Anyone who wants to start a coffee business knows entrepreneurship can involve a lot of trial-and-error. But what if we could give you six mistakes to avoid—and save you from having to learn them the hard (and expensive) way?
Texas Coffee School has educated hundreds of people from across the world on how to start a coffee business. We’ve learned from others’ mistakes—and our own—and used them to build processes that work. The topics we’ll cover include:
- Barista Training
- Shop Layout
- Cost of Goods Sold
- Not Having a Drive-Thru (and other missed innovation opportunities)
If you’re ready to learn how to start a coffee shop and bypass common roadblocks, let’s get started.
To learn about coffee shop ownership from the experts in a classroom setting, check out our 3-Day Coffee Business Master Class!
1. Choosing the Wrong Location
Many aspiring Coffeepreneurs® have a strong sense of intuition. That’s amazing! But relying on intuition alone can be a huge mistake when choosing a coffee shop location. The same goes for a trendy building, major intersection, and affordable price tag. They’re all attractive, but just those factors alone won’t guarantee a line out the door of your coffee shop.
Selecting the right location requires a great deal of research and strategy. And you don’t choose your location first and follow up with a business concept. Instead, you need to understand your concept and your specific customers before you ever sign a lease.
Other considerations for choosing a location:
- Your coffee shop’s unique business concept
- Target audience
- Type and quality of nearby businesses
- Speed limit and visibility from the road
- Ease of access and parking
- Space’s structural layout
- Much more
An optimal brick-and-mortar location is one of the most important factors we see in a coffee shop’s success. So do your homework and calculate a location’s earning potential before signing on the dotted line.
(Not sure how to start? We give you a formula and a strategy in our 3-Day Coffee Business Master Class.)
2. Not Enough Barista Training
While making a perfect espresso is a good skill to have, it doesn’t guarantee the barista’s success. The best baristas have a passion for both coffee and people. When hiring employees, look for folks who are professional, detail-oriented, hospitable, and positive natured—and of course, passionate about coffee.
After you’ve made a few great hires, you can invest in barista training to bring their skills up to speed. The best barista courses will teach things like coffee science, how to properly use different types of commercial coffee equipment, efficient workflow, various types of brewing, troubleshooting off-tasting results, milk steaming, customer service, and more.
3. Neglecting the Shop Layout
Building out a coffee shop layout and designing the interior is about so much more than aesthetics. A good shop layout leads to more functionality, happier customers, and ultimately, more profit.
A few tips for creating a coffee shop design and layout include:
- Start at the back—the kitchen and bar area—and move forward.
- Design work stations so employees don’t have to cross paths often to prevent accidents.
- Circular customer flows can make for a less hectic feeling (and working) cafe.
- Counters and backsplashes should be smooth, non-porous, and wipeable.
- Account for the flow of traffic where customers will order and pick up drinks.
- Opt for smaller tables that can be combined or separated depending on the customers’ needs.
- Build a drive-thru, if you can! (See mistake #6 below.)
- Account for acoustics, too many hard surfaces make it extremely loud.
4. Mismanaging Operations
One of our favorite mantras is that coffee shop owners should spend more time working on their business than in it. A sustainable coffee shop runs like a well-oiled machine and doesn’t require a manager’s constant oversight. Inventory is managed efficiently and materials aren’t wasted. And every drink is made to a consistently-high standard.
Three ways to dial in coffee shop operations are building an effective team, creating systems and processes, and identifying inefficiencies. Besides earning more money, this process will help you avoid burnout later down the road.
5. Underestimating the Importance of Cost of Goods Sold
Cost of goods sold (COGS) can be a pesky, yet critical, line item to measure in your coffee shop’s finances. It requires tracking inventory closely and setting the right menu prices.
When managing inventory, it’s best to avoid over-ordering, running out of supplies (make sure you have enough pumpkin spice latte syrup to generate that PSL revenue in the Fall), and letting ingredients spoil. As for setting menu prices, do the careful work of adding up how much it costs to make each item. Then set the price so you have at absolute minimum of 75% profit margin on every drink (ideally better)—not based on a gut feeling or other coffee shops’ prices.
6. Missing Opportunities for a Drive Thru (And Other Innovative Ideas)
While not every building has the space for it, you might be remiss to not consider whether a drive thru is right for your coffee shop. A drive thru offers convenience to customers, efficiency to baristas, and flexibility with your current model. Plus, it allows you to get more drinks out the door with a smaller footprint.
Other coffee shop innovative ideas include a hybrid model, health-conscious menu for a younger audience, and enhanced technology. By staying on top of market trends, your coffee shop can remain relevant and meet customers’ evolving wants and needs.
Start a Coffee Business With Texas Coffee School
Our 3-Day Coffee Business Master Class is designed for aspiring Coffeepreneurs® like you. Not only do we teach you more mistakes to avoid, but we give you the tools and processes you need to hit the ground running with coffee shop ownership.
Plus, have you read our step-by-step guide on how to start a coffee shop? You can get a feel for Coffeepreneurship before filling in the gaps in our classroom setting. Enroll in an upcoming class today.