How to start a coffee shop
What it costs, what you file, what it earns and what ends most of them. Every number below is cited to where it came from.
Starting a coffee shop costs $60,000 to $300,000, on figures published by a primary source. The hardest part is input costs colliding with a price-sensitive customer.
What it costs to start
$60,000 to $300,000Format drives almost everything: SBDCNet puts a kiosk at $60,000 to $100,000, a drive-through at $80,000 to $200,000, a sit-down location at $80,000 to $275,000 and a sit-down with drive-through at $80,000 to $300,000, the espresso machine, build-out and lease deposit are the dominant line items.
What you have to file
Licensing is set by state, county and city, so this is what the category tends to require rather than a list for where you live. The state pages below carry the filing detail for each of the 50.
- Business licence / business registration and EIN
- Sales tax permit
- Retail food establishment (food service) permit from the state or local health department
- Plan review and pre-opening inspection
- Certified food protection manager certificate and food handler cards for staff, per state adoption of the FDA Food Code
- Routine health inspections
- Certificate of occupancy and zoning approval
- Sidewalk or outdoor seating permit (where applicable)
- Music licensing (ASCAP/BMI) if playing recorded music
- Weights and measures registration if selling retail bags of beans by weight
- Roasting permit / air quality permit if roasting on site
- Fair Labor Standards Act and state wage-and-hour compliance
What the margins look like
No primary source for independent coffee shop net margins was found; commonly quoted figures (2.5 to 7%) come from vendor blogs, not a survey. Sourced cost structure instead: drink ingredients up to 40% of sales, payroll 30% or less, rent about 15%, leaving roughly 15% for everything else, and the National Restaurant Association's foodservice-wide pre-tax margin benchmark was roughly 5% (2019).
Whether demand is growing
Growing
Growing but slowing: the U.S. branded coffee shop market reached $58.5 billion across 45,227 outlets, with sales up 6.6% year on year, but net outlet growth slowed to 4.2% from 5.1% the prior year (World Coffee Portal).
Source: source
How big the market is
67% of American adults drank coffee in the past day, the highest level in over 20 years and up 37% since 2004, making coffee more consumed than any other beverage in the U.S., including tap or bottled water (National Coffee Association, National Coffee Data Trends).
Source: source
The part that ends most of them
Input costs colliding with a price-sensitive customer. Record green coffee commodity prices, a 50% tariff on Brazilian imports and supply-chain inflation pushed operators to raise prices only about 3% on a 16oz latte, and just 30% of industry leaders surveyed reported positive trading conditions, down from roughly 60% the year before. Rent and labour compound this: payroll typically consumes 30% of sales and rent about 15% before any coffee is bought.
Before you start
- What it will cost you, since the numbers above are the category and not your version of it
- Sole proprietor, LLC or S corp, what actually differs, with no recommendation
- What your state wants filed, read from the state's own pages
- What you have to sell to break even, which decides whether the margin above matters
- Which way you actually work, if the choice between these is really a choice about you
A different business
Compare all twenty side by side
SideKix, “How to start a coffee shop”. https://sidekixhq.com/how-to-start-a-coffee-shop.html
Questions people ask
How much does it cost to start a coffee shop?
$60,000 to $300,000. Format drives almost everything: SBDCNet puts a kiosk at $60,000 to $100,000, a drive-through at $80,000 to $200,000, a sit-down location at $80,000 to $275,000 and a sit-down with drive-through at $80,000 to $300,000, the espresso machine, build-out and lease deposit are the dominant line items.
What licences do you need for a coffee shop?
Typically: Business licence / business registration and EIN; Sales tax permit; Retail food establishment (food service) permit from the state or local health department; Plan review and pre-opening inspection; Certified food protection manager certificate and food handler cards for staff, per state adoption of the FDA Food Code. Licensing is set by state, county and city, so the exact list depends on where you operate.
What profit margin does a coffee shop make?
No primary source for independent coffee shop net margins was found; commonly quoted figures (2.5 to 7%) come from vendor blogs, not a survey. Sourced cost structure instead: drink ingredients up to 40% of sales, payroll 30% or less, rent about 15%, leaving roughly 15% for everything else, and the National Restaurant Association's foodservice-wide pre-tax margin benchmark was roughly 5% (2019).
Is demand for a coffee shop growing?
Growing but slowing: the U.S. branded coffee shop market reached $58.5 billion across 45,227 outlets, with sales up 6.6% year on year, but net outlet growth slowed to 4.2% from 5.1% the prior year (World Coffee Portal).
What is the hardest part of running a coffee shop?
Input costs colliding with a price-sensitive customer. Record green coffee commodity prices, a 50% tariff on Brazilian imports and supply-chain inflation pushed operators to raise prices only about 3% on a 16oz latte, and just 30% of industry leaders surveyed reported positive trading conditions, down from roughly 60% the year before. Rent and labour compound this: payroll typically consumes 30% of sales and rent about 15% before any coffee is bought.