Looking to start a Coffee Shop? Ooohh, how exciting!
We can’t help with every new venture, but we can help if you are planning to open your very own coffee shop! There is a lot you need to think about first, before opening the door. But don’t panic, we’re going to go through how to start a coffee shop so that you will be fully prepared.
Firstly, enjoy the process. If you have decided to break away from the 9-5 to work for yourself, make sure it works for you. If you don’t enjoy the process of starting a new business, are you going to enjoy running it and managing staff in the long term? Just a question to ask yourselves is all.
The Ideal Location For Starting A Coffee Shop
When thinking about how to start a coffee shop, you first need to think about the location and type of customers you wish to facilitate.
For instance, if you open a coffee shop in a small rural village, you need to take into consideration that you will most likely be seeing less footfall, and more often than not, the same customers every day. Whereas if you were to open a coffee shop in a city, you would need to prepare for a much larger footfall; some of which you would never see again.
Opening a village coffee shop may indeed mean you have a smaller footfall, however the rent for a village location will be much less compared to a coffee shop in a busy city high street.
Make sure you think about what sort of coffee shop you would like to open before you decide on a location.
It’s very likely that if you open a coffee shop in a town or city; you will have plenty of competition.
You need to make sure that what you offer is completely unique and that you offer a new experience to customers that will make them want to keep coming back to your coffee shop. This could be much better coffee, different opening hours, a record player on every table, different brewing methods, an alcohol licence, outdoor seating, a vegan-friendly menu or a children’s play area to name a few. Get creative.
What is your location missing? What could you offer? But more importantly, what do you want to provide?
Without branding, your potential customers would be unaware of what your business is, or indeed, the purpose of your business. If your brand is ‘on trend’, potential customers will assume that your business is also ‘on trend’. For example, a twee and traditional tea room will be expected to be quaint and pretty rather than having that alternative, industrial look.
Whatever you decide to do at the start; stick to it. Stick to your brand. Not everything is for everyone; do what feels right to you. Make sure you are completely happy with your coffee shops brand before you start renovating your space.
How Do I Acquire A Premises?
There are a few things you need to think about when looking for premises for your coffee shop.
Firstly you need to think about the size of your coffee shop. If you want to offer a takeaway service only, size isn’t much of an issue. However, if you are going to have seating for customers, you will need to look for a much larger space, depending on how many you would like to seat at any one time.
When looking for premises for your coffee shop, you will be looking to rent or to purchase a space outright.
More often than not, you will find that commercial premises are rented, rather than available for sale. If you are renting, you need to make sure you have negotiated the rent with your landlord, so that both parties are happy. Make sure you read everything and ask questions if there is anything you seem unsure of. For instance, you may find hidden costs to your rent, such as a service charge which you were unaware of at the onset.
If needed, you can ask a solicitor to look over the documentation for you before you sign.
Sometimes, your lease will include a clause which allows you to leave after a certain period. For example, you may have a six-year lease agreement. However, if you have a break clause which will enable you to go after three, you can walk away at this point.
You may find that when you first start renting a space, your rent is relatively cheap; however, over the years, your rent could increase. You will be able to find this information in your contract, so make sure you are happy with it before you sign anything.
Where Do I Start With Acquiring A Coffee Machine? Should I Stay Away From Contracts?
How to start a Coffee Shop, without a coffee machine? There are lots of different espresso coffee machine to choose from, with a range of prices. These will range from one to four group-head machines, some more compact than others. Keep this in mind if space is of a premium.
Contracted machines come with their advantages and disadvantages. On one side, you will have access to some of the top espresso machines for a low monthly price. You will also have someone else looking after your machine and keeping on top of the maintenance, meaning you don’t have to worry.
The Problems With Contracts
However, on the downside; you are often locked into the coffee you purchase, how much you need to purchase, and who you purchase it from. This can put you at a disadvantage to your competitors as they may have new flavour profiles coming in from all over the world, whereas you are stuck with the same coffee until your contract runs out.
Also, just because you have someone else looking after your machine doesn’t mean they will come and do it as soon as you ask, or as soon as you need if it has broken down. This can lead to serious issues for your coffee shop if there is more downtime than absolutely necessary.
