How to Start a Coffee Shop

Thinking about how to start a coffee shop? If the idea of brewing up good vibes, meeting cool people, and serving up delicious drinks gets you buzzing, you’re in the right place.

Sure, the coffee world’s got some big names—but there’s plenty of room for fresh ideas and neighborhood charm. To turn your dream into your daily grind, here’s how to start a coffee business (and actually make it work) in 10 practical steps.

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TL;DR

In a nutshell, what’s the secret to how to open a coffee shop? It comes down to a solid business plan, market research, funding, and a great location. Once you’ve covered these bases, you need to:

• Build a standout brand.
• Take care of licenses.
• Stock up on equipment.
• Hire a stellar team.
• Spread the word.

Last on the list—but super important—use the right tools to keep things running smoothly.

How to start a coffee shop in 10 steps

Ready? Let’s do this.

1. Write a business plan for your coffee shop.

First things first—start with a business plan. Even for the coziest little coffee business, this step is a must. Think of it as your roadmap: it lays out your goals and exactly how you’re planning to make them happen. It doesn’t have to be super formal, but it should cover the basics. A typical business plan includes:

• What your business is, and who it serves.
• How you intend to make money.
• Who your target market is (and where) with an analysis of the market potential.
• Your primary competitors.
• Your sales and revenue projections.
• Your sales and marketing strategy.
• Key milestones, goals, and timelines for growth.
• Strengths, weaknesses, strengths, and opportunities for your business (SWOT).

This isn’t just a handy way to get your ideas in order—it’s also something lenders and investors want to see if you’re looking for funding to get your coffee shop off the ground.

2. Do your market research.

Time to do a little digging on where you’d be setting up a coffee shop. Market research is key to figuring out if your dream spot is actually a good fit. The goal here is to answer questions like:

• Is there a need for another coffee shop in your area?
• Are your target consumers willing to pay the prices you need to sustain a profit?
• Will you be able to compete with existing businesses?
• Will you be able to afford the overhead?
• What can you do differently to stand out in your market?

There are tons of ways to gather this info:

• Chat with potential customers.
• Run focus groups.
• Hit the streets to ask questions.
• Send out surveys. 
• Tap into existing data from local government sites, research reports, or your local business association. 

The idea is to collect a mix of stats and real-world insights so you get a clear picture of who your customers are and what they actually want.

3. Get financing for your coffee shop.

Now the fun stuff—securing loans and financing (insert confetti explosion of excitement!). 

To get the ball rolling, start by jotting down all the possible ways you could fund your coffee shop, then start reaching out and filling out those applications. 

Your business plan will come in super handy here, since it’ll give you a solid idea of how much cash you’ll need to get started. 

Some common funding options are:

• Loans. Small business loans are often available through your municipality, county, state, and even the federal level. You can also talk to banks in your area to see what they have to offer. Go to the SBA website for information on what loans are available in your region.
• Grants. There are many different federal and state-level grants available to small businesses, along with those from private foundations. Check out USBusinessGrants.org for a comprehensive list.
• Personal money. Your own savings and investment from friends and families are your third option for financing. If you go this route, make sure you’re clear on investment and payment terms to make sure everyone’s taken care of.

4. Find the right location for your coffee shop.

Based on your market research, funding availability, and business plan goals, start looking for a location that will give you the best chance of success. Ideally, you’ll want something that is:

• Centrally-located.
• Easy to access.
• Highly visible.
• Receiving consistent foot traffic.
• The right size.

Take your time. Make a quick list of potential spots and start keeping an eye on the foot traffic in the area. Think about things like where commuters pass through, and any other factors that could give one spot an edge over the others. 

Go for the location with the most foot traffic and appeal, but don’t forget to keep costs in mind.

5. Brand your coffee shop.

What kind of coffee shop do you want to create? What’s the vibe or personality of your brand? Think about what customers will see, hear, smell, taste, and feel when they walk in. These are the big questions behind your shop’s branding. 

Take some time to figure out who you want to be as a business and jot down a brand strategy and identity. This branding will guide everything—from the look of your shop to how you train your team, the name and logo you choose, and all the marketing you do to draw in customers.

6. Get your license and permits in order.

Before you start making coffee and selling sweets, make sure you’ve filed all relevant city, state and federal applications for licenses and permits. This will all need to be in place before you start operating. Here are the typical things you’ll need:

• EIN (Employee Identification Number)
• Business license
• “Doing Business As” License (DBA)
• Retail Food Service License
• Resale License for Sales Tax
• Sign Permit
• Insurance
• Food Handler’s Permit
• Building Health Permit
• Live Entertainment License

The U.S. Small Business Administration is a key resource to make sure you’re playing by all the rules and not missing anything important.

7. Order your equipment and supplies.

Next up is creating a list of supplies that you’ll need to source. You’ll want to jot down everything from one-time buys to stuff you’ll need to restock regularly. Include things like:

• Coffee beans
• Espresso or coffee machines
• Coffee grinder
• Water filtration system
• Fridges and freezers
• Food prep gear
• POS system
• Tables, chairs, and other furniture
• Cups (for here and to-go)
• A menu board
• Display cases and merch or pastry items

Think through everything you’ll need day to day, and find reliable suppliers who can keep up with your orders without breaking the bank.

8. Hire baristas, cashiers, and other employees.

Unless you’re planning to run the whole show solo (no small feat!), you’ll need a solid team to help keep things running smoothly. 

That means hiring baristas, cashiers, and maybe even someone to handle inventory or back office tasks. Take a little time to figure out exactly who you need on your crew, then write up clear job descriptions so you’re ready to start the search.

