Starting A Coffee Shop – Franchise or Independent?

The reawakening popularity of the coffee shop has made it one of the most popular new business ideas for young entrepreneurs. The Specialty Coffee Association of America estimated that there would be 15,000 coffee shops in the U.S. by 2006 – and that doesn’t include coffee kiosks and coffee carts, just businesses that identify themselves as a coffee shop or cafe. By 2010, the Specialty Coffee Association of America estimates that there will be over 50,000 coffee shops.

The average coffee shop sells about $550,000 worth of coffee in a year. 52% of Americans drink coffee daily. 15% of Americans buy at least one cup of coffee at a coffee shop every day. 63% of Americans buy a cup of coffee at a coffee shop occasionally – and that number is increasing at the rate of 3-4% per year. Is it any wonder that starting a coffee shop of your own is such a popular business startup option? If you’ve thought that your interest and expertise in coffee would make you a good candidate for owning and running a coffee shop, here’s a few things you should take into consideration about starting and running a coffee shop.

To Franchise or Not to Franchise…

A franchise offers many advantages in starting up a coffee shop. The most obvious advantage is that you have prebuilt advertising. Everyone knows what Starbucks and Tim Horton’s are. Smaller franchise chains are growing in popularity. When you choose to open a franchised coffee shop, you’ll have the expertise and experience of the chain’s support staff to help you get set up. You won’t have to guess at which espresso machines are the best, or how much coffee and supplies you should order each week. Most franchise operations have all those statistics down pat and will be more than happy to help you figure out what you need for your coffee shop.

Depending on the franchise, they’ll offer you advice – or requirements – on floor plan, seating plans, furnishings and menus. Your coffee shop will benefit from their advertising campaigns and publicity. In return, you’ll be required to make a substantial financial investment in the startup, and pay an annual licensing fee for your coffee shop to use the franchise name and logos. You may be required to participate in advertising campaigns, and you will most certainly be restricted in the products that you sell. You’ll pay 6-11% of your revenues for advertising and royalty fees each year. For many, the advantages of opening a franchise coffee shop far outweigh the disadvantages. You’re working with a proven concept, and benefiting from the combined expertise and experience of a successful business.

The average costs of opening a franchise coffee shop include $100,000 to $300,000 in construction costs, $10,000 to $20,000 per year in franchise fees and training, and an additional 6% to 11% of your gross sales for other fees.

Continued At: Opening an Independent Coffee Shop

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