As briefly mentioned, some contracts also lock you into a minimum amount of coffee you must purchase each week. If you are contracted for 10kg of coffee a week and you only use 6kg, you will still be charged for the unused 4kg. This could mean that your bargain machine ends up costing you more over time.
For more information on contracted machines, check out ‘To Rent or To Buy – That Is The Question’ when convenient.
On the other hand, you have the option to purchase a machine. This is often more cost-effective in the long run.
If you are looking to purchase rather than to lease, you could finance your espresso machine by purchasing outright, on a business or personal loan, or through a finance agreement with the manufacturer.
Here at Two Chimps Coffee, we can offer finance on espresso machines through a third party. If this is something you are interested in when looking into how to start a coffee shop, please do not hesitate to contact us.
As an alternative, you could look for a second-hand espresso machine to get you started. This way, you aren’t tied into any contract, and it leaves valuable cash flow available if needed.
Where Do I Start With Grinders?
When it comes to choosing a grinder for your coffee shop, the first thing you need to think about is what you actually need the grinder for. For example, do you need a coffee grinder to pair with your espresso machine or do you need one to grind coffee for your cafetieres?
Your next decision will be if you want a burr or a blade grinder. A blade grinder has a blade in the centre that looks like a propeller. This blade will chop the beans up with the fineness of the grind being controlled by how long you leave the grinder running for. You will often find that the grounds will be very uneven in size when using a blade grinder.
If you’re looking for a finer grind, you will have to keep the grinder running for longer. Leaving this grinder on for long periods of time will allow the blade to produce heat which can transfer to your coffee, giving it a burnt taste.
Burr grinders, however, crush the beans between a moving wheel and a non-moving surface. You will find you have a much more consistent grind as a result of this. There are two types of burr grinders available.
One type of burr grinder is a wheel burr. This is where a wheel inside the grinder spins quickly which can make this type of grinder quite noisy. You may also find that these grinders can be messy if they haven’t been appropriately designed as a result of the fast spinning wheel.
These grinders have larger motors and have a flat burr. With the flat burr providing a consistent grind and the larger motor making this grinder faster, this is ideal for a fast-paced coffee shop (if well designed, as aforementioned.)
On the other hand, you have a conical burr. This type of grinder doesn’t spin as fast as a wheel burr which makes it less noisy and less messy. This means they are less likely to clog up too.
Conical burr grinders have a smaller motor and use gear reduction to reduce the RPM. With this grinder having a slower grinding speed, less heat is transferred onto the beans which helps to maintain the aroma of the coffee. They are slower, however, so maybe not ideal for you’re looking at a busy location.
On-demand & Chamber Grinders
When deciding what grinder is going to be best for your coffee shop, you need to take into consideration how many customers you will be serving each day. If your coffee shop is in more of a rural area, you may not necessarily need the fastest grinder to have ever been produced. On the other hand, if your coffee shop is in a city or a large town, investing in a faster grinder may be something you need to put some thought into.
An on-demand grinder is really simple to use. The beans are poured into the hopper at the top. Depending on the amount of coffee needing to be ground, you can adjust the timer to suit. The freshly ground coffee is dispensed directly into the group head. This makes on-demand grinders accurate and consistent, and definitely what we would recommend; funds permitting.
These grinders are slightly more expensive, so you need to think about whether it’s price outweighs its accuracy. You may also find that some of the cheaper, home-styled on demand grinders can take quite a while to fill the group head which isn’t ideal for a busy coffee shop.
Alternatively, you can choose a chamber grinder. Like the on-demand grinder, the beans are poured into the hopper at the top. However, rather than being dispensed straight into the group head, the ground coffee sits in a chamber, pre-ground, before it is then dispensed into the group head. If the ground coffee sits in this chamber for too long, it can cause it to go stale and your coffee will not taste at its best.
You can find more information on grinders here.
Now I’ve Got A Machine Where Do I Start With Buying Coffee?
At this point, you need to decide on coffee itself.
Your coffee needs to be one that meets the needs of not only your business but of your customers too. For example, a burger van that serves ‘cheap and cheerful’ coffee isn’t necessarily on the hunt for a single origin, speciality coffee, whereas that might be what you are looking to serve in your coffee shop.
