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How Much It Costs To Start A Coffee Shop

How Much It Costs To Start A Coffee Shop

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With the global coffee shop industry projected to hit $237.6 billion by 2025, it continues to be a very attractive market for prospective food entrepreneurs. But what is the cost of opening a coffee shop?

If you’re looking to venture into the industry, this is a question you must answer if you’re to get off on the right foot. Understanding the numbers behind your dream business is an important part of ensuring the business doesn’t fail.

Now, to be clear, there’s no fixed price to be expected for opening your own coffee shop. Indeed, the expected price could vary wildly, depending on your concept, location, size, and the type of coffee shop you’re building.

For instance, if you’re looking into creating a coffee shop with seating, it could cost you between $50,000 and $350,000. A coffee stand or kiosk could set you back between $50,000 and $125,000. And, a food truck-styled coffee shop could cost you between $50,000 and $200,000.

Likewise, if you’re interested in leveraging an existing large franchise or the license of an existing market leader like Starbucks, you could expect to spend anywhere between $300,000 and $675,000.

Crazy numbers, aren’t they?

You might wonder, ‘why the huge price discrepancy for the same business’? The fact is that it all depends. There are a lot of variables to be considered when setting up a coffee shop business.

In this article, we’re going to do a bit of a coffee shop cost breakdown to help you understand the intricacies of, and properly estimate how much it costs to open a coffee shop business.

To do that, we’re going to be discussing some important components you must consider when putting together your cost estimates for your coffee shop business.

Ready? Let’s dive right in!

1. Your Coffee Shop Business Plan

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The first component you need to consider when planning for your costs is your business plan. Now, the business plan doesn’t necessarily cost you money, but it’s going to be key to ensuring you’ve got everything properly documented and are ready for business.

Your business plan is an essential roadmap of where you’re going. 

Not only does this roadmap serve to guide you, it also shows your potential partners, vendors, and banks from whom you’d be collecting loans, that you’re serious about your business.

Through the rest of this article, we’d be accounting for costs that will help you create a proper business plan. 

We wouldn’t, however, be going into the details of how you can create a coffee shop business plan. If you’d love to learn more about that, feel free to check out this detailed guide on creating a business plan for your coffee shop.

2. Location and Rentals

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One of the most important things to account for when planning for your coffee shop is your location and rental costs. Indeed, your location accounts for a big part of your costs.

When it comes to location, there are four variables that you must account for to ensure you’re selecting just the right location for you. These four factors also determine your rental cost.

The first of these is the foot traffic.

Will you be siting your coffee shop in a densely populated area with high foot traffic? Then, your rent is going to be substantially higher than one who sites their shop in a small neighborhood community.

Variable number two is the size of your proposed shop. Of course, your desired size really comes down to the concept you have in mind for your shop. Are you planning on a ‘grab ’n go’ styled experience, or are you looking to create a space for people to come hang out and chill?

The former is going to cost you substantially less than the latter as it’d require much less rented space from you.

However, I’d typically recommend using an 800-1200 sq. ft. location. Coffee being a social lubricant as it is, people who come to grab a cup typically desire a place to also hang out.

The third variable to be considered when selecting the right location is the level of renovation you’d prefer to carry out. This typically falls into two categories…

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On the one hand, there’s the ‘blank slate buildings’. These buildings are completely empty and require you to plan and shape the building as you desire.

This means, you’d build your own washroom, select and install your lighting and electricals, design and install the underground piping, etc.

With proper negotiation skills, you can get the landlord to give you a leasehold improvement which could potentially run into tens of thousands of dollars.

Regardless of whatever discounts you might receive, though, having to build out from scratch is expensive. While it is a great fit for those with a strict vision of their passion project, it isn’t ideal for any looking to generate quick profits.

This brings us to the second category: existing units that are already fully set up for your use. These places are typically closed-up coffee shops or similar styled businesses which require little or no renovation from you.

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This means, the washroom, electricity, and entire structural design is already set up. All you’d have to do before you begin using the space is some lipstick service. Lipstick services here referring to cosmetic services like new décor and painting.

For many first-time coffee shop owners, this is a much cheaper route than building out a location from scratch, and makes for a potentially faster profit generator.

Finally, you’d need to consider the associated miscellaneous costs of the location. 

