Selling Coffee Online Business
Coffee is a feature of daily life that people in the private and business worlds take for granted. You can also expect significant year-over-year growth in this industry, just like if you sell wine online. Due to its high demand, starting an online coffee business is a smart idea .
Itâs helpful to know some coffee statistics to demonstrate how much opportunity this niche holds:
- Roughly $75 billion is spent each year on coffee in the United States alone.
- The United States coffee industry represents 1.6% of the nationâs gross domestic product .
- The average coffee drinker spends about $76 on coffee each month, with some estimates as high as $92 per month.
- Women spend about $400 more per year on coffee than men do.
- The average coffee drinker consumes about three cups per day.
If youâre ready to invest in your coffee venture, it can become an incredible source of fun and financial return for you. Letâs look at the details of this business model.
Get Into The Coffee Shop Community
Believe it or not, the coffee shop owners community is pretty big. And you need to get involved.
Not only do you get valuable trade techniques and opportunities, its also lots of fun.
You get to go to trade shows. You meet amazing people and make great friends. And you never know where your big break might come from.
You can talk to other people in your industry and other business owners in general, to get business tips, advice, and hacks for faster growth.
Check out The National Coffee Association for dates of conventions and for coffee related news.
Also, dont hesitate to get involved online through Facebook. Follow groups on Facebook with other coffee shop owners to get ideas on new products and services to offer and more efficient ways to run your business.
Its Less About The Coffee And More About What Comes With It
You need to have a concept, not just great coffee. Coffee shops are all about community and ambiance. You should turn your concept into your unique selling point and translate that into your value proposition. Starbucks started that way, and you should too.
As far as the coffee itself, you should have signature drinks, something that no one else is doing. Food is also a must, which is an opportunity to make your retail coffee business stand out. You dont have to be a chef, but you could partner with someone local who makes unique treats. Perhaps a gourmet food truck owner could be an option as a partner. Thats a win-win, and you could cash in on the buy local trend.
Mission-based concepts are also an opportunity. Go beyond corporate social responsibility and give back. It can give a lot of power to your brand. And as with any business, you should also look for market gaps. What might customers want that other coffee shops in your area dont have? It could be wine, entertainment, or a signature food item. Again, its less about the coffee and more about what comes with the coffee.
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Determine Your Coffee And Food Pricing
Proper pricing is crucial to your coffee shops survival. Youll want to ensure all of your product costs are covered while offering fair prices to your customers. Use menu engineering to determine which products are your plow-horses, stars, dogs, and puzzles in terms of profitability and popularity. Remember, it may take some time for you to create the right menu pricing strategy for your coffee shop that boosts your menu items profit and popularity. The easiest way to get a feel for the pricing standards in your area is to check out the competition.
Decide What Niche To Concentrate On
The coffee industry is one of the industries that does not have clear cut niches like other industries. This is so because any one who decides to open a coffee shop knows that the core of his or her business is to sell assorted coffee howbeit served in different flavors to his or her customers as requested by them.
- Coffee Shops
The Level of Competition in the Industry
The fact that starting a coffee shop business is easy to start, requires low start up capital, requires no technical skills and it is a profitable venture makes it one of the businesses that loads of people would want to start hence the high level of competition in the industry.
There are different levels of competition in the coffee shop business and it exists between larger coffee shops like Starbucks, Costa Coffee and other big time coffee shops. So also there are competitions between smaller coffee shops especially those who are involved in the operation of mobile coffee shop.
The truth is that, despite the level of competition in the coffee shop business, entrepreneurs who are running the business are still making their profits and some of them generate as 50 percent turnover rate especially those that are well positioned and over time have been able to secure loads of loyal customers.
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Finding The Perfect Franchise
Ambitious entrepreneurs are taking advantage of any gaps in the rising coffee shop business market.
Luckily, there are a variety of business models in the coffee industry to explore from a coffee van with Cafe2U and Really Awesome Coffee to more traditional coffee shop setups like with Dunkin Donuts, Starbucks and Costa Coffee.
