Ultimate Guide to Starting a Coffee Shop

If you’re thinking about starting a coffee shop, there’s a lot to consider. From the equipment you’ll need to the legal requirements for setting up your business, it’s important to do your research and plan carefully before taking the plunge.

In this guide, we’ll cover all the basics of starting a coffee shop so you can get an idea of what’s involved and start planning your business with confidence.

Table of Contents

What is a Coffee Shop?

Coffee shops are usually small businesses that focus on selling coffee and tea. They often have a limited menu, and they may also sell pastries or other light snacks. Many coffee shops also have Wi-Fi so that customers can work or study while they are there. Some coffee shops also have outdoor seating.

The first coffee shops were in Italy and the Middle East, and they quickly became popular. Today, there are coffee shops all over the world.

Why would I want to start a Coffee Shop?

The coffee industry is booming, and there are plenty of reasons to get in on the action. From the increased demand for high-quality coffee to the ever-growing popularity of specialty coffee drinks, now is a great time to start a coffee shop. Here are three reasons why starting a coffee shop could be a great business decision:

  1. Growing demand for coffee. The coffee industry is experiencing strong growth, with global sales expected to reach $48 billion by 2022. This increase in demand is being driven by factors such as aging populations and rising disposable incomes. As more people are able to afford to purchase coffee on a regular basis, the market for coffee shops will continue to grow.
  2. Specialty coffee drinks are becoming more popular. In addition to traditional coffees and teas, more and more people are interested in trying out new and innovative coffee drinks. This trend is being driven by the growing popularity of specialty coffee shops such as Blue Bottle and Intelligentsia. As people become more adventurous in their taste buds, they will be looking for new places to get their fix.
  3. Coffee shops are versatile businesses. One of the great things about starting a coffee shop is that they can be adapted to fit any number of different business models. For example, some coffee shops focus on serving food, while others focus on providing a space for people to work or socialize. No matter what your vision for your business is, there’s a way to make it work with a coffee shop.
  4. Coffee shops are profitable. One of the biggest reasons to consider starting a coffee shop is that they can be quite profitable. The margins in the coffee industry are high, which means that you can make a good profit even if you don’t have a lot of customers. In addition, many coffee shop owners find that they can increase their profits by selling food items and other merchandise.
  5. Coffee shops have low start-up costs. Another reason to consider starting a coffee shop is that they have relatively low start-up costs. You’ll need to purchase some equipment, but you won’t need to spend nearly as much money as you would if you were starting another type of business. Additionally, you can often find used equipment at a fraction of the cost of new equipment.
  6. Coffee shops provide a much-needed service. In today’s world, people are always on the go and they often don’t have time to stop and enjoy the simple things in life. Coffee shops provide a much-needed service by giving people a place to relax and take a break from their busy lives. In addition, coffee shops often become community gathering places where people can meet and socialize.

If you’re thinking about starting a business, a coffee shop could be a great option. With the growing demand for coffee and the popularity of specialty drinks, now is a great time to get started. Plus, coffee shops are versatile businesses that can be adapted to fit any number of different models.

How do I start a Coffee Shop?

Starting a coffee shop requires more than just a love of caffeine. To set up your business, you’ll need to take care of the following:

  1. Choose a Business Structure
  2. Get a Business License
  3. Register Your Business Name
  4. Find the Right Location
  5. Outfit Your Space
  6. Set Up Your Accounting System
  7. Get Insurance
  8. Hire Employees
  9. Develop Your Menu

1. Choose a Business Structure

When you’re starting a business, one of the first decisions you’ll need to make is what legal structure to choose for your company. The type of business entity you establish will have important implications for how much personal liability you face, how much taxes you’ll pay, and how easy it will be to raise money.

If you’re opening a coffee shop, that decision becomes even more complex because coffee shops can take on many different forms. Will your coffee shop be a hip hangout for young professionals or a cozy neighborhood spot for retirees? A destination for tourists or a local gathering place for families? The answers to these questions will help you decide which business structure is right for your coffee shop.

