Owning your coffee shop is an exciting experience, especially if you’re an avid coffee drinker. It’s a chance to take your passion for coffee to a whole new level, where you can offer other people the opportunity to indulge in a coffee cup that can be made just the way they like. Coffee is one of the most popular hot beverages in the world, and drinking coffee has become a cultural and social ritual that brings millions of people together. However, as a coffee shop owner, there are a few things that you need to think about and take into consideration. So, how much do coffee shops pay for coffee?
The short answer is that it depends on the size of the coffee shop and the type of coffee they are sourcing. On the high end, wholesale coffee usually costs 30% less than what it would sell for retail. On the low end, wholesale coffee can cost up to 60% less than retail.
Keep on reading to learn more about how much do coffee shops pay for the coffee beans they use.
How Much Do Coffee Shops Pay for Coffee?
When you’re starting your business as a coffee shop owner, there are several expenses and costs that you need to be aware of. First, you need to make sure that the interior decoration matches the theme or concept of your establishment. You might have to hire an interior decorator to ensure that every element in the decoration blends seamlessly to provide your clients with a unique experience.
Second, you must hire the right people to do the job. Of course, you can run a coffee stand by yourself, but if you have a coffee shop that allows people to sit down and enjoy their drinks, you have to hire professional baristas, waiters, and a cashier. You might be able to do one of these roles, but not all of them. Moreover, hiring incompetent staff will cost you valuable clients and lots of money in the long run.
You also need to invest in the right equipment. Buying a professional-grade espresso maker and a high-quality grinder will be essential. Since there are several models on the market, you need to make sure that the equipment you’re buying is designed to provide your target clients with what they need and will deliver consistent results every single time you’re serving coffee.
The most important factor to consider is your coffee. Pre-ground coffee won’t be able to deliver the right flavor and aroma that your clients will be expected to enjoy at your coffee shop. This means that you need to find a reliable source to deliver high-quality coffee beans that you can grind to prepare specialty drinks that will attract more clients to your coffee shop.
Getting Started
Author Note: In the beginning, you can expect to spend around $1000 for good coffee. Having a long-term contract with your supplier can guarantee better prices. You will usually have to buy different roasts and mixes, so you can provide your target clients with several options.
If you’re buying pre-ground coffee, you will have to make sure that you have a variety of grinds that allow you to brew coffee according to various methods. Some brewing methods require the beans to be coarsely ground to allow for adequate extraction, while others require finely ground coffee to deliver the right flavor and aroma.
Roasted coffee beans are easily accessible. However, if you want to serve fresh coffee all the time, you will have to buy green coffee beans and roast them in the oven in batches. You can start by roasting an amount that is supposed to last for a week. This will guarantee that your coffee won’t go stale or lose its rich flavor because of storage.
How Much Does it Cost to Operate a Coffee Shop?
Having a business in the food and beverage industry is an excellent decision if you know what it takes. The need for coffee shops is always increasing, and opening a concept coffee shop will attract more people to your place. This is another question you should get answered along with how much do coffee shops pay for coffee.
However, if you’re planning to open a coffee shop, you should understand the initial cost of starting your business will be between $80,000 and $250,000. This will depend on the location, size, services, and equipment. Here are the steps you need to follow to start your business.
Step 1: Write the Plan
During this stage, you should think about your funding, how you will get your money, and how much you’ll be able to raise. Then you need to list the steps that you will have to follow to open your coffee shop.
You should be able to calculate the possible revenues and how much profit you’ll be able to take home after paying any overhead costs and the salaries of your employees. The idea of writing a plan is to calculate the Return on Investment to decide whether the business is worth it or not.
In general, coffee shops have a high return on investment because the consumption of coffee is increasing. However, this doesn’t mean that every business will be a success.
Step 2: Choose the Location
The right spot depends on the type of clients you want to attract, as well as the availability of space. Whether you’re buying or renting, the more desirable the area, the more money you’ll pay.
