If you, like many others, have a love for coffee, you might be wondering how profitable a coffee shop really is.
Opening a coffee shop is incredibly alluring due to its timeless taste and large market. Coffee shop franchises are often sought after because of their affordable rates and reliability in making money.
If you’re interested in investing in one of the most ethical and successful franchise models in the UK, you might want to consider Esquires Coffee. Contact a member of our team today to find out how we can help you start your franchise!
Is Owning a Coffee Shop Profitable?
Coffee is an incredibly popular drink enjoyed throughout the day by millions of members of the public.
The big question is, is owning a coffee shop profitable?
Coffee shops are incredibly profitable thanks to their high-profit margin and low cost of stock. With effective cost management, you can ensure your coffee shop will be a success!
For example, a wholesale bag of beans will cost between £10-18 per kilo, which will hold 120-140 servings per bag. One cup of coffee will cost around 10p to produce, with an extra 6p for the milk.
The average cost of a cup of coffee in the UK is £2.45, so in total, you will have earned £2.29 per cup, a 93.5% gross profit.
What Is the Average Profit Margin for a Coffee Shop?
On average, a coffee shop’s profit margin will consist of 12% of all the coffee products on sale, meaning each cup of coffee sold allows for 12% of the money to remain after expenses.
According to Project Café UK 2021, the branded coffee shop sector was valued at £3.06bn in revenue in 2020. With 9,159 outlets, each made more than £327,000 on average, which is impressive considering the impact the pandemic has had over the retail and hospitality sector.
The business platform Bizdaq demonstrates that the average turnover of a small independent coffee shop is between £100,000-£150,000, with 22% of all cafés and coffee shops achieving this. However, around 5% have a turnover of £25,000, and only 12% will make more than £250,000.
These numbers can increase drastically with the help of a franchise. Franchises can offer you support, advice and valuable resources such as a successful and established business model.
Why Do Some Coffee Shops Fail?
With all this enticing news, you might be wondering why some coffee shops have failed.
The most common reasons a coffee shop fails are:
- Being unprepared
- Lack of business plan
- Unprepared rental lease
- Overspending on equipment
- Overestimating the cash flow
Starting any business requires research and preparation. Failure to do so can cause an array of issues to arise.
Coffee shops offer delicious delights and comforting drinks that can be enjoyed throughout every season, but these services still need to be supported by factors such as reliable business plans and an understanding of your enterprise.
Starting up on your own will require a lot of perpetual leg work, whereas a franchise can help support and educate you to have an in-depth understanding of the industry, which can make the difference between success and failure.
Here at Esquires, we offer support that we know will help you to set up your coffee shop business. Among other resources, all new franchise partners participate in a dedicated training program, which will fully prepare you to open a successful coffee shop.
For more information about coffee shop franchises, contact a member of our team today or browse through our blog! You can find out more about Esquires Coffee franchises below.