Ever wish you could go back in time to give the younger version of yourself a key piece of information? While none of us has the option of going back in time, we do have the power to learn from other people’s experiences.
With that in mind, we surveyed 39 coffee shop owners and industry experts to understand the specific tasks they wish they understood before starting a business. The entrepreneurs featured in this roundup have real-world experience starting and operating successful independent coffees houses. Many now operate multi-location businesses and have a deep understanding of what it takes to be successful from scratch.
If you’re thinking about starting a coffee house, we urge you to reflect on these responses while you’re still in the research phase. Doing so will could help you avoid common mistakes and and increase the odds of success.
Key themes discovered in the 39 responses:
- Take time to understand the local demographics, population and competition in your area. The more independent coffee shops that open in your area will mean everyone gets a smaller piece of the overall pie.
- You’ll need more sales and volume than you expected. Focus on not only on increasing coffee sales, but also average ticket size too. Find natural pairings with like muffins, breakfast sandwiches, and other easy to make food items.
- Don’t get caught up in the romance of operating a coffee shop. Recognize that you are starting a business that will need to be profitable if you want to operate longterm.
- The hours you invest into starting a coffee shop will be longer than you expect… Especially in the beginning. Don’t open a coffee shop if your goal is to operate a low-stress lifestyle business.
- Believe in yourself and core vision. Other people without skin in the game will attempt to influence the direction of the business.
What I Wish I Knew…
Read on below to get perspective on things you should be aware of before embarking on this business venture.
That the coffee business isn’t an easy one just because it’s a popular one! Coffee requires a passion for really chasing an unattainable goal of quality – constantly moving. It’s a seasonal product with many short shelf lives (green and roasted etc), with narrow margins, and low price points. There is no middle ground; the highs are high and the lows are low in this business. If you’re going to do well, either shoot for extreme quality or compete with Dunkin’ Donuts. – Phil Goodlaxson of Corvus Coffee Roasters.
Related Reading: Survey Results: Why Do Coffee Shops Fail?
Nothing. If we knew all of the ins-and-outs and exactly what it would take, we probably would not have ever started. Naivety is a beautiful thing when you are just getting started on you business. – Lindsay & Alex Dalton of Weathervane Cafe.
It’s not really the one thing I wish I knew, but something that I have learned over time. YOU NEED A LOT MORE VOLUME THAN YOU THINK. I have seen so many coffee shops start because they find a “good spot” because they think they have a captive audience and/or people will come to them because of their differentiating factor (quality, service or a certain product). They also think that everyone in that population thinks about coffee like them and are willing to go to the ends of the earth to find them, but this is far from the truth. Coffee is 90% a convenience item. Most people will not drive across town and pass multiple coffee shops to go to their favorite that day, yes, some days they will.
If you have a captive audience that you can make 10% per customer, they will not all come in everyday. The average loyal customer is twice a week. So if you have a local spot with 4000 people who are your captive audience, you get about 400, now divide your 400 by 7 and multiply by two for twice a week and you have 114 transactions a day. With and average coffee transaction around $5.50 (depending on where you live), you get $627 a day from your “captive audience”. So where are the rest going to come from? And note: 10% is a high capture rate. I am thinking of a location in a hospital, business center or local neighborhood. Another thing is that you need to do is take your population then divide it by the number of coffee shops in the area.
Most peoples reason for starting a coffee shop is because they love coffee and cafes and want to make it their life. They choose a really cool place they would like to live and start coffee a coffee shop. You must take into account the size of the pie (population) and how much it is divided up (coffee shops). You will not get the whole pie, but another small piece, which will make all the pieces inevitably smaller. My question to most people who start up is this: Why not buy out a current coffee shop and make it your own with your own spin? This keeps the size of pieces that same and decreases all your development expenses, allowing you a budget to improve your space. Note, I would only buy a profitable coffee shop or one that has the gross revenues to work with. Even if it is a little more money, it should be worth it because it is a proven population.
Advice: Find a place with a big (30,000) local population or traffic count within 1 mile radius from your shop with no competition and open your shop. If people see that you’re successful, they will follow and build, but know that you have captured the hearts of the people first and people are loyal as long as you don’t give them a reason to leave you. Always be worth more than people are paying you! – Bobby Grover, Owner, Thump Coffee in Bend Oregon.
Before I opened a coffee shop, I did a lot of research and reading. I wish I would have known to trust myself and my decisions better. I had a clear vision and listening to everyone else’s thoughts and opinions stated to veer me away from what I truly wanted. As women, we tend to not listen to our intuition as much as we should. – Hannah Ulbrich, proprietress Copper Door Coffee Roasters.
How difficult it is to build and run a profitable foodservice operation. They get caught up in the romance of owning a cafe, with little understanding of what it will take to be successful – statistics indicate that over 95% of retail foodservice operations go out of business before 2 years. – Edward Arvidson, founder of E&C Consulting and the Cascade Coffee School.
Owning a coffee shop is a romantic idea. I envisioned that I would be visiting with the regulars and drinking coffee all day long. Some of that is true… I do love to chat and drink coffee. However, there is always a long list of things to do-I wish I would have known how expensive equipment repair/replacement would be, the constant need for new things, and the importance of having a team of professionals on your side-like repair people-that you know and trust. I mistakenly thought I could rely on friends and my significant other for day to day repairs and fixes. I wish I would have set up a list of trusted electricians, HVAC, plumbing, and restaurant equipment folks long before I had issues. – Michelle Ackerman, Owner of Black Eye Coffee LoHi
Do your research, know what will set you apart and talk to other business owners who have gone before you. The coffee industry is very friendly and helpful. People are always willing to help and tell you the growing pains they had so they can save you some of the pain. – Erica Lowery, Show Director at