Want to Open a Coffee Shop? Keep These Owners' Tips in Mind.

You can cash in on caffeine addictions -- if you're savvy.

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December 21, 2016

This story appears in the December 2016 issue of Entrepreneur. Subscribe »

The retail value of the U.S. coffee market is alluring-around $48 billion. But at $3 a cup, cashing in on our collective caffeine addiction isn't always a given. Savvy experts share what they've learned.

Ben Lehman,Co-owner, Crema, Nashville

Photo courtesy of Ben Lehman (far right) Co-owner, Crema, Nashville

Maximize online

"Don’t forget the internet!," says Lehman. "There are many tools that can be easily used to capture additional revenue by offering your most unique products online.”

What can a coffee retailer do online? Plenty! Lehman’s site, Crema-coffee.com, sells bags of beans, gift certificates, coffee subscriptions, home-brew necessities from respected brands and even books and travel guides -- because coffee can be a lifestyle as much as it is a drink.

Phil Goodlaxson, owner, Corvus Coffee roasters, Denver

Photo courtesy of Daniel Mendoza, Corvus Coffee Head Roaster
Phil Goodlaxson, Owner, Corvus Coffee roasters, Denver

Listen to your customers

"Define your identity, but adapt," says Phil Goodlaxson, the owner of Corvus Coffee Roasters. "When we started, we only did pour-over. Morning customers asked for a quicker option, so now we brew by the batch, too.”

Do the math

Wondering about sales needs? To start, Goodlaxson estimates:

$40,000 in equipment
$10,000 in marketing
30 to 35 percent of monthly revenue should go to monthly operating expenses once you’re established

When considering a location, Goodlaxson uses this metric: Within one or two years after your shop opens, sales should be 10 times your rent -- so, if your rent is $4,000 a month, you should be selling $40,000. Can’t do it? Consider a different spot.

Jess Steffy, owner of coffee roaster and retailer Square One Coffee, is a certified Q Grader and WBC judge.

Photo Credit: Rachel Stauffer

Jess Steffy, owner of coffee roaster and retailer Square One Coffee, is a certified Q Grader and WBC judge.

Train your crew

"Empower some of your key people with the education needed to keep your staff’s skill level high and your drink quality consistent,” says Jess Steffy, co-owner, Square One Coffee, Philadelphia and Lancaster, Pa. She suggests the following:

Partner with a roaster that provides a comprehensive barista course with a Coffee Quality Institute-certified instructor.
Enroll in the Barista Guild of America’s Level 1 Certificate program to learn milk texturing, brewing and extraction principles, cupping, and more.
Pick up extra skills with a SCAA Coffee Taster’s Certificate. Learn about farming, processing and green coffee grading.

Should you roast your own?

It’s the question many coffee shop owners will eventually contemplate.

Yes, do it!

Roasting your own beans gives you more control over cup quality and can ultimately lead to wider margins. All three of our featured experts roast their own. Lehman’s primary reason: He’s able to source coffee from producers he trusts. “There are many business benefits to this as well, like brand building,” he says.

Nah, no need.

If you don’t have buckets of startup capital or prior experience with sourcing and roasting, you’re better off working with a trusted local or regional roastery -- at least to start. “Roasting requires an entirely different skill set than running a shop and preparing drinks,” says Steffy. “Don’t put yourself in a position where your roasting learning curve is up against your shop’s opening deadline.”