Opening a coffee shop or roastery often isn’t straightforward – so how do you make sure it’s successful?

Many coffee enthusiasts dream of one day opening their own café or roastery. As their interest and knowledge grows, managing or owning a coffee shop becomes even more enticing for those who appreciate specialty coffee.

It’s also a potentially lucrative opportunity, with the global coffee industry expected to grow substantially in the coming years and out-of-home consumption continuing to recover from a post-pandemic dip.

But the journey from consumer to coffee business owner can be tough, and won’t always map out exactly as expected. So what do you need to know before taking the leap?

To find out more, I spoke to Heather Kelley, founder and CEO of Beverage Business Consulting, and Colin Harmon, founder of 3fe and author of What I Know About Running Coffee Shops.

You may also like our article on how to open a roastery after being a head roaster.

Why do so many people dream of owning a coffee shop?

There are many reasons why someone would feel compelled to open their own coffee business. But for some people, the idea of owning a café is entrenched in romanticism, and isn’t the most realistic career path.

Heather Kelley has worked in the coffee industry since 2005, with roles held at Stumptown Coffee and The Coffee MBA. She launched Beverage Business Consulting in 2023 to help coffee shop and roastery owners find success in the market.

“People want to open coffee businesses because there’s such a broad range of ways to interact with coffee and so much knowledge to learn and share,” she says – emphasising how intriguing the industry can be to those who are new to specialty coffee.

However, it’s certainly possible to find success. Take 3fe in Dublin, Ireland, for example – founded by Colin Harmon in 2008. As his interest in coffee grew in the early 2000s, Colin tells me he wanted to understand more about running a café.

“I’d go to a coffee shop, have a great coffee, then go back the next day to the same place and the coffee would taste awful,” he says. “So I started Googling more about it, bought an espresso machine, and then I flew over to London to meet people in the industry and it kind of snowballed from there.”

During this time, Colin explains he worked as a trustee for an investment funds firm, but quickly realised it wasn’t his ideal career path. Job dissatisfaction can certainly ignite interest in opening a coffee shop – especially in the corporate world – but Colin emphasises that being passionate is just the starting point. 

Having realistic expectations is vital

Colin believes that if people want to own a café or roastery simply because they love drinking coffee then they need to take a more pragmatic approach. According to data from a recent Perfect Daily Grind survey, 75% of people said operational costs are the most important factor business owners should take into account when opening a coffee shop or roastery – which have become increasingly higher in recent years.

Both Heather and Colin highlight the fact that coffee shops and roasters already operate on tight margins. For instance, a cup of filter coffee generates around a 10% profit margin, so a US $3.50 cup means the owner pockets about US 35 cents.

Additionally, Heather points out that the average customer spend is typically low.

“I don’t mean to discourage anyone, but your average ticket is around US $7,” she says.

Taking the first steps

First and foremost, Heather explains that a solid business plan is crucial.

“If opening a coffee shop is your passion, start with the fun stuff – what the business will look like and how it will feel,” she says. “But then you will always need the numbers to back up your decisions.”

Some of the most important factors to know are what your upfront investment will be, margins and costs, and how long it will take to receive return on your time and money.

Then there is the “soft side” of things, as Heather puts it: “This is what your intrinsic value adds to the industry – how you differentiate your business from another or from a concept that already exists.

“But even though it may be your passion, it will very quickly start to feel like a business,” she adds, explaining that tax regulations, employment laws, permits, and health codes are all part of the early stages of opening a coffee business.

The next steps involve a lot of moving parts, such as which equipment to buy, milk, food, and coffee suppliers (or whether you will roast your own), developing a house or signature blend, and selling merchandise and equipment.

Heather also stresses how important it is to factor labour costs into anything you plan to do yourself – whether it’s designing a menu or making syrups for signature drinks.

Choosing a location

Both Heather and Colin acknowledge that location can make or break a café and can often trip people up, especially those who might have a lot of coffee knowledge but little industry experience. 

There are several approaches to take, but Heather and Colin recommend finding synergy between a location and your business plan. 

For instance, a takeaway-only coffee shop might work best in or close to a train station or office district where footfall is likely to be much higher. Meanwhile, a café which focuses more on food service might be better suited to a neighbourhood or high street location.

Colin’s preferred approach, however, is to tailor a business plan to the specific advantages and disadvantages of a potential business site, which is a process he refers to as “decoding a location”.

“Ask yourself: what will work in this area?” he says. “Will you have a lot of takeaway orders or would a menu with a lot of food options work best? What set-up will you need for the bar, as well as table and chair arrangements?”

Managing expectations vs. reality

Given how challenging the journey from coffee enthusiast to café owner can be, opening day is a huge achievement. But the process is still far from over.

“You need to think about how you’re going to drive traffic into your space,” Heather explains. “Just opening the doors is unfortunately not enough.” 

This will invariably involve a combination of social media marketing and distributing flyers and promotional offers for first-time customers. 

“There are so many opportunities to try good coffee now more than ever, so you need to make sure people know you’re open and what they can expect from your business,” she adds.

Colin tells me that in the early days of 3fe, he relied on word of mouth to spread awareness, as well as leveraging his online network of fellow coffee enthusiasts and professionals.

“I started in the lobby of a nightclub,” he says. “I got no passing trade, but baristas from other shops in the city would come and geek out.”

He adds that new coffee shop and roastery owners need to be prepared to adapt and evolve to build a successful business.

“Trends are always changing, and a seamless workflow when you serve between 200 and 300 cups a day can fall to pieces when you hit 301,” he explains. 

Keeping your menu fresh and exciting is a big part of this. Seasonal and signature drinks can create inherent value and be an effective way to capture repeat trade throughout the year, as well ensuring higher margins.

How to set up for success

Even with plenty of passion and enthusiasm, having limited knowledge of how to run a coffee business can be a huge barrier to growth.

Both Heather and Colin highlight the importance of practical considerations, including:

• Staying on top of inventory levels
• Ordering stock in advance
• Developing good relationships with suppliers and paying invoices on time

But perhaps the most salient piece of advice both Colin and Heather have for coffee enthusiasts with little industry experience is to fully immerse themselves in a café environment.

“Seriously, go get a job in a coffee shop first,” Colin tells me. “You have to put the hours in to make it viable – that kind of realisation is key to success.”

Alternatively, working with a consultant and hiring experienced staff can help to minimise some of the more common pitfalls and misconceptions. 

“Business practices from other industries don’t always apply in coffee and I’ve seen people try to implement them unsuccessfully,” Heather says. “Find a mentor and be prepared to be resilient.”

The romanticism of opening your own coffee shop or roastery can quickly fade once reality sets in. But when set up for success, it can be an incredibly rewarding journey.

Ultimately, resilience and creativity are key, and will help new business owners to remain agile and grow successfully.

Enjoyed this? Then read our article on why the barista-to-roaster career step may not be as logical as it seems.

Perfect Daily Grind

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