Starting a Coffee Shop

[MikeBryan]

Hello - I am brand new to the forum and had a question to ask. I'm sure this is not an uncommon question, so I apologize for the redundancy.

I am working toward opening a coffee shop/lounge. While trying to budget starting costs, I'm finding a HUGE variation in machines, rent, fixtures, etc. We are in the Nashville area and there are already 6-7 really good and apparently successful coffee shops in the city. I have a small-scale coffee shop in my home for family and guests with a commercial FETCO brewer, and plan to make sure the equipment in our retail location is the best quality as well. We are VERY particular about pure water, organic & fair trade coffees and teas, equipment quality and longevity, etc.

With all that being said, we are on a very tight budget to get this coffee adventure started and open for business. We (my wife and I, and our 4 grown children) are coffee purists. We also love teas and the many benefits of herbs and natural benefits of various mixtures. Coffee is more our passion, however. The real QUESTION is, how much money do we have to have in the bank to get started on a very limited scale, that we can grow over time as profits increase? I work in the medical field and plan to continue that income while this coffee dream takes hold and begins to grow.

What is a reasonable price range for the following items?
Equipment brands and costs
Retail location rent cost
Coffee costs
Fixtures (tables, chairs, front counter, etc.)

How do you know if an area is already saturated enough with coffee shops?
How do you know if it's working or that it's time to throw in the towel? (Other than running out of money, of course)
Are there any words of wisdom anyone can offer that I haven't mentioned?

Thank you for your replies and help. I will keep you all updated as we make our final decisions about moving forward with this new chapter.

Mike
LongLiveTheBean

 

[John P]

Mike,

As someone who would rather see someone succeed rather than fail, I cannot say strongly enough that until you have enough money to start this venture, don't. Simply don't.

You cannot start a business if you are worried about nickel and dime-ing everything. You certainly should not skimp on equipment, and if you are concerned about spending (for example) $12-$15K on an espresso machine vs $6-$8k, you really shouldn't be opening a shop at all. If $10-$15K here or there would keep you from opening, then you are not ready. It sounds like you want to do things right, so take your time, make sure you have plenty of liquid cash, DO YOUR OWN RESEARCH, and prepare properly over the next year or two.

The only time you would ever need to throw in the towel would be when you haven't taken the proper time to learn, understand, plan, and execute properly. I had no doubts, no fears, and I knew that we would be successful. And we have been. But you have to be committed. Have a well thought out and researched plan, execute that plan, and continue to improve both your coffee skills and business acumen week after week, month after month, and year after year, or there's no point starting at all.

Those who fail failed before they started. Succeed before you start, it makes it much easier.

 

[cotatiadam]

I'm thinking out opening of opening a small roaster shop and I just attended some low cost classes through the local small business development center. They were pretty good, helped getting a business plan started and got me thinking about all kinds of stuff that wasn't on my radar.
I would highly recommend it.

This forum is great and you will get some good advice too.

Adam

 

[SFcoffeefan]

Hey Mike,

I have no experience opening a coffee shop, but I have seen a lot of success and failures here growing up in San Francisco. There seem to be 3 different combinations that work.

1) Large shop, lots of initial funding, high grade everything, lots of space for people, wireless internet, etc.
2) Medium size shop in good neighborhood with lots of foot traffic, decent food and coffee for cheap. Adding in board games and catering to allow hanging out is always good.
3) Small shop, limited options for drinks / food, but do them well! This one is getting more and more popular.

It sounds like 3 may be your best option to start. You could open a shop that does just "cup at a time" pour over coffee which is big here in the city, but still relatively new in some places. A lot of people use the Melitta cone but I personally like the Quick Drip (small manufacturer whose owner runs a little shop I go to) as it takes a lot less time and I can take it anywhere without he fear of breaking (stainless steal). Provide a limited number of pastries (that are good) and tasty coffee at a decent price, with low overhead and you can start something without the cost of espresso machines.

Just my 2 cents.

 

[CoffeeJunky]

Mike,

I am sure you will be purchasing coffee from the good local roasters.
Find the one who has good reputation and consult with them.
I have my very bias opinion about the coffee house and how they should be set up with equipment but the local roaster have dealt with all of them from small to large so they will have better idea.

As far as equipment goes, you should decide either purchase or lease ... If the purchase is the option, you could look into used stuff.
You will need large fridge, freezer, under counter fridge, under counter dish washer, cold espresso base drink maker, and tons of other equipment that you can purchase used.

As far as saturation of business, check out what your town is offering and offer what they don't have.
Most of the town do not have high end coffee shops, single origin coffee, or even a good fresh roasted coffee.... Find out that is not offered there...

Good Luck

 

[smalltowngirl13]

Good luck with your venture and welcome to the forum!

 

[John P]

Mike,

Re: What CoffeeJunky wrote.

Be aware that not all local roasters are good. Most local roasters happen to be poor to adequate. Sometimes your best move is to seek out a great roaster that's not local. If you are using the same beans as any of the other shops in your area, then, immediately, you have lost a chance to differentiate.

