Thinking about opening a coffee shop? here are the real #s

Mar 6, 2006
5
0
Tampa Area
***warning*** this post isnt to discourage anyone from opening their own little shop... this is just the "reality check"... i was looking for this info when i was researching... now that i am neck deep in startup, i wanted to post out the numbers for those who are thinking of doing it too.

with reguards to profit margin, its not as high as you think...

for example.. a simple break down

100 customers a day (average new shop) x average sale of $3 x 30 days = 9k

so lets say a decent shop pulls in a solid 10k a month gross.

now subtrract out the following every month:

2-3k rent
300-500 electric
250-300 water
1000 stock supplies
100 internet
50 insurance premiums
250 "miscellaneous shit"
.... so now we are down to 5-6k spent.. easily

out of the 5k....
cost of employees... wages, taxes, fica, etc etc (employers pay a lot more out that just the hourly wage)

so say you have 2 employees.. and you pay them say 8 bucks an hour-ish... after all the other stuffyou pay to the govt. it costs somwhere around $10-$12 an hour to have them


so $10 an hour per employee x2

that $20 an hour in salaries..
if you are open 16 hours a day, thats 320 a day in salaries

320x 30 days= $9,600 in salary alone!

so... 10k income - 5-6k costs- 9k employees = -4k a month....

IF you work the shop your self to cut labor costs and only have 1 employee, you just about break even.... MAYBE!

yes there is profit in the business. but the average shop owner is only making around 20-40k a year himself... we wont even discuss the fact that it takes a good 25k-30k to OPEN a shop in the first place. and even thats cutting it tight

equipment alone is around 12k... not to mention buildout costs

so yea... its a cool little business, but no chance of getting rich.... starbucks does well, not because they have one shop thats making 20k a year profit... but because they have thousands of them pulling in 20k per year.

anyone got anything to input on this? any comments that shed light ?
 

freetodream

New member
Feb 3, 2006
46
0
Mississippi
Hmmm.....I am just getting started myself - guess I am lucky - just got my very large (approx 6,000 sq. ft) bldg for $501 monthly mortgage - something to be said for small towns....that and my sons and I will be running the place....Your post makes me feel very blessed....
 

equus007

New member
Apr 4, 2006
315
0
Austin, Tx
real #'s

I agree with your #'s but you should get with muddy. In my area the overhead is even highter and it is to the point now that you can not have just a coffee shop...must meet other needs. Starbucks is able to function here because of the wal-mart-esque business plan they have. I doubt their shops are making much real money. If you are in a big enough market you may want to think about catering or doing office coffee services(no rent there and you use their water and power...pretty sweet when you figure the profit margin on drip is very high). It is also a very good way to get your name out and introduces you to a clientelle that will not be frequenting your shop during the weekdays.
 

barefoot

New member
Sep 21, 2004
75
0
Santa Clara, CA
if you are only making 100 drinks a day it does not seem that you could survive anywhere. NEVER focus on reducing costs at the expense of increasing revenue. If you had a $10,000 lease a month but were serving 1000 drinks a day you would make serious money. (or at least you will have a lot of employees!) it is not the lowness of your costs that makes you money. It is the high revenue that makes you money.

I saw a dilbert cartoon where the pointy haired boss was thinking to himself and he said "technically if I reduce expenses enough we will be profitable without ever having to sell anything to any customers!"

try it.
 

uberslacker

New member
Jun 27, 2006
4
0
Yeah, I was pondering opening a shop at some point. I don't like how your numbers break out... they are scary..... :)
 

harpua

New member
May 17, 2006
11
0
Re: Thinking about opening a coffee shop? here are the real

Insomniacs_Coffee_House said:
so yea... its a cool little business, but no chance of getting rich.... starbucks does well, not because they have one shop thats making 20k a year profit... but because they have thousands of them pulling in 20k per year.

anyone got anything to input on this? any comments that shed light ?

Though I believe your numbers can be fine tuned and improved I do agree that if you are going to open a coffee shop to be rich you should look into other ventures.

Most people will open a coffeehouse because of a passion for coffee and wanting to be part of thier community.

By the way, I do love being in the business but if you ever find something where I can invest $125,000 and get $125,000 a year out of it without working, let me know, I always like to keep my options open.
 

ElPugDiablo

New member
Jul 16, 2004
991
0
Hartford and New Haven, CT
Insomniacs_Coffee_House, you are wrong about Starbucks having a lot of shops each making 20K a year. They make a lot more than that. 5 years ago I did a quick number crunching on them and figured their average store sales per day is about $2500, or about 800 customers a day. They make serious money in retail coffeeshop. With their cost structure, they probably net 200K+ per shop.

By the way if you are doing 300 a day after one month into the shop, I would not read anything into it. It's more important that your customers like your place, like your service and like your products and will spread good word for you.

One thing though, without knowing your hourly business volume this is a total shot in the dark on my part but 16 hours a day is awful lot of hours.
 

berniecmyk

New member
Jun 26, 2006
8
0
i do have a friend who opened a coffee shop which serves lunch. he was on target to do 250k a year in revenue based on the 6 months of his opening.

it conversations, he had said it would not be worth it if as owner you could not pull out 70k a year.

he also did not intend to pour coffee all day, ideally to open a 2nd and 3rd shop.

so, is 70k a year for the owner reasonable?
 

equus007

New member
Apr 4, 2006
315
0
Austin, Tx
70K

70k is shooting pretty high especially for the first few years...but it depends on the type of shop you are running. With larger menus(getting more into the restaurant biz than coffee)it is attainable. Also depends on how much competition you are having to deal with.
Every shop is different.
 

ElPugDiablo

New member
Jul 16, 2004
991
0
Hartford and New Haven, CT
berniecmyk said:
i do have a friend who opened a coffee shop which serves lunch. he was on target to do 250k a year in revenue based on the 6 months of his opening.

it conversations, he had said it would not be worth it if as owner you could not pull out 70k a year.

he also did not intend to pour coffee all day, ideally to open a 2nd and 3rd shop.

so, is 70k a year for the owner reasonable?

You need more than 250K per year to pull in 70K for the owner. 70/250 = 28% that is a lot.
 

love8me

New member
Jul 5, 2006
16
0
i am planning to open a shop soon if i get the money. but with passion for coffees, hardwork and great customer service, i think you can pull it off.....happy customers would mean more money :)
 

berniecmyk

New member
Jun 26, 2006
8
0
i just remembered what another friend told me, he knows of a woman who has 3 dunkin donut shops and only pulls about 35k a year out for herself from each.
 

ericesquire

New member
Sep 7, 2006
4
0
Is anyone really open 16 hrs a day, 7 days a week, 30 days a month? And $2,000-$3,000?!?! Man...where do you live? 5th avenue? That seems ridiculous for an espresso stand. My advice, don't rent, BUY - a mortgage would likely be much cheaper on a little piece of commercial dirt. Of course, it all depends on where you live :)
 

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