How to Open a Cafe With Your Budget: Cost Reducing Guide

Have you ever wondered how to open a cafe just like the one you used to go to when you were a kid? That amazing smell of coffee and fresh-baked bread always takes you back...

How to open a cafe

Here we will talk about how to start a cafe with your budget and your terms. Working with several successful cafes, we will take your vision to reality one step at a time. Looking for ways on how to grow your cafe shop? Scroll all the way down for tips!

1. How Do I Start a Small Cafe?

Starting a cafe no matter the size takes a big investment in both time and money. It’s crucial that you spend time now learning what it takes to run a flourishing cafe. The first step aside from doing your personal research, pick a couple of local cafes that you love and model from them. For example, take a few characteristics from each that you would like to incorporate into your own cafe.

The fun part is, it also means visiting lots of cafés to get an insight into what you want your business to be like. Learn about their customers, habits, and what makes them happy. Who will they be? What are their needs? What time of the day will be the busiest? Knowing your customers well will assist with planning, creating a menu, price points, and advertising strategies.

How Do I Start a Cafe

2. Create a Business Plan For Your Cafe

This will probably be the most tedious part of creating a cafe, which is the business plan. In reality, the real benefit of putting together a business plan is less about the final document and more about the execution. The process of writing a plan helps you to truly understand the cafe business and get a grip on the numbers you need to make the business successful. A business plan will lead you through each stage of developing and managing your cafe shop and will be the founding commandments for how you structure, run, and grow your business. Your cafe's business plan should cover (Including tips):

  • A summary: The cafe's story, and the vision.

  • A local market analysis: Who are your regular customers? Who are your competitors? How are they advertising their cafe?

  • Your team: What will your responsibilities be on a day-to-day basis, who will you be hiring? (College or High school students would be the most affordable).

  • A marketing plan: What channels will you be advertising your cafe? Does your budget cover social media marketing? SEO? Find the best advertising path for your cafe.

  • How much cash you need to get started and where it’s coming from (Normally it takes around 50k-75k to start a cafe on average).

  • Financial projections: Projected Profit & Loss, Cash Flow

  • A location and lease strategy.

Your business plan for each of these aspects of your cafe will help set you up for success.

3. The Best Location For a Coffee Shop

Location is crucial to the overall success of any business. Before you make a decision, spend some time in the areas you’re considering. Pay close attention to how many people are on foot, and how much parking is available. Is the population around the area enough? What does the location mean in terms of demographics? What kind of things do the local community like to do? Are you close to any cafes? Are there any stores that will help your cafe's business?

You will be spending a lot of time in your cafe, you might even sleep there! A given is to have your living situation close to your cafe for an easier commute. Make sure you also understand the details of the retail lease and if its cost-effective. It’s wise to talk to a lawyer or someone you know who specializes in retail leases before you move forward.

Best Location For a Coffee Shop

4. Coffee Shop Supplies

Finding a reliable supplier will be extremely important for your cafe's overall business. In terms of the quality of the supplies and how your margins will be, it will be due to only your supplier. Depending on the type of café, the major suppliers are usually coffee, milk, bread, fresh produce, and groceries. You’ll also need cups (paper and porcelain), napkins, coffee stirrers, teapots, syrups… and whatever you invasion your cafe to have.

Start by making a list of all the supplies you need, look at a competitors store to start out. Don't forget the miscellaneous things like napkins, toilet paper, or cleaning products. One of the most important things customers notice is a clean or dirty place. From there, you can begin researching suppliers until you find ones that fit your vision and margins.

How to Open a Cafe

5. How to Design Your Cafe

The design of your café is essential for drawing customers in and converting them to loyal customers. The concept will largely depend on your target audience. Will it be Retro? Sophisticated? Rural? Family-friendly? Health-focused? Understand the tastes of your customer base and design your café with them in mind. Finding your niche is much better than pleasing everyone. This is how you accumulate loyal customers. Consider storefront design, interior designing, and even lighting. The details are what will set you apart!

Evaluate the effectiveness of the layout from both an employee and a customer perspective. Can your workers work effectively? Is it inviting? Where will you place your menu or any promotions? Will customers understand the ordering process upon entering your coffee shop? Get a few friends over and if one is an interior designer, it will be a plus! Ask for their opinion and see their reactions. Learning in the beginning will help the process of growing your cafe business.

6. Cafe Menu Ideas

Your menu should express your vision and the theme of your café. Everything needs to be considered, from food options, to design, color and fonts, to engaging descriptions, images, and pricing. Think about a signature dish and how that might shape the style of your menu. The simpler the better, 99% of the time. Do not overwhelm your customer with tons of options. First, if you have a long line it will cause an unnecessary wait time and will put pressure on your workers. This can also leave you with dozens of items that are hardly ever ordered.

Your menu also needs to be profitable (obviously). Calculate the ingredient costs and margin of each item, this is where your supplier comes in to enhance your margins. As a rough rule of thumb to get you started, the ingredient costs should be no more than 35% of the retail price.

Cafe Menu Ideas

7. Hire Great People For Your Cafe