For example, if your location is inside a strata unit or a mall, you may be required to pay a percentage of your revenue in addition to your original rental costs. In the end, even if the traffic level is really high, the costs may not be worth it.

Some strata units may also have extremely high fees that are easy to miss in the lease agreement. These could be in the form of charges for garbage disposal or even utilities like gas, water or power.

3. Equipment Costs

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Much like your rental costs, equipment costs will be taking up a large chunk of your initial investment. While there are a ton of equipment you might need to start out, your coffee brewing machine is definitely the most important one you should plan for.

This machine can cost you anywhere from $3,000 all the way up to over $100,000 depending on how professional and sophisticated you want your equipment to be.

This great price discrepancy is usually a result of the wide difference in functionality between different types of the same equipment. 

For example, if you’re looking for something that is quick, like McDonald’s or Panera Bread, you could opt for automatic one-press machines that quickly spit out great quality coffee. These save you a ton of preparation time and make the whole process much faster.

On the other hand, you may prefer a more sophisticated machine that grants you more control on the beans and how it is brewed. These semi-automatic brewing machines would certainly set you back more than automatic brewers.

You may also prefer a machine that produces a bigger yield, one that creates more coffee at a go, which would likely cost you even more than the regular semi-automatic brewer.

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In addition to a coffee brewing machine, a serious coffee maker may also consider roasting their own beans. This means you’d need your own roaster, which could cost you up to $25,000.

There are also other kinds of equipment you might need, depending on your coffee shop concept. These include:

  • Dishwasher
  • Blenders
  • Display cases
  • Toaster ovens
  • Freezers 
  • Undercounter coolers
  • Refrigerator
  • Standup coolers
  • Ice machine
  • Storage racks
  • Paper cups
  • Containers
  • Cups
  • Napkins
  • Stir sticks
  • Straws
  • Lids 

Of course, you can also expect to spend on necessary ingredients like coffee beans, milk and alternatives, spices, and sugar. And, depending on what it is you’re offering, you may also spend on things like baked goods, bottled water, juices, and all that.

This is clearly a long list, but it shouldn’t scare you away. You wouldn’t necessarily be needing all of this equipment, anyway. This list is only here to serve as a general guide. 

So, take a long look at your concept and identify the items on this list that would be needed. Then, find out the costs of the required items and estimate your total equipment cost.

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As a bonus tip, you don’t need to create all the items on your list for your coffee shop. And, this was exactly what we did with our ice cream shop. 

We really wanted to include waffles amongst our menu items, but lacked the capacity to create waffles. Rather than get the equipment and hire someone to do the job, we struck a deal with the bakery next door to supply us waffles.

Partnering with someone who enjoys a better economy of scale in a particular product could offer you the chance to increase your average order value and boost revenue, while keeping costs down.

Tips for cutting down equipment costs

  • Take advantage of auction sites:

Auction sites are a good place to find cheap equipment for your new business. These sites often auction out equipment from other coffee shops that just went bankrupt, allowing you get their equipment at a major discount. Reputable auction sites often offer a measure of warranty on their auctioned products.

  • Check out secondhand websites:

Secondhand websites often list fairly used equipment for sale at modest prices. However, secondhand products are often risky investments. You certainly do not want to have your moneymaker breaking down in the middle of a service. To reduce the risk of secondhand shopping, ONLY shop for secondhand equipment from reputable sites that offer one to two-year warranties on their listings. you

  • Lease your equipment:

If you lack the level of capital required to purchase your equipment outright, you can take a look at leasing options around you. Leasing companies typically allow you to lease their equipment for sometimes as much as five years. This allows you to get all of the equipment you need to get your business up and running, while spending only a fraction of the equipment cost.


Not sure how to start your Restaurant Or Food Business?

How Much It Costs To Start A Coffee Shop 8

A lot can go wrong before you even open the doors of your restaurant or food business. The wrong equipment, the wrong menu, the wrong hire, or the wrong location can mean $10,000s down the drain for you. I sadly had to learn this the HARD way…

And you don’t want to be the one to make these costly mistakes.

Which is why in my free masterclass, I share with you my mistakes and my 3 step formula in how to transform your idea into a popular and profitable restaurant business – even if you have don’t have any experience.


