How to open a cafe? Step-by-step

The coffee shop market size is projected to grow at 3.5% from 2021 to 2027 worldwide, amounting to approximately ...


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The coffee shop market size is projected to grow at 3.5% from 2021 to 2027 worldwide, amounting to approximately $244.40 billion. Do you know what it takes to build a successful cafe?

  • Coffee is one of the most popular beverages in the world.
  • Opening a cafe requires planning to ensure the quality and safety of your products.
  • Secure your food safety compliance using our digital HACCP plan template builder at FoodDocs.

The popularity of cafes as part of the food industry has significantly increased over the years. Who could resist a cup of coffee, whether hot or iced, in the morning or any time of the day? This food business has become a very popular choice for aspiring business owners. The affinity of young professionals for a cozy place with great coffee has pushed investors to invest in opening cafes. This time might just be perfect for opening a cafe

Coffee is considered a very valuable commodity, and its trade is an important type of business all over the world. In fact, consumers around the globe consumed approximately 1663.63 million 60 kg bags of coffee in 2020-2021 alone. In the U.S., an average of 2.8% growth in the number of coffee shops every year was established. Americans alone drink an average of 400 million cups of coffee a day. 

Discover how to open up a coffee shop with us and find out how you can ensure serving safe food products all the time. Learn the basics of how to start a coffee business with 12 easy steps.

 

opening a cafe

Navigate through this informative article using this list of topics discussed:

 

 

What do you need to open a cafe?

Opening a cafe is a very popular aspiration for many people. The popularity and upward trend of the coffee market have added to this aspiration. Despite this fact, opening a cafe or a coffee shop is a huge undertaking that requires intensive planning. A cafe, although smaller in operation size than a restaurant, requires a comprehensive coffee shop business plan to maximize the startup capital you will be using. 

A cafe's food operation is no less important than that of a fully operational restaurant. The food and beverage you will serve must be safe in addition to being high quality. As such, a cafe plan must always include a food safety plan, such as the Hazard Analysis Critical Control Point (HACCP), on top of all other things to have to ensure safer food

 

food safety plan builder

 

How much does it cost to open a cafe?

Coffee shop startups do not come cheap, and there is more to knowing just your target market. The size of your startup capital can determine the complexity and scope of your cafe's operations. Factors such as the location you intend to use, the food equipment, the number of staff, the food business registration, and the products you aim to serve will all act as significant factors in the average cost of opening a cafe. 

The Crimson Cup, a successful cafe chain in America, estimated that you would need capital somewhere between $80,000 to $300,000. This range estimate is for a fully operational seat-in, independent coffee shop. A cafe operating solely through a drive-thru mode or a mobile food truck would require less operating costs. 

Additional expenses would add up in case you want to expand your operations, such as offering in-house baked goods or specialty drinks. 

 

What should your capital cover?

Your capital or seed money will cover most of the essential expenses you will need for starting a coffee business. In some cases, you can secure startup loans to be able to assure other necessary startup costs for your startup business.

To help you in estimating how much capital you will need to open a cafe, consider the following essentials:

  • Location of your business (e.g., real estate matters)
  • Raw materials (e.g., coffee, pastries, filters)
  • Fixtures and furniture
  • Promotions and advertisements
  • Equipment (e.g., coffee or espresso machine, warmers, and kitchen tools)
  • Restaurant software (e.g., point of sale, inventory, and food safety)
  • Food safety training for employees

Other expenses, such as if you choose to consult with an agency to hire employees, should also be considered. Not all individuals readily have generous capital. As such, you need to plan everything up to the last detail to optimize what you have. 

 

12 Steps when opening a cafe

To guide you on how to start a cafe business, from conceptualizing your business to executing your soft launching, we have listed 12 steps

 

1. Create a concept and state your vision

Every food business starts with a vision. When you think of opening your future cafe, you must have a unique concept of a cafe in mind or at least want to have a cafe that stands out. During the conceptualization process of your business, consider doing market research and analyzing the location where you intend to have your business.  

While having a unique cafe may be attractive to different types of customers, if your concept is very niche, you cannot expect it to last long.

When you conduct market research to establish your concept, consider the following aspects:

    • Current trends in cafe
    • Who are your target customers?
    • Sustainability of your plan
    • What types of drinks and food will you be serving?
    • Will you focus on dine-in or to-go services?

 

how to open a cafe

 

Remember that the larger the scope of your target audience, the more resources you will need. Once you have a concept and vision, you can easily narrow down the elements you need. 

 

2. Create a business plan

After choosing a concept based on research and your preferences, you need to document every step that you will need to establish your cafe.

A business plan is a written document of every idea and research you have and the strategies you plan to perform to achieve them. This plan is essential for achieving a successful coffee shop.

