Are Coffee Shops Profitable?
The answer to this question “ Are coffee shops profitable?”, depends on your point of view (POV). On one hand, is the amazing sales (then profit) of Starbucks, on the other hand, the high turn over of the cafe industry, where in a year 7 out of 10 new coffee shops closes down.
Due to the many variables and changing environment that one would be subjected to, it is important to be able to not just start, but sustain your coffee shop in times of low profitability. So, it is important to understand the very basic of coffee shop cost breakdown to prepare if you are opening a coffee shop.
Here is an average of how many cups of coffee a successful coffee shop is able to sell:
1.Take away concept:
- 60 to 80 cups per hour
- 3 key morning peak hours
- Slightly more than 200 cups of coffee daily
2. Small sit down coffee shop:
- 100 to 150 cups per hour
- 3 key morning peak hours
- With pre order and take aways.
- Slightly more than 450 cups of coffee daily
3. Large dining coffee shop (with food and drinks):
- 150 to 200 cups per hour
- 3 key morning peak hours
- With pre order and take aways.
- And more sit down capacity
- Likely more than 600 cups of coffee daily
How much can one earn from a cup of coffee?
If you are using the usual retail price of $3, you can already roughly estimate the number of sales and average profit of each of the coffee shop business. To calculate your own independent coffee shop profitability, try out free to use .
Things to note, the ability to sell hundreds of cups of coffee lies in the ability to serve an excellent coffee and not an average coffee. Average profit will go up if the coffee shop owner is able to serve both food and drink.
In order to attain high profit, it is important to note not only the sales, but your expenses, the ability to manage your expenses allows one to optimise their profit margin. One key component is all coffee shop businesses is their reliance on manpower (see: how much coffee shop employees make), the less reliance you are on it, the better the margin.
Now, let’s look at various scenarios and companies and how their cafe business perform in the last couple of years:
Starbucks - 2nd biggest food and beverage companies in the world
If you are wondering how much can one make selling just coffee, take a look at Starbucks, second only to McDonald’s. So, it it possible to rake in decent amount of money selling just coffee.
**Btw, back in those days when Mc was focusing on Mc Cafe, there was one year where coffee was their number one revenue SKUs.
Starbucks -profitability during COVID
This chart is a further encouragement if you are going into coffee business. It is possible to make money even during a crisis and none is as serve as COVID. When you look at the Starbucks profitability chart, in the worst of the crisis in year 2020, it is faring better than a “normal year” of 2018 (all things being equal).
Espresso House (Sweden) operating profits
Taking another point of view, we look at another coffee chain that is more localised, Espresso House in Europe. Once again, you can see the overall growth trend in terms of operating profit for this cafe chain.
Why are you asking this question?
It is obvious that if you are reading this page, you are either running or consider running a coffee shop. The profit margin from a cup of coffee is definitely higher than many other food products, that being said, there is a critical need to run a tight operating to lower the operating (and consumables) costing in order for your coffee shop to be profitable.
We have written a few articles on coffee shop business operations (do take a look):
Coffee Shop Business Model Canvas - the first thing to note prior to start your cafe
Coffee Shop Value Proposition - the “concept” or theme that many people talks about.
You might be able to find more such articles or ones similar to "are coffee shops profitable".
And below you can find a free calculator to evaluate your own coffee business startup cost or a free event to hear from one of the industry experts.
About US | OCM Profile
OCM (OnCoffeeMakers.com) was started in 2007 with the first webpage about coffee machines. And for a number of years, we focused on helping people find their desired coffee machine (we still are helping folks with that! So, if you are looking for coffee machines for office or restaurants - check out the link).
In 2010, we started getting enquiries on restaurant marketing and we start to help food and beverage brands with their marketing. Below are campaigns and events that we have done over the years:
OCM's campaigns: F&B Marketing Ideas by OCM
OCM's Events: F&B Industry events by or with OCM
Check out this restaurant marketing guide to learn more about the many campaigns and companies we have worked with.
Since then, we have also created many marketing workshops and classes for the F&B industry. Many of these modules are still running in tertiary institutions such as Temasek Polytechnic Skillsfuture Academy and also ITE College East COC classes, below are some snippets of our lectures and workshops:
OCM’s F&B workshops: Food and Beverage Marketing Lectures | Workshops - click to watch classes on customer journey map, JTBD and more.
So, if you are looking for industry practitioners to help you scale your coffee or F&B businesses, do drop us a message or book an appointment. Do also check out our various social media platforms on regular F&B and coffee market updates:
For regular coffee (F&B) related videos: OCM Youtube
For Daily Coffee Inspiration (fun coffee content): OCM IG
For insights into the coffee (F&B) industry: OCM LinkedIN
PS: For the coffee lovers, we continue to share coffee articles (and videos) and have also started a free coffee class section (with free online coffee training supported by coffee partners).
