Is it your dream to start your own cafe/coffee shop? If so, you’re in the right place. We’ll discuss the procedure, from start to finish, of planning and launching a coffee cafe.
Step 1: Identify your “Why”
Your “Why” is your statement of purpose and existence. It describes why you want to open your cafe and why you’ll suffer through all the hardships to see your mission or dream come to life.
The “Why” is your motivating factor, your mission, and your guiding light. Without realizing your “Why”, it’s quite easy to give up along the way.
The business will demand that you put in more time and work than everyone else. There will be hardships in dealing with licensing, hiring & managing your staff, and finding customers. The “Why” should live beyond you. It’s your mission to humanity.
Step 2: Identify your target market and speak to your potential customers
One of the most overlooked steps in starting a coffee shop is determining who your target audience is. This is the group of people who are most interested in visiting your coffee shop. You can identify this group based on demographics like age, gender, location, and income level.
It’s not enough to simply state that you’re targeting youth under 25 years old as your core market. Go beyond others, by reaching out and speaking to representatives from this group. Ask them about which coffee shops they like, and what they would want to see in a new business.
As an extra step, research your competitors. Read their negative reviews to see what people don’t like. It could become your competitive edge.
Step 3: Come up with a concept and theme
The concept is what you want to create. It should be informed by your market research. There are many concepts you can try:
- Traditional cafe with comfortable and intimate seating, where people come to enjoy a latte and eat their food;
- ‘Grab and go’ concept featuring premade and prepacked meals and snacks?
- Food truck with minimal seating;
- Drive-thru coffee cafe located at gas stations.
You can add a creative twist to the concept with a coffee shop theme. Your theme may be a topic from art & history, lifestyle choice, emerging issues, design style, etc. Some themes include:
- Membership-only coffee shops;
- Co-working cafes
- Indoor garden cafes;
- Bicycle-powered cafes;
- Arabian-style cafe.
Many factors should go into the selection of a concept and theme. Factor in the level of investment, personality style, target market preferences, and even stress level. For instance, in terms of investment, it’s cheaper to design and launch a grab-and-go cafe compared to a fully dedicated space. The latter requires more staff and comfortable sitting, where people can spend hours of their time.
Step 4: Plan for the menu
The menu is the core product of your coffee shop. It’s the reason that guests come in.
Menu design and selection play a huge role in profitability. You can’t assume that you’ll sell coffee only. While a cup of coffee has a gross profit of about 70 to 80%, the price is low. You have to sell a lot of cups to break even. Instead, you can complement coffee with other food items. They can cost more and increase the profitability margin.
Another hint is that the menu must be available year-long. There are certain seasons when demand for certain food items will go down. For instance, during the hot summer months, the consumption of hot coffee drinks may reduce. If that’s all you offer, your revenues may be in the red. Instead, you have cold drinks such as iced coffee.
Step 5: Create your brand Image & personality
Your brand is all about how customers feel as they interact with your products and services. It’s the first thing they feel as they step inside your establishment, or even interact with your website online.
You should figure out who you’re as a brand. After this, you create the branding elements that showcase this personality and identity. They will include your logo, custom colours, and even the name.
Many businesses start this process in reverse. They create logos, choose names, and pick colours before knowing who they are as a brand and what they represent.
Step 6: Pick a location
Running a Cafe shop entails serving guests in-person. So, a location is a must as you start a coffee shop. It’s important to start thinking about the location earlier in the process as it greatly impacts startup costs.
The best location has high foot traffic, great visibility, and prominent access to the street. But the rent may be higher. Even when all these factors align, the place should fit your concept and theme. It should be near your target customers.
Step 7: Budget for all your startup and ongoing costs
Budgeting for startup and ongoing costs is critical if you’re going to run a sustainable business. You also need to remember that customers may not come right away. You’ll need a budget to cater to your rental costs, inventory, and staff during this time. It’s equally important to determine your breakeven point.
Some major costs to think about include:
- Rental costs: Can you afford the rental cost for your preferred location? Additionally, how much is it going to cost to build out your cafe? A brand-new retail location without flooring, plumbing, etc., may cost more. Renovating an existing space may be cheaper. It’s advisable to have a contractor when evaluating suitable locations.
- Equipment costs: You must figure out how much you can spend on your equipment. Basic equipment includes a coffee grinder, POS system, expresso machine, etc.
- Hiring costs: On average, labour costs amount to about 30% of all the revenue generated by all restaurant types. You must factor in the required expertise for your cafe and how much it may cost.
Step 8: Build your team
Your team is the most fundamental component of your business. Without a team, you’ll try to run everything yourself, which is tedious and inhibits growth.
Before posting job ads, define your company culture and policy manual. It specifies the expectations you’ll have for anyone who will work or invest in your business. All stakeholders need to be aligned with your mission and your “Why?”
Step 9: Get professional help and entrepreneurial advice
Launching a coffee business is overwhelming. There is so much to do and figure out. You may feel that the task ahead of you is too difficult because there are many things to know. Luckily, you don’t have to continue feeling this way. Many people have come before you, and made silly mistakes, that in hindsight, they could have avoided.
So, Hi there,
I’m Hammam founder & CEO of Cafinto
Today, I’m taking this opportunity to invite you to have a professional consultation with me about your business idea.
I’ve had the opportunity to operate in the fast-growing coffee industry in Oman as a roastery business. I don’t claim to know everything there is to know. I’m one of the many experts who you should talk to. I would further recommend speaking to baristas, chefs, lawyers, marketers, contractors, etc.
In our business startup consultation, we’ll talk about
– How to optimise your business opportunity and avoid costly mistakes
– Understanding risks and success factors
– How to budget correctly and minimize waste
– How to find the right employees for your business
– and much more