Opening a coffee shop can be attractive because it combines creativity and community with a daily ritual for many people. A coffee shop can also become a thriving business, given the global coffee market was worth an estimated $223.78 billion in 2023 and is expected to grow through 2030. But there are many decisions involved before you can brew your first cappuccino: you have to craft your concept, find the right location, design the space, and figure out how to make the shop profitable.

Below is a guide to opening a coffee shop, including how to choose a location and details about a payment system.

What’s in this article?

• Why open a coffee shop?
  
• How do you choose the right location for your coffee shop?
  
• What permits and licences are required to open a coffee shop?
  
• How do you design and equip your coffee shop?
  
• How Stripe can help your coffee shop
  

Why open a coffee shop?

Starting your own business gives you the freedom of entrepreneurship. You can design the space, develop the brand, and shape the customer experience in a way that aligns with your vision. Whether you open a coffee shop will depend on your goals and interests. Here are common motivations for doing so:

• You have a passion for coffee and hospitality: If you’re passionate about coffee, its preparation, and its culture, owning a shop lets you share that passion with others. You’ll have the opportunity to experiment with roasts, brewing methods, and creative menu options.

• You like the nature of the work: Many are drawn to the daily rhythm of running a coffee shop. It’s hands-on, focuses on people, and often involves an upbeat environment.

• You want to build community: A coffee shop often serves as a hub where people gather to work, socialise, or relax. If you enjoy creating a welcoming space for others, running a coffee shop can be rewarding. It can also help you establish connections within your community.

• You want to work in a growing industry: The coffee industry continues to grow, with steady demand for speciality and third-wave coffee. Though the industry is competitive, there’s always room for a unique concept, whether it’s a niche theme, a focus on sustainability, or an emphasis on local products.

• You want a creative outlet: With a coffee shop, you can express creativity in areas including the design of the space and the menu offerings and branding. It can also reflect your style or interests, which makes the business feel deeply personal.

• You want to make a profit: With the right location, pricing, and operational efficiency, coffee shops can generate consistent revenue. When shops are sourced wisely, items such as coffee and pastries often have strong profit margins.

How do you choose the right location for your coffee shop?

A coffee shop’s location can make or break the business, so it’s worth taking the time to get it right. You need to consider how the location fits with your concept, customers, and long-term goals and determine where to access the most foot traffic. Here’s how to do so:

• Know your customer: Who are you serving? The “right” location depends entirely on your target customer. If you’re catering to commuters, you want to be near transit hubs or on their daily routes. If you’re aiming for freelancers or students, proximity to campuses, libraries, or coworking spaces is key. Families? Think about neighbourhoods with parks and schools. Your shop’s vibe and menu need to match the people in the area, so define that audience before you start looking.

• Visit potential locations: Explore the areas you’re considering. Spend time in potential neighbourhoods at different times of the day and week. Watch how people move, where they linger, and how busy nearby businesses are. Get a feel for the energy of the area. Sometimes you’ll spot things – such as a nearby park with no coffee options – that won’t show up in market reports but could be golden opportunities.

• Think about visibility and first impressions: People need to see your shop – literally and figuratively. Corner locations, spaces with big windows, or spots near key landmarks tend to attract attention. Think about the immediate impression people get as they walk in. Does the location make it easy for you to create the atmosphere you’re aiming for? If not, you might spend a lot fixing that later.

• Consider the competition: Study other coffee shops in the area. What’s their customer base? Are they doing well, or does the location seem quiet? If you’re up against multiple established shops with loyal followings, you’ll need a strong angle to compete. On the other hand, if there’s no competition, ask yourself why. Sometimes it’s a gap in the market; other times, there’s no demand. Ensure you know which it is.

• Analyse the type of foot traffic: Foot traffic matters, but the right kind matters more. Operating on a bustling strip of luxury boutiques isn’t going to help much if you’re selling £3 drip coffee to students. Look for places with businesses or attractions that complement your concept – for instance, gyms for grab-and-go drinks or art galleries for a creative crowd. Proximity to offices, schools, and residential areas can be important, depending on your audience.

• Consider parking and accessibility: In urban areas, people might walk or take public transportation. In suburban areas, parking is often non-negotiable. Either way, your location needs to be easy to access. Ensure there’s space for bikes and strollers or even enough room to comfortably walk in and grab a to-go order.

