How To Start A Coffee Cart Business | Essential Guide For 2024

How To Start a Coffee Cart Business

Starting a coffee cart business could be a great venture if you’re thinking about opening a cafe but want a more low risk and flexible point of entry. Better yet, according to Verified Market Research, the global coffee cart industry is projected to grow 7.1% each year between 2024 and 2031, from $4.67 million to $7.95 million. 

However, opening a coffee cart business also comes with a unique set of challenges, such as dependence on location and weather, regulatory hurdles, and high competition in the coffee market. Fortunately, with the right knowledge and tools, you’ll be prepared to overcome these challenges and build a thriving business. 

So, in this article we’ll explore all the key elements of how to start a coffee cart business, from defining your concept to understanding your costs and much more.

Key takeaways

• Coffee carts offer an affordable entry point into the coffee business with the mobility to adapt to high-traffic areas, events, and seasonal demands.

• A solid business plan, including market analysis, menu development, and financial projections, is essential for defining key aspects of your business, ensuring profitability, and even securing funding to launch.

• A concise, high-quality menu combining a few signature drinks, specialty or seasonal options, and cafe staples can differentiate your cart and attract loyal customers.

• Securing the proper permits and meeting health and safety standards is vital to operating legally and avoiding costly delays.

• A visually appealing cart, combined with effective social media and local promotions, can build brand awareness and drive foot traffic.

Pros and cons of starting a coffee cart business

Before exploring how to open your own coffee cart, it’s important to weigh the benefits and challenges of this unique business model. Some of the pros of starting a coffee cart business are:

• Lower startup costs: Coffee carts require less capital than traditional cafés, avoiding costly leases, large equipment, and build-outs.

• Flexibility: Mobility lets you adapt to high-traffic areas, seasonal demand, and special events.

• Direct customer feedback: Engaging directly with customers offers valuable insights to refine your menu and operations while testing new products with minimal commitment.

• Scalable: Small operations enable quick experimentation and easy scaling into multiple carts or new locations as your business grows.

On the other hand, some of the drawbacks to starting a coffee cart business include:

• Limited menu options: Space constraints restrict your offerings to simpler, smaller menus.

• Weather and location dependence: Outdoor setups are vulnerable to weather and inconsistent foot traffic, leading to unpredictable revenue.

• Regulatory hurdles: Compliance with local health and vending permits can be complex and may limit your operational flexibility.

• Seasonal variability: Foot traffic often fluctuates based on location, events, and seasons.

• High competition: Competing with established brands requires constant creativity, strong marketing, and unique offerings to stand out.

Should you start a coffee cart before opening a full-scale café?

Some aspiring café owners use coffee carts as a testing ground before committing to the high overhead costs associated with opening a brick-and-mortar café. This "proof of concept" approach allows you to fine-tune your offerings, identify customer preferences, and establish a brand presence with minimal risk.

Other advantages of using your coffee cart business as a stepping stone to a full-service coffee shop include:

• Low initial investment: Compared to the cost of opening a traditional café, which can easily reach six figures, a coffee cart requires much less upfront capital.

• Test the market: Starting with a cart allows you to gauge interest in your concept, test menu items, and assess customer preferences.

• Build a customer base: By establishing a loyal following through your cart, you’ll have a ready-made customer base if you decide to expand into a café or other locations.

• Operational flexibility: A cart offers you the freedom to experiment with different locations, service hours, and promotions, giving you valuable insights into what works best for your business.

For example, Brew Peddler in Spokane started as a mobile operation in 2022 before evolving into a traditional cafe in 2024. Andrew Tye, who co-owns the business with his wife Elizabeth Tye, said:

“The goal was always to open a brick-and-mortar with it… It is pretty cool how many people we served at those events who have come here and now become regulars.”

How to start a coffee cart business checklist

Starting a coffee cart business requires careful planning to turn your vision into a profitable venture. From conducting market research to creating a standout menu, these steps will guide you through building a solid foundation for success.

Perform market research

By understanding your local coffee scene and customer preferences, you can position your cart to meet demand while standing out from competitors. Thorough research will help you determine the best locations, develop a unique menu, and identify opportunities to fill market gaps.

Key elements of your market research should involve:

• Local coffee demand: Analyze where and when people are purchasing coffee in your target area. Are mornings the busiest time, or is there demand throughout the day? Pay attention to popular drinks—are customers gravitating toward specialty options like cold brews or seasonal lattes?

• Competitor analysis: Study competitors in your area, including coffee shops, other carts, and kiosks. Look at their pricing, menu offerings, branding, and customer service. Identify gaps you can fill. For example, can you offer faster service, unique flavors, or more convenient locations?