Sole Proprietorship

If your coffee shop will be a small operation with just a few employees, and you plan to be actively involved in its day-to-day operations, a sole proprietorship might be the right choice. This business structure is the simplest and easiest to set up, and it offers the most flexibility when it comes to decision-making. However, it also exposes you to the most personal liability; if your coffee shop is sued, or if it incurs debt that you can’t repay, your personal assets could be at risk.


A partnership is similar to a sole proprietorship in that it’s easy to set up and offers flexibility when it comes to making decisions about your business. But with a partnership, there are two or more owners, which means there’s also increased personal liability. If one partner mismanages the business or runs up debt, the other partners could be held responsible—even if they weren’t involved in those decisions.

Limited Liability Company (LLC)

An LLC is a hybrid legal structure that offers the limited liability protection of a corporation with the tax benefits and flexibility of a sole proprietorship or partnership. If you choose this structure for your coffee shop, your personal assets will be protected in the event that your business is sued. You’ll also have the option of choosing how your LLC will be taxed—either as an S corporation, which means taxes are paid at the individual level, or as a C corporation, which means taxes are paid at the corporate level.


A corporation is a legal entity that’s separate from its owners—meaning its owners have limited personal liability. This makes it an attractive choice for businesses that are expanding quickly or raising money from outside investors because it signals that the company is here to stay. But corporations also come with some downsides; they tend to be more expensive and complicated to set up than other types of businesses, and they’re subject to double taxation (corporate income tax plus shareholders’ dividend tax). That said, if you’re planning to grow your coffee shop into a national chain, a corporation might be the right choice.

2. Get a Business License

Before you can open your doors to customers, you need to obtain a business license for your coffee shop. Depending on the state in which you’re located, the process for getting a business license can vary. However, there are some general steps that are usually required in order to obtain a business license for your coffee shop. Here’s what you need to know.

Determine what type of business license you need. The first step is to figure out what type of business license you need in order to operate your coffee shop. The type of business license you need will depend on the state in which you’re located as well as the type of business you’re running. For example, if you’re selling food, you’ll need a food service license. If you’re hiring employees, you’ll need an Employer Identification Number (EIN). You can find out what type of business licenses are required in your state by contacting your local Chamber of Commerce or visiting your state’s website.

Obtain the necessary permits and approvals. Once you know what type of business licenses are required, the next step is to actually obtain them. This usually involves filling out some paperwork and paying a fee. In some cases, you may also need to submit to a background check or get fingerprinted. You can find out more about the specific requirements for obtaining a business license in your state by contacting your local Chamber of Commerce or visiting your state’s website.

Complete any additional requirements. Depending on the type of business you’re running, there may be additional requirements that must be met before you can obtain a business license. For example, if you’re planning on serving alcohol at your coffee shop, you’ll need to get a liquor license in addition to your business license. You can find out more about the specific requirements for your coffee shop by contacting your local Chamber of Commerce or visiting your state’s website.

3. Register Your Business Name

Most states require you register your business name with the state. Register your business name through the Secretary of State’s office in your state. Each state has its own process for registering business names, so you’ll need to check with the Secretary of State’s office in your state to find out what the requirements are. In most cases, you’ll need to fill out an application and pay a fee. The state will then conduct a search to make sure your business name is available and not already in use.

The other way to register your business name is through the Internal Revenue Service (IRS). The IRS doesn’t actuallyregister business names, but they do issue Employer Identification Numbers (EINs). An EIN is basically a social security number for your business. You’ll need an EIN if you want to open a bank account or apply for credit in your business’s name. You can apply for an EIN online, by mail, or by fax.