4. POS Costs

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An important cost to miss out when planning your coffee shop business is the cost of your finance software and point of sale (POS) machine.

As with everything else here, the actual price would depend much on the features the machine ships with, and how fancy it is. As a result, it could cost you anything from a few hundred dollars to about $5,000.

For the most part, though, you’d hardly be needing any expensive, feature-rich software for your new shop. Indeed, there’s a number of very efficient but lightweight machines that can perfectly serve smaller cafes and businesses.

One of these is Square, my personal preference in all of my locations. Lightweight and easy to use, Square boasts a user-friendly interface that requires a very short learning curve. It is also pocket-friendly, with no fixed setup or monthly fees, and only very minute processing fees per transaction.

If you’re looking to set up your own café and are in need of a solid POS machine to begin with, I’d highly recommend you click here* to learn more about Square and how they can best serve you.

*This is an affiliate link where I may get a small commission if you sign up with my link, but at no extra cost to you.

5. Interior and Exterior Décor 

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Aesthetics matter. Your café aesthetics include everything from the core design of your coffee shop to the packaging of your product. 

You can think of this as the general presentation of your product.

This presentation is the first thing that draws in your customer, and it goes a long way to deciding the kind of customer you pull into your coffee shop.

Always remember that humans are vain. People actually enjoy going to a location that is aesthetically nice, even if the coffee taste isn’t as high as they’d expect. Taste could easily become a secondary reason why they walk into your shop.

So, depending on the kind of atmosphere and ambience you want to create for your shop, you may end up spending a lot of money on your interior décor.

This money would go into your purchase of furniture, your design or selection of appropriate wall murals… and, really, the creation of the experience you hope to sell.

This was the case when we first set up 720 Sweets. We actually spent thousands of dollars to hire a designer to create wall murals for our coffee shop and ice cream shop. 

This allowed people to come into the store, take nice, Instagram-worthy pictures, and post them online. This tactic alone helped us become viral in our location in Vancouver, CA. 

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Now, besides the ambience you create in the core design of your coffee shop, you must also pay attention to the packaging of your coffee. 

You must recognize that there’s a ton of coffee shops out there, each with their own branding and style. So, how can you make your coffee cup stand out from the crowd?

For our ice cream shop referenced earlier, we took the time to create fantastic AutoCAD designs for our cups. Additionally, we crafted our ice cream cones to give a sense of smoke rising out of the cones, thus, helping us craft the perfect experience for our desired customers. 

Thanks to the effort we put into our packaging, we elevated the status of our product, and achieved a lot of success in our city. This is the beauty of proper packaging.

Everyone, for instance, knows what a cup of Starbucks coffee looks like, despite the many different brands out there. The brand is a bit of a status symbol and is easily distinguishable. 

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Look on Pinterest for inspiration

Your brand should be just the same – unique, distinguishable, classy.

Note that it is always important to identify your target market before you begin designing your coffee shop or coffee cup packaging. Your designs and styles must be put together with that target market in mind, lest you’d run the risk of losing the market.

So, before spending thousands on your design, first understand who it is you’re trying to serve. Who is in your target market? What do they desire? 

The answer to these questions will dictate your design patterns and packaging concepts.

6. Insurance and Licenses

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Every city has their own set of required permits, licenses, and insurance policies for food businesses. While these costs may be minimal when compared to other expenses, they certainly stack up quickly.

Be sure to know what’s required in your city and provide for them before you begin.

Always remember that random mishaps can happen. Someone could walk into your shop, slip, and sue you for damages. Someone could react to what they eat in your shop, end up in the hospital, and sue you for the health hazard.

Beyond getting sued, fire outbreaks, break-ins, and natural disasters, like earthquakes, could easily destroy your business investment. 

Proper insurance cover helps you stay in business regardless of what goes wrong. Do not take them for granted.

7. Staffing 

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Staffing costs rank amongst your top three expenses when opening your coffee shop. Labor is considered a prime cost in this business, and should be properly budgeted for.

Thankfully, the skill level required for working hands in a coffee shop is much less than that required for a diner. This allows you to spend less on labor than other food business types.

Likewise, cafés generally require less hands than diners. In fact, you could run your café with just one staff, cross-training them to both be a barista and to handle cash.

