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Hi coffee friend!
So, you’re thinking about owning a coffee shop, huh?
The warm vibes, the artisanal brews, the soft hum of chatter blending with the hiss of a steam wand—it’s like a Nicholas Sparks novel, but with lattes.
Romantic, yes.
But let’s talk reality: is this a business or just a lifestyle tax disguised as one?
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Running a Coffee Shop is a Business, and Business is Tough
The cold brew truth?
It’s complicated.
The coffee shop business is as saturated as your double-shot oat milk latte. Sure, we’re a caffeine-dependent species, and the margins on coffee are seductive.
But profitability?
That’s a whole different grind.
The Math of Running a Coffee Shop
Yes, coffee has a high markup. But that doesn’t mean you’re raking it in.
Rent, utilities, staffing, benefits, and the endless stream of costs (think Wi-Fi, fancy mugs, and the inevitable “let’s redo the interior to make it more Instagrammable” expenses) are all swirling around your margins like poorly frothed milk. Employee turnover alone will have you questioning your life choices.
Alright, let’s flesh this out with some hard numbers to make it clear: running a coffee shop isn’t just about frothing milk—it’s about crunching numbers.
Here’s how the financials typically break down, and spoiler alert, it’s not all double-shot profits.
Revenue Potential
The average cup of coffee costs $2.70 in the U.S., with premium spots charging upwards of $5–$7 for specialty drinks.
A moderately busy coffee shop can serve 200–300 cups a day. At $3.50 per cup, you’re looking at roughly $700–$1,050 daily revenue, or $21,000–$31,500 monthly.
Add pastries, breakfast sandwiches, and other offerings, and you can boost your monthly revenue by 20–40%.
For example, a $4 croissant with 20% attachment rates could tack on another $4,000–$6,000 a month.
Operating Costs
Let’s bring you back down from that caffeine high:
Rent: If you’re in a high-traffic area, expect $2,000–$10,000 a month depending on location. Urban spots can push that to $15,000+.
Labor: Hiring baristas, cashiers, and a manager? Wages can easily hit $12,000–$20,000 per month, even before benefits.
COGS (Cost of Goods Sold): Coffee beans, milk, and supplies typically take up 25–30% of revenue. For a $30,000 revenue month, that’s $7,500–$9,000.
Utilities and Miscellaneous: Count on $2,000–$5,000 monthly for electricity, water, internet, insurance, and those quirky mugs everyone steals.
Total Monthly Costs: For a small-to-midsized shop in a decent location, plan for $20,000–$35,000 monthly operating expenses.
Profit Margins
Let’s assume a healthy 60–70% gross margin on coffee and food sales after COGS.
Subtract rent, labor, and utilities, and you’re left with 8–12% net margins if you run a tight ship.
That’s $2,000–$4,000 monthly profit on $30,000 revenue—assuming no major surprises.
For comparison, Starbucks operates at about 15–18% profit margins, but they’re scaling at a wild level.
Startup Costs
Build-out and Equipment: From espresso machines to furniture, you’re looking at $80,000–$300,000 depending on the vibe you’re creating.
A commercial espresso machine alone can set you back $10,000–$25,000.
Licenses, Permits, and Initial Inventory: Add another $10,000–$20,000.
Unless you’re bootstrapping from a cart or pop-up, the total investment often lands between $100,000–$400,000 to open the doors.
Breaking Even
Industry estimates suggest the average coffee shop takes 18–24 months to break even—if everything goes according to plan.
Achieving profitability depends on hitting consistent daily sales of $1,000+. A slow start, bad location, or staff turnover can stretch that timeline to 3 years or more.
Key Takeaway
If you can get your shop to net $50,000–$100,000 annually (not bad for a single location), you’re doing better than most. But if you’re dreaming of real wealth, you’ll need multiple locations, franchising, or diversifying revenue streams (like merchandise or subscription models).
Coffee shops can make good money, but they’re a financial marathon—not a sprint.
Without meticulous planning and tight financial controls, that romantic dream can quickly turn into a daily grind.
Bottom line: the coffee shop dream isn’t dead—it’s just demanding.
If you’re ready to hustle harder than a barista on a Monday morning, innovate like your margins depend on it (they do), and create an experience that’s more than just a cup of joe, there’s potential.
But let’s be clear: this isn’t a side hustle or a passion project. It’s a business. Approach it like one, and you might just brew up something special.
✌️,
Tom at Coffee Shop Keys
