How Much Do Coffee Shop Owners Make?

When the television show Friends hit the airwaves in the 1990s, many Americans did not have a local coffee shop like Central Perk. A few decades later, you’d be hard-pressed to find a city or small town without at least a few coffee shops. These cafes have become gathering spots for communities across the United States – and represent a great business opportunity.Coffee has grown increasingly popular in recent years, particularly when it comes to specialty drinks. With such high demand for drinks that can cost over $5, coffee shop owners can readily make $5,000 to $13,000 a month – or more. Increasing your marketing efforts can help drive profits even higher.

One easy way to advertise your coffee shop is through the use of custom branded coffee cups and custom coffee sleeves. Budget Branders offers high quality disposable products that can be printed with your shop’s name and logo. Since you’re probably already purchasing these items for your coffee shop, it makes sense to brand them – and send your customers out into the world with an advertisement for your business. Reach out today for a quote on our products.

How the Popularity of Coffee Has Grown in the U.S.

In the not-too-distant past, coffee was a humble beverage that most Americans made – and enjoyed – at home. Today, it isn’t unusual for many Americans to drop $8 on a cup of specialty coffee from a coffee shop.Believe it or not, Americans actually consume less coffee per capita than they did in the 1940s. However, a greater percentage of Americans overall drink at least one cup of coffee every day. According to one study, 64% of Americans drink coffee daily. In 2015 alone, Americans spent more than $72 billion on coffee.

While more Americans drink coffee daily, it has become far more common to purchase coffee at a chain like Starbucks – often credited for starting the fancy coffee trend in the U.S. – or at an independently-owned coffee shop. 32% of Americans purchase coffee at a coffee shop at least 1 to 3 days per week. They are drawn to these shops for high quality java, tasty specialty drinks (pumpkin spice latte, anyone?), and welcoming atmospheres.

This last point is key. In our modern society, coffee shops aren’t just a place to grab a cup of joe. They are often community hubs: a place to meet friends, chat with coworkers, or relax and work. It is little wonder, then, that the coffee shop business is booming.

How Much Profit Do Coffee Shops Make?

It isn’t cheap to open a coffee shop. You may spend anywhere from $80,000 to $300,000 (or more!) to start your own coffee shop. That being said, coffee shops have enormous potential. Depending on your location and other factors, you could earn anywhere from $60,000 to $160,000 annually if you own a coffee shop.Like other types of beverages, coffee typically has a higher profit margin than prepared foods. A standard cup of coffee might have a 75 to 80% gross profit margin. However, a regular cup of coffee – as opposed to a latte, mocha, or other fancy coffee drink – is usually fairly inexpensive. While you may not have to put much into a cup of coffee in terms of ingredients, you have to sell a lot of regular cups of coffee to turn a profit. This is where specialty drinks, foods, and other menu items come into play.

To increase your profits, you should consider adding other items to your menu, such as:

Baked goods, which may account for as much as 40% of your sales. While most people don’t come into coffee shops specifically for a pastry, if you have them arranged invitingly in a display, many people will add a baked good to their order.
Seasonal drinks, which don’t necessarily cost much to make, but can bring customers into the shop. These are typically priced much higher than a regular cup of joe.
Intricate and speciality drinks are almost required if you want to capture the millennial and Gen Z crowd. These drinks may include espressos, lattes, cappuccinos, and frappuccinos. They are fairly quick to make, and typically don’t cost much in terms of ingredients.

Of course, you have to consider your expenses when figuring out profitability. Making a cup of coffee requires more than beans, water, and heat. You will also need to budget for employee wages, rent or mortgage payments, utilities, marketing, insurance, and other operating costs. In addition, you will need to pay for ingredients for your food and drink as well as disposable coffee cups, sleeves, and other items.

The average revenue of coffee shops is between 75 and 85% of sales. Using data from your point of sale (PoS) system, you can calculate your profit margin, forecast monthly profit and more.

Your salary will come from the coffee shop’s profits. Typically, the owner’s salary is less than 50% of overall profits. After all, all expenses must be paid and the business must be invested in before you can draw a paycheck. On average, owners of small to medium sized independent coffee shops may make $60,000 to $160,000 annually.

Of course, this number could be significantly different based on factors such as your location, how busy your coffee shop is, and what kind of “extras” you offer. For example, if you are based in a prime location – such as near office buildings downtown or on a college campus – you might do a far brisker business than a coffee shop in a suburban strip mall. You may be able to boost your profits by doing things such as:

Keeping up on trends. For example, in 2020, dalgona – or whipped coffee – became incredibly popular on Tiktok. Being aware of what is hot in the world of coffee can help you keep a steady stream of customers coming through your door.
Making your shop warm and inviting. Coffee shops can be so much more than a place that sells drinks. By offering cozy seating, unique artwork, space to gather, and things to do (like board games), you can attract more customers. Taking these steps can also help to create an emotional connection between your cafe and your patrons, who will see your space as something more than just a business.
Use high quality products. When people pay $8 to $10 for a cup of coffee, they expect it to be good. Buying the best coffee beans, offering a variety of sweetener and dairy options, and stocking great flavored syrups can help you increase your profits.
Be consistent. People want to know that when they patronize your coffee shop, they will get what they are expecting. Train your staff well so that your coffee drinks are made well and consistently each and every time.
Market your coffee shop. You can have the best coffee shop in town, but if people don’t know about your store, they won’t visit it. Explore both traditional and digital forms of advertising to boost your reach.

One easy way to make sure that people in your community know about your coffee shop? Using custom printed disposables. When your customers take your coffee to go, they will effectively be a walking advertisement for your business. Custom disposable cups, coffee sleeves, and paper bags for pastries and sandwiches is a cost-effective way to expand your advertising efforts.

Grow Your Coffee Shop with Budget Branders

It is very possible to make a great living owning and operating a coffee shop. With the right location and high quality menu items, you can make anywhere from $60,000 to $160,000 per year in salary. Budget Branders understands how hard it can be to run a successful small business – particularly over the past few years of COVID-related shut downs and rising costs. Our goal is to make it as easy as possible for independently-owned businesses to obtain high quality, custom-branded disposable products. Our cups, coffee sleeves, paper bags and related products are a simple way that you can market your business for little added cost.

To learn more or request a quote, reach out today by filling out our online contact form or hitting the live chat button on the bottom right of your screen.

The information disclosed above does not constitute legal or financial advice. Use this information at your own discretion.

David Kranker

David Kranker has been working in and writing topics related to the food and beverage service industry since 2010. David continually monitors restaurant, bar, and coffee shop trends to keep a finger on the pulse of the food and beverage service industry. David has been writing for Budget Branders since 2020, where he's covered emerging trends like ghost kitchens, robot waiters, and the angel shot. David shares all of his insights on the Budget Branders blog to inform and entertain restaurant, bar, and coffee shop owners.

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