4. Find the Right Location

Before you open your doors, you need to choose a location for your coffee shop. It might seem like a daunting task, but if you break it down into smaller parts, it’s manageable. Here are a few steps to take when selecting a location for your coffee shop:

1. Know Your Target Customer

Your first step is to understand who your target customer is. Are you aiming for a young, hip crowd? Or are you more interested in attracting families and professionals? Once you know who you want to reach, you can start narrowing down your list of potential locations. For example, if you’re hoping to attract young adults, opening near a college campus or trendy neighborhood is a good bet. But if you’re looking to appeal to families, you’ll want to be in a more suburban area.

2. Do Your Research

Once you have an idea of the type of customer you want to reach, it’s time to start doing some research. Check out the demographics of various neighborhoods and see how they match up with your target customer. Pay attention to things like median income and age range—you want to make sure there’s a good fit between the people who live in an area and your desired customer base. You should also look at things like foot traffic and parking availability. After all, you want potential customers to be able to easily find and access your shop.

3. Consider Rent Prices

Of course, finding the perfect location won’t do you any good if it’s too expensive to rent or buy a property there. When considering rent prices, it’s important to strike a balance between being in a high-traffic area (which will likely be more expensive) and being in an affordable location (which might have less foot traffic). It’s also worth considering whether it would be more cost-effective to buy a property rather than renting—if you plan on staying in one location for many years, owning your space can save you money in the long run.

5. Outfit Your Space

You want a space that feels inviting and comfortable, with enough room for people to linger. Once you’ve found the perfect spot, it’s time to start outfitting your space. Here are a few tips to get you started.

Create a Floor Plan

The first step is to create a floor plan. This will help you determine how much furniture you need and where it should go.

You’ll also need to take into account factors like plumbing and electrical outlets, as well as zoning regulations. Zoning regulations can dictate everything from the size of your signage to the number of parking spaces you need. It’s important to be familiar with the regulations in your area so that you can avoid any costly surprises down the line.

Furniture and Decor

Your furnishings should be comfortable and aesthetically pleasing. Think about adding some cozy couches or armchairs for people who want to stay awhile and chat. And make sure there’s plenty of surface area for people to put their coffee cups down without having to worry about them getting knocked over.

When it comes to decor, less is more. A few carefully curated pieces will make your space feel warm and inviting without being cluttered or overwhelming.


Lighting is important for both practical and aesthetic reasons. You’ll want to make sure your space is well-lit so that people can see what they’re doing and so that your coffee looks its best. But you don’t want your space to feel like a hospital waiting room; a few strategically placed lamps will do the trick.

6. Set Up Your Accounting System

As a new coffee shop owner, you have a lot of things to think about. One of the most important things you’ll need to decide is what kind of accounting system to use for your business. The right accounting system can save you time and money, so it’s important to choose wisely. Here are some things to keep in mind as you make your decision.

First, you’ll need to decide whether you want an off-the-shelf solution or a custom solution. Off-the-shelf solutions are typically less expensive and easier to implement, but they may not be a perfect fit for your business. Custom solutions tend to be more expensive and require more work to implement, but they can be tailored specifically to your business’s needs.

Second, you’ll need to decide what features are most important to you. For example, some accounting systems include features like inventory management or online ordering, while others do not. Knowing which features are most important to you will help you narrow down your options.

Third, you’ll need to consider ease of use. Some accounting systems are very user-friendly, while others require more training and experience to use. If ease of use is important to you, be sure to look for an accounting system that is simple and user-friendly.

Finally, you’ll need to consider price. Accounting systems can range in price from a few hundred dollars to several thousand dollars. Be sure to compare prices and get quotes from multiple vendors before making your final decision. By taking the time to do your research, you can be sure that you’re choosing the right accounting system for your coffee shop.

7. Get Insurance

If you’re thinking about starting a coffee shop, one of the first things you need to do is figure out what kind of insurance you need to protect your business. While there are many different types of insurance available, there are three that are particularly important for coffee shops: product liability insurance, property insurance, and workers’ compensation insurance.

