Setting up a successful cafe means entering a highly competitive space with the right plan. According to a study, coffee shops are one of the fastest-growing segments of the food industry, which is growing at a 7% annual rate and is expected to reach $237.6 billion by 2025.
The research reveals that people in the U.S. consume about 400 million cups of coffee on a daily basis, and around 79% of coffee drinkers drink at least one cup daily. If you also want to leverage this booming industry, try opening a coffee shop.
Before you start a cafe, check out the different steps involved in the process for a smooth opening.
Step 1: Do research
Understanding your target audience in depth enables you to create a suitable menu and set prices reasonably. Do thorough research to get insights into
- How your cafe will look like
- What kind of food you’ll serve
- What will make your shop different from others
- Who will be your target audience
- What are your customers’ needs and preferences
Step 2: Create a business plan.
A detailed business plan can help you understand the local market, your competition, and the sale you need to make your cafe profitable. A business plan will guide you through each stage of managing and growing your coffee house.
Your business plan should include the following section:
- A summary concludes your business goals, mission and vision, and what makes it different.
- A local market analysis informs who will be your potential customer and competitors.
- Team structure details the required staff for your cafe and their roles.
- A marketing plan includes your marketing strategies or how you’ll target your customers.
- Investment requirement informs how much funds you need and what will be your funding source.
- Financial projections detail your projected profit and loss and how you will manage your cash flow.
- An overview of the workplace policies.
Step 3: Choose a location.
Location plays a major role in making a cafe successful. For a sustainable coffee business, you must consider the following factors for choosing a cafe location:
- Rent cost
- Competitor locations
- Foot traffic
- Parking space
- Shop area
Step 4: Calculate the cost of starting your cafe.
According to a study, the top three critical factors of coffee shops’ success are friendly staff, good quality food, and high hygiene standards. And the top three barriers to success are high rents for premises, high local government business rates, and high business taxes.
The starting cost of a cafe depends on its location, size, and design. The starting cost of setting up a coffee shop with seating may range between $80,000 to $300,000. You may also hire the right people to help you run your coffee shop.
You can calculate the total cost of opening a cafe by considering the following inventory cost:
- Location, decoration and utilities
- Coffee and food prices
- POS system
- Staff salary
- Marketing and promotions
Step 5: Find a funding source.
Now that you have calculated the cost of starting your cafe, you may use your funds, business lines of credit, equipment financing, or a small business loan to cover the upfront expenses.
Step 6: Get a reliable supplier.
Find a reliable supplier for the daily inventory needs of your cafe. The essential supplies you’ll need are usually coffee beans, milk, bread, fresh produce and groceries. You’ll also need cups (paper and porcelain), napkins, coffee stirrers, teapots, syrups, pastries and napkin holders.
Step 7: Prepare the list of required equipment.
Coffee shop owners may need several machines for opening a cafe, like:
- Espresso machines
- Coffee grinders
- Coffee brewer
- Commercial blender
- Refrigerators and coolers
- Water source
- Restaurant POS System
You can buy, lease or finance the equipment required for your coffee shop. You may not need all equipment instantly, so make a list and prioritize your purchase.
Step 8: Secure the necessary permits and licenses
Choose your cafe’s name and legal structure and obtain all necessary licenses and permits to operate your coffee shop. Ensure that you fulfill all the food service and health department regulations in your region before setting up the cafe.
A cafe should have business insurance depending on the location, store value, and staff strength. It will protect your business and employees against accidental damage to your premises and equipment due to events like fire.
Step 9: Design your cafe interior
An attractive interior design can help you draw customers to your cafe. The theme and concept of your coffee shop should largely depend on your target audience and their preferences. Consider appealing storefront design, signage, furniture and lighting for your cafe.
Step 10: Create a menu for your cafe.
Keep your menu profitable but don’t include too many options that may confuse the customers. You can offer gluten-free cake or vegan and vegetarian food options. For a successful cafe, the cost of ingredients should not be more than 35% of the retail price (excluding GST).
There are different types of coffee like cafe latte, mocha, americano, etc. Collecting customer reviews and feedback on your cafe menu can help you decide which items to include in the main menu or discard.
Check out the competitive prices of the food items you plan to sell. Also, ensure that you set the menu price reasonably and all of your product costs are covered while offering fair prices to your customers.
Step 11: Buy a reliable POS system
Invest in a reliable and efficient POS system to digitalize the order and payment process. It will help you achieve system-based ordering, loyalty program integration, track inventory, menu management, and real-time analytics and reports.
Faster order fulfillment leads to happier customers and a more successful cafe.
Choosing a POS system that accepts online orders and payments can help you focus on customer service and set you apart from your competitors.
Step 12: Market your cafe
A study shows that coffee is the second largest commodity market next to oil, and the specialty beverage industry is advancing at an equally strong pace. The beverage industry is expected to grow at a 40% rate yearly.
You must leverage social media to build up your brand. You can use the following marketing ideas for your cafe:
- Claim your Google Maps listing
- Claim your page on review sites
- Create loyalty program
- Use digital menu
- Offer coffee gift cards
- Promote coupons and discounts online
How Orderific can help
Orderific leverages the best technologies to enhance your customers’ experience at every level. It is an easy-to-use free web-based service that does not require heavy software downloads.
Orderific can increase your chance of success and profitability by offering:
- Digital menus for tableside ordering
- Integrating payments with loyalty programs
- Efficient POS systems for inventory management
- A free website builder for marketing and promotions
- Menu customization for better offerings
- Accurate insights and reports to make informed decisions
After months of planning, preparation, and hiring the best staff, set yourself up for success with a grand opening. Make sure you have enough staff members for a successful launch and no local events clash with yours.