If you are a fan of coffee and its warm aroma, the “cafe or coffee shop” project may be the right idea for you to join the world of entrepreneurship. You will find many coffee lovers who will guarantee the success of your project.
Is the “cafe” project profitable?
Yes, it is one of the profitable projects. But you cannot be satisfied with providing the finest coffee or inventing new types of espresso and cappuccino because the coffee shop project depends on the number of customers. So you have to strive to attract customers and expand the project.
The average small café operating margin is 2.5%. This means that you will likely get 2.5% of all the money you take from sales — after you factor in every cost (including overhead).
You can’t change the fixed cost of overheads — like rent, equipment, and staff — and you can’t charge more than your competitors for coffee. So your challenge is simply to sell more.
What are the types of coffee shops, and who are the target customers?
Types of coffee shops can be classified according to the type of coffee, service, and target customers as follows:
coffee shop type
The type of coffee and the services it provides
Specialty coffee shop
The finest types of specialty and unfamiliar coffee.
Side meals of sandwiches, pastries, baked goods, and desserts.
Specialty coffee lovers prefer cafes with distinctive decor and comfortable and quiet seating areas in public cafés.
They are the majority of regular coffee shops that serve well-known types of coffee.
Fast food, including sandwiches, baked goods, and some types of sweets, such as cake
General customers enjoy a cup of cappuccino and latte at medium prices and suitable for different categories.
Includes a seating area
Coffee of all kinds.
A small selection of sandwiches or baked goods.
There is no seating area
Coffee of all kinds.
A small selection of sandwiches or baked goods.
Urgent customers or passersby
There is no seating area, and it depends on moving between different areas.
How do you ensure the success of the cafe?
You don’t have to be a barista (coffee maker) or have extensive experience, as you can hire experts to advise and help you prepare a successful plan for your business. But you have to diligently research and understand the concepts of the market and the coffee and coffee industry sector. For example, you can see the success story of Java Time and the Roasting House to benefit from the experiences of its founders and learn how they managed to succeed and expand in several branches.
We offer you a list of the top 10 tips that you can also follow to ensure the success of your project:
- Hire an expert barista and understand the coffee-making process.
- Providing high-quality coffee.
- A great site that attracts customers.
- High-quality and reliable equipment and devices.
- Distinguished brand design.
- Innovative marketing.
- Professional team in dealing with customers with tact and courtesy.
- Strong wifi connection.
- Continuous inventory and accounting management.
How to write a business plan?
You need a business plan to present your ideas to potential investors. However, if you don’t need investors or apply for a loan, you will still need to write a business plan. Why? Because writing a business plan requires you to research all aspects of the project, from financial planning, marketing research, and competitor data analysis, to choosing the ideal location, appointing the work team, marketing plan, and others. This means you have all the necessary answers and information and can go to work setting up and opening the café.
To learn the steps of writing a business plan, you can review the guide on creating a business plan through our blog and follow it in your coffee shop project.
What is the ideal location for opening a coffee shop?
Location is the number one factor behind the success of many cafes, and the perfect location is always crowded.
Invest in a site that has a lot of traffic and many visitors. Don’t hope to attract customers just because you opened an innovative coffee shop that serves the best coffee but is in a hard-to-reach location, and not many people frequent it.
You need a busy location because the only way to bypass a coffee shop’s low operating margin is to sell more coffee.
For specialty coffee outlets, you also need to make sure that you invest in high-end locations. As for the regular kiosks, carts, and cafes, you will find more options, such as shopping malls, transportation stations, universities, event venues, and sports centers.
What permits and licenses are required?
Permits and licenses vary by location, state, and city, but the procedures followed in general include:
Commercial license: It is necessary to practice any commercial activity from the municipality.
Civil Defense License: This license is concerned with site safety, such as emergency exits, fire extinguishers, and electrical connections. Require a site inspection by the Civil Defense to approve its extraction. You can review the fire prevention requirements through the General Directorate of Civil Defense website.
Food licenses from the Food and Drug Authority.
Advertising banner licenses.
For the coffee cart, you need a permit that allows it to be parked in authorized locations. And do not forget to obtain a driver’s license for you and some work team members.