Product liability insurance protects your business from claims arising from injuries or illnesses that occur as a result of using your products. For example, if someone gets food poisoning after eating a pastry from your coffee shop, they could sue you for damages. Property insurance protects your business in the event that your property is damaged or destroyed by fire, theft, weather, or other causes. Finally, workers’ compensation insurance covers medical expenses and lost wages for employees who are injured on the job.

8. Hire Employees

If you’re opening a coffee shop, one of your most important tasks will be hiring the right employees. After all, your employees will be the face of your business, and they’ll have a direct impact on your customers’ experience. So, how do you find the best employees for your coffee shop? Start by looking for these four qualities.

A passion for coffee. This may seem like a no-brainer, but it’s important to find employees who are passionate about coffee. They should be able to talk knowledgeably about different types of coffee, brewing methods, and so on. Not only that, but they should also be excited about sharing their knowledge with others. If your employees are passionate about coffee, they’ll be more likely to provide excellent customer service.

Great customer service skills. Speaking of customer service, it’s important to find employees who are friendly and outgoing. They should be great at handling customers’ questions and concerns, and they should be able to do so in a professional manner. If you can find employees who genuinely enjoy interacting with customers, you’ll be off to a great start.

The ability to work independently. A lot of times, coffee shops can get pretty busy—which means your employees will need to be able to work independently and manage their time well. They should be able to stay focused and organized even when things are hectic. Additionally, it wouldn’t hurt if they were able to take initiative and think on their feet; that way, they can solve problems as they arise without having to rely on you or other supervisors for help every step of the way.

Flexibility. finally, it’s important to find employees who are flexible—both in terms of their schedule and their job duties. For example, you might need someone who is available to work early mornings or late nights, as well as weekends or holidays. As for job duties, your employees should be willing and able to perform whatever tasks are necessary to keep the coffee shop running smoothly; that might mean cleaning tables, taking out the trash, or even restocking shelves from time to time. If you can find individuals who possess all of these qualities, you’ll have no trouble creating a strong team of employee for your coffee shop!

9. Develop Your Coffeehouse Menu

A well-developed menu is essential for any foodservice business, but it’s especially important for coffee shops. Why? Because coffee shop menus are often short and straightforward, which means there’s no room for error. Every item on the menu must be executed perfectly in order to create a positive customer experience.

In this section, we’ll share some tips on how to develop the perfect menu for your coffee shop. We’ll cover everything from developing unique selling points to designing an attractive layout. By the time you’re finished reading, you’ll have all the tools you need to create a top-notch coffee shop menu that will please your customers and help boost your bottom line.

1. Unique Selling Points

When it comes to developing a successful coffee shop menu, one of the most important things you can do is identify your unique selling points (USPs). USPs are the qualities that make your business stand out from the competition. They’re what make your coffee shop special. For example, maybe you use fair trade coffee beans or offer vegan-friendly options. Whatever your USPs may be, make sure they’re prominently featured on your menu. Customers should be able to look at your menu and immediately see what sets your business apart from others in the industry.

2. Attractive Layout

Once you’ve identified your USPs, it’s time to start thinking about layout. Your menu should be easy to read and aesthetically pleasing. Consider using white space to break up text and make it easier on the eyes. You might also want to use images or icons to highlight specific items. And don’t forget about branding! Make sure your menu reflects the overall look and feel of your brand identity.

3. Pricing Strategy

Pricing is always a delicate issue when it comes to foodservice businesses. You want to charge enough to cover your costs and make a profit, but you don’t want to price yourself out of the market. When developing a pricing strategy for your coffee shop menu, start by looking at your competitors’ prices. Then, determine what kind of margin you need in order to stay afloat and make a profit. Once you have a good understanding of the market and your own costs, you can start setting prices for individual items on your menu.

How much does it cost to start a Coffee Shop?