We would recommend that you find out as much as you can about the roaster to see if their values match with yours. Do you think their coffee is a match for your coffee shop?
Once you’ve found a coffee roaster, meet with them in person, allowing you to find out more about them, and vice versa. This is also a great opportunity to ask any questions you have along with finding out what they offer.
Do they just roast coffee, or are they on hand to support you in other ways. For instance, do they offer continued free staff training and point of sale material? Will they engage with your business on social media to help get your name out there? You might find that your coffee roaster can supply you with teas and hot chocolates too.
Now you need to decide on the other offered products. Are you only looking to serve hot drinks, or are going to be serving food too? If you are going to be serving food, you will need to think about where your food is going to come from. Think about what is going to work best for you and your business. Maybe you’ll choose to use local suppliers for the food you will need. You might prefer to pop down to the local supermarket and grab what you need for yourselves? Make sure that when you are pricing your food, you take into consideration where you sourced from, so you can give a fair price to the items on your menu.
Are you looking for a traditional offering? Maybe you are looking for a Michelin starred chef? It’s your business; what do you want to offer?
Is There Anything I Need To Do Before I Start Employing People?
If you are looking for staff, you will need to advertise. There are lots of websites which allow you to advertise your job vacancy and will enable you to give as much information about the job role as you wish.
Alternatively, you could choose to advertise your job vacancy in the local newspaper, on social media, or simply put a poster in your shop window. Choose the method that works for you, for the type of person you are looking to employ. For instance, if you are looking for someone to wash up on a ‘last minute’ basis, you may want someone who lives close by. For this role, maybe a national job site isn’t the ideal place.
Before you start inviting for interviews, think about the type of person you are looking for. Next, give some thought as to what you want to include in the interview. Will the interview be hands-on, or an informal chat? Think about what is important to you and use this to help you draft your questions. Are you looking for someone with barista skills, or do you want to train them for instance?
Once you’ve found someone who will be amazing for your business, you need to offer them the position. Upon acceptance, you will need to think about a contract of employment.
You may need some help from an HR advisor if you don’t feel confident creating a contract on your own. Think about the type of contract the potential employee will be on.
For example, a casual working hours contract may be mutually beneficial. Casual hours contracts allow both parties to choose when they would like to offer work, or accept work. The employee can decline hours whenever they like too. You may decide to select a fixed hours contract instead; where your employee is contracted to work a certain amount of hours each week.
Ensure your contracts work for both parties. Make sure that you are paying at least the minimum wage for their age bracket too.
Everyone is entitled to holiday pay, and the opportunity to be enrolled for a pension (even if they do not qualify for auto-enrolment) so give these some thought too. For instance, you may need to make sure you have something in place for when that person does decide to take holiday leave.
When your new employee starts, you will need some information from them. This includes identity to prove who they are. You will also need their National Insurance number which will allow you to add them to your payroll system, along with their bank details so you can pay them.
If you have any company policies in place, now is the time for your new employee to read these. These policies could include a social media policy, a lone worker policy or a health and safety policy to name a few.
Health & Safety
You may need to implement risk assessments for your premises or a particular job role. You also need to make sure that you supply your employees with the correct PPE (Personal Protective Equipment). For example, here at the roastery when staff are roasting, they wear steel toe cap boots, hairnets and aprons. For packing coffee, just hairnets and aprons are worn.
If you employ five or more staff, it is a legal requirement to carry out a fire risk assessment and to document it in writing. If this applies to you, make sure you contact your local fire authority to find out what you need to do.
Amongst other things, there are legal requirements that anyone handling food needs to be trained to a particular level for them to do so. This is known as a ‘Basic Food & Hygiene Certificate’.
Any further training is going to be beneficial to you and your business. If you have baristas that have been given proper training to create hot drinks, the quality of those drinks will be much higher than for those who are new to barista skills. To aid with this, we offer continuous free training to all of our wholesale customers.
How Do I Know If I am Charging The Right Price For Drinks?
Generally, hot drinks have a high markup from the price of the raw ingredient. This high mark up comes from the café adding value by creating comforting surroundings, presentation through latte art, knowledge of their drinks menu and offering drinks that are high quality.