A cafe business plan can also help aspiring coffee shop owners to assess their progress. Every business plan must contain the following components:

    1. Executive summary
    2. Overview of your operations and business description
    3. Market analysis (includes target customer, competitor research, and risk analysis)
    4. Cost analysis for startup
    5. Organizational overview
    6. Marketing plan and strategies
    7. Financial projection or Financial plan
    8. Proposed menu and mode of service

A business plan is also necessary if you plan to apply for commercial loans and grants. Benefactors will require proof that you have a plan and you are prepared to open a cafe amid risks.

 

3. Secure your capital 

As mentioned, starting a cafe is not cheap. Even if you plan on starting with a mobile cafe in the meantime, coffee shop startup costs will still require a significant amount of money. While others have this area secured from their personal budget and can operate as sole traders, there are other ways to secure capital and handle tight profit margins.

Some of the potential financing options that you can opt for include the following:

    • Partnership or angel investors. This funding source requires two or more people interested in supporting your business. Investors can provide monetary means or equipment and can choose to own a particular share of your business. Partners share profits, risks, and losses. Investors that do not seek anything in return are called angel investors. 
    • Friends and relatives. Relatives are a common source of funding. This type of capital funding often entails internal arrangements regarding payment terms.
    • Brick-and-mortar loan. Refers to traditional bank loans where the aspiring business owner will seek business loans from a physical bank. Loaning from this type of method requires collateral in case of failure to repay the loan.
    • Small business association loan. More commonly known as SBA loans, this type of lending method is facilitated by the U.S. Small Business Administration. SBA loans can cover your working capital or finance equipment purchases and expansion. 
    • Equipment financing. Lenders specializing in equipment financing can help you procure and purchase the necessary tools and equipment you need. They can buy the equipment itself for you or give you the money. Most equipment financing terms require payments in increments with interest.
    • Crowdfunding. This alternative method for raising money aims to fund your business by raising money from groups of people interested in the niche you are in.

 

4. Select a location for your business

Setting up the perfect location for your business will help you determine factors such as the type of customers to expect and your proximity to your target audience. If you plan on opening up a mobile cafe business, researching hot spots is an essential step, but for sit-down cafes, decisions of whether to lease a commercial space or buy a spot for your business must be made.

Choosing an ideal location goes beyond just your distance from the consumers and enough space for large foot traffic. You also need to consider the available physical space for setting up your bar, kitchen, and spacious storage area. 

 

choosing a location for opening a cafe

 

5. Select a reputable source of coffee beans and other raw materials

Of course, you will need coffee bean suppliers! You cannot expect to rely on ambiance alone. A high-quality coffee shop flourishes with the right coffee selection of beans and food to serve. The majority of your sales will come from the types of coffee and other beverages you offer. This stage would be a great point to sample coffee products and structure your menu.

Aside from choosing the perfect blends of coffee, recent trends have shown that a supplier's sustainability plays a great role in sales. An independent study revealed that four out of 5 customers are likely to choose a brand that uses sustainable approaches, such as sourcing coffee grounds. 

 

making coffee in a cafe

 

6. Create a menu

This important step can be done simultaneously with the previous one. When selecting your exclusive supplier, you can have a menu in mind to help you find the perfect flavors. 

During this time, consider choosing if you will also be selling non-caffeinated and other types of drinks. Your menu is the fastest way for a customer to get to know you. As such, the cafe menu must clearly present what your business offers and must be understandable.

Consider creating your digital menu with online payment options if you plan on building a cafe business and offering online ordering services. Different software programs offer quick and easy platforms for this objective.

In addition, consider menu engineering programs that will help you compute your food cost to help you measure the profit margins of your products. Use our free food cost calculator to evaluate your pricing strategies and profitability regularly.

 

7. Get proper licenses and permits

Running a business in a particularly convenient location means coordinating with the local government departments. You need to know what licenses and permits do you need to start a cafe. These documents serve as proof that you will abide by the law and that you are operating under the supervision of the government.

In the U.S., different states may have different business permits needed for operation. Consult local government business units for guidance.

Some of the most common licenses required for opening a cafe include:

    • Business License
    • Food service license
    • Employer Identification Number (EIN)
    • Retail food service license
    • Resale license (sales tax purposes)*
    • Liquor license*
    • Live entertainment license*
    • Building health permit
    • Food handler's permit
    • Sign Permit

*if applicable

Securing permits requires hours of your time and fees. This step is mandatory as security for your business and customers. Failure to have the essential licenses and permits may merit violations and legal offenses.

 

8. Procure equipment and tools

A cafe requires some particular equipment not commonly found in restaurants. These pieces of coffee shop equipment, such as an espresso machine, are used for making the products you will offer. When procuring equipment, you may be faced with tough decisions to make.

