When you’re learning how to open a cafe, it’s important to learn the answer to “How much does it cost to open a cafe?” Your startup costs, overhead expenses, and everything else will be a foundational part of your cafe business plan and future success. Knowing those costs inside and out, from the beginning, is critical.
You’ll have a variety of costs to consider. There is the cost of labor. Restaurant food cost will come into play. There are food inventory costs, where food inventory software may come into the equation. Then there are customer satisfaction costs, where guest retention is something you need to budget time and some funds toward.
In this BinWise blog post, we’ll walk you through the overall cost of opening a cafe, and the finer points of ongoing costs. How much does it cost to open a cafe? Read on to find out.
Cost to Open a Cafe
The cost to open a cafe can start as low as $80,000, but it can go all the way up to $1 million as well. Your cost will depend on the size of the cafe you want to open and your goals for the business. It’s similar in that regard to the cost to open a wine bar or the cost to open a pop-up restaurant.
So, how much does it cost to open a cafe? The answer is, it varies. You can expect to spend up into the tens of thousands, if not more. These eight costs of opening a cafe will play into your overall cost. Finding cost-effective options where you can for these costs will help you lower overall funding needs.
8. Location Costs
Your location costs are going to be some form of rent unless you buy a location outright. Depending on the type of cafe you want to open, a sole location that you purchase could be a great fit. Renting, however, gives you a little more flexibility. The price will depend on your location. The guarantee is that this cost will be ongoing.
7. Inventory Costs
Inventory costs are another ongoing cost of owning and operating a cafe. Your inventory consists of all beverage and food items and ingredients. It also covers disposable items and things you’ll need to keep replenishing. Your inventory costs will likely be one of the highest costs on your list when it comes to items you need on hand.
6. Payroll Costs
Payroll costs are an ongoing expense once you hire your staff, from servers to the executive chef. When you’re just starting out, it may just be you for a bit, but that’s a good time to plan for payroll expenses. Budget to pay your employees a living wage, and plan for a future with more employees, since that is what business growth will require.
5. Licensing Costs
Your licensing costs will depend on your location and what you want to put on your menu. A general business license is a fixed expense to plan for. Getting a liquor license will also likely be on your list. BinWise isn’t a legal advisor. Our recommendation is that you look into your local licensing needs to make sure you have everything you might need.
4. Marketing Expenses
Marketing expenses won’t be a huge part of your overall budget, but they are a very important part. Small business marketing is best kept to a small amount of your budget. Finding ways to make that amount work for your email marketing, content marketing, and business branding is key.
3. Insurance Costs
Your insurance costs are another location-dependent cost. Some coverage areas to consider are the business location, your employees and their health and other insurance, and liability insurance. Consulting an attorney for small businesses will be helpful in making sure you have all your insurance needs covered.
2. Equipment Costs
Your equipment costs are primarily a startup cost. If you invest in the best equipment from the beginning, you can avoid some replacement costs down the road. Budgeting several thousand dollars for your equipment costs from the start will help you get what you need for a smooth business opening and success down the line.
1. Business Taxes
Business taxes are an ongoing expense that could derail your business if you aren’t prepared for them. Like many costs on this list, business taxes are location-specific. For your location, look up taxes beforehand, and work with an accountant to make sure you have your ducks in a row.
"Key Takeaway: The cost to open a cafe can start as low as $80,000, but it can go all the way up to $1 million as well. Your cost will depend on the size of the cafe you want to open and your goals for the business."
Frequently Asked Questions About the Cost to Open a Cafe
When answering the question: How much does it cost to open a cafe? You’re bound to come across other questions along the way. Our answers to these frequently asked questions will give you a leg up. The costs involved in opening a cafe can range from getting a liquor license to investing in kitchen equipment. These questions dive into the reasoning behind those costs.
Is Owning a Cafe Profitable?
Owning a cafe typically sees a profit for the owner of between $40,000 and $60,000 a year. That can easily get up in the $100,000 a year range with more locations. Those numbers can also rise with drink menu engineering for your alcoholic beverages. Overall, the more diverse your cafe operation is, the more profit potential you have.
How Can I Start a Cafe On the Cheap?
To start a cafe on a budget, focus on cost-efficient methods of business. There are things you need for a cafe business no matter your budget. Those include supplies and inventory, legal requirements, and location costs. You can save money by taking every chance to do things with more efficiency.
A perpetual inventory system can help you save on an unnecessary inventory surplus. Inventory forecasting can also help in that regard. You can cut down costs on equipment by investing in the right equipment and avoiding having to replace it within the year. Overall, seeking out ways to be more efficient will help you stick to a tight budget.
What Determines a Cafe?
A cafe is defined as a small eating and drinking establishment. Cafes have been, in many places, historically only places that serve restaurant coffee and baked goods. However, the overall definition of a cafe encompasses everything from a brunch cafe with alcoholic beverages to a sidewalk cafe open all day, for every meal.
Which Type of Cafe Is Best?
The best type of cafe, for the owner and for customers, is a specialty cafe. A specialty cafe is a cafe that has a unique offering. This could be a good brunch menu, themed cocktails with unique cocktail ingredients, or a level of fine dining that suits a cafe environment.
The Cost to Open a Cafe: Cash and Credit for Your Cafe
When you’re starting your journey of being a cafe owner, there are plenty of questions you’ll find yourself asking. How much does it cost to open a cafe? How many employees do I need? How do I organize my menu with alcoholic beverages, coffees, and all manner of foods? All of these and more will come into your cafe business plans.
You can take the questions of inventory and order management off your list with BinWise and BlueCart. The BinWise Pro inventory program, together with the BinScan mobile app, gives you peace of mind when it’s time to take inventory. BlueCart’s order management software streamlines your order management system.