New Kid on the Block Needing Advice - Opening a Coffee Shop

[JennC]

Hi all,

I just came upon the coffee forum. What a great site! My name is Jenn and I live in Washington state. For a couple years now I have wanted to start a coffee shop. Worked in management at a movie theatre for 7 years. Loved it! Had a cafe within the theatre where I got some exposure to making drinks. Finished school, married, and no kids yet...thinking it just might be my time now. I am so ready
to take this passion to the next level. I am leaning most towards a franchise. I have the location I want. I am currently working on the funding - first though I need to get my business plan finished up to present. I am having the hardest time with the financials. Common issue probably. Every location is different, so where do you start? Anyone willing to help me out with some questions -

*Any personal experiences with a coffee franchise? Thoughts?

*Start Up Costs -
- Average licensing and permit costs?
- Average marketing expense? I know marketing is vital, but don't know that I need to throw a bunch of money to this for coupons and ads. I feel like those would be a waste. Am I wrong?
- Average cost of insurance (general liability, workers comp and property casualty)?
- Average cost of rent? I know this varies on so many things. I am just curious for those that have a coffee shop - what is your rent?
- Average cost of start up inventory? Again I know this varies on a lot of things. Personal experience though?
- Average cost of equipment?

Average cost in general to start up a coffee shop [franchise]? I was told $350,000 for brand new and allows for 6 months of being open. Think that is too little or too much?

Is having a financial plan absolutely necessary if NOT asking a bank for funding? I am actually going to ask a friend to be a silent partner. Anyone have experience with that avenue?

Just looking for some advice/feedback. If email is an easier way of communicating, let me know. I am all about paying it forward, so once I get the experience under my belt, I would LOVE to help another newbie work their way into the field.

Thank you in advance!!

- Jenn

 

[malkaNjeff]

Hi Jenn:

Good luck in making progress. When you are shopping suppliers, please consider the Organic Fair Trade Coffee Company. Thanks.

 

[coffee4you]

I have to tell you, I have considered opening up a little coffee stand/shop for years. I have weighed and re-weighed the financial ups and downs. Finally I found the answer. And NO, I'm not trying to sell an infomercial, but what I am about to tell you is REAL! I vowed I would NEVER join another multi-level or direct sales company again. Then I found Javita; or maybe Javita found me. I'm not sure. I have KNOWN for a LONG time that coffee is a HUGE business. But for the initial investment (which is FAR lower than opening up a coffee stand) the financial rewards far out way that of my own coffee shop/stand. Javita is a new company, having launched in June of this year. I am getting in on the ground floor. Now is the time to get in on this amazing opportunity. I will be earning over 500k next year. Javita has the best compensation/bonus plan I have ever seen. So if you are interested, or know someone who is interested, let me know and I will get you the website (I'm new so I can't post the link). I look forward to hearing back from you.

 

[Tophie2]

Have lots of money.

 

[Mr Shave]

Hi Jenn,

Welcome to coffeeforums.

First and foremost, if you are at all serious about a coffee venture you need to be at Coffeefest next weekend. Check out all these seminars WOW!
Drop what you are doing and go to this seminar.

*Any personal experiences with a coffee franchise? Thoughts?

No experience with a franchise. My thoughts are, I left the corporate world to have full range of creativity. Also, I don't want to or need to pay a royalty to someone else every month.

*Start Up Costs -
- Average licensing and permit costs?

For Washington $15 for registration and $5 for dba name = $20 (this literally took less then 30 seconds to find...)
Health department info - find your county and then find the application. I think I paid around $350

- Average marketing expense? I know marketing is vital, but don't know that I need to throw a bunch of money to this for coupons and ads. I feel like those would be a waste. Am I wrong?

Just used facebook, twitter, and yelp so far. Spend $0. Has resulted in 1 booking

- Average cost of insurance (general liability, workers comp and property casualty)?

Varies based on a lot of factors. I think I pay around $2,400 for truck and general liability

- Average cost of rent? I know this varies on so many things. I am just curious for those that have a coffee shop - what is your rent?

Usually .75 / hour :star: but that is just me
Seriously check out loopnet or craigslist and look at comps. Also, depending what stages you are at you can talk to a commercial real estate agent.

- Average cost of start up inventory? Again I know this varies on a lot of things. Personal experience though?

A little over $30k for major equipment

- Average cost of equipment?

???

Average cost in general to start up a coffee shop [franchise]? I was told $350,000 for brand new and allows for 6 months of being open. Think that is too little or too much?

This question has been asked numerous times. I have seen some shops/trucks using a $300 machine and there are shops using a $20k machine. Depends on the concept and what you are going for. I haven't been open for 6 months, I do wish I had more money set aside though

Is having a financial plan absolutely necessary if NOT asking a bank for funding? I am actually going to ask a friend to be a silent partner. Anyone have experience with that avenue?

YES! a 1000 times yes. When building a business plan it will require you to seek relevant answers to all of your stated questions. Not having a payback plan, clear equity stakes, or expected sales strategy is a great way to lose a friend. It doesn't mean you can't succeed without a plan, but your chances are greatly improved with one.

Alright that is another patient (yes I'm on vaca) response

 

[usstommy]

Jenn, Knowing what you're getting into is essential BEFORE you get into it. I've started and run a coffee house for 16 years and have worked in the corporate restaurant world and having a detailed plan (budget) and the means to measure (P&L) your performance against it is essential. Without them you'll be guessing on how much you'll need to open and run the business and guessing on whether or not your profitable. Entrepreneurs like you and I have a passion for our business and don't want to be bothered learning the financials. That is a serious and costly mistake. You would be well served to learn the technical aspects of a budget. Once you've learned it, filling it out gives you the opportunity to play "what if" by massaging the details (price of a cup, a pound, food, accessories, salary of employees...) and see it's effects on the bottom line. It is a real eye opener.

I'm in the process of doing just that and I'm stunned and pleased at the possibilities. You'll need good knowledge of prices, product costs, labor costs, staffing, operating costs, facilities costs, the law (yes this will impact your bottom line), health & safety codes, building codes, etc. Yes it's going to take time but the end result will be an informed decision, that could make or save you.

Tom

 

[usstommy]

A good source of info are the business plans offered thru the Entrepreneur magazine. In the back of the mag there's a section that offers biz plans for most kinds of businesses, coffee & tea business being one of them. Not very expensive (~$75) and well worth it. Also the SCAA web site and numerous other web sites will give you most of the info you're seeking. Just Google the question you want answered.