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Cost to Open a Coffee Shop
Coffee is a staple of almost every country and culture around the world. With a newly invigorated appreciation for handcrafted coffee drinks, local shops for folks to get their caffeine fix are on the rise.
In the U.S, three quarters of all caffeine consumed is coffee. And with the rise in the hybrid workforce, more and more people are looking for places to work on their days away from the office. Google searches for “coffee shops to work” hit an all time high in 2021.
There is a real opportunity for aspirational restaurateurs to open a coffee shop with its own unique flavor, whether that’s a community space for freelancers to gather, a shop that prides itself on its rich blends and beans from all over the world, or a coffee cart to serve busy downtown streets.
At this point, all that’s standing between you and becoming the neighborhood’s favorite barista is the question — how much does it cost to open a coffee shop?
We'll explore all of the restaurant startup costs to prepare for, give you all the expected ongoing operating costs, and provide a restaurant cost calculator to help you create a customized coffee shop business plan.
Average Industry-Wide Restaurant Startup Costs
Restaurant startup costs can vary based on location, local rent prices, whether you have furniture and seating, renovation needs, and more. The average cost to open a restaurant is around $100,000 to $2 million.
Average Cost to Open a Coffee Shop
Compared to an average restaurant, starting a coffee shop costs tend to be lower, but also depend on a few different factors. The cost to open a coffee food truck, a coffee shop franchise, or a bookstore café combo will all vary and can require more upfront capital investment if there are multiple locations or more inventory.
The average cost to open a single coffee shop with seating is between $80,000-$300,000. The cost of opening a coffee food truck or kiosk is on the lower end (closer to $60,000 for the minimum possible cost), and including both seating and drive-thru coffee is higher and can reach the $300,000+ range.
Learn how Toast is building better experiences for restaurants, guests, and staff at Spark, an innovation event for restaurant people.
Restaurant Opening Cost by Square Foot
When budgeting the costs of opening a restaurant by square footage, it can help to review real estate costs as close to the time of procuring financial capital as possible. Real estate prices and trends change fairly quickly, and the estimated price per square foot from a few years back may no longer be accurate.
To construct a brand new, single-story commercial space for a coffee shop in 2021, you’re looking at around $300-400 per square foot. These costs tend to be a bit lower in the midwest and the south, and higher on the east and west coasts.
Purchasing existing commercial property for a restaurant costs around $180 per square foot, and leasing isn’t much less, averaging somewhere around $160 per square foot but largely depending on location. Budget around $2,000-$12,000 per month for rent for your coffee shop and consider how much square footage you need. Adjust this estimate if you want to start small and expand, and consider what types of locations are less expensive, like the suburbs versus downtown real estate.
Plan to spend around $100 to $800 per square foot to open a restaurant, and use $450 as a guideline and later, we’ll explore the specific costs that go into this, like restaurant equipment, materials, existing setup, and more. The larger the location, the more customers you’ll serve, and the more you need to spend on ongoing expenses.
Restaurant startup costs can be reasonable or quite pricey, depending on the state of the building you start with. For example, a small restaurant (less than 1,500 square feet) that already includes furniture and equipment for a reduced price might only cost $25,000 to get up and running. But building a brand new property in an expensive location and purchasing all new equipment up front might be closer to $500,000 for the same sized coffee shop.
Now that you have a rough idea of the average cost to open a coffee shop and the price per square foot to open a coffee shop, you can use the restaurant opening calculator above to estimate the specific costs for your restaurant vision.
Factor these costs into your overall coffee shop restaurant business plan.
Are you imagining a cozy, busy coffee shop or a minimal, elegant ambiance? Define your coffee shop visions and help make them come true with this business plan template.
Restaurant Startup Costs for New Coffee Shops
There’s no exact number for the total cost of opening a new coffee shop, but it’s key to map out the expected costs for your operation before you get started. You’ll need to determine what you need to pay for and how you plan to pay for it. This doesn’t all need to be liquid cash — there are loans, rentals, and grants that new restaurant owners can take advantage of to offset the initial startup costs.
Restaurants run on tight margins, so having a rocky foundation like a poorly chosen location, insufficient (or absent) business plan, or ineffective restaurant layout can set a new business up for failure.
Here are some of the top restaurant startup costs for coffee shops and operational expenses to anticipate.
