The coffee culture is big in South Africa with popular local franchises like Ziggi’s Coffee and Krispy Kreme competing with big, international brands like Starbucks. This article provides a 10-step process for local South African entrepreneurs looking to open their own coffee shop.
- Choose a coffee shop concept
- Learn how to run a coffee shop
- Plan your drink and food menu
- Choose your equipment
- Create a business plan
- Choose a location
- Decorate your shop
- Recruit professional service staff
- Install a POS system
- Launch a marketing campaign
Step 1: Choose a Coffee Shop Concept
Your coffee shop must offer something unique to attract a loyal customer base. The best way to go about this is to study coffee shop trends till you identify a concept that works for you and has a good chance of succeeding in your local area.
The concept you end up choosing must shape your brand messaging. For example, let’s say you opt to go with an in-house coffee roasting concept; your marketing materials, website, and shop design must use descriptive words and images to showcase what your business is all about.
Below are some coffee concepts you can use in your shop.
- Classic coffee: This is the regular coffee brewed using hot water. The “classic” term also applies to Espresso coffee, espresso-based drinks, instant coffee, and decaf coffee. This is the tried and true concept with a taste and aroma everyone recognizes.
- Healthier milk alternatives: Customers are becoming increasingly health-conscious, and many of them are willing to pay more for plant-based milk options. Top choices include oat milk, soy milk, almond milk, and cashew milk.
- Cold coffee: Cold brew and iced coffee both fall under this category. Cold brew is made at a cold temperature, so it can be refrigerated and stored in large batches for use over several days, while iced coffee is regular coffee served over ice. The draw of cold coffee is that it retains its freshness for much longer than hot coffee and it has become a popular choice for younger customers.
- Protein coffee: It became popular due to the prevailing low-carb trends, and it can be marketed as protein-rich morning coffee to customers. It is coffee mixed with a protein shake or plant-based protein. When done right, it will retain the flavor of coffee while adding up to 30 grams of protein.
- Custom ordering: The idea is to let customers choose the type of coffee flavors and toppings they want, and in what quantities. The customer may then watch as the barista prepares the drink. More coffee drinkers want to mix things up, and the concept has been gaining popularity.
- Coffee vending machines: It is more convenient for customers in a hurry and cheaper for business owners without the capital to build a physical store. Provided a good location can be found, a coffee vending machine serving good quality coffee removes the need to hire a barista and can be very profitable.
- In-house roasting: The coffee will be roasted in-house to ensure it still retains its peak flavor and aroma when served to customers. This approach is an excellent way to distinguish your brand. A restaurant can use single-origin beans from a remote locale to offer unique coffee of the highest quality.
- Artisan coffee: Offering coffee prepared using locally sourced beans or local brewing methods is a great way to leverage coffee tourism. It can be a major draw for locals and out-of-town visitors, but it only works if local ingredients are of the required quality.
- Sustainable coffee: The idea is to only use ethnically sourced coffee and recyclable packaging materials. The concept will resonate with an eco-conscious audience, who are often willing to pay a premium for sustainable products.
Step 2: Learn How to Run a Coffee Shop
You can’t run a successful coffee business without any foundational knowledge of coffee brewing and how the business works.
You don’t necessarily need formal training, but you must take the time to do your research and learn from established players in the industry. You can visit coffee clubs, bean traders, and trade shows to meet people and learn techniques from them.
Ultimately, the most effective way to master coffee brewing is through formal certified training. It lets you develop robust barista skills that could be vital if you are starting off with little capital to hire skilled staff.
You should also take restaurant management and marketing courses that will give you the knowledge and skills to run the business side of your venture.
In South Africa, organizations like The Speciality Coffee Association and the Ciro Coffee Academy offer coffee courses with certifications.
Step 3: Plan Your Drinks and Food Menu
When starting your coffee shop, you can choose to focus on two or more coffee concepts depending on which types of drinks would resonate with your target audience.
For example, an entrepreneur planning a high-end coffee shop serving a customer base of young, wealthy business people can choose to offer classic coffee, cold coffee, protein coffee, and in-house roasting.
Beyond the coffee, you can also sell food items like muffins and sandwiches to customers. Some coffee shops even sell teas and smoothies along with their main coffee drink.
Where you source your ingredients is very important. Your business will only be successful if you always serve quality coffee that will keep customers coming back.
Find the right supplier that can provide the quality of beans you want in the right quantities whenever you need it. Make inquiries about the origin of the beans, how it is roasted, and the nature of the supplier’s storage facilities.
Step 4: Choose Your Equipment
Your equipment will depend on the type of establishment you want to create and the food & drinks on offer.
For example, a kiosk coffee shop offering classic tea and iced tea can make do with just an espresso machine, 2 coffee bean grinders, filter coffee brewers, and disposable supplies (plastic cups, straws, and cup carriers).
On the other hand, a cafe store offering both classic coffee drinks and in-house coffee roasting will require everything the kiosk shop is getting plus the whole range of coffee roasting equipment.
The range of equipment that may be needed to start a coffee shop has been listed below.
Coffee brewing equipment
- Measuring cups and spoons
- Portion scales
- Espresso machine
- Espresso grinder
- Espresso tampers
- Coffee grinder
- Coffee brewers
- Hot water dispenser
- Airpots and satellite servers
- Teaball infusers
- Syrup pumps
- Knock boxes
- Smoothie blenders
- Frothing pitchers
- Frothing thermometers
- Iced tea dispenser
Coffee roasting equipment
- Moisture reader
- Coffee roaster
- Bean trier
- Coffee grinder
- Coffee brewer
- Bag sealer
- Coffee bags
- Coffee mugs
- Espresso cups
- Sugar pourers
- Paper hot cups with lids
- Straws and stirrers
- Take-out cup carriers
Step 5: Create a Business Plan
A business plan helps to link all your ideas together into a coherent strategy. It helps you map out how your vision for your coffee shop will be brought to life. The plan is also crucial if you want to obtain external funding from investors.