You will have the option to purchase brand-new coffee shop equipment or buy old ones. Always consider that essential equipment and tools will be used for a very long time. While purchasing old equipment can save you a lot of money, maintenance and repairs can come sooner than when you purchase a piece of new coffee shop equipment. 

Some of the most common yet essential coffee shop equipment you will need to include:

  • Espresso machine
  • Coffee machine or brewer
  • Coffee roaster
  • Coffee grinder
  • Cooling units (e.g., refrigerators and freezers)
  • Display units
  • Ice machine
  • Blender
  • Kitchen utensils and preparation table
  • A computer for online payment methods

The bigger your planned cafe is, the more equipment you are expected to purchase. Some types of cafe will also require special pieces of equipment. If you plan to add your own bake shop, you must purchase equipment such as ovens and trays. 

Essential equipment must cover the services you offer and supporting units such as food storage spaces and display units.

This step will also require the procurement of fixtures and furniture you intend to have in your cafe.

 

what you need to open a cafe

 

9. Hire competent employees and invest in training

Choosing your staff can help you convey how much you value excellent customer service. While selecting staff with stellar training and experience is the most ideal choice, this route entails higher salaries. Make sure that you are choosing the right people for each job.

Your core employee for a cafe is an experienced barista who has received formal training in handling coffee equipment. You will need someone who is knowledgeable about the coffee culture and has enough level of experience. During the hiring process, you must be clear about your expectations regarding customer service and work ethics. This will help you select only those who are fit for the job. 

In addition to the initial hiring process, you are required to invest in training your employees, especially with food hygiene matters. This process is your opportunity to introduce topics, such as food safety, customer service, principles of food preparation, and marketing techniques, to your employees. 

Training is essential to build a strong sense of food safety culture among your employees. This will help improve accountability in terms of performing tasks correctly, even with minimal supervision. 

 

baristas in a cafe

 

10. Conduct marketing strategies and launch advertisements

In today's era of technology, marketing has gone so far from the age of print marketing. Although the latter strategy still brings significant attention, there are many innovative ways of marketing that were introduced to the food and coffee industry.

Some of the trusted and proven marketing strategies include:

  • Commercial advertisements
  • Print ads (e.g., posters and flyers)
  • Word-of-the mouth
  • Partnering with other food businesses

Today, more advanced and farther-reaching strategies, such as digital marketing, are available for business owners:

  • Email marketing
  • Social media marketing
  • Loyalty programs for regular customers
  • Restaurant marketing software

Marketing strategies are how you intend to introduce your business to unknowing customers. Other evident marketing strategies include the aesthetics of your cafe, branding, and added features such as being pet-friendly or accommodating for gatherings. 

 

11. Conduct a soft launching

Once everything from the business plan down to the marketing strategies has been covered, you can now conduct a soft launch or opening. This step is not mandatory but can be a significant training point and marketing strategy. It can also help you build your customer base early in the game.

During a soft opening, you can invite famous influencers, critics, and avid fans of coffee shops to try your services. Other business owners also treat a soft launch as a way of showcasing the operations to an investor.

You can use a soft launching event to gather information on which areas need more attention and which features can be considered your cafe's strong points.

Your team can review the valuable information and prepare for a grand opening after a few days. A soft opening will help you and your staff be ready for a more random flow of customers.

Learn more about how to execute a successful soft launch here

 

12. Grand opening of your cafe

Finally, opening your cafe is the culmination of your efforts. You can set up an event to celebrate the occasion and use it as a marketing point to attract new consumers. Incorporate all reviews and improvements from your soft launching to ensure a smoother grand opening.

The key to a successful business opening is enough preparation. Use important checklists and monitoring logs to ensure that your team is prepared before your cafe doors open and for busy periods during operation.

Check out our free tools and templates that you can use to prepare your team for your grand opening.

 

Software solutions for cafe operations

In recent times, many food business owners have attested to the convenience and improved efficiency that restaurant software programs have contributed to their operations. These programs help simplify complicated tasks, automate repetitive tasks, and reduce the likelihood of human errors.

Consider reviewing the following popular software programs for your cafe:

    • Point of sale
    • Accounting software
    • Inventory management software
    • Food cost calculator and menu engineering software
    • Online reservation software
    • Food safety management software
    • HACCP food safety compliance software

 

These different software programs can help your team manage your operations more efficiently and increase profits in the most effective way. You can even integrate software programs with each other to create a seamless system.

Software systems such as HACCP food safety compliance software can save you at least 120 hours of time you are expected to spend on building a food safety plan. With a digital solution, such as the FoodDocs HACCP plan builder, you can get a HACCP plan in just 1 hour.

