10 steps to open a coffee shop

Step 01 Store opening plan

Management Structure

Understanding the current market is the most important task in operating a brand. We analyze the management trends of existing cafes and the strengths and weaknesses of competitors. From independent stores to directly managed branches, we need to carefully consider the advantages and disadvantages of each format and how to expand while maintaining our independence.

clear concept

Brand image and store Establishing a concept is very important. It will influence what your brand means and what image it will have in the minds of your consumers. If the concept is not established, it will be difficult to get to the heart of the matter in subsequent spatial design, product composition, pricing, target customer selection, etc., and it will be impossible to define a clear scope. The brand will lack a core spirit and will be difficult for consumers to remember.

Narrowing down your target customers

Before entering the market, you need to clearly define your target customers, analyze their consumption habits and purchasing power, and set your product price accordingly. This will help you to be accepted by that customer base. For example, take-out shops do not offer long-term seating and are mainly located in commercial districts, so customers are mainly office workers. Therefore, you need to adopt an affordable price strategy for the price of a cup of coffee. On the other hand, if you have a concept of a high-end cafe, you will not have as many people as take-out shops because they are mainly located in educational districts and offer long-term seating. Therefore, you can emphasize the unique style and atmosphere of the space and provide consumers with a different experience than before, so you can make your high price setting acceptable.

Product planning

Once you have established the concept , you can plan the product mix according to your business model. For example, in a complex cafe, the types of products are not limited to coffee drinks, but can also be combined with accessories, clothing, tableware, books, etc., or with services such as laundry services, regular exhibitions, beauty salons, etc. The more types of products you have, the more consumers you can attract, but you should be aware that too many types of products can lead to high costs and the risk of poor quality.

Operational Plan

When formulating an operating plan, divide it into short-term, medium-term, and long-term goals, set the final goal for each period based on the development blueprint, and explore the possibility of business development from there. In addition, when setting the opening date, it is recommended to first open quietly as a pre-opening during the cafe's off-season, so that you can take enough time to verify the thoroughness of the plan and make adjustments if there are any problems.

Step 02 Store selection

Trade area population density and characteristics

Population density is an important indicator for evaluating the appropriate store selection. The higher the population density, such as in commercial districts, office districts, and tourist destinations, the more advantageous it is for management. However, in recent years, an increasing number of managers have been moving away from saturated areas and into rural areas, taking advantage of the uniqueness of their space and products to attract people and promote the development of local tourism, while also avoiding a situation where there are too many competitors. This is a solution to market saturation.

Convenient transportation and ability to attract customers

Transportation convenience has a direct impact on the ability to attract customers. Usually, stores that are close to subway stations and have parking spaces increase consumers' desire to visit the store and promote purchasing power. Also, as mentioned above, if the store is located in a rural area, it is necessary to emphasize the uniqueness of the space and products more strongly. Using social media marketing to encourage consumers to go beyond transportation to visit the store is also one way to overcome market saturation.

Step 03 Funding Structure

Enabling Fund Allocation

It is very important to manage your funds appropriately. Opening a store requires various costs, such as rent, labor costs, equipment, renovations, and cost of goods. Among these, the most important things to consider are rent, equipment, and renovations.

In the early stages, labor costs and costs can be reduced by being self-sufficient and focusing on only a few items. It is also recommended to create a budget for your cost structure. Once operations are stable, it is desirable for rent costs to be less than 10 % of total operating income, labor costs to be less than 20 %, and material costs to be less than 30 %. If you can effectively control these cost ratios, it will not have a significant impact on your actual operating income. At the same time, you should also give priority to the maintenance and renewal costs of your facilities. Otherwise, you may run out of funds when you need them, which may become a bottleneck that stalls your operations.

Step 04 Profit and Loss Assessment

A brand management company should not evaluate its profits based solely on the success of its business or the number of customers, but should deduct its variable and fixed costs from its actual operating income to determine its true profits. In addition, by regularly conducting profit and loss evaluations, a brand can detect problems early, find solutions, and eliminate factors that impede the development of the brand.

