American coffee drinkers consume the equivalent of more than 20 million 60-kilo bags of dry coffee a year. Caffeine is addictive, and millions of Americans stop by coffee shops or coffee kiosks for their first morning hit. If you want to cash in on that market, it's best to do some prep work before you spend any money.
Research the coffee business in your community and figure out what you can offer to compete with established kiosks, carts and coffee shops. Find a location that has good customer traffic but also falls within your budget. Look for a supplier who can provide quality beans at a price you can afford. Learn the food safety regulations you're required to meet.
If you're into coffee, you know there are multiple ways to sell it: coffee shops, espresso carts, or a coffee kiosk or coffee stand business. While Starbucks has spread coffee shops across the nation, the company's stores also include mall kiosks and stand-alone exterior kiosks.
The overhead for a coffee kiosk business is typically half of what you need to spend for a coffee shop. If you use a mobile coffee cart rather than a stationary kiosk, your overhead is even less. Among the factors to weigh when you're choosing your business model:
- How much capital do you have to invest? According to one estimate, a bare-bones kiosk could require $15,000, while a bare-bones coffee cart business might take as little as $5,000. A coffee shop costs considerably more.
- What's the market like? If you're in a small town, how many daily customers can you count on?
- What do you plan to sell? The more elaborate and diverse your coffee offerings, the more equipment and space you may need. If you want to sell food, that's another factor to consider.
- What sort of space is available? If you want to set up in a local mall or strip mall, is there a place for a coffee shop? If you set up an exterior kiosk, will you have water and electricity available? If you're hunting a coffee kiosk for sale rather than starting from scratch, these issues may already be resolved by the current owner.
- A coffee cart gives you the most flexibility in finding a location or multiple locations. However, you still need water and electricity available wherever you do business.
- Are you going it alone or will this be part of another business? A coffee kiosk might make a great addition to your established bookstore or bakery.
- If you find a perfect location without a kiosk or a cart already there, ask yourself why? Is there a hidden flaw that everyone in the industry knows about, or have you genuinely stumbled on a golden opportunity?
- If you find an affordable space that doesn't fit your concept for the coffee kiosk business, don't be afraid to walk away. The alternative is to change your dream to fit the space available.
If you haven't firmed up your ideas yet, take some time and visit local coffee shops, stands and kiosks. See where they're situated, how many customers they deal with in a day, and whether the traffic is drive-by, pedestrians or customers who make a special effort to get there.
Whether you're creating a business from the ground up or looking to find a coffee kiosk for sale, you may find several locations that look promising. It's worth spending several days studying the different candidates before you sign any leases or purchase agreements. Location is important to any business, and you want to know you've found a good one. While you are evaluating the locations, ask yourself these questions:
- What is the cost of renting the space?
- How much potential foot traffic passes the location? A kiosk site with higher rent but much higher foot traffic might be a better deal than a low-rent, low-traffic coffee kiosk business.
- If you're looking at a mall, how much foot traffic do you see in it? Is there an anchor store or a movie theater that draws a steady stream of customers? Can you position yourself close to the anchor rather than in a low-traffic area?
- If you base your location on an anchor store or another nearby draw, are you confident it won't close or relocate soon after you open?
- If you're considering an exterior kiosk, will it be positioned so that it's easy for drive-by traffic to reach your location? Are you on the correct side of the street to catch the morning rush?
- Check on promising outdoor locations throughout the day. How does the light hit the area? Is the location reasonably protected from wind and weather?
- How secure will your location be when you close the kiosk and go home? Can you bolt your kiosk to the ground so that it can't be knocked over easily?
- Is your kiosk location large enough that you can provide seating? If so, is there enough parking where customers can leave their cars and walk over for coffee?
If you have a coffee cart business or a cart and a kiosk, you have mobility. If there are special events, you can see about moving the cart to wherever the action is.
Coffee is everywhere. It's at Starbucks, Dunkin' Donuts, convenience stores and McDonald's. One of the ways you can compete is with your menu, so give some thought to how your coffee and other offerings can draw customers away from established brands. Try to come up with something nobody else offers or provide the same offerings only better.