• Assess the value you’re getting for the rent: High rent isn’t always bad, but it has to make sense. A busy corner in the city centre might justify a premium because it guarantees volume. But if you’re paying a lot for a spot that’s hard to find or doesn’t align with your audience, that will decrease your profit. Factor in rent, utilities, upkeep, and how much revenue you realistically need to make it all worthwhile.

• Factor in the neighbourhood’s trajectory: Look ahead. An up-and-coming neighbourhood could be a great opportunity – but only if it’s actually on the rise. Talk to other business owners, check city development plans, and look for signs of growth such as new flats and businesses moving in. Be cautious about relying too much on future potential; you still need the location to work for you now.

Once you’ve found the spot, take your time with the lease. A longer lease might seem like a good deal, but it can lock you into a bad situation if things don’t go as planned. Negotiate for flexibility – for example, options to renew, rent escalations tied to revenue, or clauses to help if the landlord sells or redevelops the property. It’s worth paying a lawyer to review the lease.

What permits and licences are required to open a coffee shop?

The permits and licences needed to open a coffee shop depend on your location, but note that there are some universal requirements for health, safety, and zoning. Here are the ones you should look into to operate legally:

• Business licence: Coffee shops typically need a basic business licence, which is issued by the local government and registers a business to operate in the area. The process and fee vary by location, so check with your local business office.

• Seller’s permit (or sales tax permit): If you’re selling taxable items – such as coffee, pastries, and merchandise – you’ll need a seller’s permit. This lets you collect sales tax, value-added tax (VAT), or goods and services tax (GST), which you’re required to report and remit to your jurisdiction’s tax agency.

• Health department permit: The local health department will inspect your coffee shop to make sure it meets health and safety standards. Your shop will need to have proper sanitation, food storage, and preparation areas in place before you can open. Be ready for regular inspections after you open.

• Food handler’s permit or manager certification: Depending on local regulations, you and your employees might need food handler certifications. These are short courses on food safety and hygiene, usually followed by a test. Some areas also require you to have at least one on-site manager get a higher-level food safety certification.

• Building or zoning permits: If you’re leasing or buying a space, make sure it’s zoned for a coffee shop. If you plan to remodel the space, add signage, or install equipment, you’ll likely need building permits and approval from the city planning office. Work closely with your landlord and contractors to ensure compliance.

• Fire department permit: Coffee shops need to meet fire safety regulations, especially if they have seating or use certain equipment such as ovens and espresso machines. The fire department will inspect your space for compliance, which might require having sprinkler systems, fire extinguishers, and proper exits.

• Music licence: If you plan to play music in your shop (even from Spotify or Pandora), you might need a public performance licence from organisations such as the American Society of Composers, Authors and Publishers (ASCAP), the Society of European Stage Authors and Composers (SESAC), and Broadcast Music, Inc. (BMI). This licence covers royalties to artists and is required whether the music is live or recorded.

• Tax identification number: If you’re operating as a corporation or hiring employees, you’ll need a tax ID number, such as an Employer Identification Number (EIN) in the United States. The government uses this number for tax purposes. Even if you’re the sole owner, it’s a good idea to get a number in case you expand.

• Sign permit: Do you want to hang a sign outside? Many cities require a permit for that. Check local regulations to ensure your signage meets size, placement, and aesthetic guidelines.

• Waste disposal permit: Some cities require businesses to have a plan for proper waste disposal, especially if they’ll be handling food scraps or grease or using a lot of water. You might also need a grease trap permit or agreements with waste management services.

• Speciality permits for outdoor seating: If you’re offering patio seating or outdoor tables, you might need another permit. Some cities charge extra for using public pavement or outdoor space.

How do you design and equip your coffee shop?

Designing and equipping your coffee shop is all about balancing form and function. You want to create a space that feels inviting and runs efficiently. Every choice you make affects the customer experience, staff workflow, and your profit. Here’s how to think through the process step-by-step.

Start with your concept and customer

First, decide on your coffee shop’s concept and the kind of customers you want to attract. Is your shop a cosy, community-focused space with mismatched furniture and a local vibe? Or is it a sleek, modern café appealing to professionals who grab their coffee to go? Every design choice (e.g., layout, furniture, equipment) should reflect that vision.

Prioritise the layout

An efficient layout can make a difference, especially during busy hours. You want to minimise the steps your baristas have to take to serve customers. Here’s how to do so:

• Back of house (barista workflow): Place the espresso machine, grinders, sink, fridge, and other tools in a logical order. Think about where spills or bottlenecks might happen, and plan accordingly.