Finding the break-even point

Starting a business is not just about realizing your dreams, but also about how long you can survive in the market and continue to make profits without being eliminated. When you first open your store, it is important to set a break-even point goal and avoid unconsciously spending too much working capital. If you can reach the break-even point, it means that your brand is taking one step at a time on the path to stable management. Many people tend to think that "sales - cost of sales = operating profit", but this is not actually the case. This is because "selling, general and administrative expenses" such as rent and utility costs must also be deducted, and although the "operating profit" is the amount after deduction, it is still not actual income. Taxes such as business tax and income tax that must be paid every year are also unavoidable costs, and only after deduction do you get "net profit after tax".

Considering variable and fixed costs

When calculating operating profit, you need to take into account variable costs as well as fixed costs.

So-called variable costs include things that are not constant, such as promotions, repair costs for consumables, etc. All of these factors can act as a cover to eat into your profits, so it's important to remove the apparent profits and understand your actual revenue situation.

Step 05 Human Resources Management

Labor costs

Labor costs are an unavoidable expense for food and beverage businesses, and it is not uncommon for them to account for more than half of the total costs. However, because personnel and the quality of service are closely related, care must be taken not to cut back too much. However, inefficient staffing must also be avoided, which leads to unnecessary wasteful spending. It is advisable to allocate staffing according to the demand at each time of day.

Identifying the number of staff required for operation

Because staffing affects the quality of service, before planning staffing, first estimate the daily turnover rate and check the peak and off-peak times. Because peak times affect sales revenue, you can understand the fluctuations in sales revenue from this and adjust the ratio of full-time and part-time employees according to the range of fluctuations to maximize personnel efficiency and avoid personnel duplication.

Create shifts based on staff strengths

A café is made possible by the cooperation of members with various specialties, such as baristas, pastry chefs, and cooks. Some staff are good at working in the back room, while others are good at communicating with customers at the dining area. It is necessary to clearly divide up the roles according to each staff member's specialty, such as coffee, sweets, and snacks. In addition to helping each other develop the habit of helping each other, by allocating areas to each individual based on their strengths, staff can work more efficiently without being overwhelmed.

Step 06 Material Warehouse Management

Coffee beans are the main raw material for cafes, and they are particularly sensitive to the temperature and humidity of the storage environment. Whether you sell your own roasted beans or purchase them directly from a supplier, you need a storage space that meets basic requirements to maintain freshness. Be careful not to negatively affect the freshness of your beans in an attempt to reduce transportation and management costs.

Rational allocation of storage space

Coffee beans need to be kept in a dry environment, but other ingredients such as tea leaves, milk, and brown sugar need to be stored separately according to their characteristics. You can also allocate storage space according to the amount and size of the items. Coffee and tea leaves are used in large quantities, so you should have a dedicated storage space in the store. Milk loses freshness quickly and requires specific temperature control, so place it under the coffee counter or install a small refrigerator near the equipment storage area so that staff can easily access it. This will prevent the freshness from decreasing due to repeated taking in and out. Storing room temperature ingredients such as brown sugar, cinnamon powder, and cocoa powder in bottles makes it easy to inventory and see how much is left.

Inventory Control

Material managers need to understand inventory management in practice, and should do daily, weekly, and monthly inventory according to the item. For example, coffee beans can be managed with weekly inventory because they can stay fresh for a long time. If you serve sweets and snacks in your store, it is recommended that you manage dairy products such as cheese and milk, which tend to lose freshness, with daily inventory. By conducting regular inventory checks, you can optimize the overall operational efficiency and understand the actual consumption frequency of each item, and flexibly adjust your inventory management accordingly.

Step 07 Design planning

Spatial design is closely related to the brand concept. Whether hand-drip coffee or espresso coffee is the main focus, you need to consider the entire space and the interaction with customers. This includes the position of the counter, traffic flow planning, seating area allocation, etc. Some owners who manage multiple businesses also need to consider the allocation ratio of each area. By designing appropriately, you can create a diverse coffee shop space.

The counter design determines the overall atmosphere of the space.

Placing the counter in the center of the space creates a focal point for the whole space, which is suitable for brands that focus on hand-dripped coffee. Because the gestures involved in hand-dripping are performative, placing the counter in the center allows customers to see it clearly, improving brand familiarity. It also increases curiosity about hand-dripped coffee, which can lead to more in-store coffee orders.