Here are some essential sections you must include in your business plan:
- Business Description: This will be an overview of how you plan to position your coffee shop in the market to distinguish it from other competing locations in your local area. You will explain what you want to be known for.
- Target Audience: You can’t sell to everyone, so you must identify the demographic segment of people in your geographical location who are most likely to be attracted to the type of establishment and menu items you want to introduce.
- Competitor Analysis: This will be an in-depth profile-building exercise with the aim of discovering everything you can learn about other restaurants and coffee shops targeting the same customers you want to attract to your business.
- Sales and Revenue Projections: You will use a bottom-up forecasting model to estimate what you hope to earn on each of the items offered in your menu. It all starts with the number of potential customers you believe you can attract to your shop daily. That’s the number that will help you calculate what you can achieve in the next month, year, and five years.
- Marketing Plan: This will be easier to create if your competitor analysis is done the right way. Researching the competition will show you their successful marketing strategies and the promotional opportunities they have been oblivious to.
- Milestones and Goals: You will outline the goals you want to achieve over a specific period, when you want to achieve each objective, the individual responsible for carrying out the task, and the resources that will be required.
- Startup Budget: This section will outline everything you must purchase to make your dream a reality and where you hope to source the funds required. We recommend grouping your list into one-off purchases and continuous monthly expenses.
Step 6: Choose a Location
Unless you are planning to open a mobile coffee shop, one major decision you must make is to decide whether you want to rent a shop or buy one.
Many new businesses operate on a tight budget, so we recommend renting since it’s cheaper. It also makes it possible for you to change locations if you initially make the mistake of renting a shop in an area with slow businesses.
You can avoid picking the wrong location by making sure there is enough foot traffic in the area to sustain your business. The dominant demographics of the area must also match your target audience.
Of course, the shop must be of the right size to fit the scope of what you are planning. There must be ease of accessibility, and customers must have space to park their vehicles.
Once you secure an excellent location, the next step is to register your new business. You must apply for a business license as required by the 1991 Business Act. Also, Regulations Governing the General Hygiene Requirements for Food Premises, the Transport of Food and Related Matters state that all businesses involved in the preparation and handling of food must obtain a Certificate of Acceptability.
Step 7: Decorate Your Shop
Your coffee shop decor must be optimized to appeal to your target audience. It must be a design aesthetic that leaves a lasting, favorable impression on them.
For example, a coffee bar selling drinks and cakes to an audience of highly educated and young professionals may want to opt for a sleek and minimalist decor. In contrast, an artisan coffee shop that caters primarily to tourists may choose a rustic decor theme.
Your furniture pieces must be comfortable and laid out in a way that optimizes freedom of movement all over the floor. Perks like free WiFi can be offered to make your location a hub for people seeking a tranquil space where they can work on their laptops while enjoying the drinks on offer.
You also need to sort out your logo and signage. Work with a designer to dream up brand colors and a style guide for all your marketing materials. The end result must align with your brand positioning and be unique.
Step 8: Recruit Professional Service Staff
It’s not a stretch to say that the quality of your staff will ultimately determine whether or not your coffee shop business will succeed.
Get the right personnel and their professionalism and joyous countenance will keep customers coming back. Get the wrong ones, and your brand will develop a negative reputation that will dissuade potential customers who have never even visited your shop from ever taking that step.
To hire the right employees, you must first list the qualities you want from your staff, before coming up with a recruitment and training plan that will help you get the talent you need.
We recommend looking for the following qualities in potential recruits:
- A positive and good-humored attitude
- Communication skills
- Attention to details
- Willingness to learn
- Formal training (barista)
Step 9: Install a POS System
Installing a POS system is one of the most important steps you must take when setting up your coffee shop. The system will not only help you process payments, it will also serve as the backbone of your establishment. It will help you track sales, inventory, revenues, profits, and more.
Usually, the package consists of multiple bulky items, including a screen, cash drawer, card reader, and receipt printer. However, with the advent of dynamic cloud-based platforms like Slant POS, you can convert any iOS or Android device into a hand-held POS system.
Unlike most other alternative platforms, the Slant POS system is built for coffee shops and restaurants from the ground up. It has all the digital tools you need to run a seamless cafe operation, including:
- Payment processing
- Inventory management
- Sales reports
- Coffee shop promotions
- CRM tools
- Coffee franchising support
- Loyalty program support
Step 10: Launch a Marketing Campaign
A great location and a top-quality menu of coffee drinks and snacks wouldn’t matter much if you can’t get the word out to your target audience about your new business.
Marketing is a process that can start during the business gestation phase. Some creative entrepreneurs have opted to share their journey on social media with potential customers, which had the effect of building a base of customers ready to visit on opening day.
You can take a similar approach by first identifying the social media channels frequented by your target audience and sharing constant updates about your progress. You can share pictures and information on how your shop is being decorated and tell them about the coffee drinks you are concocting.
Once the business is up and running, social media will still play a crucial role in keeping them engaged and attracting new potential customers to your brand.
Traditional promotional mediums should not be overlooked. They can be very effective for local coffee shop owners like you who are targeting a local audience. You can distribute flyers, pay for ads in the local newspaper, and sponsor local community events.
It should be obvious from this article that setting up a successful coffee shop requires hard work, skill, creativity, and money. Yet, setting up a coffee shop can be a very lucrative and rewarding venture if you are willing and able to follow all the steps outlined in this article.