Next, you have to set up space by paying for the utilities even before opening your place. You also need to work on the renovation costs to turn your space into a concept coffee shop. This will include buying the right light fixtures, cabinets, tables, and chairs.
Step 3: Buying the Equipment
The equipment you will buy depends on the type of coffee shop you want to operate. Commercial-grade coffee machines are more expensive than the ones that you’re likely to use at home, but they’re designed to deliver better performance and more consistent results. Your clients can expect the same high-quality espresso shot every time they head to your place.
Author Note: You also need to invest in a high-quality water filtration system, as it will enhance the taste and flavor of your drinks. If you’re thinking about offering other types of drinks, you will need an ice machine, kettles, and other pieces of equipment that allow you to prepare several beverages to cater to the needs of your clients.
You might also consider serving snacks or desserts with your coffee. You’ll have to buy a fridge to keep the bakery that you get from a reputable supplier or invest in a stove and oven to prepare your in-house snacks.
Inventory Costs
In addition to the equipment cost, you also need to worry about the cost of your inventory. This includes coffee beans, sugar, tea, cups, napkins, paper cups, stirrers, spoons, and lids. Cream, sugar substitutes, flavors like cinnamon, vanilla, chocolate, and nutmeg, should also be considered. You will also pay for bottled water, juice, baked goods, whipped cream, ice cream, salads, and ready-made sandwiches. These costs can amount to up to $10,000.
The best thing that you can do is to focus on the budget and expand on what you can offer as you start to gain more money. Starting big will definitely bring more people to your place, but will represent a large financial pressure if you can’t cover the costs during the first few months. The best plan would be to start slow, and gradually expand your business and offer more services after you’ve already established your presence in the market.
In addition to the hardware cost, you will have to pay for software. POS software can cost between $50 and $200, depending on the size of your coffee shop. In most cases, you can get a bundle for the hardware equipment with the software that allows you to manage your coffee shop properly.
A potent POS software will help you manage your business, keep track of your inventory, and understand your sales patterns. You will also be able to manage the marketing and accounting aspects of your business better.
Step 4: Find the Right Staff and Vendors
Compared to restaurants, the cost of labor and vendors is a little lower, and things can be easier if you’re starting your business. Nevertheless, you need to be careful about the people you hire and the vendors where you get your supplies to help your business boom.
Top Tip: Regular coffee drinks have an average profit margin of 15% to 20%, while specialty drinks have an average margin of 18%. Food like snacks and desserts will have a higher profit margin.
Picking low-quality supplies will eventually affect your sales, as people won’t be interested in coming to your coffee shop. Since there are probably several coffee shops on your block, you need to offer something extra to make sure that you’re building a base of loyal clients who will keep on coming back for more.
In addition to the drinks you’re serving, you should also invest in the right people who will be able to help your business boom. Professional baristas, waiters, cashiers, and cleaning staff are essential for the success of your coffee shop.
Step 5: Marketing
Your marketing campaign can be as simple as a social media campaign on a page you set up on Facebook to actually printing and giving out flyers. You can also invest in software that allows you to send menu updates and offers to your customers.
Step 6: Getting your Permits
The last step you will have to go through is guaranteeing that you’re not breaking any laws. You will need to pay for permits to run your coffee shop, serve food, and hire employees. A Business License and Employee ID Number, Certificate of Occupancy, and Food Service License are also required. You will also need a liquor license if you want to serve alcohol.
Understanding the kinds of costs you will be required to endure will help you decide if you’re ready to launch your business.
Wrap Up
Without the right coffee beans, your coffee shop won’t be successful. You need to make sure that you’re buying your coffee from a reliable vendor to guarantee that your clients will be coming back for more, as well as consider all the other costs that you will have to pay before starting your business. We hope you found this article on how much do coffee shops pay for coffee useful and informative.
Stay caffeinated friends!