Coffee is the black gold that powers up our mornings and fuels us through the day. As the second-highest sought-after beverage (with water being the first), the demand for coffee has grown by many folds in the past few years. This trend is expected to continue as the global coffee shop market is slated to touch a valuation of USD 237.6B by 2025!
Given the lucrative nature of the business, one may be keen on knowing the cost of starting a coffee shop. While there are many moving parts involved, let’s try to demystify the process of calculating the cost of starting a coffee shop, especially as a small business.
Cost Components of Starting a Small Coffee Business
Before getting into the meat of the matter, here is a quick overview of the types of expenses involved in running a small coffee business:
- Startup Cost – This is the initial cost solely associated with the capital investment required to kickstart your business.
- Operational Costs – These correspond to the routine day-to-day or month-to-month expenses that are necessary to keep your small business in operation. Operational costs are broadly classified into two portions:
- Fixed Operational Costs – This value is mostly constant with frequency. It could include rent, salaries, and wages, taxes, insurance premiums, security payments, etc.
- Variable Operational Costs – Quite often, these are regular and recurring expenses related to consumable items like coffee beans, sugar sachets, tissues, etc. These are proportionate to the product and service you offer.
For simplicity’s sake, we will be focusing on the fixed components of the overall cost of starting a coffee shop.
Factors That Will Affect the Cost of Starting a Coffee Shop
The cost of starting a coffee shop primarily depends on your business plan. It answers critical questions like are you operating a mobile coffee food truck or running a cafe that offers seating? How diverse is your coffee selection? Do you also offer food? Are you taking over an existing small business or starting one from scratch?
Based on such questions, even the fixed elements, such as the startup cost, may vary depending on:
- Coffee shop concept
- Items on the menu
- Equipment and serving wares
- The physical location or online presence
- Branding and marketing costs
- Furniture and fixtures
- Point of Sale System and pos software
- Labor costs
- Legal and administrative costs
Read More: The Costs Involved in Starting a Coffee Shop