An employee hiring and onboarding tool can make the hiring process way easier—and more efficient. The right tool can be your sidekick from the start by automatically posting ads to job boards, tracking applicants as they go through the interview process, and creating employee onboarding programs for new hires.

9. Market your coffee shop business.

Once you’re ready to swing those doors open, it’s go-time for your marketing campaign! This is your chance to build buzz and get people excited about your coffee shop. Here are a few fun ways to get the word out:

• Host an opening day event with prizes and exclusive offers.
• Send out advertisers in local newspapers, flyers, and through your BIA.
• Network and collaborate with other businesses in town to spread the word.
• Create a social media presence to share your journey and interact with the community.
• Create and use engaging signage that aligns with your brand and message.

Whatever approaches you go with, keep it all cohesive—when your messaging is consistent, it’s easier for customers to remember you (and show up!).

10. Get the right tools to run your coffee shop.

Last but not least, make sure you’ve got all the right tools in your toolkit to keep things running smoothly. You’ll need a solid point-of-sale (POS) system, something to help manage inventory, and a few handy tools for marketing. 

And while it may be easy to keep things organized with a pen and paper at first, you’ll need payroll, time clock, and scheduling software for hourly teams down the line. Better yet, get a head start and look for an all-in-one solution!

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Should you start a coffee shop?

Coffee shop culture isn’t just about a love of java—it’s a booming business. Americans drink a lot of it (we're talking billions of dollars' worth every year). Sure, not everyone’s grabbing a latte daily, but there’s still plenty of room for small shops to thrive. The trick? Standing out with something fresh and unique.

Pros to starting a coffee shop

• You’re independent, and you’re an entrepreneur
• You’re bring a vision to life and owning its growth
• You’re engaging with your local community
• You’re employing people within your community
• You’re creating an oasis for people to sit and relax
• If you’re really successful, you could turn into the next Starbucks

Cons to starting a coffee shop

• Profit margins could be good, bad, and anything in between
• You’re the head honcho, in charge of, well, everything
• There are lots of things to juggle to run a successful business
• You risk losing your investment if your business is a failure

Owning a coffee shop takes a lot of time and effort. But the potential rewards are there, and the feeling of fulfillment from a successful venture? There’s nothing like it.

Take payroll stress off your plate with Homebase 

The right setup can seriously streamline your day-to-day and let you focus on what you love about coffee shop culture.

Meet Homebase!

If you’re dreaming of running a smooth, stress-free coffee shop, Homebase might just become your new best friend. It’s an all-in-one tool that handles the behind-the-counter stuff—like scheduling software for hourly teams, time clock, payroll, and team communications—so you can focus on crafting the perfect cappuccino instead of juggling spreadsheets.

Need to build a weekly schedule in minutes? Done. 

Want employees to clock in and out from a tablet or their phones? Easy. 

Plus, Homebase helps you stay compliant with labor laws and keeps everything in one secure place—so you’re not bouncing between ten different apps.

Built with hourly teams in mind, Homebase makes small biz life easier from the get-go. The best part? As your business grows, Homebase helps you hire, schedule, track time, pay your team, and stay compliant—all in one simple app that grows with you.

"The first time creating a work schedule for my team was stressful and frustrating. Someone suggested Homebase. The customer service was amazing, they were patient and helpful in getting set up and comfortable. Smooth sailing now!" – Lori Bishop, Owner, Blush Tea and Coffee

Try Homebase free today and see why 100,000+ small businesses trust us to make their teams unstoppable.

How to start a coffee business FAQs

How much money do I need to open a coffee shop?

Opening a coffee shop typically costs anywhere from $80,000 to $300,000, depending on your location, size, and concept. Smaller setups like kiosks or carts can start around $25,000, while full-service cafes with seating and custom build-outs can climb higher. 

Your biggest expenses will include rent, renovations, equipment (like espresso machines and grinders), licenses, staffing, and initial inventory. Keep it lean if you're on a budget. Even if you're aiming for a premium experience, plan carefully to avoid surprises.

How profitable is a coffee shop?

A coffee shop can be pretty profitable thanks to the high markup on drinks, but net profit margins typically range from 2–15% after covering rent, labor, and supplies. Profitability depends on factors like location, customer volume, and how well you manage costs. 

A successful shop can earn $60,000–$160,000 a year in profit once it's up and running, but expect it to take 1–2 years to hit solid, reliable profits.

What licenses do I need to open a coffee shop?

Opening a coffee shop means you'll need a few key licenses to keep everything legal and smooth. You’ll need:

• a business license to operate legally in your area.
• the food establishment permit if you’re serving food or drinks, which says your shop meets health and safety standards.
• a sales tax permit to collect sales tax from customers.
• a liquor license if you plan to serve alcohol too (like a wine/coffee combo).
• employee identification numbers (EIN) for tax purposes if you have staff.
• local zoning permits to make sure your location is approved for business use.

What are the monthly expenses for a coffee shop?

Monthly expenses for a coffee shop include:

• Operating Costs: $13,000-$65,000
• Insurance: $500-$8,000/month
• Utilities: $1,000-$1,200/month
• Marketing: $500- $5,000 (3-6% of sales)
• Food Costs: $5,000-$25,000 (30-35% of sales)
• Labor: $2,500-$25,000 (24-40% of sales)

Running a coffee shop isn’t cheap—your monthly expenses will probably eat up around 75–85% of your sales. And in those early years? Don’t be surprised if you have to put a little extra cash into the business to cover things like staffing, food costs, or getting the word out. It’s all part of building something great.

Staying on top of your costs means you’re setting yourself up to stay in control, avoid surprises, and make sure your coffee shop’s on track to turn a profit.