Opening your very own coffee business is an exciting step, no matter what your future goals are. Franchises like those that make coffee are extremely popular and can be quite lucrative.
While some people prefer to drink their coffee at home, 80 per cent of consumers buy coffee from a coffee shop at least once a week. 16 per cent travel to a local cafe daily. Signs of the £10bn coffee shop sector slowing down dont seem to exist the industry has been steadily growing for over 20 years.
Step : Register For Taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It’s really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation .
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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Craft Your Unique Coffee Shop Brand
The foundation of your brand should be built on the same core values and company culture you seek to exemplify. Once established, youll want your brand to be consistent and recognizable.
To craft a brand that is a true representation of your values, ask yourself:
Who you are
To help you determine the coffee shop brand that is right for you, check out Restaurant Branding Ideas: How to Build Your Restaurant Brand.
Find A Good Location With Reasonable Rent
Before opening a coffee shop, understand why they’re so popular. First of all, coffee shops are great places to socialize and meet up with friends, or to pass the time reading or surfing the web while enjoying a beverage and snack. Coffee shops are also a popular place for informal business meetings, or for students wanting to catch up on schoolwork. Walk into any popular coffee shop and you’re likely to see a realtor reviewing listings with a client, or a group of students collaborating on a school project.
When selecting a location, make it close and convenient for the types of customers your coffee shop will draw.
If you are franchising or buying an existing business, you won’t have much say in location, but you should still do your research and decide whether the existing or selected location is desirable.
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Decide What Coffee Products You Want To Sell
After you know your target audience, you can determine what type of coffee to sell that will best suit their needs. Determine if you want to offer cups for Keurig, pods for Nespresso, coffee beans, or a combination. According to the NCA, 41% of coffee drinkers own a single-cup machine, while 63% of home coffee drinkers use a drip-brew machine.
When deciding what products you want to sell, be sure to look at what your competitors have on their shelves and online. You will want to offer products that set your business apart, while keeping up with current coffee trends.
How To Start A Coffee Roasting Business
Are you passionate about coffee? Do you friends know you as a Coffee Nerd? Do you already enjoy the process of brewing specialty coffee at home, buying green coffee beans and roasting them to perfection? Have you made a study of the science of it, creating blends your family and friends crave?
Do you also have a good head for business? Add those traits together, and you may have what it takes to start your own coffee roasting business. Got that Full of Beans feeling? Lets get started.
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Create A Business Plan
Now that youve sorted out your finances, you can look towards composing a business plan for your coffee shop franchise. Writing a coffee shop business plan is easier than you think, and many business owners actually love doing it.
Business plans are a way for you to show how passionate you are about your business and where you think you can take your business in the future. It just seems scary because it is a large document that requires some research and a lot of time.
The great thing about building a business plan is that it can actually be helpful outside of presenting your business idea to other individuals or other companies. It can actually help you make more sense of what you want to do and where you want to go with your business.
In fact, some of the components of a business plan are in the next few steps that you have to complete for your business. Your business plan is just a neat guide to sew everything together.
Find Professional Service Staff
To find reliable personnel, start developing portraits of your future workers. What should they look like? What qualities do they need? Then, create a catchy job description and publish it on job portals and social networks. Dont forget to prepare for interviewing your potential employees think about questions you want to ask them.
Remember that hiring the right people will be one of your biggest challenges. And as much effort you’ll have to put in retaining your employees. That is why it’s important to develop a nice motivation system with bonuses, extra days-off, lunches on the house, and so on. Besides, you will have to combine friendliness with more or less strict control. Otherwise, your employees may relax too much and spoil your business.
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Concept Branding And Design
It’s not vital for you to have worked in a café before, but as with any business, industry experience goes a long way. If you dont have any prior experience, it’s a good idea to spend at least a few weeks working in a similar establishment to the kind you want to open.
If you choose a business to learn from thats in a different geographic area, there won’t be any issues with competition, and you’ll find people are surprisingly receptive to offering advice if you’re honest about what you’re planning to do.
