How to Start A Coffee Shop

The founder of Philz Coffee explains how to start a coffee shop business. Let's get you brewing.

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By Brad Klune • Dec 12, 2022 Originally published Dec 12, 2022

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Jacob Jaber is the co-founder of Philz and a consumer investor and would be thrilled to help you get started. Book a 1-on-1 consulting call with Jacob today!

Jacob Jaber started Philz Coffee with his dad, Phil Jaber, out of their bodega in the heart of San Francisco's Mission District. Now, it is a coffee empire, with stores in 52 communities and over 1,000 employees. They're famous for their ridiculously crave-able classics like the silky Mission Cold Brew or the addictive Iced Mint Mojito coffee.

We sat down with Jacob for a true coffee chat and learned his "how-to" process when launching a local shop.

1. Do you love coffee?

"Don't start a coffee shop if you don't want to spend time in it," Jacob Jaber told us.

It's incredibly challenging to succeed in the food business without passion. You need to start this business from a place of love. The owner sets the standard for coffee shop culture. At Philz, you feel like you are in grandma's house: the employees are always attentive to your needs treating you with niceness and respect.

This is not a good side hustle — you have to live it.

2. Solidify a unique concept

"To have a successful coffee shop," Jacob says, "you need 5 things people love."

Although coffee is one product with seemingly endless demand, it's crucial to stand out with a handful of spectacular menu items. What makes Philz so special is the heart and soul in each craft coffee drink. Jacob originally defined himself through crafted creations like the Tesora, a coffee blend with cream and honey, which was perfect for latte drinkers (check out their menu for inspo).

Be passionate that the cup of coffee (or food) you have to offer is different than anybody else's. As Jacob says, "Finding something that you don't think is already available and boldly offer it? This takes courage."

Don't stress too much about your company name or branding, but obsess over the quality of your product offering.

3. Get your business docs sorted

Jacob let us in on his secret – "I don't know if I've ever even written a business plan. When you start something with passion and love, it's going to give you the fuel. Don't overly sweat the business plan. Make it one page max."

Take care of your legal documentation (ie. entity formation) with the help of a lawyer. You can ask around for a good local lawyer, but some good online options are Legal Zoom or Zen Business.

4. Hire a real estate agent and pick a location

"Great marketing cannot fix a bad location," says Jacob.

Jacob breaks this down into three things to consider: density, visibility, and accessibility. You want to be in a space that people will walk or drive by frequently. Things need to be convenient to the customer (eg. need a parking lot for heavily trafficked areas and busy roads).

Don't rush this part of the process. If you find a neighborhood you like, spend time studying the area. If there is a competitor in your area, which there probably is, it's an opportunity to learn. Get a sense from the baristas and customers. Ask competitors how they are doing.

Think about customer habits on weekdays versus on the weekends. You need to determine the culture of your shop. A business park isn't bad, but you'll service office workers and it'll be dead on the weekend. Near hospitals can be great.

Location is EVERYTHING. It's easily the most important step to get right. If your location requires a retrofit, it can get costly. You sign a lease, get a general contractor, and the costs start racking up.

Before you dive in, try these budget-friendly tactics to test your product and market:

  1. Think of your coffee company as a product, not a store.
  2. Research all the events in the next 6 months that you can pop up a kiosk
  3. Open a popup and show up at events, farmer's markets, etc.
  4. Use this revenue and profit as proof for banks, angel investors, friends and family, etc.

This scrappy mentality can go a long way. Blue Bottle started through popups and is a great success story.

5. Execution is key

You've got the perfect space in the up-and-coming part of town and maybe you've even found your favorite cold brew formula.

Now what?

If you're stressed about the furniture, pastries, machinery, or other logistical parts of making your shop stand out and sparkle, consider these tips first. "Iterate. Don't make all the design choices at once. Not only is it ineffective moneywise, but it is also a waste of your time," Jacob shared.

Instead, open up with the bare bones.

From there, you can build the shop around the customer experience to something they'd really love. If you notice people coming in with laptops, make it a comfy space to work. If there are families, put kid-friendly drinks on the menu. If there are students, consider a discount! Either way, when the shop first opens, you should plan on being there to ensure the execution and training are just how you like them.

All set? Get out there and get brewing!

Want to go deeper? Book a 1-on-1 consult with Jacob today! Jacob Jaber is the co-founder of Philz and a Consumer Investor and would be thrilled to help you get started. Browse all experts here.

Brad Klune

Entrepreneur Leadership Network VIP

Head of Business Operations

Entrepreneur Leadership Network Contributor. Head of Business Operations at Intro. Former leadership at Uber and Instawork.

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