Pricing your coffee and related products is based on the cost of the ingredients per cup of coffee and each plate of foods you serve. You will then need to set a high retail price based on the prices of the coffee shops and what your brand can offer. The difference between the total cost of the ingredients and the retail price is called the gross margin, and in coffee shops, it is generally up to 85%.
You should beware of raising prices to the extent that may cause the cafe to lose and that’s why you need a café business plan. Here are these tips:
- You need to know the category of your customers and the maximum they are willing to spend.
- Knowing your location and the price range, it will bear. However, if your prices are much higher than the cafes around you, you have exceeded the limit and may face financial losses due to the lack of demand for the cafe.
What tools and appliances do you need in a cafe shop?
In general, you will find that the cafe requires a coffee machine (espresso machine) first, which is the espresso machine with its delicate design and available in five colors. You will surely find one that matches the design and decor of your cafe. In addition to the following equipment and tools:
Coffee grinders, Drinkware, Ice makers, Hot water dispenser, High-speed oven, Coffee shop accessories (small coffee tools and beverage items like cups, spoons, jugs), Water treatment equipment, Blenders, Juicers, Sandwich counters, Cleaning and washing equipment.
How do you choose the appropriate design and decoration?
The design of the café depends on defining the space for coffee makers, sandwiches, refrigerators, the ordering area, the back area of the kitchen, and storage.
The coffee maker area is the most important in the front part, where it is clear to the customer the process of preparing the coffee.
The seating area depends on the type of cafe, where specialized cafes rely on comfortable and elegant seating areas, while ordinary cafes rely more on simplicity.
On the other hand, trolley cafés and kiosks require enough space to wait for customers and receive orders easily without causing crowding in front of the café.
How important is wifi to the success of a coffee shop?
Internet connection – wifi – is available everywhere, but in cafes, it is a vital factor, as many customers prefer to work or read in cafes. So you need a strong, high-speed connection.
For cafes, kiosks, and carts, you will not need wifi for customers, but only to complete administrative operations.
What is the best POS software?
It is the computer used in calculating bills with a barcode scanner to read prices, a credit card reader, and a bill printer, in addition to the software used for the calculations, i.e., the cashier system.
Great services are provided to the coffee sector through the economic point of sale solutions – in addition to offering a range of payment and ordering methods that allow cafe owners to market and advertise smartly:
- Gift cards:
Gift cards are great for marketing as studies have shown that when customers use a gift card, they generally spend more than it’s worth, i.e., pay more. So choose a point-of-sale software that supports this feature.
- Loyalty Program:
Studies show that loyalty programs can expect 35% more customer visits. So make sure your point of sale system supports this software.
- Online ordering:
Set up an app or website so customers can order before they reach the café and have their orders ready.
How do you define standards for hiring employees and develop a plan for training them?
Here are the top three tips for hiring and training coffee shop staff:
- You don’t have to hire employees who love coffee and its aroma, but they need to smile. For all customers, buying a cup of coffee should be a relaxed and friendly experience. So choose the naturally friendly staff.
- Find “barista” coffee makers who have studied at any of the espresso academies run by manufacturing and design companies. Either in Italy or elsewhere, Where you will find the best baristas.
- Get a reliable, high-quality, guaranteed equipment supplier at the start of your coffee shop business. That you can count on to provide continuous product and equipment training for your staff.
How do you develop a marketing and advertising plan?
Start by designing the visual identity, which is the image and content of your brand, from the logo, fonts, and colors to the message and goal of the project, such as introducing the culture of specialty coffee or presenting the strangest types of coffee.
Then he moved on to the process of marketing through social networking sites by creating accounts, interacting with followers, and publishing all offers and advertisements.
One of the most important marketing elements is paying attention to customers, complaints, and suggestions to gain customer loyalty and ensure their praise and recommendation.
How do you plan for the opening event?
The biggest and most important event you have to plan is the “opening.” The cafe’s opening is the first interface to attract customers through several offers, including offering free samples or discounts and gifts for a specific number, for example, the first 50 customers.
Start by creating a guest list and registering the attendees in a database, and take the opportunity to encourage them to follow the café’s pages on social media and participate by posting photos and tweets.
And don’t forget to ensure all permits and licenses are registered correctly, so you don’t risk getting locked out.
Remember that coffee shop customers are lovers of coffee and the ritual of sitting and enjoying it, so start your business with a passion story that attracts these customers.
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