Starting a coffee shop can be a great way to be your own boss, build community, and make people happy. But, of course, it takes significant time and money to get off the ground. How much money exactly? It depends on a variety of factors – from the cost of real estate in your area to the type of equipment you need – but there are some rough estimates you can use as you start planning your business.

The Cost of Opening a Coffee Shop

There are several key areas where you’ll need to spend money when opening a coffee shop. Here are some rough estimates:

  • Real Estate: $2,000 – $5,000 per month
  • Equipment: $20,000 – $30,000
  • Initial Inventory: $3,000 – $5,000
  • Marketing & Promotions: $500 – $1,500 per month
  • Licenses & Permits: $500 – $2,000
  • Insurance: $250 – $500 per month
  • Professional Fees (accounting, legal): $1,500 – $2,500
  • Miscellaneous Startup Costs (furniture, decor): $2,000 – $5,000

As you can see, there are plenty of costs to consider when starting a coffee shop. The good news is that many of these costs (real estate, professional fees) are one-time expenses. Others (equipment, inventory, marketing) will be ongoing costs that you’ll need to account for every month.

Starting a coffee shop is a big undertaking – but it doesn’t have to be an expensive one. By careful planning and consideration of all the major costs involved in opening a coffee shop, you can make your dream business into reality without breaking the bank.

How do I find customers for my Coffee Shop?

You’ve just opened a new coffee shop. Congratulations! Now the hard work begins. How do you get people in the door? And more importantly, how do you keep them coming back?

1. Start with your existing network.

The first place to start is with your existing network. let your friends, family, and colleagues know that you’ve opened a new business and ask them to spread the word. Also, be sure to promote your business on your personal social media accounts. You never know who might be looking for a new place to get their caffeine fix.

2. Get involved in your community.

One of the best ways to find customers for your coffee shop is to get involved in your community. Attend local events, sponsor a little league team, or host a fundraiser at your shop. When people see that you’re invested in making your community a better place, they’ll be more likely to support your business. Plus, it’s a great way to meet new people and make some valuable connections.

3. Use social media.

Social media is a powerful tool that can help you reach a wide audience with very little effort. Make sure you have an up-to-date and active presence on all the major platforms, and don’t forget to use relevant hashtags so people can easily find you. You can also use social media to run targeted ads and promote special offers or events at your shop.

4. Make sure your café is visible.

Another way to attract new customers is to make sure your café is visible and easy to find. Make sure your sign is large and easy to read from the street. You may also want to consider investing in some exterior lighting to make your café more visible at night. Additionally, make sure your café is listed on all major online directories (Google Maps, Yelp, etc.), so potential customers can easily find you when they’re searching for a coffee shop in the area.

5. Offer discounts and promotions.

Everybody loves a good deal, so offering discounts and promotions is a great way to attract new customers to your café. Consider offering a discount on the first purchase or giving away a free drink with each purchase of food item. You could also run a promotion for loyal customers—such as buy 10 drinks and get one free—to encourage repeat business. Whatever discounts or promotions you decide to offer, make sure they’re prominently displayed so potential customers are aware of them when they walk in the door.

Attracting new customers is essential for any businesses’ success—and that includes coffee shops! By getting involved in your community, making sure your café is visible and easy to find, and offering discounts and promotions, you can bring in new business and keep your café thriving for years to come.

With careful planning and attention to detail, starting a coffee shop can be a rewarding experience that leads to years of success. By taking care of the basics like choosing the right location and registering your business name, you’ll set yourself up for success from day one. And don’t forget—developing a strong menu is key to keeping customers coming back for more. With these tips in mind, you’re well on your way to becoming a coffee shop owner!

About Jeremy Reis

Jeremy Reis is a serial entrepreneur from the Franklin, Tennessee area. Jeremy is the founder of multiple businesses and is the VP of Marketing for CRISTA Ministries. Jeremy has his MBA with a focus in Entrepreneurship from The Ohio State University.