On the other hand, a counter against a wall can maximize the seating area. However, care must be taken to distribute the distance between the counter entrance and the seats as evenly as possible. This is so that while staff are working at the counter, they can still keep an eye on the customers at each table and attend to their needs, such as taking orders and paying the bill. Therefore, to accommodate the maximum number of customers, there should be at least 50cm of space between tables, so that customers can pass sideways without bumping into each other.

Streamline counter hierarchical division and traffic flow

The main work area in today's cafés is the rectangular counter, but the division of responsibilities within the counter also affects the types of products offered. If you offer multiple types of coffee, such as espresso coffee, hand-drip coffee, and even sweets and snacks, you need to subdivide and clearly separate the process. For example, the space for the espresso machine should be kept at a certain distance from the sweets preparation area, which also requires a lot of equipment. This will improve work efficiency without staff getting in each other's way. Also, since the hand-drip area is performative, you can use the counter as a stage to shorten the distance to customers and improve brand familiarity.

Step 08 Store renovation ( interior and exterior)

Deciding on store renovation method

Independent brand cafes often either ask an interior designer or a construction team to design, or create a rough design themselves and then order it from a construction company. Which method to choose depends on the owner's wishes and budget. If you ask an interior designer or a construction team, you will have to pay design and construction fees, but you can use the knowledge and experience of experts to create a more sophisticated space. On the other hand, if you create a rough design yourself and then order it from a construction company, you can keep costs down, but you should be aware that if you don't have specialized knowledge, the finished product may not be what you imagined.

Interior design points

It is important for the interior design of a coffee shop to highlight the brand concept. Express the brand's world view by paying attention to every detail, such as the materials used for the walls and floors, the design of the lighting fixtures, and the taste of the furniture. For example, if you want to create a warm atmosphere, you can create a cozy atmosphere by using wood-grain flooring and upholstered sofas, and using warm-colored lights. Also, if you want to create an industrial atmosphere, you can create a sophisticated urban space by using exposed concrete walls, metal chairs, and spotlights.

The Importance of Exterior Design

Exterior design is an important element for promoting the presence of your cafe and attracting customers. Creating an exterior that catches the eye of passersby can encourage new customers to visit. When considering the exterior design, you should also pay attention to the design of the signboard, whether or not there is a eaves, and the color of the building. By matching the color of the building and the signboard, you can create a unified appearance. Also, having an eaves can appeal to customers that they can enter the store comfortably even on rainy days.

Step 09 Preparation for opening

Preparations for opening a cafe are extensive, and advance research and planning are essential to ensure everything goes according to plan. You will need to obtain the necessary permits to open a cafe, such as applying for a business license from the health center, undergoing inspection by the fire department, and appointing a food hygiene manager. It is also important to conduct a trial run before the grand opening to check the operation and provide staff training.

Obtaining the necessary licenses to start a business

To open a restaurant, you need to apply for a business license from the health center. To apply for a business license, you need to prepare the required documents, such as the store's design drawings and a notification of the appointment of a food hygiene manager. You must also pass an inspection by the fire department. The type of license required and the application procedures vary depending on the store you are opening, so you should check with your nearest health center or fire department.

Test operations before the grand opening

It is very important to conduct a trial run before the grand opening. During the trial run, you can check the operation and train the staff in an environment similar to the actual operation. By conducting a trial run, you can discover unexpected problems and find areas for improvement in the operation. You can also check the cooperation between staff members and improve their customer service skills. You can invite general customers to the trial run, but you can also do it with just family and friends.

Step 10 After opening

When you open a cafe, it is important to focus on attracting customers at the beginning. Even after the grand opening, you should hold sales and events regularly to attract new customers and retain repeat customers. You should also focus on training your staff to improve customer satisfaction.

Attracting customers and promoting sales

When you open a cafe, it is important to focus on attracting customers. You can create flyers and posters and distribute them in the neighborhood, or use social media to attract customers. It is also effective to launch special campaigns such as issuing discount coupons and offering limited-time drinks and food when you first open your cafe.

Increase customer satisfaction

In order to improve customer satisfaction, it is important to focus on staff training. By improving not only coffee brewing techniques and product knowledge, but also customer service skills, you can provide a comfortable space for customers. It is also important to regularly conduct surveys and listen to customer feedback to understand what customers want and use that to make improvements.