- An espresso cart or coffee kiosk business with a limited range of coffee options may be enough if you're in the right location or can find some way to jazz up what you offer. An example is being the only one in town who makes your coffee from fair-trade, organic beans.
- Will you offer tea as well? How about soft drinks? Hot chocolate if the weather's cold? Chai?
- If you offer food, what sort? Do you want to offer homemade baked goods? Prepackaged sandwiches? Bagels? Muffins? Cookies? Is there some gap in the market that other coffee shops aren't providing?
- Are you going to sell beans or ground coffee as well as the drink itself?
The ideal menu is one so good that customers make an effort to find your coffee kiosk business rather than you needing to rely only on customers who happen to pass by. Write down your ideas in detail and go over them until you have a clear, precise idea of the menu for your coffee stand business.
Quality coffee is a must for coffee kiosks. If your customers are happy with substandard coffee, they can probably find it cheaper and easier elsewhere. Quality costs, but it leads to repeat business, so search for a supplier that can deliver what you need.
- If you have a good palate for coffee, ask to sample the suppliers' goods. A reputable company will be happy to let you judge their products by taste.
- Ask about the company's experience roasting beans.
- If you plan to offer fair-trade, direct-trade or organic beans, ask potential suppliers about their programs in these areas.
- Ask how quickly the company ships the beans after roasting. The faster they reach your store, the more flavorful they are.
- Find a supplier with low minimums on orders. When starting out, you can't afford to buy large quantities of beans. It may turn out they're not what your customers want.
- Inquire how quickly the supplier can refill your supply if you run short.
- Quality is essential, but don't buy at a price that's too high for you to turn a profit.
You can start some businesses with nothing but a laptop and the right software. A coffee kiosk business takes more of an investment in equipment.
For starters, there's the kiosk, which you can assemble from modular components. You want a kiosk that can stand up to abuse, such as being scratched, pushed on or leaned on. The same is true of a coffee cart. If you want seating and tables as part of your operation, that costs more unless you're in a mall or other area with public seating nearby.
The need for other equipment varies with the coffee kiosk business concept. You may need some or all of these:
- Espresso machine
- Bean grinder
- Refrigeration for milk and cream and ice for iced coffee. You may need to refrigerate food too.
- Fresh water
- Hand-washing sink
- Drip coffee brewer
- French press
- Backups for your coffee-making equipment so that you can keep going if the grinder or espresso machine is down.
- Shelves for storage
- Display case
- Froth pitcher
- Syrup pumps
- Mugs or cups
- Cold-brewing equipment
Equipment is not a place to stint on costs. You need the best quality equipment you can afford, durable enough to hold up under constant use. You also want equipment you can easily obtain parts and repairs for if there's a problem.
Your coffee stand business deals in drinks and possibly food, so local food safety laws and regulations apply to you. The county health department for your area can provide you with the necessary information to stay within the law. Coffee is a low-risk food item, but it's still regulated, and milk and snack items even more so.
In California, for example, you have to clean syrup dispensers and coffee grinders frequently enough to prevent mold or dirt from accumulating. One employee, at a minimum, must be certified in food-safety handling, and all employees need basic training. Even if you're working a coffee cart rather than a kiosk, this applies.
The state may require your kiosk to have sinks for cleaning equipment and for hand-washing. Depending on state or county regulations, your kiosk may also need a bathroom. You can expect periodic health inspections to confirm you're not putting the customers' safety at risk.
Food-safety regulations are only part of the rules you have to meet. For example, the zoning code may restrict whether you can open your business at a particular location. Local regulations may also determine hours of operation, space between you and adjacent activities, and how big your on-site advertising and signs can be.
When you give your business a name, you may have to file a "doing business as" or "fictitious name" statement with your local government. The exact rules for what constitutes a fictitious name vary from state to state. In California, for example, you need a DBA if the business name doesn't include your surname or the nature of the business isn't clear; Sam's Hot Stuff would need a DBA but Johnson's Organic Coffee might not.
You may also need a building safety inspection, a fire inspection and liability insurance, if it is required to meet local standards. More business is usually good for a community so your local government should be happy to explain the rules.