It’s rare to find a UK high street without a coffee shop but it is still a good business model so we provide a guide on how to open a coffee shop with what to look out for and likely costs for your business model.
The coffee shop business remains robust, providing several openings for would-be business owners with cafe concepts.
Coffee cafes in the UK are also seeing increased sales. The 10.4% rise in sales volume between 2015 and 2016 was the largest annual growth in the last five years.
Customers are always looking for personalised service that can only come from a small, locally-owned coffee shop.
How Much Does It Cost to Open a Coffee Shop?
The estimated cost to open a coffee business ranges from £30,000 to £99,000. However, the initial investment you need to launch a coffee shop would vary depending on its physical location, size, design, and quality of its coffee-making equipment.
Similarly, starting a coffee business on a tight budget, you can either buy your equipment or rent coffee machines.
What follows is a guide for the fundamental supplies and services required to launch and maintain a coffee business.
With a cost of about £2.45 per coffee cup, business owners make a baseline profit of about £25,000 a year. However, this will vary with location, cost of production and political atmosphere.
Moreover, with 9,159 open locations, the branded coffee shop industry brought in £3.06bn in sales in 2021, according to Project Café UK. That amounts to about £327,000 earned by each location despite the spread of coronavirus.
So, a coffee shop is a profitable venture through the seasons.
How much does it cost to open a coffee shop? Getting your company off the ground and realising your vision is always the most difficult phase of launching a business. Hence, you should start with your coffee shop business plan.
You should think about whether you will rent or purchase the property. Also, think about adding furniture, acquiring new appliances, the salary of your workers, risk coverage for the structure and its contents, and costs associated with utilities used in daily work.
How much money are we talking about here? It’s important to give this subject some thought. Always leave extra money in your budget for anything unexpected, like broken wiring. After you’ve figured all that out, you’ll need to figure out how you’ll pay for it.
Paying for everything yourself is the wisest action to adopt if your resources permit it. You avoid interest payments and other financial commitments by putting up your own money for the coffee shop start-up cost.
Furthermore, this demonstrates to potential investors that you mean business. Have the funds ready if you want to use this method. Savings accounts, 0% APR credit cards, and other asset leverage are all viable options; just make sure you don’t take on more than you can handle.
Bank loans are more secure and have lower interest rates than other types of loans, but they may be challenging. Before approving a loan, most financial institutions want evidence of a company’s previous profitability and financial stability.
Banks will want to see that you’ve given your company some serious consideration, so be sure to have a detailed and well-thought-out business plan ready to present to them. As a retail business, you’ll be dealing directly with consumers and cash (or rather contactless payments) so you’ll need an EPOS system to process credit cards and payments – and use this to work with your accounting software and generate reports for your accountant.
Many financial institutions provide company loans, often up to £20,000. In addition, many financial institutions assist in setting goals and achieving them; some even have mentorship programs. Loans from the bank often come with fixed interest rates, which are advantageous since they guarantee a consistent monthly payment.
Do your homework on the coffee business before opening your doors to the public. Researching the successes and failures of other coffee shop owners and their owners might provide valuable insight. This is crucial if you are a newcomer to the field.
Look into the local business climate to see whether franchises or mom-and-pop stores are more common.
In contrast to sit-down eateries, a coffee shop requires focusing on walk-in customers, such as office employees and weekend shoppers.
This implies that you won’t have to develop a completely novel idea for your independent coffee shop. However, you should still develop a proposition that separates you from the competition.
There are two main coffee shop concepts: those catering to clients in a hurry and those where people may relax for an hour or two.
One way to set yourself apart is with the quality of your coffee; artisanal coffee is now trending amongst small, locally-owned coffee businesses.
Better coffee will bring in more regulars, so make sure it’s up to par.
You may set yourself apart from the competition by serving premium coffee made with specialty beans and brews.
Choose a successful coffee shop concept. Are you envisioning a high-tech, contemporary urban space or a cosy den with plump sofas?
Location, the area’s demographics, and the competitors’ strengths are all factors to consider when deciding where to set up shop, how to lay up the interior space, and how to advertise your business.
However, you should not get too attached to the idea before calculating expenses and potential returns.
Your new coffee shop location is crucial to its success since it should complement your company plan.
Premises near workplaces, retail districts, and railway stations give the amounts of foot traffic you need to make a high profit since most customers choose a coffee shop for its convenience when they are out and about.
Unfortunately, finding affordable commercial real estate in a prime location is difficult.
A decent rule of thumb is that your rent and rates should amount to less than 15% of your anticipated sales for a good profit. So, do not stay in an expensive space if you can’t find a means to reduce the rent.
You should be willing to downsize your expectations to get a desirable site; a little coffee kiosk in a railway station concourse, for example, might do far better financially than a huge storefront in a suburban shopping promenade.
Commercial real estate sections on real estate websites let you look at locations that could be good for a coffee shop.
● Hire Staff for Your Coffee Shop
Managing and hiring staff is one of the most difficult aspects of owning a coffee business.
It’s important to have staff members that are dependable, hardworking, and nice if you want to make a good impression on clients.
Before you even open your doors for business, you should begin actively seeking new employees by posting ads on social media and in the local paper.
Pay as much attention to a candidate’s interpersonal qualities as you would to their expertise and experience in food or coffee preparation since a solid reputation for customer service is essential for maintaining repeat business.
Offer barista classes and other training if requested. New hires must spend their first two weeks in the company shadowing a seasoned worker.
Think about getting some additional help for those hectic lunch rushes. Depending on the number of hours worked and the conditions of employment, you may be responsible for paying employer’s tax, National Insurance, and holiday pay.