A Breakdown of Coffee Shop Startup Expenses
Use this checklist of coffee shop startup costs to help you plan your new restaurant’s budget and estimate how much you’ll need in investments to open your business.
If you’re building a new coffee shop from the ground up, you need to run utilities during construction. If you’re renting or opening up shop in a renovated, turnkey space, you will begin paying during the soft launch or pre-opening phase.
Restaurant utilities like electricity, gas, water, and internet service can cost restaurants $1,000-$1,200 per month for spaces that are under 4,000 square feet. For larger restaurants, allocate more than $1,200 per month.
The best locations for coffee shops are typically heavily populated and often cater to areas with a high concentration of office buildings, or “business hubs.” Coffee shops can also be successful as drive-throughs, particularly in areas where driving is more popular like suburbs.
With the rise of people working from anywhere and on flexible schedules, the demand for coffee shops that offer workspaces, outlets, and comfortable places to take business meetings will continue to increase. Coffee shops can offer a nice change of scenery for remote and hybrid workers and help them to establish a routine.
To find restaurant real estate for your new coffee shop, consider if you want to rent or lease, buy, or build. Look into existing restaurants and shops that are for sale, since it’s easier to convert a space that was used for a similar purpose than to start from scratch.
If you feel like searching for a location for your new coffee shop restaurant on your own is out of your comfort zone, you can work with a real estate agent who specializes in the restaurant industry or commercial property.
3. Interior Design + Furniture
As we learned from the iconic Central Perk cafe in Friends, coffee shop interior decor and furniture can make or break your space — or turn it into an iconic restaurant brand that will eventually become a pop-up coffee shop for superfans.
Creating a cozy, inviting environment or one where creatives and innovators thrive will set the strategy for your target customer and needs to fit the needs of your ideal crowd. Will you offer open mic nights or community events in your coffee shop? This will require some additional cost considerations, like a small stage and audiovisual equipment.
When budgeting for your coffee shop’s interior design and furniture, account for:
Some budget-friendly design ideas include chalkboard walls, searching for furniture at resale or consignment stores, or repurposing existing furniture and signage. Think about how your behind-the-scenes materials, like burlap sacks of coffee beans can serve as decoration, too.
Cafe decor can be simple and sleek, bright and colorful, funky and vintage or anything in between. Check out this list of 10 coffee shop decor ideas and get inspired.
4. Coffee Shop Equipment
The equipment for your coffee shop will take up a significant portion of your startup costs, and this depends on what machinery you’ll need.
More and more coffee shops are utilizing single-serve coffee makers, but others pride themselves in using top-of-the-line espresso machines from Italy. Kitchen equipment and restaurant furniture can cost anywhere from $20,000-$400,000, depending on the size and complexity of your restaurant business.
Some of the most popular pieces of equipment for coffee shops are:
Do you have the essential restaurant kitchen equipment and supplies you need? Check off this list to make sure your restaurant kitchen is all set.
5. Pre-Opening Expenses
Before you open up your coffee shop, take note of what needs to happen before your restaurant grand opening.
You’ll need to have a training program in place for new staff (think about how much you’ll need to pay for training hours), and plenty of extra inventory like coffee beans, plates, utensils, office supplies, cups, to-go cups, lids, and sleeves, and merchandise.
Pre-opening restaurant startup expenses can total around $20K-$120K depending on the size and scope of your coffee shop business.
6. Marketing, Branding, and Merchandise
The amount of money you’ll need to spend on restaurant marketing and advertising depends on how you’re starting your coffee shop. Brand new restaurants are the most expensive to market, new locations for established restaurants can build off of existing brand recognition, and local franchises often have marketing and advertising paid for by the parent company.
Potential marketing and branding costs for new coffee shops include:
Public relations (PR) services
Social media marketing (paying to boost posts)
A website and brand identity
Restaurant marketing costs are estimated to be around 3-6% of your business’s total sales. For smaller operations, start small by investing in branded coffee cups and bags and using the power of restaurant social media marketing to grow brand awareness for free.
7. Restaurant Startup Capital and Ongoing Emergency Funds
Startup capital for restaurants needs to cover the initial opening costs, 3-6 months of operating costs, and some additional cash for emergency situations. Let’s say your restaurant has a pipe burst and needs to be fixed ASAP. You need to have enough cash on hand to pay for the repair and make up for lost sales.