When doing her research, Sahar Hashemi, the co-founder of Coffee Republic, spent a day on the Circle Line, getting off at each of the 27 stops to investigate what type of coffee was on offer. It’s important to make sure youve spent some time considering the business from more than just a customer’s point of view.
Heward says: My background is in catering and hospitality, so in 2005 I decided it was time to break out of the corporate straight jacket and be my own boss. I was ready to give up the London rat race and open my own business. From London town to the rural village of Tyndrum, I took over a derelict Little Chef and turned it into The Real Food Café.
Over the past 15 years I have had ups and downs and running my own business has taught me very valuable life lessons. The café serves over 280,000 people and has a turnover of £1.6m.
Find The Best Supplies
When launching a coffee business, finding reputable and dependable suppliers is crucial to any companys success. Consider that premium coffee and tea enthusiasts expect more than just a mug of regular coffee or a teabag in a foam cup. Your entire business revolves around one thing: coffee. Its critical to get your coffee from a location you enjoy the taste of and also feel confident in.
Many customers also appreciate knowing that the coffee theyre drinking is made locally, so look into local coffee wholesalers to see if any of their beans suit the taste. Essentially, have a taste of your coffee before selling them. Ask some friends and relatives to taste the products before releasing them to the public.
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Turn Your Caf Dreams Into Reality With Tips To Open Your Own Coffee Shop
Opening a coffee shop can be extremely profitable if you do it right. Pass by any busy specialty coffee shop and it will likely be full of customers enjoying coffee, espresso, lattes, teas, and a variety of pastries and other goodies. Wi-Fi and other work-friendly features have become commonplace as well, as coffee shops frequently serve as meeting hubs.
Serving quality coffees and snacks in a trendy, relaxing atmosphere can be a hugely successful endeavora business model pioneered by Starbucks, which as of 2021 has grown to nearly 33,000 coffeehouse locations around the world.
If you love coffee and are looking for a business opportunity, this is your guide to starting a coffee shop and making it a success.
Step : Obtain Necessary Permits And Licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Establishments that prepare or work with food are randomly inspected by the local health department on a regular basis. These inspections will check for compliance with local health laws, typically related to prevention of contamination. Here are some tips for faring well on a health inspection.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerks office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources
Certificate of Occupancy
A coffee roasting business is generally run out of a regulated location . Businesses operating out of a physical location typically require a Certificate of Occupancy . A CO confirms that all building codes, zoning laws and government regulations have been met.
Fair Trade Certification
In order to be qualified under an Fair Trade certification, the company must submit to fair trade supply chain audits as well as paying fair trade price premiums for the quality of bean supplied.
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Come Up With Your Menu
If theres one thing most successful coffee shops have in common, its serving a high-quality product. And this no longer just means serving drip coffeemost stores also offer specialty coffee drinks, teas and pastries, and some even serve alcohol.
Come up with a few signature drinks that your coffee shop will be known for. If you plan to serve food and pastries, its a good idea to offer gluten-free and vegan options as well. From there, you can calculate the cost for the ingredients and determine your profit margin.
Why Is Marketing Important In The Coffee Industry
This combination of factors can be a huge advantage in building brand loyalty, but it also means that marketing is especially important in the coffee industry.
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A Breakdown Of Coffee Roasting Profit Margins
coffee roasters are more profitable than coffee shops, on average.financial benchmark for roasters and cafes
- Coffee retailers have a solid average gross margin on each item sold , but the added expenses of operating a retail location make it the least profitable business model of the bunch .
- Roaster retailers roast and serve their own brand of coffee, naturally giving them the highest gross margin on each item sold and a relatively high profit margin .
- Wholesalefocused roasters have the lowest gross margin , but they also experience significantly higher sales due to large, frequent, and longterm customer relationships.
- At the end of the day, roasters who offerbothwholesale and retail locations fared the best when it comes to business profit marginsby a wide marginat 11.92%.
For the coffee shop that wants to keep growing, starting to roast coffee is a natural next step.