Setting Up Your Coffee Shop
Let’s begin by analysing some fundamental elements you need to consider before you start your coffee shop.
What is your niche?
Given that there are many coffee shops in Canada, how can you differentiate yourself from the crowd as a newcomer to the industry? First, you need to identify a niche to focus on. Successful coffee shops have a strong USP - or unique selling proposition - which is a clear advantage over rivals that customers can appreciate.
Setting yourself apart from a variety of brands your potential customers may be interested in can be advantageous. Instead of offering a typical experience, think of ways to take a more personalized approach. By concentrating your efforts, you have the chance to become the best at what you do for your small business.
Examples of intriguing niche ideas include:
- Offering strictly single-origin coffees
- Hosting live music
- A uniquely designed store where customers can take beautiful pictures
- Better pricing with more value
- Having Wi-Fi for customers
- Vegan alternatives
Do you need any training or industry knowledge?
Some business owners who own a coffee shop have no prior experience working in one, but we recommend you have some form of experience in hospitality and business management. You may be asking, how hard is it to start a coffee shop? As a serious business owner, your clients anticipate that you'll be an expert in your field and possess a set of certain competencies.
Here are some of the skills we recommend considering before opening a café:
- Barista training: This training is focused on the grinding and brewing of coffee, as well as preparing coffee-based drinks. You can check the Canadian Barista Academy out. It is designed to cater to both beginners and experts. There are affordable course fees, and there is an option to learn online.
- Bookkeeping: To run a successful business, you need to be able to keep accurate financial records. Having detailed financial information on your coffee business can save you from losses, help you apply for grants and pitch to investors. We recommend this online bookkeeping course from International Career School, Canada. It is self-paced and payment starts from as low as $10.
- Marketing: You may need to know some basic marketing strategies tailored to the coffee shop industry. Creating a strong brand identity, and effective promotion to support your sales is crucial to generating awareness. Click here to find out the top ten digital marketing online courses in Canada.
- Catering: Catering skills can come in handy if you want to excel as a coffee shop owner. Your prospective clients deserve the best and you should know how to deliver that. You can consider the George Brown College Coffee Specialist program.
- Food hygiene: Proper food hygiene is essential to running a trustworthy and safe coffee business. To keep your customers safe, your team needs to understand food handling and safety practices. We recommended the Managing Food Safety online certification.
Where can you register your coffee shop?
Once you have a business name, the next step is to register your business, as it is one of the requirements to start a coffee shop in Canada. You can register your business on the Government of Canada website.
We know that registering a business can seem daunting, especially when you think of the lengthy application process, but there are agencies that have the expertise to assist you with the registration process. One credible agency is Cogency Global. They have local and multijurisdictional coordinated expertise that can assist in registering a business in Canada.
The costs involved to start your coffee shop
This can vary depending on several factors, such as the size, nature, and complexity of your business. For example, the cost to open a drive-thru coffee shop, a coffee food truck, and a coffee shop franchise will vary.
In general, to determine how much money is needed to start a coffee shop, you have to consider the cost of some basic coffee shop equipment like grinders, brewers, display boards, mugs, espresso machines, coffee roasters, and POS systems. Put together, these can cost anywhere from $10,000 - $12,000(CAD).
When budgeting the cost of what you need to start a coffee shop, it’s important to also review real estate payments. The cost of renting a shop in areas with high footfall changes fairly quickly and depends on your location, but an estimate can range from $10,000 to $25,000 p.a.
Some other elements we think are important for you to consider are interior design, furniture, and utility costs.
Unless you plan to be a one-man team, there is a need to hire talents like a barista, a manager, and an accountant. Their salary range will depend on their experience levels, in addition to the size of your business.
According to Indeed, the average salary for barista in Canada is $16 per hour, $20 per hour for a manager, and $17 per hour for an accountant.
Based on our research, we estimate that a coffee shop would cost between $150,000 and $200,000 to open in Canada.
Getting funding
Starting a coffee shop can be capital intensive, but there are funding options available to you, including grants and start-up loans.
Grants are a free source of funding if you're not interested in taking out loans. However, acquiring small business grants has a tedious and competitive application process. We have prepared a small business grants guide that focuses on where you can find different small business grants by sector.
You can also explore loan options available in Canada.
To secure funding, you need a coffee shop business plan. It should be creative, practical, and convincing enough to get the relevant organization to support your business idea.
A good business plan should include the following:
- A brief description of your business concept
- A market analysis and a competitive analysis
- Marketing plan
- Operating plan
- Financial plan and projections
Find out more: Need funding? Check out our guide on small business grants.
