Are coffee shops profitable?

Hello.

I had some thoughts on opening a coffee shop.

Any advice? How are the margins? What are the factors of success? What are the failure rates?

Many thanks!

 

I love all these are ????? profitable.

Anything is profitable otherwise you wouldnt see them!

What makes a business profitable is knowing your market

 

They can be very profitable with very large profit margins they can also be huge sinkholes that devour all your money. Im sure youll be told this a few more times but the amount of profit anything makes depends on how well you run it.

Rant aside For coffee shops it really depends on alot of things the main being location, being near a university is one example of a good spot. Being sure to set your store up as a lovemark is very important, If Im going to go to a coffee shop and pay 2.50 for a cup of hot cocoa(I dont drink coffee) when I can go to HEB and buy a mix packet of 20 for a dollar, the store has to have a certain feel. I know it sounds hokey but its the truth just look at starbucks.

 

Yeah, and how about those drive-thru coffee sheds? Are those better or worse? I am guessing those aren't as good, b/c I have never been to one and there is not place to sit and enjoy...

 

But the overhead costs are much less, so there might be less sales, but less costs as well. Like any business, you need to research, research, research. Know your area and come up with a niche if you can. For example, a local coffee shop started doing a "hooters" style thing where the servers are in bikinis are adult where.

 

It all depends on the location if it ain't in a good oen your very screwed!

 

Location, atmosphere, service and quality of your products (premium coffee) will make or break you.

 

Stand out in the saturated market. Value your customers. Be innovative.

Yes it can be very profitable as other have said already. If you happen to do it the very same way as local competitors do, you are less likely to win unless people are mad at drinking coffee there. Where do you plan or are about to plan to open a coffee shop?

 

Import rare and exotic coffee and create an atmosphere that will set you apart from the crowd will make your coffee shops a hit.

 

Ok, some good points here and some that are simply not true.

I live in Belgrade (moved here from Canada) and one thing was very evident from the second I got here... there are a LOT of cafes and restaurants, way more than in any North American city of even 2x population.

A lot of your success will depend on the attitude of the people in your city towards cafes and such. I lived in Hamilton (in Canada) and the only coffee shops that succeeded there where the drive through type (Tim Hortons) and to a lesser extent Starbucks.

Here (Belgrade) I know a guy who's got over 4 VERY successful cafes and looking to open more. Here's what's key to making it a success (in order of importance)

1. You must know LOTS of people (and I mean LOTS, hundreds of people that you can call when you open a new cafe and ALL will come)

2. Location - you can't be in the middle of a corn field but you don't have to be in the heart of the city to be successful... Location is important, but comes in 2nd place

3. Atmosphere - More important than coffee. People come to hang out and socialize, and to be seen... coffee gives them a reason to go out, atmosphere grabs them and keeps them coming back.

4. Quality - it's important... you don't need the best coffee but if it's crap people won't drink it often, so try to get the best you can afford (it's cheap).


Aside from that, consider parking and a patio... there's a ton of other factors but those are the big ones.

PS: If you don't know a LOT LOT LOT of people, then your location has to make up for it, and that's not easy.

Remember, people like to go to places where there are other people. If your place is always full, it's atractive to others... if it's empty then people will avoid it like the plague.

 

well I think all food businesses are profitable....becuz of the nature of the business. The profit is around 40-60% of the net sales.

However it depends on your brand-ability and quality of service. I think GR8 Customer Relationship is important for coffee shops.

 

Another important thing I forgot to mention. Make sure you have good staff, a good sense of humor is a must and they can't be rude or overly stupid... after all they handle money.

Also, security cameras to monitor your staff and establishment... people tend to steal if they think you're making good money.

 

Answer from Seth Godin.

 

Coffee shops are notorius for high profit margins. Lets face it, the cost of producing a cup of coffee is no more than 40 cents (even the most expensive types of coffees) but are sold for $2-3 a cup.

 

I know one kind of coffee shop that could make money. But you probably have to move to Amsterdam or go to India and make a deal with a government bang-lassie outlet...

 

Learn what not to do from Starbucks. They've changed from what mad them big and they are suffering. If they didn't have dynamic brand saturation (and a little more convenient competition), they'd be dying faster.

If you're not a coffee fanatic, you might look into something else--or become one.

Traditionally, people visit coffee houses for the atmosphere. This is what made Starbucks big and it's what's bringing them down now.

 

I think internet cafes + food + internet and bring your own laptop and connect to their network would be very profitable.

You can pick up bulk bandwidth cheap, and sign some contracts with premium coffee brewers.

Your main cost would be electric, rent, start up cost, internet

 

starbucks are everywhere, i think they are making $.


bear

 

Thanks for all the input.

One question. What is good way to get the pastries? Contract with bakers? Or Costco? lol.

 

And the bigger question would be why are you asking a bunch of webmasters about running a coffee shop?

Go outside, yep it's there--I just checked, and talk to coffee shop owners. Next, go look for trade magazines and books. See if there's an organization of coffee shop owners out there and join it if you can.