The next step is to outfit your coffee business with the necessary tools. Many commercial coffee machines might work in a cafe, but an espresso machine is a must-have if you want to provide your customers with the best possible beverage.
Commercial espresso machines come in various styles, from lever to pump to a pod to steam, so finding the right one for your business may be a matter of personal choice and practicality.
Choosing an espresso machine requires careful consideration of both cost and functionality. Don’t be late with your coffee deliveries by planning and estimating the daily volume of customers you expect to serve.
When shopping for a coffee maker, you have a wide variety of vendors to choose from. Delonghi, Kenco, Bosch, Astoria, and Miele are only some of the most reputable names among UK coffee machine providers.
If starting a coffee shop on a tight budget prevents you from purchasing a machine altogether, you may want to consider renting or leasing a machine instead.
● Get the Finest Coffee Beans for Your Cafe
Your coffee business needs more than a great setting and a novel idea to get consumers to visit coffee shops regularly. Your key selling point is coffee; therefore, you must get the best beans possible.
However, the best coffee will cost you more money. Coffee beans are a major cost for any cafe.
Coffee Robusta and Coffee Arabica are the two most common varieties. Arabica coffee, known for its strong acidity and sweet, mellow flavour, is often more costly than its Robusta counterpart.
On the other hand, the flavour of Robusta is more robust and harsh. Caffeine-wise, it’s superior to Arabica.
You should calculate the optimal purchase price to maximise your sales revenue. Don’t forget that the greater the quality of the coffee, the more you may charge for it in your café.
The next thing to do is decide what kind of roast you want for your coffee beans. The range of roasts available goes from very mild to quite dark.
Concurrently, you may choose a brewing style from the American Roast, French Roast, Italian Roast, European Roast, or Viennese Roast categories. You may learn to combine various roasts to provide a special product for your clients.
In terms of suppliers, you can go with either a global giant or a mom-and-pop shop. Picking a nearby vendor gives the impression that you value and purchase regional goods, which might boost your company’s standing in customers’ eyes.
The success of every modern firm depends heavily on its visibility on the internet.
Customers can’t locate your coffee business if you don’t have a website. It’s a great way to let customers know who you are and what makes your coffee business unique. So, your website serves as a central hub for advertising your physical location, operating hours, photo gallery, and client testimonials.
Creating a website nowadays could not be simpler. It’s important to remember that your site’s complexity will directly impact how much it costs to create a website. Customers often look for coffee shops on their mobile devices, so optimising your website for mobile users is essential.
Your café’s primary draw will be coffee, but you may diversify your offerings (including food) to increase your earnings.
Pastries like muffins, doughnuts, and croissants are standard fare and pair well with coffee. However, you must choose whether to create these items in your café or to order them from vendors.
If your café is near schools or offices, serving breakfast might be an excellent way to attract customers.
Vegan and gluten-free products should be readily available, as should other diet restrictions that many clients may need. Provide options, and your clientele will be satisfied.
Avoid offering the same things year after year. Customers are more likely to spend money at a coffee shop that offers seasonal deals and discounts.
For instance, if you’re a coffee drinker, the fall season wouldn’t be complete without a pumpkin spice latte. Perhaps a holiday-themed hot chocolate would be the ideal treatment for this season.
To be ready for opening day, you must finish the paperwork for your coffee business. When opening a cafe or other food service establishment in the UK, you must first get the necessary permits and licences from the relevant authorities. There is no cost associated with signing up. To be safe, do it at least 28 days before the grand opening.
After registering with the proper authorities, they may conduct a food safety inspection. You’ll be given a score using the Food Hygiene Rating Scheme.
The Food Hygiene Certificate is only one of several licences or permissions necessary to launch a coffee shop.
The establishment of a protocol for pest management is mandated by law. A Food Premises Approval is required from your local council if any of your goods include meat, fish, or dairy.
Public liability insurance means you’re financially covered if a client is hurt or their property is damaged while on your premises.
You need a PRS for a Music licence if you wish to play music in your cafe.
Planning approval would be required if the property was not previously classified as an A3 restaurant or coffee shop. Be sure to inquire with the local government about any necessary permits before setting up tables in front of your coffee shop. To avoid any unwanted surprises, we recommend that you contact local authorities to inquire about the specific rules and fees that apply in your area.
Understanding food safety rules is crucial while managing a coffee shop. The local environmental health department must be notified of your restaurant’s opening at least 28 days in advance. Online registration is available at no cost at gov.uk.
Coffee shops are subject to routine inspections by environmental health officials, who may issue fines or even shut down the company if they find that the proprietor is violating regulations governing food safety.
Food Standards Agency (FSA) is the UK government agency responsible for ensuring food safety and providing extensive resources for people interested in starting a food company.
The guidelines for serving and preparing food and drink are spelt in full in the Safer Food, Better Business leaflets.
A passion for coffee is essential if you want to succeed as a coffee shop owner. You need to be well-versed in the varieties of beans and roasts you sell and the various brewing techniques you use. Learn as much as possible about coffee to respond confidently to your client’s inquiries.
Coffee cupping is a social event where people gather to compare the flavour and fragrance of coffee at various stages of the brewing process and learn from one another.
If you’re interested in staying abreast of developments in the coffee industry in the United Kingdom, joining the British Coffee Association is a great idea.
You might also learn about coffee shop innovation expos and the yearly industry banquet.
Finally, the Specialty Coffee Association (SCA) of the United Kingdom is a great resource for learning about coffee via its events, championships, and educational programming.
We hope this post has helped you learn how to open a coffee shop UK. While there are certain dangers to starting your own company, there are also several benefits. Cafés and coffee shop businesses are becoming more popular, so now may be the greatest time to open one.
Guides to businesses you could start today
Take a look at our series of articles with business startup ideas.