffee shops are great because you can easily relocate them to where there’s more traffic. You need to make sure you are aware of any zoning regulations and laws in your area though. There may be places that food trucks are not allowed to do business in. You want to establish a good reputation in your community. Following the rules is one way to do that.
Piggyback Your Coffee Shop
This is probably my favorite option for opening a low-cost coffee shop. The possibilities are endless and you get to help another business out while they’re helping you too. Who doesn’t love a win-win situation? This option saves you money, saves someone else money, and is advantageous for both sides.
Piggybacking your coffee shop business off of another business means that you will set up your shop within the walls of another business where the two businesses will each draw in customers, thus providing potential customers to each other in the process. This set up can be very beneficial to both parties involved in the agreement.
This can save you tons of money because the space you’ll be using is already paid for or being paid for by the other business. Essentially, the existing business will sublet part of their space to you for your coffee shop to operate in. Since you’re only using a portion of the building, your rent will be less than it would if you were renting a full space.
You get the benefit of an already established customer base too. People who are already coming in to patronize the other business will sometimes decide to buy coffee from you. Similarly, coffee-lovers who come in to buy your delicious coffee will often decide to shop with the other business, as well. Thus, the win-win situation.
The great thing about coffee is that it can pair well with many other kinds of businesses. People drink coffee while doing lots of other things. Shopping, eating, driving, watching, listening, playing, running errands, cleaning, working, and the list goes on and on.
You can reach out to many different kinds of businesses to see if you can establish a piggyback relationship with one and set up shop in their space. Try talking to owners in book stores, repair shops, department stores, music stores, gyms, zoos, museums, art galleries, flower shops, shared workspaces, salons, news shops, boutiques, and anything else that might seem fitting.
Open a Coffee Shop Drive-Thru Stand
Another option to consider is a drive-thru coffee shop. These are shops that don’t have anywhere for customers to come inside. There’s no seating area housed in the shop. Some stands might have picnic tables outside, but that’s really up to you whether or not you want to provide those.
A coffee shop drive-thru business doesn’t need a lot of space to operate from. You only need the room for your equipment and preparation space to make all of your menu items. This is basically like having a food truck business but in a small building that doesn’t move.
The obvious key to having a successful drive-thru coffee shop is having a good location. You need to look for a busy commuter route so you can get all of the worker bees driving through the area or the students going to and from school. You need to be convenient to get to from the main road and directly on the way to busy places like business districts, schools, large shopping areas, and cultural regions.
A drive-thru coffee shop stand might cost you the purchase price of the building. But some of these shops will cost you less because the owner will be leasing you the space. Then you’ll have to purchase the equipment you need and all of your supplies. You’ll also likely have to pay an employee or two.
Overall, you are probably looking at anywhere from about $35,000 to $80,000 to open a coffee shop drive-thru stand. That’s according to Bellissimo Coffee InfoGroup. That might seem like a lot to some people looking to get into the coffee shop industry, but relative to other options like standalone coffee shops and cafes, that could cost you up to $250,000, that’s really not bad at all.
There will be far less maintenance to worry about with the building. Many of these stands don’t even have a restroom. (That means you’ll have to consider what your options are for that.) Your utilities are usually going to cost you less in these types of stands, you’ll use less cleaning supplies to keep everything nice and shiny, and you’ll not be keeping as many ingredients on hand. This is a lower-cost option for starting up and can be less expensive to run than other kinds of coffee shops.
Raising Funds for Your Coffee Shop
So, now you know that if you have a little money to open a coffee shop business with, there are some good, low-cost options for you to consider. But what if you have no money or not quite enough for the option you want to go with? Well, then you’ll need to raise more funds, or in some cases, all of your funds.
There are a couple of things you can do to raise the money you need to open your coffee shop business.
First, you can apply for a business loan from a bank to see if you can get the funds you need that way. If you go this route, you can feel secure in that it’s a stable establishment that is reliable. Just remember that bank loans come with interest rates too so you’ll be paying back more than what you took out.
