Owning a Cafe: How to Break into the Coffee Shop Market

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Business owners about to begin a new venture usually have a solid understanding of the market and their competition. This approach is really crucial in the coffee shop segment. The cafe industry is flooded by large corporate franchises to small, privately-owned coffee bars. While this can represent a challenge for new coffee bars, it’s not impossible for a new place to succeed.

In fact, many locally-owned cafes make an impact in their communities by creating a solid brand name, serving a particular consumer segment, and following a few key steps for breaking into the market.

Find a Way to Stand Out

You must find a way to stand out from the other beaneries in your area. Perhaps you can do so by procuring and roasting your own beans, catering to gluten and vegan free customers, setting up your bistro in a historic location, or offering a place for local artists to display their work. There are dozens of great ideas for setting your cafe apart from other coffee shops. Identify the approach that is most authentic to you and the identity of your business.

Become a Specialty Spot 

Even if you and your competition are both selling coffee beverages there is still a way to specialise. For example, you could become an expert at cold brewed coffee or offer interesting flavours that other coffee houses don’t have. Another option is to include food ingredients that are locally-sourced like milk from nearby dairy farmers.

Rely on feedback from your patrons to determine menu items they can’t seem to find anywhere else then provide that item.

Create a Strong Brand

All businesses should have a clearly identifiable brand. This identity is incorporated into everything from the logo to signage to the paper cups to marketing materials. Most cafes also design a decor that reflects the brand whether it’s the color scheme or the wall decorations.

Offer Plenty of Product 

Think about the coffee shops you’ve visited. Did they only sell coffee and tea? Or did the cafe also sell pastries, snacks, and fruits? Did they have novelty items for sale such as travel mugs? Could you buy the cafe’s beans to grind and brew at home? You may have answered yes to some or all of these questions. The point is diversifying your product offerings will increase your revenue.

Create a Welcoming Atmosphere

Creating a welcoming atmosphere is a great way to get consumers to become regular patrons. You only have one chance to make a first impression. Setting up an inviting floor plan, creating warm decor, and establishing friendly staff will help you gain regular customers.

From the time you begin designing and building your new cafe you’ll be structuring the atmosphere by selecting: the color theme and the furniture, lighting fixtures, the amenities offered like parking, Wi-Fi, music systems, televisions. All of these particular features part of the ambiance. Every time you make a decision about any of these things you are creating the atmosphere.

Complete Consumer Research

Businesses that do well often start with a solid business plan. Part of that business plan should include details about the targeted consumer group. You’ll probably be interested in capturing multiple demographics but may not be sure where to begin. For a cafe owner, completing an in-depth consumer study can help provide the answer you seek. The results of your consumer research will probably inform many of your business decisions such as the coffee house’s design, pricing, and location.

Here are a few specific points to consider:

Who do you envision is your main consumer group? What are your target consumers’ preferences? What’s the lifestyle of your target consumer?

A potential patron’s lifestyle can make a big impact on the success of your cafe. Where do your consumers live and work? What type of disposable income do they have to spend at your coffee bar?

What will motivate your target consumer to visit? People visit a cafe for any number of reasons. Maybe they just enjoy a strong cup of morning coffee, need a midday break, want a place to catch up on work, or would like to gather with friends.

What type of floor plan or building design will your consumer appreciate? What type of products will this consumer buy?

Calculate Your Start-Up Costs

Miscalculating start-up costs is a common error for new business owners, regardless of the industry. Whether you are a restaurant or a café owner, it is essential that you have proper hospitality insurance coverage tailored to your business. While it’s impossible to forecast expenses 100 percent accurately, there are some matters to consider closely when creating your cafe’s budget

  • Location; You’ll need the right place to operate your coffee house which means you’ll need to find a space that’s workable and safe with convenient parking. Factoring the cost of leasing versus purchasing property will be critical.
  • Decor: You’ll also need to make sure both the external facade and internal floor plan compliment your cafe. Some buildings you consider may require a bigger financial investment to capture your vision. Be sure to shop around and get written quotes from a variety of professional contractors and interior designers before hiring anyone.
  • Product: All the coffees and food items, as well as other supplies like napkins and cups must be included in your financial planning. Think about everything your staff will need to get their jobs done (e.g. equipment, cleaning supplies), as well as what your patrons will want to enjoy their coffee experience (e.g. stirs, sugar packets).
  • Equipment: Any cafe location you consider will probably not come with the right equipment for your operation. This means you’ll have to budget for purchasing refrigerators, water filtration, espresso machines, cash registers, etc.
  • Overhead: Every coffee shop has overhead expenses that are simply part of doing business, such as utilities, payroll, and insurance.

You can certainly consult with a financial planner, personal banker, or business accountant for more tips on how to sufficiently budget. You can also work with an insurance agent to figure out the best, most cost-effective insurance for café owners like yourself.

As you can see, researching and planning are often the secret to a successful cafe.

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