Coffee shops are incredibly popular, both in the United States and around the world. 66% of Americans drink coffee daily. Most significantly for entrepreneurs, the number of people who drink coffee away from home rose by 8% since January 2021.
If you’re considering opening a coffee shop, these numbers are good news – as is the rising number of people who work remotely and are interested in a place to work away from home. Of course, there is a lot to analyze when deciding whether it is a good idea to open a coffee shop, such as how much it will cost you. While the total cost will vary significantly based on location and store type, you can expect to spend anywhere from $60,000 to $300,000 to open a coffee shop.
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Average Cost to Open a Coffee Shop
It can be difficult to predict exactly how much it will cost to open a coffee shop. Many of your start-up costs will depend on where you want to have a shop and the features that it will have. For example, a tiny drive-through coffee hut (or coffee stand) without parking or seating will typically cost far less to open than a full-service coffee shop.
Generally, if you plan to open a coffee shop that has seating, you should budget $80,000 to $300,000. This is a wide spectrum that captures differences in real estate costs, the need to build a kitchen, and other factors. By comparison, opening a coffee stand or kiosk may cost as little as $60,000.
One way to get a good idea of how much it will cost to open a coffee shop in your area is by examining real estate costs. The price for square foot for commercial will give you a notion of how much you will need to raise in capital funding. The bigger the shop you plan to have – and the more amenities you want to include – the more it will likely cost. When making your business plan, these numbers should be included so that your investors can get a sense of what they may need to put in to make this dream a reality.
New construction for a commercial restaurant or coffee shop may cost as much as $300 to $400 per square foot in certain areas of the country. If you are looking to open a coffee shop in a higher cost of living area, such as New York, San Francisco, Los Angeles, or Washington, DC, that number may be significantly higher.
For most entrepreneurs, it makes more sense to purchase or lease an existing commercial space. Depending on location, you may pay $160 to $180 per square foot for a commercial space. A local realtor can advise you of current pricing on commercial spaces when you are getting ready to seek funding.
Of course, a physical space is not the only cost associated with opening a coffee shop. Below, we detail some of the expenses that you should account for in your business plan. Like restaurants, coffee shops run on tight margins. It is important to truly understand exactly what you will need to spend before moving forward with a plan to open a coffee shop.
Typical Coffee Shop Expenses
While each establishment is different, there are some costs that most coffee shop owners will have to take into consideration. Having a sense of what expenses you will have is critical when applying for loans or seeking capital. You can use data from your area to get a more precise estimate of your potential costs.
Ongoing Expenses
There are certain costs that you will pay regularly over time – such as your electric bill. While you may not need to have the full amount available up front, there are often specific costs that should be accounted for in your business plan.
The first big ongoing expense will be your rent or mortgage payment. Purchasing or building a space will cost more upfront than leasing – but you may still need to pony up first and last month’s rent for a commercial lease.
The best locations for coffee shops are places that are heavily trafficked, whether by foot or by car. These locations – such as downtown near office buildings or near a busy shopping center – also tend to cost more. You will also probably pay more for larger spaces that give patrons the space to work, have meetings, or simply relax and enjoy their cup of joe.
The next big ongoing expense for most coffee shops is utilities. If you are building a new coffee shop, you may need to run utilities during construction. Otherwise, you will need to have water, gas, electricity, and sewage service when you are prepping your coffee shop for opening. You may spend anywhere from $1,000 to $1,200 a month on utilities.
Utilities also include something that has become a necessity at coffee shops: internet service. In addition to using the internet for your own PoS and other devices, your customers will expect free high speed wifi to use while they work. If your space isn’t currently set up for internet service, it may cost you a few hundred dollars to get lines run.
A third big ongoing expense is marketing, branding, and merchandising. The amount of money that you will spend on these items will depend in part on how you are starting your shop. If you are taking over an existing shop, then many of these items will be included as part of the sale price. However, if you are opening up a completely new space, then you will likely have to budget for expenses such as:
- Setting up a website
- Branding (logo and/or slogan)
- Branded merchandise
- Social media marketing
- Digital and traditional advertising
- Email marketing
Perhaps the biggest ongoing expense that any food service operation will have is labor. Even a small coffee shop will likely need an employee or two. In addition to the cost of hiring and training staff, you will need to pay their wages, benefits, taxes, and other costs.
Finally, you will need to factor in the cost of the supplies that you need to do business on a daily basis: coffee beans, cups and coffee sleeves, sweeteners, syrups, milk and non-dairy options, and stirrers. You will have to make a large initial outlay to have a stockpile of these supplies – but then it will be a regular expense that can be accounted for based on our sales.
One-Time Expenses
In addition to ongoing expenses, you will have a number of expenditures that will only need to be made once – or once every 5+ years. Many of these costs will have to be paid before you even open your doors.
First, you will need to account for interior design. Coffee shops are more than a place to grab a cup of coffee. For many people, they are a home away from home – or an office away from the office. To that end, you will need comfortable chairs and couches, plus tables and sturdier chairs.
Beyond furniture, you will also need decorations, lighting, signs, and a music system. This décor can often be an eclectic mix, using repurposed coffee bean bags or thrift store finds. You’ll also want to think about displays, which may include refrigerated cases, shelves, and more.
If you plan to have outdoor space for patrons, you will need to pay for seating, tables, umbrellas, lighting, and some landscaping. Depending on the weather where you are located, you may also want patio heaters and other features.
Second, any coffee shop will need some equipment. Given customers’ demand for fancy coffee drinks, equipment will probably include items such as:
- An industrial coffee grinder
- A high quality espresso machine
- Automatic drip coffee makers
- Industrial blenders
- Refrigerators and freezers
- Ovens and toasters, if you are offering pastries, sandwiches, or other food
You may also want other supplies, such as shelving in the back for ingredients, containers, pumps and storage, and a PoS system and other technology. You will probably also need to purchase a security system, at least one phone, and other basic equipment.
Third, you will have some expenses related to getting your coffee shop opened. This will typically include training staff, adding features like a chalk wall, and buying mugs, silverware, and dishes if customers can enjoy your drinks in the shop.
Fourth, you will likely need to pay for the assistance of professionals. This may include a lawyer to help you close the deal and ensure that you have the proper permits and licenses, an accountant to help with financials, and a public relations specialist. Some of these expenses may be ongoing, but there is often a larger initial outlay.
Finally, you will need a bit of a slush fund to cover random expenses that may arise for emergencies or unexpected expenses. While the exact amount will vary, you should generally have enough cash in an account to pay for an emergency and account for lost sales if you have to close temporarily.
Open a Successful Coffee Shop with Help from Budget Branders
There is a lot that goes into opening a profitable coffee shop. In addition to the start-up costs, you will also need to think hard about how you will market your business. If people don’t know that your shop exists, you won’t have customers – and your business may not succeed.
Budget Branders works with small and medium-sized restaurants, coffee shops, and bars to help them expand their marketing efforts through the use of custom-branded disposable products. We know that many independent coffee shops can’t afford to buy millions of coffee cups and sleeves at once. That is why we offer high quality products in quantities and at prices that work for your business.
Using branded disposables may seem like a small thing, but it can help to set your coffee shop apart from the crowd. It is also an incredibly cost-effective way to advertise, as your customers will take your product out into the world and do your marketing for you. It is an easy way to increase brand awareness – which is why all of the big players in the coffee world (like Starbucks, Peet’s, Tim Hortons and Dunkin’ Donuts) all use them.
Want to learn more? Press the live chat button or fill out our online contact form to request a quote for custom branded disposable products. You can also hit the chat button to speak to someone about a quote for your coffee shop.