The Nuances of Starting Your Own Coffee Shop
Being a coffee shop owner is a very alluring endeavor because of how much people enjoy coffee. However, just like any other business, coffee shop owners deal with a number of frequent issues. Fortunately, some of them can be avoided. Let's talk about some of these issues and how to prevent them from happening.
Location
For a coffee shop, choosing the right location is very important. Some elements we think you should look out for when choosing a location are:
- Accessibility - you want to be accessible and in proximity to your target audience. No one wants to drive a long distance to get a cup of coffee.
- Security - how secure your shop location is decreases your odds of being affected by crime.
- Business rates of a particular location will affect your pricing and budgeting. More sophisticated cities will be more expensive than others.
- Foot traffic - this is extremely important for coffee shops. You don't want to be located in an area where coffee lovers are more likely to bypass you.
Having looked at these factors, some popular coffee-shop locations in Canada are Toronto, Cavalry, Quebec, Vancouver, and Montreal.
Suppliers and quality control
You need suppliers for coffee beans and other raw materials. When choosing a supplier, do not just go for the first one you find. We advise you to look for at least three that have been in the business and served other coffee shop owners.
It is also very important to narrow down your search for suppliers whose sourcing promote a sustainable and socially responsible standard. When you become Fairtrade certified, you support small-scale farmers that adhere to social, economic and environmental standards, and this will give you a better business reputation.
When you have options of suppliers to choose from, compare and contrast their beans, ask for samples and references, and also look for exclusivity by working with suppliers who haven't worked with anyone in your location. The quality of supplies you receive, coupled with top-notch customer service can help you ensure quality control to retain customers.
Once you have explored your options and chosen a supplier that aligns with your goals, play your part in nurturing the relationship. You should be able to maintain regular communication and give feedback wherever necessary.
Your team
The quality and experience of your team members make for an outstanding coffee shop business. When recruiting, you should not just be on the lookout for technical skills but for personable qualities too.
When you have employees that are friendly, intentional about good customer service and are people-oriented, productivity and customer retention can be improved.
Get your legal documents sorted
You should be aware of basic food safety regulations in Canada and stick to them. One very common regulator is Health Canada, which is responsible for establishing policies and setting food safety standards, while being enforced by the Canadian Food Inspection Agency.
If you don’t comply with their requirements, you may face consequences like having your license canceled, paying fines of thousands of dollars, defacement of your brand's reputation, and inventory confiscation.
We suggest you get a license before opening a coffee shop, but it is not mandatory by law. Also, if your proposed location is in either Saskatchewan, or British Columbia, you will need to register for provincial sales tax in order to collect and remit the right provincial tax.
Finally, you should make plans to insure your coffee business to cover costs in the event of an accident or damage.
Marketing Your Coffee Shop
There is one harsh truth you ought to know: your coffee shop won’t survive without a marketing strategy. Sadly, customers are not just going to start trooping in after you set up. You may be wondering “how do I market my cafe business?”.
We’ve got some tips for you:
The importance of an online and offline presence for your coffee shop
While two out of three Canadians visit a coffee shop once per month, there is still a fundamental need to understand your target market.
Conducting market research can give you better insights into what and how your prospective customers want to be served, which can further help you find your USP.
Maintain consistent branding. Your logo and brand colors should go on your interior & storefront design, branded coffee cups and mugs, and brand merch for your frontline employees.
Create offers that show customers you are grateful for their support and loyalty such as:
- The bottomless mug concept
- Free pastry or an extra cup of coffee as purchase based rewards
- Weekend promotions (e.g., 50% off)
These should be included in your marketing messaging, especially prior to the opening day of your coffee shop.
Get customer reviews and use them to attract more customers. People tend to trust a business more if someone else had a positive experience with the brand.
Attending trade shows for coffee shops can increase your visibility and give you more opportunities to network. Some popular trade shows in Canada are:
Finally, leverage social media channels (perhaps two or three) to create more awareness of your new café.
Find out more: Need more advice on this sector? Read our sector-specific articles.
Starting a Coffee Shop Isn’t Your Only Option
Now that you know the essentials of how to start a coffee shop in Canada, it is important to mention that this is not your only option.
You can also consider buying a franchise, which offers you a ‘halfway’ option between buying an established premises and running your own coffee shop.
With a franchise, you have established business concepts that have been tested and proven to be successful. You will also have the benefit of a recognized brand name and an existing customer base.
You can also buy an existing coffee shop that already has a business model that works. Buying a business can be tricky, but our buying a business guide offers practical advice from experts to guide you through the process. If you are considering this route, we have a list of coffee shops for sale in Canada that you may want to explore.
Feel free to connect with us if you need any support or guidance on starting or buying a coffee shop. We want to hear from you!
We hope this guide offers you the support you need and we wish you the best of luck on your business journey.