Why Do Coffee Shop Businesses Fail?

When done right, opening a coffee shop can be an incredibly profitable opportunity. However, like any kind of new business venture, coffee shops still have the potential to fail.

Despite their popularity, not every coffee shop is going to make it – something that is even more of a concern for startups. Having an understanding of what can go wrong can be useful for entrepreneurs looking to make a start in the coffee shop industry.

When you buy a franchise backed by an established brand instead of opening an independent store, you greatly increase the chance of finding success.

So, why might coffee shops fail, and what can you do to ensure your store goes from strength to strength?

How profitable are coffee shops

High Coffee Shop Competition

One of the simplest reasons a new coffee shop might not find success is that the market is well established and competition is high.

Many high streets are already saturated by both independent coffee shops and chain stores, meaning that newer establishments will have to work even harder to stand out; if they can’t, they fall behind before they can get their footing.

People buying coffee in a coffee shop

Unprepared Coffee Shop Owners

Running a coffee shop might look like a breeze from the outside – it’s just serving coffee, right? In reality, there are many working parts to owning a business.

New coffee shop owners need to research and prepare for all aspects of the business if they want to succeed. A passion for coffee is a good place to start, but you need the business knowledge to back it up.

There’s a lot that goes into opening a coffee shop or cafe – this process can be much easier with the support of a franchise. When you have the backing of a top brand, you get all the market knowledge and experience that comes with it, along with the necessary training to ensure that knowledge is passed on.

Poor Coffee Shop Location

Another potential reason for coffee shop failure is a new store opening in an inopportune location. Coffee shops need to be in an ideal spot to cater to their target demographics; if the customers are not there, establishments will find it hard to succeed no matter how good their products are.

Lack of footfall can come down to a location that isn’t attractive for people to visit or is too far out of their commute.

Again, partnering with a franchise will mean that you receive additional support when choosing a location and site for your coffee shop, ensuring you are set up for success.

Coffee in a white cup

Lack of Working Capital

Many might be attracted to the coffee shop market because it promises to be profitable. Along with the relatively low barriers to entry, some may assume a high return on investment is a sure thing as soon as the doors open.

However, a lack of working capital to keep everyday operations going at the beginning of the venture can often be the downfall of a coffee business. Entrepreneurs may underestimate the funds needed to sustain and grow the establishment.

Poor Customer Service

A good coffee shop experience comes down to the quality of the product, but an excellent experience can come down to the quality of the customer service. Poor service could be the difference between a customer returning and not.

Because competition is so high, you want to give your customers every reason to keep coming back and transform from one-off visitors into loyal patrons. This means you need a team of experienced baristas with outstanding customer service skills to ensure there is always a friendly face to accompany the coffee.

Many enjoy the coffee shop experience because of the social aspect it can bring, meaning coffee shop teams need to be sociable and ready to engage with the customer.

No Brand Image or Coffee Shop Concept

Nowadays, coffee shops need to offer more than just a couple of hot drinks. Starting out with a solid brand concept will mean you waste less time and money down the line when attempting to build a brand around what you already have.

When thinking about a coffee shop concept, business owners will need to consider how they market themselves, the visuals of the store, what kinds of items are on the menu, the ideal customer experience and anything else that contributes to the brand.

Without a successful brand image, concept or desirable menu, your coffee shop becomes another characterless store that won’t attract repeat customers.

A trendy coffee shop

Opening an Independent Coffee Shop is Challenging

Owning your own coffee shop comes with numerous perks, but it’s often no walk in the park – all of these reasons for potential coffee shop failure prove just that.

Even with just a bit of support, a failing business could become a thriving hub for the community. This is why buying a coffee franchise can often be a better option for those looking to get into the coffee shop industry.

The Benefits of Buying a Coffee Shop Franchise

Opting for a franchise rather than an independent store greatly reduces the risk of failure. With a franchise, you receive all the benefits of an established brand, including:

  • Built-in customer base
  • Recognisable brand image
  • Market knowledge and expertise
  • Analysis and insights of the latest UK coffee shop trends
  • Coffee shop design support
  • Site selection
  • Marketing materials

When you become an Esquires Coffee shop franchise partner, you receive help in all of these areas, along with full training and ongoing support to ensure your store is a success from the start!

Find out more about our franchise opportunities to discover if you’ve got what it takes to become an Esquires Coffee franchisee.

You can also head to our franchise FAQs page for some insight into the most common queries about joining an Esquires franchise.