Read our Complete Guide to Restaurant Financing and Loans to learn more about the many financing options available to restaurant operators.
Whether you’re opening a new restaurant, expanding your concept, or renovating within your existing four-walls, you’re going to need capital to make it all happen.
8. Exterior Design and Outdoor Space
Coffee shops are known for their atmosphere and options for seating and lounge areas. Over the past few years, outdoor patio seating has become a premium for restaurant owners, providing a safe, distanced space for people to visit.
If you have access to outdoor space, budget $1,000 - $40,000 for updating your outdoor café area, including signage, decor, lighting, landscaping, and seating.
9. Organizational and Development Costs
Restaurant licenses and permits are critical to avoid potential fines and fees for restaurant owners. Coffee shops may need licenses for serving food, serving liquor, or operating a food truck.
These ongoing operating costs include paying for and filing restaurant licenses, permits, insurance, and utilities. You may need a lawyer or bookkeeper to help you stay organized and avoid concerns when tax season or audit season comes up.
Plan for $2,500-$200,000 to cover your coffee shop’s organizational costs — which is a huge range, so google "[your state] restaurant licenses and permits" to get a better idea of what to expect in your region.
10. Professional Services
Speaking of restaurant licenses and permits, experts can help you file everything correctly, particularly those who have worked with small restaurant owners in the past. Some professional services you may need during the process of opening your new coffee shop may include restaurant consultants, architects or interior designers, lawyers, accountants, marketing agencies, or graphic designers.
These can cost anywhere from free (friends and family) to $500 per hour, depending on the expertise level and requirements. Sage predicts that restaurants will need up to $50K in professional service fees to open a new business.
Your customers expect the latest technology and may seek out alternate coffee shops if you don’t have the latest tech and features, like ordering ahead online or collecting loyalty points for their morning cup of joe. At the very minimum, coffee shop customers expect quick, efficient service and the ability to use their credit card.
Toast’s POS is a scalable solution for coffee shops and has a variety of price plans for different sized operations.
12. Food Cost
Food costs can vary, and with supply chain disruptions, prices for certain items can fluctuate. Having a well-stocked inventory means that you can offer incredible service and stand out among the competition. Budget for $5,000-$25,000 in monthly food costs and order as much ahead of time as possible. Finding local vendors and food suppliers can cut down on shipping and handling costs, as well as seeking out in-season items.
13. Staffing + Management
A top reason that restaurants fail is because they are underfunded and understaffed. As you plan to open your coffee shop, consider outsourcing some of the initial work to real estate agents, attorneys, accountants, bookkeepers, contractors, marketing agencies, architects, and designers.
Importantly, find a restaurant manager who is trustworthy and has experience managing staff and handling customers.
Working with restaurant industry professionals helps new restaurant owners to avoid rookie mistakes and ensure the best possible experience for guests and staff. Culinary Agents is a job seeker website specifically designed for the restaurant industry and is a great place to seek out new employees.
Restaurant labor costs come in around 30% of total revenue.
14. Franchise Fees
Opening a coffee shop franchise can be extremely lucrative, but requires a significant upfront investment. Here are some of the franchise fees and initial investments for opening popular coffee shop franchises:
Dunkin’ Donuts: $40,000-$90,000 franchise fee, $400,000-$1.5M initial investment cost
The Coffee Bean and Tea Leaf: $180,000-$600,000+ initial investment cost
Scooter’s Coffee: $40,000 franchise fee, $300,000-$600,000+ initial investment cost
Take the Next Steps Towards Opening the Coffee Shop You’ve Dreamed Of
If you’ve had an idea for the next seasonal latte waiting in your back pocket for years, or have thought about opening a creative coworking coffee shop in your neighborhood, now is the time to get started. With the tools and resources to budget for the costs required to open a coffee shop and some inspiration, you can even open up a new café with no money of your own.
Be smart with your restaurant startup budget and consider where you want to spend the majority of your cash. The decision to rent vs. buy, purchase pre-owned vs. new, and use savvy marketing channels like the power of social media can be the difference between a successful coffee shop owner and an attempt that runs out of money fast.
Related Coffee Shop Resources
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