There are an estimated 35,616 coffee stores throughout the U.S., according to the Allegra World Coffee Portal. With this high number staring you in the face, it can be tempting to forgo your dream of starting up your own coffee shop and turn your hand to something that is a little less saturated. However, there is still money in coffee. After all, Americans drink, on average, 2 cups of coffee each day and takeout coffee is a growing trend. So, there’s no better time to finalize your business plan, hunt for premises, and consider your business insurance options.
Location is everything
Starbucks is the reigning coffee champion in America, with close to 15,000 chains dotted through the U.S, according to Statista. With thousands of other outlets across the country too, it’s essential that you choose a spot that is going to generate you the most amount of custom.
Coffee shops are increasingly being used by freelance and gig economy workers who want to get out of their house and into an environment with a lively atmosphere that serves great coffee. Meanwhile, office workers love nothing more than to grab a cup of coffee on the way to work. You can’t forget the groups of friends who regularly meet up for coffee and a chat, either. As such, you need to source a prime location that is accessible for all these groups of people. Typically, this means securing premises in the city or in major towns close to office complexes and malls.
The one thing to consider with this is that rental prices in these areas are more expensive. Figures from Peer Space show that commercial premises in a mall cost between $18 and $30 per square foot. But, just a few miles away, you can to rent a commercial property for your coffee business for up to half of this.
You mustn’t forget the importance of Commercial Property insurance, either. In some cases, your landlord may foot the bill for the insurance of the physical building, but coverage for the contents in the building will most likely be down to you.
You should always weigh the pros and cons of securing a prime spot and its associated insurance costs, and if you have any concerns that you’ll be unable to afford them, opt for the best premises you can find in the best location possible instead. You can then use some of the cash you’ve saved by promoting your coffee business to your target market with leaflets, special discounts, on social media, and by popping into local businesses with tasty samples of your finest coffee.
Don’t skimp on quality
Americans are increasingly selecting gourmet coffee when ordering their favorite beverage. The latest annual National Coffee Association USA (NCA) survey reveals that 61% of coffee consumers have opted for a gourmet selection - the highest recorded figure. A spokesperson for the NCA advises that gourmet coffee comes with a cupping score of 80 or above.
There’s no need to splurge on fair trade varieties, though. Fair trade is usually more expensive due to it having a set minimum price of $1.40 per pound for arabica coffee beans. But as research shows that fair trade coffee isn’t always good quality and coffee farmers, particularly smaller-scale ones, don’t financially benefit, it’s not necessarily worth spending extra on these types of coffee beans. Instead, look for beans that provide a balance of acidity, sweetness, and bitterness and are affordable.
When contacted about what makes quality coffee, Chris Vigilante the founder of Vigilante Coffee advised that “A great farmer makes a great cup of coffee. The hard work takes place at the farm level. All we do as roasters is try not to mess up the end game. Additionally, a barista, the last step in the supply chain, is immensely important. Without their attention and dedication to detail, a great coffee may be brewed improperly causing all that hard work to be for nothing.”
Offer added extras
Coffee lovers don’t just want a cup of good quality coffee when they step into a coffee shop. They want the option to spoil themselves with tasty treats, too. According to Order Nova, bakery sales will increase by an average of 5.5% every year up until 2021. It’s therefore highly recommended that you offer sweet pastries and slices of cake to your customers. Not only will this increase the average spend per customer, but it will also boost your profit margins.
For example, Fast Food Menu Prices states that a chocolate chip cookie from Starbucks costs $1.95. Yet, it’s possible to make an entire batch for less than $5.00, according to Chief Mom Officer, meaning you’ve only got to sell 3 to start making a profit. But if you are going to increase your food options and bring in more machinery and tools to assist with making and storing them, make sure every item is covered by your insurance.
There’s no need to feel concerned about starting your own coffee shop. Despite there being thousands of coffee stores already, demand is growing and consumers want as much choice and variety as possible. Therefore, by carefully choosing your location, offering only the best quality coffee, and providing plenty of tasty extras to your customers, your coffee shop will become an established and successful business in your community in no time at all.
Amy Fletcher is a freelance writer and researcher with a keen interest in the coffee industry. In recent years she has written for various online magazines, journals, and blogs. When she's not writing she enjoys long walks with her daughter and two dogs.