• Location strategy: Location is everything for a coffee cart. High-traffic areas near offices, schools, parks, or transit hubs are ideal for capturing regular customers. Seasonal opportunities like farmers' markets and events can boost visibility and sales.

For example, Philadelphia-based La Petite Tasse is located just blocks from popular museums and other high-traffic attractions. Additionally, they specialize in hand-crafted espresso drinks using local coffee beans, as well as locally baked French pastries.

Define your coffee cart business concept

Your concept coffee cart business concept should combine a unique value proposition with a strong brand identity that resonates with your target audience. Here are ways to carve out your niche:

• Specialty drinks: Offer unique beverages like seasonal lattes, flavored cold brews, or nitrogen-infused coffee. Highlighting ethically sourced or locally roasted beans can also help you stand out.

• Sustainability: Emphasize eco-friendly practices, such as using biodegradable cups, adopting a zero-waste approach, or sourcing fair-trade and organic coffee beans. This resonates strongly with environmentally conscious customers.

• Customer experience: High-quality service and customization options, like allowing customers to choose syrups, milk alternatives, or coffee strength, can elevate your brand. Personal touches, like remembering regular customers' orders, can make a big difference in customer retention.

You also need to determine whether your cart will operate from a fixed location or move between multiple sites. Each approach has its advantages and challenges, so choose based on your business goals and resources.

For example, rather than have a fixed location, 2nd Rule Coffee only participates in pop-ups and does private events in New Jersey, New York, and Pennsylvania.

Obtain business and food licenses

Operating your coffee cart business without the correct paperwork can lead to fines, shutdowns, or delays, so it's important to understand the regulations in your area. While requirements vary by region, here are the most common licenses and permits you’ll need to operate legally:

• Business license: A general license issued by your local government that allows you to legally operate your business.

• Health department permit: Required to ensure your coffee cart meets food safety and sanitation standards. This typically involves an inspection of your cart and equipment.

• Food handler’s permit: All staff preparing or handling food must have this certification, which demonstrates knowledge of food safety practices.

• Mobile vendor license: Specific to businesses operating in public spaces like streets, parks, or event venues.

Manage inventory and supplier relationships

Inventory management is crucial for keeping costs under control and ensuring your coffee cart consistently delivers quality products. Some key tips for effectively managing your coffee cart’s inventory and relationships include:

• Track demand: Use sales data to identify your best-selling items and adjust orders accordingly.

• Optimize storage: Since space is limited on a coffee cart, prioritize stocking essential, fast-selling items.

• Restocking schedule: Develop a regular restocking routine to avoid running out of popular items during peak hours.

• Negotiate pricing: Establishing a strong relationship with suppliers can often lead to better pricing, discounts for bulk purchases, or favorable payment terms.

• Ensure reliable delivery: Work with suppliers who offer dependable delivery schedules, so you’re always stocked with the essentials.

Develop your menu

Your coffee cart’s menu should be concise, emphasizing core items that can be prepared quickly and consistently in a small workspace. At the same time, your offerings should showcase a unique twist to differentiate your business from competitors.

To create a standout yet efficient menu, consider these tips:

• Limit complexity: A streamlined menu allows you to deliver high-quality drinks without slowing down service. Focus on popular favorites like lattes, cappuccinos, and cold brews, while incorporating a signature item or two that sets your cart apart.

• Seasonal offerings: Add variety and excitement with limited-time items tailored to the season.

• Focus on quality: Use premium ingredients like locally roasted coffee beans, fresh milk alternatives, and house-made syrups to enhance the flavor and perceived value of your drinks.

• Add simple snacks: If space allows, include a small selection of easy-to-store snacks like pastries, cookies, or energy bars. These pair well with coffee and can boost your average sale value.

• Test and adapt: Start with a smaller menu and gather customer feedback to identify which items are most popular. Adjust your offerings over time to align with customer preferences and sales trends.

• Strategic pricing: Encourage upselling by offering a premium size or an extra shot of espresso for a small additional cost.

For example, Luna Espresso, a mobile coffee cart in Austin that focuses exclusively on event catering, keeps their sample menus super simple. In addition to four signature lattes, their baristas also make staples like espresso, americano, cappuccino, cold brew, and regular latte.

Design your cart

The design of your coffee cart is more than just aesthetics—it’s a key part of your marketing strategy. A visually appealing and well-branded cart can draw attention, attract foot traffic, and even serve as free advertising through social media. 

Here are some tips for designing a cart that differentiates your business from the competition:

• Consistent branding: Use a cohesive color scheme, clear logos, and complementary fonts to reinforce your brand. This consistency makes your business easily recognizable.