Another route would be to try crowdfunding. People, in general, are often generous and willing to support something that they feel is a good idea and will be an asset to their community. You can use social media to help rally support around your idea and start a crowdfunding webpage to collect donations from many people and use that money to open your coffee shop business. Remember to find some way to thank people like a free coffee giveaway, discounts, or something else.
You can also look for an angel investor. This is a person who has plenty of money and that sees your vision and supports it. Many people will ask family members or look for others that they know first. But you can look to a prominent person in your community that might be willing to help you get started. Oftentimes, the angel investor will build something into the agreement as a payback for their money. You’ll be paying them back, sometimes with interest, or they may even ask for a stake in the business.
There are plenty of ways to raise money to start your coffee shop with. And since there are so many options for starting a low-cost coffee shop business, it shouldn’t take you long to acquire the funds that you’ll need.
You don’t have to have a ton of money to start a coffee shop of your own. There are some really lucrative low-cost ideas for opening coffee shop businesses. You can start your business completely online, get yourself a coffee cart, open a mobile coffee shop, piggyback your coffee shop off of another business, or even open a drive-thru coffee stand. And if you don’t have quite enough money for these ideas, there are ways to get the money that you need with little effort.
Frequently Asked Questions
There are many different coffee franchises to choose from. Some of them are more locally recognized and operate only in small regions, while others are nationally and even internationally recognized. You don’t have to be a business expert to guess that if you want to open an internationally recognized franchise you’re going to have to pay for that.
In some cases, the franchise route will cost you more. There are some pretty hefty fees that go along with opening a franchise. Basically, you have to pay to have the privilege of opening a store that already has a huge consumer following. You’re paying for the brand. You’re paying for the effort that has already gone into making that franchise such a great success.
That being said, it might be worth paying for the successful franchise. There are some brands that you’ll not have to even market much because there is already so much established for you. If you decide to go with a smaller, more locally known franchise, you likely won’t pay as much for it in terms of fees and other costs, but you also will have to work harder at gaining customers.
So the answer here is that in some cases the franchise will cost you more to open, and in other cases, it won’t. It depends on the franchise you want to open, the area you’re in, and several other factors.
I’m going to answer this question by saying they absolutely can be. It might seem like you won’t be able to make much with a little coffee cart. But if you look more closely at the situation, you’ll see that you can make some good money with this option.
Sure, you will likely be able to serve many more menu items with a standalone coffee shop that has seating and all the perks. But here’s the thing—you have to pay for all of that space, all of the equipment, and all of the ingredients it takes to make the different selections. Also, you have to pay the people who are running the place from day-to-day.
A coffee cart doesn’t need more than one or two people to run it. You won’t have a huge menu so you don’t have to keep all sorts of ingredients on hand at all times. You’ll likely waste a lot less, and you can make up for some of what you won’t be getting with variety in volume. If your cart is located in a good busy spot, you won’t have any trouble making a profit.
You will have low expense costs, high profit margins, and a high volume of sales. Those things all put together equal plenty of unspoken-for money going into your pocket.
Alternatively, much of what you make in a large coffee shop operation has to be put back into the business for ingredients, supplies, employee pay, lease or mortgage payments, taxes, insurance, and other operating costs.
If you don’t mind sharing decision-making responsibilities with other people then going into business with someone else could be a very good idea for you. You’ll have someone to help with ideas, help with running the coffee shop, and help with funding.
You can open a co-op coffee shop. When a few people with small amounts of money put aside for business ventures come together, they can pool that money and open a coffee shop much more easily. The partners then all share the business equally and make decisions for the business together.
It’s not a bad idea. It can make you feel better knowing that there is someone else who is equally invested in this company and is working as hard as you are to see it succeed. It can also open the doors to more options for you to take on for your coffee shop because there is more money available.
You’ll want to be careful about making sure that the financials and legalities are all in place and on paper from the beginning though. You might be partnering with someone who you see as one of your best friends, but this is too big of a deal to just say—oh we’ll always see eye to eye on things, we’re best buds. Sometimes arguments happen or you’ll fall out over something.
Business relationships have a way sometimes of turning south. Be proactive in the beginning so you don’t have to be threatened with anything later. It’s just a smarter way to do business, whether you’re friends with your partners or not. The reactive route is a lot harder to deal with.
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
