Coffee Shop Startup Cost Breakdown
In this section on the coffee shop startup cost breakdown, we look at the amount of capital you need to start a cafe. Click the free cafe cost calculator to enter the other coffee shop startup cost breakdown.
Here is a simple startup cost breakdown of the different types of coffee places that you can open:
- Café & Bakery: $80,000 to $250,00
- Small coffee shop with seating: $40,000 to $200,000
- Large coffee shop with seating: $75,000 to $350,000
- Franchise coffee shop: $120,000 to $350,000
- Cloud Kitchen coffee Concept: $20 000 to $50 000
 Café & Bakery: $80,000 to $250,00 |
 Small coffee shop : $40,000 to $200,000 |
 Large Coffee shop: $75,000 to $350,00 |
 Cloud Kitchen: $20,000 to $50,00 |
Franchise coffee shop: $120,000 to $350,000
The cost of starting a coffee shop** differs from country to country and even from location to location. For instance, the investment of starting a cafe in India is very different from starting a cafe in Malaysia. And to open a coffee shop in Orchard Road versus Tampines in Singapore, the cost also differs significantly.
One common thing about costing across all regions is this: using a cloud kitchen to sell coffee significantly lowers start-up costs.
**By the way, the coffee shop has a different meaning in South East Asia (Singapore, Malaysia, Indonesia); it refers to a street channel type of coffee place, locally known as Kopitiam.
The Formula: Startup Cost
+ 6 months Operational cost.
The formula above summarises the investment you need to start your cafe business. This section will look at the cost of opening (or building) your desired coffee place.
The cost to open
In the segment above, we gave a breakdown of the type of set-up and the cost affiliated with it. The cost breakdown has to do mainly with the size of the set-up. Here are the components that
Rental
The terminology to note for the rental is how much per square footage. And even in the same location, the price can vary greatly. The price difference is based on the landlord's perception of traffic and the potential of a business.
For instance, the most expensive square footage in a shopping centre is usually the ground floor or the basement. The higher you go, the cheaper the square footage.
Let’s take a shopping mall in Tampines, Singapore. A basement rental can be as high as $50 per square foot, while space on the upper floor might only cost you $15 per square foot.
Things you need to know:
With the outstanding traffic you are paying for in the desired location, will they come into your shop and buy any food or beverage from you? Do you have factual data on similar businesses in this area that have such a result? Or, will you be doing an intense user study about the possibility of your business offering in this location?
Deposit
It is important to ask many questions before starting your coffee shop in any location, as this rental will also determine another start-up expense - a deposit. It can range from 2 to 6 months and depending on your rent, and it can mean a sizeable amount of money stuck with the landlord.
Things you need to know:
Even in a shopping mall, not all the brands are subjected to the same conditions, and some brands might not need to pay so many months of deposit. Try to negotiate with the landlord for ways to reduce the amount of the deposit.
Renovation | Interior design
This is a significant cost and variable that many cafe owners spend considerable time on.
Things you need to know:
While there are merits in a narrative and thematic approach, ultimately, building a cafe to be instagrammable is not sustainable. Always look to optimise the square footage that you are paying for. For example, what is the revenue for every $X square foot you are paying for?
Equipment
You will have to spend this significant cost to get your coffee shop up and running. The equipment will vary according to the type of cooking you will be doing.
Things you need to know:
Some well-known coffee chains (e.g. Starbucks) have straightforward equipment (coffee machine, grinder, speed oven). They adopt what is known as the lean kitchen concept and have the ability to serve hot food easily and quickly.
This not only saves them a considerable amount of equipment investment but also improves their response time in serving their customers (and fast response time translates into good customer service).
Start Calculating your Cafe Startup Cost below
Other things to consider in a coffee shop startup
Six months of the operational cost that includes:
- Manpower cost
- Payroll taxes (E.g. CPF in Singapore context)
- Licenses and permits
- Consumable costs
- Utilities
Look out for an upcoming article on the six months of operational cost.
A critical variable but not “top of the mind” in many owners’ minds is the cafe's marketing.
Here are some coffee shop marketing solutions that we have done and brought in quite good results:
For Coffee Shop Consultation
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).