• Front of house (customer experience): Make it easy for customers to walk around. Provide clear lines for ordering and pickup, enough space to linger without feeling cramped, and a logical flow from entry to counter.

Choose durable, easy-to-maintain materials

Coffee shops experience a lot of wear and tear, so choose materials that can handle heavy foot traffic, spilled drinks, and constant cleaning.

• Flooring: Select something durable such as sealed concrete, wood-look tile, or vinyl. Avoid anything too slippery.

• Tables and counters: Look for scratch-resistant surfaces, especially for your coffee bar. Quartz and stainless steel are great options for counters.

• Seating: Choose sturdy chairs and tables that are easy to clean. Consider lightweight pieces that can be rearranged.

Design for comfort and atmosphere

Your shop’s design should make people want to stay (or at least come back). Lighting, seating, and even soundproofing can play huge roles. Here’s how to approach each feature:

• Lighting: Use a mix of natural light and warm artificial lighting. Bright overhead lights can feel harsh, so consider pendants over the counter and softer lighting for seating areas.

• Seating: Offer a variety of seats – bar seating for solo customers, communal tables for groups, and cosy corners for people who want to work or relax.

• Noise levels: Consider acoustic panels or other soundproofing options to keep noise down during busy hours.

Get high-quality equipment

The equipment you choose will affect your workflow, drink quality, and utility costs. Invest in high-quality tools that match the volume you expect:

• Espresso machine: This is your centrepiece. Choose one that can handle peak demand without sacrificing consistency. Brands such as La Marzocco and Slayer are common choices for this reason.

• Grinders: You’ll need separate grinders for espresso and brewed coffee. Aim for precision and speed to keep things moving.

• Drip coffee setup: Batch brewers such as Fetco or Bunn are great for volume, but if your focus is on pour-overs, ensure you have the right tools and training.

• Refrigeration: You’ll need reliable refrigerators and display cases to keep your stock fresh and accessible, including milk and desserts.

• Water filtration: Clean water is non-negotiable. A high-quality filtration system can offer great-tasting coffee and protect your equipment.

Incorporate technology

Your tech setup can make your employees’ jobs easier and improve the customer experience. Choose carefully when you implement these components:

• Point-of-sale (POS) system: Choose one that’s intuitive for your staff and integrates with your payment processor. A smart reader that pairs with your POS device, such as Stripe Terminal, will make the payment process easier.

• Wi-fi: Customers appreciate reliable wi-fi, especially if you’re catering to remote workers or students. Ensure it’s fast and free.

• Online ordering system: If you’re offering takeaway or pickup, invest in a system that syncs with your in-store operations.

Invest in branding and visual design

Your branding should be consistent. Think about colours, textures, and design elements that reflect your shop’s identity.

• Signage: Your exterior sign should be clear, visible, and aligned with your brand. Inside, menu boards and any wall art should complement the vibe.

• Colours and decor: Use colours and materials that cohere with your brand. Plants, art, and small details such as mugs and napkins can all reinforce the atmosphere.

• Logo placement: Subtle logo placement on walls, cups, or even napkins can build brand recognition without feeling overdone.

Think about your budget in the long term

It’s tempting to cut corners on design or equipment to save money up front, but think about the long-term impact. Durable equipment, quality furniture, and an efficient layout will save you money in the long run.

How Stripe can help your coffee shop

If you’re opening a coffee shop, Stripe can handle a lot of the payment and backend work. Here’s how Stripe can help:

• Easier payments: With Stripe, you can accept credit cards, debit cards, contactless payments, and digital wallet options such as Apple Pay at the counter. You can also integrate payment processing into your website or app for online orders or pickup.

• Subscriptions and loyalty programmes: Stripe can manage recurring payments for any subscriptions you might be considering. It can also support gift cards or a loyalty programme as you expand.

• Compatibility: Most of the systems you rely on can integrate with Stripe, whether that’s your POS system, inventory tracking, or accounting software. Your payments and sales will sync automatically.

• E-commerce: If you want to sell branded gear (e.g., mugs, T-shirts, beans), Stripe can handle those online transactions just as easily as it can your coffee sales.

• Fraud prevention: Stripe has built-in tools to spot suspicious transactions and help minimise chargebacks.

• Scalability: Stripe can scale with you without slowing down or requiring extra work, whether you’re opening a second location, adding catering, or expanding your online shop.