Top Choices Of Coffee Shop Business

There are a few things to know when considering getting into the

coffee shop business. You can enter this business by one of three

ways- start your own coffee shop from scratch, buy an existing

independent business, or purchase a franchise. Each type of

business has its pros and cons. For instance startups have more

risk associated with them than buying an existing business or

franchise. In my opinion, buying an existing business, either

independent or franchise, is the easiest route and the more

popular way to get into the business. If you plan on buying an

existing coffee shop you will need to do your research. Check out

the location, the atmosphere, the menu and the financials.

Location

It's not a bad idea to visit the coffee shop business you are

interested in. You can act like a private investigator, after all

nobody knows who you are. This will allow you to watch the

business and its employees in action. It will also give you a real

feel for the amount of traffic going in and out of the shop. The

most successful coffee establishments are easily accessible to

foot traffic. Great locations produce greater revenues but come

with a price. High traffic equals high rent. High rents can eat up

profits. Monthly rent should not be more than 10-15% of gross

sales. Look at the current lease agreement. See if it's possible to

renegotiate the lease if the rent is too high. If the coffee shop is

not accessible to foot traffic then more advertising dollars will

need to be set aside in order to attract more customers.

Atmosphere

Check to see if the establishment has a pleasant atmosphere.

What is the decor like? Redecorating can be expensive. Are the

employees friendly? Customers will be more apt to spend time in

an inviting and comfortable environment. Will you keep the

current employees? These are important factors to consider

when negotiating the purchase price.

Menu

During your visit to the coffee shop for sale check out the menu.

Sample different types of coffee and ask questions. Some coffee

businesses sell food items and some do not. Adding food to the

menu can boost profits. Cost of goods sold should be around 28-

32% of annual sales.

Financials

Once you have investigated the location, atmosphere and menu

you will need to look at the financials. Pre-tax profits should be

around 16-20 percent of annual sales.

If the shop is adhering to industry standards and everything else

seems to be in order concerning the location, atmosphere, menu

and financials then all that's left to do is close the deal.