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Starting a Cafe or Opening a Coffee Shop

Thinking of starting a coffeeshop business or cafe? Be careful! Selling low value consumer products is one of the toughest business environments to enter. Here’s what you must remember before opening a coffee shop biz.

Reasons to not open your own cafe or coffee shop business

A coffee shop is HARD work.  Every day you need to be ordering new stock, managing staff, greeting customers.  Day and night all you’ll think about is your coffee shop.  Accounts, partners, legal paperwork will be on your mind constantly.  You won’t sleep from stress most nights until you’re making a solid profit from the coffee shop.  These Amazon coffee shop books might help.

Coffee shop competition is fierce.  A Starbucks can open across the street at any moment.  How would you compete?  Do you have a better store ambiance? Better tasting coffee? Delicious muffins your customers love?  Think of every advantage you have before starting and write it all down.

Low profits for coffee shops – No one becomes a millionaire with a coffee shop (except Jerry Baldwin, the original owner of Starbucks USA).  Truer words have never been spoken. The profits of a cafe are low.  High workload and low profits mean high stress.  Is it worth it to own your dream cafe?

Coffee shops are high risk businesses.  A coffee shop costs the same as a regular retail outlet, yet comes with a much higher risk profile, and stock that decays within 2 weeks max.  Are you willing to accept that 9/10 coffee shops go bust within the first year?  Never personally guarantee any debt on a coffee shop business because of this statistic.

That’s the negatives of opening a cafe.  How about some positives?  Well there are some positves to having a cafe that are unique, others which are relevant to all business owners.

Reasons to own a Cafe

You are in control.  You get to make the coffee YOUR way and no one can tell you not to.  You can’t be fired from your own shop.  No one tells you what to do.   You take a break whenever you want. You’re the boss.

If you make the coffee shop profitable it is a good self sustaining, long term business.  Although difficult to turn a profit, if you can make it, a cafe is a great long term business (even with the low profits and hard work mentioned earlier).

Coffee shops have high margins and loyal customers.  If you are great at customer service and choose a great location you can bemaking serious money from the very first day of opening the cafe.  Coffee has a 70% mark up MINUMUM.  The markup on coffee is even higher if you aim for the luxery market or choose a premium location with higher rental.

The final reason to open your own cafe business is to make people happy.  To provide others will something valuable to their day and to their lives.  Even if it is just that morning mocha pick-me-up and a lick of your hot sweet muffins.

Should I open a coffee shop?

Personally, I would not open a coffee shop as a business due to the risk profile, stress, and hard work, but then you are you.  If you have that dream location, if you have the money to take a roll, and you lack alternative options, then go right ahead!  Great luck on your coffee shop business!