• Eye-catching visuals: A bold, professional design with creative signage can make your cart stand out in crowded spaces. Consider elements like chalkboard menus, neon accents, or unique cart shapes to capture attention.

• Functional design: While aesthetics are important, prioritize functionality by designing your cart for smooth workflows.

Consistency in design, branding, and messaging across all platforms will ensure your coffee cart stands out and creates a lasting impression.

Integrate technology solutions

A reliable point-of-sale (POS) system designed for mobile food can help streamline several different areas of your business operations with features like:

• Mobile-friendly design: Choose a handheld POS system that is portable and can operate in environments with limited connectivity.

• Multiple payment options: Cater to customer preferences by accepting a variety of payment methods, including credit cards, mobile payments (e.g., Apple Pay or Google Pay), and cash.

• Sales tracking and cost analytics: Access detailed sales reports to help you identify trends, such as peak hours or best-selling menu items. Use this data to make informed decisions about inventory, pricing, and menu adjustments.

• Inventory management: Integrate your POS system with inventory tracking to alert you when stock is low and automate your reordering process.

• Online ordering: Allow customers to pick up orders placed online or consider collaborating with third-party delivery services.

• Loyalty programs: Implement digital loyalty programs to encourage repeat visits through rewards like free drinks or discounts.

Understand your costs

By breaking down your expenses into categories, you can monitor spending, identify opportunities for savings, and ensure your pricing covers costs while maintaining healthy margins.

To develop your coffee cart’s budget, be sure to consider essential expenses such as:

• Equipment and supplies: Purchase your cart and equip it with coffee-making essentials such as espresso machines, grinders, refrigeration for milk and perishables, and storage.

• Cost of goods sold (COGS): Track expenses for coffee beans, milk, syrups, and other ingredients. Adjust menu prices as needed to account for fluctuations in ingredient costs while staying competitive.

• Labor costs: If you hire staff, research local labor laws and tax implications to ensure compliance.

• Marketing expenses: Allocate a portion of your budget to marketing efforts such as social media ads, printed materials, and participation in local events.

• Operating expenses: Daily expenses include utilities, cleaning supplies, cart maintenance, and fuel for traveling.

Write your business plan

A well-structured business plan provides clarity on your goals, helps you stay organized, and is essential if you’re seeking funding. Key sections of your document should include:

• Executive summary: Provide a high-level overview of your business, including your concept, mission, goals, and what sets your coffee cart apart.

• Market analysis: Define your ideal customers, competition, and market opportunity. 

• Menu offerings: Outline a menu that reflects your brand, including signature items, specialty or seasonal drinks, and core coffee staples.

• Operational plan: Outline the logistics of your business, including locations, hours of operation, staffing needs, and supplier relationships. Detail how you’ll handle challenges like weather or fluctuating foot traffic.

• Marketing and branding strategy: Explain how you’ll attract and retain customers. Include plans for social media, local advertising, and customer loyalty programs.

• Financial projections: Estimate your startup costs, revenue, and expenses. Include projections for at least the first year, covering key metrics like break-even points and profit margins.

Once your business plan is complete, use it to calculate your startup costs and explore funding options. Common ways to secure capital for your food cart startup include:

• Personal savings

• Small business loans

• Crowdfunding

• Loans from friends, families, or business partners

Launch your coffee cart business

The final step is to bring all your planning and preparation to life! To have a successful launch, be sure to keep the following tips in mind:

• Final preparations: Ensure your cart is fully equipped, functional, and complies with local health and safety regulations. Test your equipment and processes.

• Soft launch: Consider starting with a soft launch to test your operations in a real-world setting. Set up in a low-pressure location or for a limited audience, like friends and family, to gather feedback and make adjustments.

• Offer promotions and incentives: Launch with special promotions like discounted drinks, free samples, or a loyalty program to encourage first-time customers to return.

• Engage with customers: Provide excellent customer service and ask for feedback. Positive interactions will help establish your reputation and encourage word-of-mouth referrals.

• Monitor and adapt: Track sales, inventory, and customer preferences during the first few weeks to identify what’s working and what needs improvement. Use this data to refine your menu, optimize your location strategy, or adjust pricing as needed.

Launch your coffee cart business with the right tools

Starting a coffee cart business offers an exciting opportunity to break into the food and beverage industry with lower risks and greater flexibility. However, having the right tools to streamline your operations and provide a stellar customer experience is essential for your business to thrive. 

Fortunately, with a robust POS system like Toast, you’ll have access to critical features like inventory management, cost analytics, online ordering, and much more all in one simple-to-use platform.

To discover all the ways Toast can help you open and run your coffee cart business, be sure to check out all of the great features!