Do you have no idea which software for building your own cafe? Check out this detailed list of the best software programs for restaurants we previously published.

 

Food safety compliance is a crucial topic when opening a cafe

One of the main responsibilities of every food business owner is to ensure the safety of your consumers from the food you serve. Compliance with food safety standards does not only ensure safe products. It also increases consumer confidence in your business. Safety, quality, and customer experience are all essential to keeping customers happy. Restrictions on food preparation may vary from one state to another.

As a startup food business owner, you may have limited knowledge of how to establish your own HACCP plan. At FoodDocs, we offer several free HACCP plan tools that you can use to slowly build your HACCP plan step-by-step. In addition, you can also use our free templates and checklists from our HACCP plan template hub to help employees record all food safety tasks accordingly and maintain compliance at all times.

In the U.S., every food business has the legal requirement of having a food safety plan that will prevent and control food safety hazards. These food safety plans are standards for businesses that are handling high-risk foods.

The most widely known food safety plan is the HACCP food safety plan. This food safety system addresses food safety risks before they occur, minimizing the efforts and resources you would need to use. Establishing a HACCP plan can easily get you compliant with the most essential food safety regulations and laws.

 

At FoodDocs, our food safety experts came up with a digital solution that can intuitively help you achieve food safety compliance within 1 hour and maintain compliance daily.

To help every aspiring cafe owner get compliant fast and easily, our team of experts at FoodDocs has developed a digital solution to build a comprehensive Hazard Analysis Critical Control Point (HACCP) plan in just 1 hour.

HACCP is regarded as a standard food safety plan worldwide. Establishing a HACCP plan requires months of preparation and will often need the expertise of a food safety consultant.

Luckily, you can use our digital solution to build a digital HACCP plan template with the following components:

  • Prerequisite programs
  • Basic flowchart of your operations

Flow_chartBasic flowchart from FoodDocs

 

  • Hazard analysis
  • Critical control points with appropriate critical limits
  • Corrective action plan
  • Monitoring procedures
  • Verification procedures
  • Recordkeeping and documentation procedures

 

Using artificial intelligence and a machine-learning program, our system can automatically generate a customizable digital HACCP plan fit specifically for your food operations. The whole process is as easy as answering a few basic questions about your business, and our system will generate the plan for you.

After describing your operations to our system, you will get a comprehensive digital HACCP plan template with all of the essential components and more in just an average of 1 hour.

 

HACCP_template-1FoodDocs Digital HACCP Plan

 

With our built-in digital HACCP plan builder, aspiring business owners can guarantee compliance through these benefits:

  • Get a comprehensive digital HACCP plan template in just 1 hour. Our system considers your location and the most relevant regulations when generating your digital HACCP plan. With this feature, you can easily get compliant in no time.
  • Our solution is 500x faster and 150x cheaper than manually building your HACCP plan, even with the help of a food safety consultant.
  • The digital HACCP plan template that you can get is fully customizable to accommodate unique operations in your food business. This feature also allows you to immediately apply suggestions and revisions from your food safety inspector, saving your team time. It means, you can continuously improve your HACCP plan by simply logging into your account and applying any updates from regulations or improvements from your verifications.

 

Our digital solution was made to make compliance accessible and ensure that every food you serve is safe for consumption. Make food safety compliance an easy task for your team to allow yourselves to focus on establishing or improving your cafe with our digital solutions.

You can experience all of our solution's features for free by using our 14-day trial.

 

How to save time and money on food safety compliance when running a cafe?

Once your new business achieves food safety compliance, the next goal is to maintain compliance by constantly monitoring your operations and evaluating them accordingly. To do this task, what you need is a comprehensive Food Safety Management System.

In combination with our built-in HACCP plan template builder, we also feature a digital solution for monitoring your everyday operations. 

 

When you use our digital Food Safety Management System, you can get the following benefits:

  • With our digital solutions powered by AI, you can get your digital Food Safety Management System based on your operations in just 15 minutes. You can customize your digital monitoring system according to your company's specific needs.
  • Notification system that sends intuitive alerts to the food handlers in charge help your team remember every task and never delays them. With this feature, you can ensure that your cafe will always be compliant with food safety regulations.
  • Helps you as an aspiring cafe manager to efficiently oversee and manage your coffee shop operations remotely.Get more features and benefits, such as a real-time dashboard,  when you fully use our digital Food Safety Management System.

 

Maintaining food safety is a continuous task. It must be consistently done to ensure that your customers will always be safe and satisfied with your products and services. With our digital solution, you can ensure this objective even with minimal experience in running a food business. 

Improve your cafe profile, customer appeal, and sustainability by consistently ensuring food safety using our digital solutions. Start your food safety and cafe journey using our free 14-day trial.

 

START MANAGING FOOD SAFETY

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