CoffeeU is our podcast where we discuss various topics in the coffee industry.
This year we started season 2, focusing on various types of coffee businesses, from roasting to cafes to mobile coffee setups. Our first few episodes focus on coffee shops and what goes into starting one. To recap our conversation this blog will break down the four main areas you need to think about when looking at your costs: buildout, equipment, employees, and operating expenses.
It’s impossible to predict every cost you will encounter as a coffee shop owner. A lot of costs are dependent upon where your business is located, your market, your vision, etc. We will have some real numbers in this article, but they will fluctuate up or down depending on your situation. This post is to be a guide, not a rule. With that PSA out of the way, let’s dive in.
Your Coffee Shop Buildout
This is the area where the bulk of your short-term costs will be. Before you even start swinging a sledgehammer, though, you have to have a plan. Let’s assume you’ve found that amazing place that has great foot traffic and customers with disposable income. So, how are you going to make that space look inviting and create a great customer experience? Well, you’ll need a planner or architect.
A planner can typically do most things an architect can do but for a fraction of the cost. There are stipulations, though. Planners are limited by how many square feet they can plan and sign off on. If you take location drawings to a municipality that were done by a planner and the plans don’t meet local requirements, you will have to have them approved by an architect and then submitted. This will add cost to your budget. Make sure to check with the municipality on what their requirements are for drawings. There is a big range in cost here but expect somewhere between $8,000-15,000 for architecture drawings and engineering plans.
Once it’s drawn and approved, the fun begins.
After you’ve found a builder you like and trust, they will give you an estimate of what it will cost to construct your space. Your builder should take care of building and contracting out everything in the approved plans: plumbing, electrical, HVAC installation, and architectural requirements like walls, doors, windows, etc. This is where you can negotiate cabinets, tables, and other things that you may want built. This most likely is a 6-figure expense unless you’re in a very small space or doing some of the work yourself.
The construction phase is a good time to be procuring equipment. Shipping times have gotten much better since 2020-2021, but anything coming across the ocean (like Italian-made espresso machines) can take a few weeks to get here. Make sure you have a technician around who can install and service your equipment. The last thing you want is to have an issue with a machine and have to send it somewhere to be repaired.
This is also when you need to be talking to your local health department and municipalities about any approvals and/or licenses you may need. Sometimes your contractor can handle this for you. You’ll need to finalize this before signing your scope of work with them.
Purchasing Equipment For Your Coffee Shop
This is the fun part of the up-front cost and the easiest to manage. The first two things you will want to purchase are an espresso machine and an espresso grinder. This is very important. The grinder is more important than the espresso machine. It’s easy to get sucked into a fancy espresso machine – but trust us – spend your money on the nicer grinder. There is no espresso machine that can overcome bad, inconsistent grinds. A really good espresso grinder will go anywhere from $1,500 to $3,000. That’s a big range, so there should be some options for every budget. There is also an option to go with a used grinder and change out the burrs. This is more work on your end, but it can save you a few hundred dollars. Check out other affordable coffee grinders for your coffee shop.
As for the espresso machine, there is a huge range. For this article, We’ll use 2-group machines as an example. You can find basic, automatic machines for around $8,000 and some really nice ones costing upwards of $20k. Remember, the more tech you get in a machine, the more expensive it will be.
The other piece of brewing equipment you’ll want to have is a good batch brewer and brew grinder. For the brewer, we recommend Ground Control. It is the best batch brewer out there and is very versatile. We use it to make our cold brew and even coffee concentrate to make iced lattes. This machine is on the higher end, around $9,000. If you’re looking for a quality brewer that is less expensive, take a look at Fetco or Curtis. They have machines that range from $1,800 – $3,000. And for brew grinders, you can find good ones between $1,000 – $2,200.
Other pieces of equipment to consider are refrigerators, microwaves, sinks, and a dishwasher. These pieces of equipment aren’t as expensive as coffee brewing equipment, but they can run over $1,000.
Barware is also a necessary expense. Expect between $300 – $500 for cups, milk pitchers, tamps, and cleaning tools.
Hiring Employees For Your Coffee Shop
Your team should be an important part of your investment, if not the most important. The Green Mermaid starts most of their baristas at $15 an hour, which is a reasonable expectation for most small businesses as well. You need to decide what you can pay and how you will include tips in their paycheck. Remember that to have a great café experience, you need to have good people working it. It may be a big investment upfront, but it will be worth it in the long run. You can’t serve good coffee without good baristas.
Miscellaneous Coffee Shop Expenses
There are some other daily costs to consider when running a shop. You will want to have internet available, at least for your employees, and a POS system. That will run you anywhere from $100 – $200, depending on your location. If your space is big enough to have seating, you will need somewhere for customers to sit. This will cost around $200 – $400 for a set of tables and chairs.
This is definitely not an exhaustive list, and you will most likely come across costs you didn’t expect. However, this is a good place to start, and it covers most of your big purchases.
Contact us if you have any questions or need help starting your own coffee shop.
Our consulting team is ready to help you turn your coffee shop dreams into reality.