This kind of overlap of duties saves you extra labor costs. It also helps you properly account for both the peak hours and the downtimes, without overextending your cash.

As a rule of thumb, avoid spending more than 30–40% of your expenses on labor alone. 

For any of this to work, though, you must be intentional about your team selection. Hire the right people, offer them proper training, and set a good work culture. 

This will help you operate your coffee shop in the leanest possible manner.

8. Marketing Costs

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A surprisingly large number of persons in the food industry fail to budget for marketing. There seems to be an expectation that the crowd would follow as soon as you open your doors. Wrong!

Whether you’re hiring a marketing agency to handle your marketing, or you’re taking care of it in-house, be sure to budget for, and properly account for your marketing.

Of course, should you choose to go the agency route, ensure you ONLY engage agencies with outstanding track records in the field.

Agency marketing can be quite the expensive venture, though. 

If you feel like this, don’t worry. You can always keep your marketing costs lean by managing it in-house. If you’d love to improve your skills in this regard, we have a ton of helpful resources on YouTube to guide you. These include extensive playlists on:

Be sure to check out the above video playlists and take advantage of the extensive insider knowledge they provide.

Should you choose to use the in-house marketing option, there are a few marketing channels you MUST take advantage of. Amongst these are:

  • Review websites: These include sites like Yelp, Trip Advisor, BBB, etc. List your business on these sites, and ensure you respond to reviews left about your business in a timely and consistent manner.
  • Social media: Social media channels like Facebook, Instagram, and even TikTok are a great way to generate organic interest in your business. Create and share quality content, share “intimate” behind-the-scenes videos/pictures, and constantly engage with your followers. 

PS: You’d be best served focusing on more attractive options like Instagram and TikTok over the currently less-favored Facebook.

  • Google My Business: Technically, this is still a review website, but it’s one that offers you a lot more visibility. People are very likely to google your business before they try it out. So, be sure to register and regularly update your Google My Business listing. Your listing should hold your opening/closing times, pictures of your place, exact location, other ways to reach you, etc.
  • Business website: Your business website is another critical way to build your online visibility. Your website should clearly state what you do, and should include your contact info, address, menu, and pictures. Ensure all of the information on your website is carefully curated and inviting, and always keep it up-to-date. 

Your public image is an important part of any marketing efforts. Take advantage of the press whenever possible. Establish relationships with traditional media, and take advantage of them. If you have the media reaching out to you, ALWAYS respond to them. Being seen in a favorable light in the media can do your business a lot of good.

Whew… that’s certainly a lot of channels to keep track of, not so? 

If you’re unsure where to begin and how to proceed, hire an entry level digital marketing intern to handle your marketing for you.

Inform your intern about the channels you wish to pay attention to, and they’d know how to help improve your visibility using these channels. 

Digital marketing interns could cost you between $15–20 per hour, depending on where you live. 

While budgeting for your digital marketing hire, do not also fail to budget for direct investments into these channels (which could set you back between $1,000 and $1,200 monthly). 

Of course, you do not necessarily need to start with all the channels at once, and can choose to focus on a few at first in order not to spread yourself too thin.

Final Thoughts

So, there you go with the top costs to account for when budgeting for your new coffee shop. Understanding how much you’d need to spend before you start will help you be intentional about your plans.

Take your time to study your concept and where you’re going. Identify what you need to get you there. And, put together the costs of each of these to get a true estimate of your opening budget.

Of course, creating a successful café goes beyond just identifying the total costs in advance. 

You must also be able to properly identify and create your ideal customer avatar so that you can tell who exactly you’re looking to serve, and how best to connect with them with both your menu and your marketing campaigns.

You should also really get updated on digital marketing techniques and how you can use these to drive awareness and improve your customer base after launch.


Not sure how to start your Restaurant Or Food Business?

How Much It Costs To Start A Coffee Shop 8

A lot can go wrong before you even open the doors of your restaurant or food business. The wrong equipment, the wrong menu, the wrong hire, or the wrong location can mean $10,000s down the drain for you. I sadly had to learn this the HARD way…

And you don’t want to be the one to make these costly mistakes.

Which is why in my free masterclass, I share with you my mistakes and my 3 step formula in how to transform your idea into a popular and profitable restaurant business – even if you have don’t have any experience.


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