When we started we made a conscious decision to not use anyone local. First and foremost, there wasn't anyone exceptional. And secondly for the reason mentioned above. After a year and a half, we started sourcing and roasting our own seasonal regional, and single-farm coffees.

Start with superior ingredients.

 

[CoffeeJunky]

John,

I was not talking about just any local roaster....
"Find the one who has good reputation and consult with them."

The local roaster = Any roasters who are not out of town and take 2 weeks to send you the finished product. Also roaster who is ready available to help you.

I think reputation is very important as far as the roaster goes.
If there isn't anyone local, I can recommend you one.

Good luck

 

[CoffeeJunky]

Another thing about coffee business, I don't think you need to be exceptionally better then anyone who is in your area. You just need to be better or sometimes if you are equally good, you have product to sell.

Some might disagree with me but if you have convenient location, decent product and great marketing, you will have good turn out most of the times....

 

[John P]

CoffeeJunky,

Getting people through the door is the easy part.
Creating a place worth going out of your way for is something else.

 

[CoffeeJunky]

CoffeeJunky,

Getting people through the door is the easy part.
Creating a place worth going out of your way for is something else.

I totally agree with you John.... No questions about it. You need to offer something special for people to come to you.....

 

[MikeBryan]

Wow! Thank you all so much for these replies and advice.


I guess I should further clarify a few points for consideration.


John P - I appreciate your wisdom and caution, and I wholeheartedly agree with you. I have looked into costs of most of the equipment, and realize this may take a few months or more to fully prepare. I will definitely do my due diligence, and heed your advice about having cash in the bank before proceeding. I have started and owned several businesses, had many employees over the years, and made many mistakes financially! Your counsel is certainly welcomed.


My determination to succeed is based on patience to make sure everything is perfect and well-planned and thought through. I have made arrangements with our finest local roaster to get proper training over the next few months. I met with the head of that effort earlier today, and he gave me good advice about buying new equipment that comes with a warranty, and not skimping on brand. He was clear that the La Marzocco was by far the best espresso machine to buy ($15K), and he told me which espresso grinders to buy as well. I have a commercial FETCO brewer in my home, so I know that's the very best brewer. I will definitely purchase only the best.


One idea I've considered is to go to work part-time at one of our local coffee shops to learn - but I would never want to mislead anyone into thinking I was there to work long-term. I have also considered hiring a knowledgeable manager up front and learning from them. But then, how would I know they were doing everything correctly? I am very concerned that the coffee is the very best it can be. Then again, I'll have to watch all costs and make sure no cash is being wasted.


Thank you, again, John P.


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Cotatiadam,


Thank you for your advice - I will look into that availability of classes in my area!


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SFCoffeefan,


Thank you for your insights. I definitely lean toward wanting a large, full-scale cafe - but with limited yet exceptional foods at first, good coffee, and a very inviting & warm atmosphere. A place where people think about being when they're not there, and never want to leave once they're there.


Reality may dictate starting out smaller, however, and that'll be fine as well.


Thank you for your "2 cents" - it's a LOT more valuable than that to me!


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Coffeejunky,


Thank you for your perspective. I agree that there has to be uniqueness to capture new attention and eventual loyalty. We have been researching coffee shops in our area for 3-4 years now, have made friends with our local roasters and have even traveled outside of our area to expand our ideas of what works in a cafe.


i think I have decided to buy the best equipment for grinding and making coffee, and searching for used equipment for refrigeration and cooling. Tables, chairs and other fixtures can be purchased on the cheap in our area, and still obtain high quality furnishings. Does this sound correct to you?

 

[MikeBryan]

Smalltowngirl13,

Thank you for your well-wishes - I pray our cafe will be worthy of all the great advice we've already received on this forum. I'm sure glad you guys are here!

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John P,

We have 3 really good roasters in our area - one is our favorite, and is the roaster we get all our personal coffe from. We have a small cafe in our home, and get this particular coffee shipped to us each month in one-pound bags, whole bean. We have them ship our coffee to our home each month, rely on them to choose seasonal coffees for us based on the peak flavors from different parts of the world monthly, and have unlimited access to them for training and education. It seems to be a reliable relationship with high-quality coffees - organic & fair-trade. I would certainly be open to ideas for the best roasters you know about. My long-term goal would be to roast my own coffee - but I know roasters are pricey, and I'm not even sure how necessary it would be!

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Coffeejunky,

I agree that at least in our area, the right location will go a long way toward making our cafe successful. There are parts of Nashville that live and die based on foot traffic alone. So the right feel with great coffee and food, especially at the correct location, seems to be a winning combination in and of itself. But if the cafe is memorable for serving high-quality coffee, and has an inviting atmosphere and spirit, I would hope the success would be definite.

As John P says, getting people in the door is one thing, creating a place worth going out of your way for is something else entirely - well-said, John!

 

[CoffeeJunky]

Mike,

It seems like you have done your home work and know what you want. To me that is half of the battle.

Good luck with your venture and hope you can fulfill your dream of owning your own coffee shop to be reality and successful.

CJ

 

[John P]

Mike,

it sounds like you have a good perspective on what it will take to get started.

Best of luck!