When coffee beans are supplied to you, there is no VAT to add as coffee beans are zero-rated. When the coffee is turned into a hot drink, there is 20% VAT to deduct, if you are VAT registered. If your business’s turnover goes over the VAT threshold, you will need to be VAT registered.
Just because your competitor is charging £2.50 for a coffee doesn’t mean you need to follow. The experience that a customer has in your coffee shop compared to your competitors should be completely different which is why your prices should be different too.
Another thing to think about when deciding on prices for your coffee is the cup sizes you will be offering. For example, say two coffee shops have the same coffee. One charges £2.30 per cup and the other charges £2.50. However, the second coffee shop has a larger cup size than the first. This could mean that the second, with the higher price, is actually offering better value for money.
Charge what you think your product is worth and take into consideration the experience the customers will have when entering your coffee shop. Although it’s great that you have awesome tasting coffee, if the atmosphere in your coffee shop isn’t quite right, customers will start to question your prices and look for somewhere else.
How Do I Know If I’m A Sole Trader, A Partnership or A Limited Company
How you set up your business will determine what sort of business it is. If you were setting up a business on your own, you’re best to go down the sole trader or limited company route. However, if you and someone else wanted to set up a business together and you both wanted an equal share you’d need to look at a partnership or a limited company.
Generally, setting up a limited company can be slightly more costly and can sometimes get a little more confusing. If you think you are going to earn £10,000 or more in profit, it can be more tax-efficient for you to start that business as a limited company. We would always suggest you seek the advice of a local bookkeeper, or an accountant, however.
As a limited company, if for whatever reason something went wrong with your business, the bank will not hold you responsible for any financial losses as a result of ‘limited liability’. It can be harder to set up accounts with suppliers, however. Research all of the pros and cons to both before you make your decision.
If you start your business as a sole trader but then decide you want to change to a limited company, you will have to change everything within your business. You would need to close your business bank account as a sole trader and then open another one as a limited company. You would also need to close your business and reopen it as a limited company.
How Do I Set Up A Business Bank Account
A crucial step in starting up is financing. With business banking, it is important to keep this separate from your personal bank account. This is so you can clearly see what’s coming in and out on the business side of things. It also means that if someone wanted to view your account, there wouldn’t be any confusion with what was what, and who was liable for each transaction.
Nearly all banks will charge you for using them for your business bank account. However, some banks will reward you for using them with things like free accounting software or higher interest rates. Spend some time looking at what each bank offers and see what works best for you.
There are organisations such as FSB (Federation of Small Businesses) who offer free business banking as well as other things to support your business such as a free legal helpline. Give some thought to the price of a membership to an organisation like FSB compared to the price you would pay to the bank to access business banking.
Just like normal banking, you will receive a debit card or credit card depending on the needs of your business.
A lot of the things you do for free with your personal banking you will have to pay for with business banking. For example, cashing a cheque in. So before you choose a bank to set up your business account, make sure you are completely happy with them and their charges.
How Do I Become Self Employed?
To become self-employed, you will need to register on the HMRC website. Doing this will let them know that you need to pay your tax through a self-assessment and pay national insurance contributions.
You can be employed and self-employed at the same time so, for example, you may have a full-time day job, and then in the evenings you run your own business. Either way, you need to tell HMRC.
What Are Self Assessments?
Self-assessments are how HMRC take your tax off you. You will need to complete a self-assessment tax return, or employ the services of a bookkeeper to do this for you. This will allow you to pay any tax that you owe.
As an example, if you employed someone and you paid them £1000 every month, but they were taxed by £200, you as the employer would pay them £800, and the other £200 would go to HMRC; thus settling their tax and national insurance bill with HMRC.
However, if you were working on your own as a sole trader, you wouldn’t usually receive a pay slip. Therefore, nothing can be taken from you as no one knows how much you have earnt. So rather than paying HMRC £200 every month, you would pay them £2400 at the end of the year on your self-assessment.
In your first year, you will be charged 50% of the following year upfront too. So, you would pay HMRC £1200 for the year to come, plus the £2400 from the previous year which means you’d actually be paying a total of £3600. This is only an example, so when you start your own business, the costs may be different.
