Starting a coffee cart can be a rewarding business for anyone looking to become an entrepreneur. But before doing so, it’s important to examine not only the advantages of opening a coffee cart but also the disadvantages of doing so.
Pros and Cons of Owning a Coffee Cart:
- Brand Loyalty
Owning a coffee cart can be a lucrative and rewarding business with several advantages to it. It’s crucial to understand these advantages before opening a coffee cart of your own
These Advantages Include:
Owning a coffee cart is extremely flexible and can easily fit around any type of lifestyle, unlike a regular coffee shop which becomes a day in and day out routine.
When owning a coffee cart you can choose to operate only during special events in your area, giving yourself plenty of time for other things or other business if you so choose.
You could also choose to operate as a coffee catering business, operating like any catering business where they are hired to work specific events or areas.
You could also choose to operate on a set daily schedule like any coffee regular shop.
No matter how a coffee cart chooses to operate, however, they can always change or alter that decision because they have that flexibility, which can be a major advantage for some.
Flexibility of Location
Coffee shops also have the choice as to where they are going to locate their business.
Unlike a normal coffee shop, a coffee cart isn’t going to be locked into one location. Rather a coffee cart has the choice to move from location to location.
If one location isn’t doing so well in terms of sales, that coffee cart has the flexibility to move to a different location which may do better.
This is unique to a coffee cart compared to a coffee shop, as if a coffee shop isn’t doing well in sales, it doesn’t have the option to simply move to a new location.
Coffee is a non-seasonal product in every sense of the word. Its popular and drinkable every single day of the year, with no actual reason for people to stop because the weather has changed.
Because of that, coffee is a fantastic investment for anyone looking to be an entrepreneur.
With coffee not being seasonal, a coffee cart is a business that can be operated year-round. As a result, this can be a huge advantage compared to something like an ice cream truck, which is realistically only a seasonal product that is consumed in the summer.
By being non-seasonal, a coffee cart ensures consistent, year-long sales, to ensure that profit is continual.
Opening a coffee cart is a fairly affordable investment, only costing about $20,000. This is an incredibly low start-up cost when compared to opening a traditional coffee shop which will cost between $200,000 and $375,000!
- Why does a coffee cart have a much lower start-up cost?
There is really only one major reason as to why a coffee cart has such a low start-up cost.
- There’s no need to pay for a physical shop
Commercial space can be incredibly expensive, especially in larger cities such as New York and Los Angeles.
Most coffee shops report that paying for commercial space is their greatest cost.
But by operating a coffee cart, there’s no need to pay for a physical shop, which can save plenty of money when operating a coffee cart instead of a coffee shop.
For the pros and cons of opening a regular coffee business, click here.
- Necessary costs to open a coffee cart
As mentioned, the necessary start-up costs for a coffee cart is on average $20,000. Here’s a short list as to what goes into that total cost, all of which may differ on price depending on the area.
- Coffee cart
- Coffee brewing machines
- Coffee and other products to sell
- Cost of rent for that space
Cons of opening a coffee cart
While a coffee cart does have a large number of advantages over other types of business, it does have disadvantages as well.
These Disadvantages Include:
The coffee business is not one that should be considered a lightweight when it comes to competition.
Coffee carts have to compete with large chain companies like Starbucks, as well as local small coffee shops, and top of all of that they have to compete with other coffee carts.
- Why is competition a problem?
Competition can a huge problem for any business, but it especially hits consumer-based businesses the hardest.
Competition can be a problem for a coffee cart because there are only a certain number of customers and in an area. That means that all the coffee shops in an area are forced to compete for those customers.
This can be an issue for a coffee cart because coffee carts often don’t have the resources to compete with these larger companies, which costs coffee carts customers and in turn money.
In most states across the country, the licenses required to open and operate a coffee cart legally are the same licenses required to operate a food truck.
Now each state may have its licensing laws and regulations, so vendors need to be sure as to the specific regulations in their states.
Most states, however, require a basic set of licenses that include the following:
- Business/vendors licenses
- Foodservice license
- Food handlers permit
- Health permit
- Employee identification number
- Why can licensing be an issue?
All of these licenses are going to be required before a coffee cart can legally operate. If a coffee cart vendor does not have all of its licenses in order, it can face major fines and the possibility of facing closure.
The main issue, however, is the cost that all of these licenses can bring to a coffee cart. When starting a coffee cart, the main attraction is that the start-up cost is low.
These licenses however can greatly increase the start-up cost of any coffee shop.
If a coffee shop is caught operating without all of its licenses in order, it can face major consequences including fines.
- Brand Loyalty
Brand loyalty may perhaps be the greatest issue that a coffee cart will face. It can easily affect a coffee cart’s sales and may affect if it is effectively able to survive.
- What is brand loyalty?
Brand loyalty is just as it sounds. It’s the tendency for consumers to stick with a certain brand simply because they know that brand and feel that they should be loyal to them.
This is incredibly common in the food industry, which is why customer retention is such a big deal when it comes to the success of a coffee shop.
According to a study done by BIAKesley, 61% of business that a small business enjoys is from repeat customers. Most of these repeat customers are returning simply on the premise of brand loyalty alone.
- Why is brand loyalty such as a problem for a coffee cart?
The reason that brand loyalty is such a problem for a coffee cart is that that one cart is the entirety of the brand.
There is no chain of restaurants plastered in every city and small town that a coffee cart can rely on for advertising and brand recognition.
Rather, it’s just that one cart who has to compete with the brand recognition and brand loyalty of a global coffee brand like Starbucks.
Frequently Asked Questions
One of the best aspects of a coffee cart is that it can be placed essentially anywhere. Anywhere that is considered a public place of course.
This includes places such as malls, the street, in a park, on the beach, or even outside a hospital in most cases.
In some cases, coffee shops are even allowed to operate in private buildings like the inside of hospitals, with the permission of that private building or operation.
Before making a choice, it may be important for a coffee cart owner to find out the cost of rent for that space. Some may even get very lucky and are allowed to be there for free simply because it may attract more business that area, but this is not very commonplace.
By having the choice of where to operate, a coffee cart owner can make sure they limit their competition in the area, which can be a major advantage to any coffee cart.
On average a coffee cart will bring on $200,000 a year! This a fantastic amount of revenue for a business with such a low start-up cost.
This number comes from an estimation that a coffee cart will operate 5 days a week for 50 weeks of the year.
It also hangs upon the idea that a coffee cart is in an area with high foot traffic, which is something that a coffee cart should be taking into consideration anyway.
But if a coffee cart can put themself in an area with high foot traffic and the owner can work a decent schedule, it can make a significant profit!
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!