Is There Anything I Need To Do At The End Of Each Month?
If your business is VAT registered, every three months you will need to do a VAT return. If this is daunting, enlist the help of a bookkeeper.
At the end of each day, you should balance the till and make sure all is in order. You will then need to do this on a larger scale each week, and then at the end of each month.
If you are happy to do this yourself, there are websites which help you to record this information. Think about what you are good at and what you’re not so good at. If you aren’t confident in bookkeeping and decide to look for someone else to do it, this means you can invest more of your time into your business. You will also need to submit the information to HMRC periodically.
How to start a Coffee Shop Marketing Campaign?
The easiest way to get people to know your business is to think that every Latte, Cappuccino or Americano that you make is an advert for your business. If your coffee isn’t top notch and you made someone a drink with it, they could leave your coffee shop full of negative thoughts about the coffee. This would, of course, be a bad advert for your business. Word of mouth is incredibly important when starting a new business.
We would recommend that if you are going to advertise anywhere, that you do it online on your website, or through social media. When using social media, it is important to make sure that your posts are unique and engaging.
Social media is an opportunity to be social with your customers. Don’t just post pictures of your café without engaging with any of your followers or potential customers. When using social media, it is important to keep going with it and not to get disheartened if for the first few weeks your posts don’t get the attention you were hoping for. If you are consistent with your posting and you engage with your followers, you will quickly start to see your page following grow.
Tools To Help
To help, there are websites which will allow you to schedule posts throughout the week. These sites will enable you to plan your social media posts in one go, freeing up the rest of the week; while your social media essentially runs itself.
Google places is also well worth getting involved in. Get your business registered to appear in the local searches. Great if your potential customers have stumbled upon your area, looking for an awesome coffee!
Just remember that word of mouth is super important and always keep the mentality that everything that leaves your coffee shop is an advertisement for the business. If everything is spot on, customers will keep returning, and soon enough your coffee shop will be booming!
Interior & Exterior Décor Of My Coffee Shop
This links back to the branding of your business, as mentioned above. If you wanted a modern feel to your coffee shop and you showed this from your exterior décor, customers would expect to see the same on the inside. You need to think about the kind of experience you want to offer and use the décor, both inside and out to help your customers understand this.
For example, if you wanted to open a coffee shop with no WiFi and lots of books on shelves, you could aid this by not including desk space or any plug sockets in your interior design plan.
Alternatively, if you were going to be opening a coffee shop with WiFi and you were looking to invite customers to come in and use your coffee shop as a space to work, you would need to facilitate this too, maybe with the desks and plug sockets you removed earlier. If this is for you, think about your customers using your coffee shop for a whole day and potentially buying just the one cup of coffee while they are there.
When it comes to running any business, there is a lot to think about. This includes deciding where your bins are going to be placed, both inside and out. Think about where most of the waste in your coffee shop is going to be. You also need to think about what sort of bins you will have; for example a regular bin and a recycling bin.
Have you got space to store a bin outside, or will everything need to be stored internally until it is collected? Maybe you will need a collection from a licenced waste company once a day or every two weeks. Give this some thought.
We would recommend getting in touch with your local Environmental Health Officer who will visit and evaluate Health and Safety regulations, such as a fly screen or mouse traps. You may want to get in touch with a local pest controller at this point too.
When do you want to be open for business? It is okay to open seven days a week, from nine to five. You won’t be able to do this alone for too long, however. Maybe you need to employ more staff to cover these hours. Even if you’re open for shorter periods, some things will need to be done out of trading hours, such as turning your machine on, ordering new stock etc.
Maybe you want to open early in the mornings, to facilitate customers on their way to work? Around noon for lunch and after people finish work could also be busy times for you too.
Hopefully, our article will have guided you in the right direction. If you have any questions about opening your own coffee shop, please do not hesitate to contact us. We are always on hand to help.
If you’re looking for a wholesale coffee supplier, then you’ve come to the right place! We supply coffee to businesses that want to stand out from the rest and offer their customers a new experience. Our wholesale customers range from hotels and pubs to village stores and estate agents.