Considering entering the coffee shop industry? Do you want to purchase an existing coffee shop or start your own?
In this guide, we’ll walk you through the process of buying a café, coffeehouse, or espresso bar. We’ll cover essential factors such as location evaluation, financial analysis, seller motivations, negotiating the purchase agreement, and other important considerations.
If you are considering opening a coffee shop, you have two options: build your own coffee shop business from scratch or buy an existing coffee shop.
Before deciding, carefully weigh each option’s advantages and disadvantages to determine the best action for your coffee shop venture.
Pros and cons of buying a coffee shop
Buying an established coffee shop business comes with both benefits and drawbacks.
Pros of buying a coffee shop
- Established brand: You inherit an existing brand, established customer base, and reputation from the previous owner, saving time and effort in building brand awareness.
- Established location: The coffee shop’s location is already recognized, possibly lowering marketing expenses and drawing in established foot traffic.
- Existing infrastructure: The coffee shop likely already has equipment, furniture, and systems, such as an online ordering system and a QR code menu, reducing startup costs and operational setup time.
- Immediate revenue: You can start generating revenue from day one, bypassing the initial period of low or no income associated with starting from scratch.
- Established supplier relationships: The coffee shop may already have established relationships with suppliers, simplifying restaurant inventory management and procurement.
- Experienced staff: As a new coffee shop owner, you may inherit trained staff members familiar with the business operations and customer service standards, reducing the need for extensive training.
- Growth potential: With an existing customer base and infrastructure, the coffee shop business may have opportunities to expand and grow further.
Cons when buying a coffee shop
- Higher initial investment: Purchasing an existing coffee shop typically requires a larger upfront investment than starting a new one.
- Hidden issues: There may be undisclosed problems such as financial debts, legal issues, or equipment maintenance needs that can impact profitability.
- Limited flexibility: Depending on the terms of the purchase agreement, you may have limited flexibility to implement your own ideas, branding, or operational changes.
- Legal obligations: You may inherit legal obligations or contracts from the previous business owner, such as existing lease agreements or supplier contracts, which could impact business operations and finances.
- Reputation management: If the coffee shop has a negative reputation or poor reviews, rebuilding trust and attracting new customers can be challenging.
- Integration challenges: Adapting to existing systems, processes, and staff dynamics may pose integration challenges and require careful management.
How much does it cost to buy a coffee shop?
The cost of buying a coffee shop can vary widely depending on location, size, equipment, inventory, and business reputation. On average, it ranges from tens to hundreds of thousands of dollars. According to Start My Coffee Shop, the established coffee shop prices typically range from $80,000 to $250,000 or higher.
It’s essential to conduct thorough research and due diligence to determine the specific costs of buying a coffee shop in your desired area and market conditions. Additionally, expenses such as renovations, permits, licenses, and legal fees should be considered when estimating the total investment required.
Here’s a simplified step-by-step roadmap for acquiring a coffee shop within the industry. This concise guide will help you efficiently navigate each crucial stage of purchasing your new business.
Step 1. Define your coffee shop concept
Prospective coffee shop owners should start by defining their cafe concept and setting clear restaurant goals. Consider whether your preference lies in traditional coffee shops, specialty cafes, or other coffee-related ventures.
To define your coffee shop concept, consider the following guiding questions:
- What type of atmosphere do you envision for your coffee shop?
- What coffee offerings do you plan to provide (e.g., specialty drinks, single-origin beans, organic options)?
- Who is your target demographic (e.g., students, professionals, families)?
- What will set your coffee shop apart from competitors in the area?
- Will you offer additional products or services besides coffee (e.g., pastries, sandwiches, Wi-Fi)?
- What will be your coffee shop pricing strategy compared to other coffee shops in the area?
- Will your coffee shop have a specific theme or concept (e.g., cozy neighborhood cafe, minimalist modern design)? Check out these coffee shop ideas for inspiration.
- How do you plan to use technology in your coffee shop operations? (e.g., an online ordering system, QR code menu, restaurant mobile app, etc.)
- How do you plan to create a welcoming and inviting space for customers?
- What is the coffee shop’s current reputation and customer perception, and what changes may be necessary to enhance restaurant feedback?
- What marketing strategies will you implement to attract customers to your coffee shop? (For inspiration, check these coffee shop marketing ideas)
Step 2. Do a market research
Before buying a coffee shop, thorough market research is essential to grasp the dynamics of the coffee industry. Here’s what you need to do:
- Analyze your target market: Research demographics such as age, income, lifestyle, and coffee preferences to pinpoint your ideal customer base.
- Assess your competitors: Evaluate existing coffee shops to understand their menu offerings, pricing strategies, branding, and customer feedback.
- Stay informed about industry trends: Stay updated with popular menu items, emerging coffee trends, and consumer preferences.
- Understand regulatory requirements: Familiarize yourself with local laws and regulations governing coffee shops, including health codes, fire safety regulations, and licensing requirements.
- Estimate startup costs and revenue potential: Determine the upfront investment needed to establish your coffee shop, covering expenses for equipment, permits, supplies, and staffing. Moreover, revenue possibilities can be evaluated by projecting sales and estimating expenses.
Market analysis is essential in developing a coffee shop business plan. It assists coffee shop owners in creating an effective coffee shop marketing strategy to attract customers and maintain long-term success in the market.
Step 3. Find a coffee shop
The next step involves locating a coffee shop for sale or lease. This can be done through various means, such as
- online listings, for example
- real estate agents specializing in commercial properties,
- networking with other coffee shop owners.
When searching for the ideal coffee shop, factors like location, size, lease terms, and existing infrastructure must be considered. Additionally, conducting site visits and inspections to assess the premises’ condition can help make a decision.
Step 4. Evaluate the business
The next crucial step is to evaluate the coffee shop business. Ask yourself, “Why is this coffee shop for sale?” Is it due to financial struggles or other challenges the owner cannot overcome?
Depending on the reason for the sale, you can determine whether to proceed with the purchase or explore other coffee shops on the market.
Understanding the motive behind selling the coffee shop is vital, especially when inheriting existing leases. If the coffee shop faces financial difficulties, it may require rebranding or operational changes to improve performance. Conversely, if the owner is retiring with a strong financial position, you may maintain the menu, name, and brand identity unchanged.
When assessing a coffee shop for potential purchase, there are several additional factors to consider, which include:
- Financial performance: Review the coffee shop’s financial records, including revenue, expenses, and coffee shop profit margin, to confirm its viability as an investment.
- Location: Assess the coffee shop’s visibility, accessibility, and nearby demographics to gauge its ability to attract customers.
- Condition of assets: Assess the quality and condition of existing equipment, including coffee machines, grinders, refrigeration units, and other essential items.
- Coffee beans quality: Evaluate the freshness and quality of the coffee beans used in the coffee shop, considering factors such as sourcing, roasting methods, and variety.
- Reputation: Investigate customer satisfaction and feedback online and through direct interactions to gauge the coffee shop’s reputation and service quality. Verify if there are any restaurant complaints and why.
- Competition: Research the level of competition in the area, including the presence of other coffee shops, cafes, and specialty beverage establishments.
- Contracts and agreements: Inquire about existing contracts or agreements with suppliers, vendors, or service providers that may impact the coffee shop’s operations and expenses.
- Branding: Consider the coffee shop’s current branding, marketing efforts, and online presence, including its website, social media accounts, and customer engagement strategies.
Step 5. Secure funding
Make sure to secure all necessary financing before making an offer. When purchasing a coffee shop, it’s essential to account for various costs, including
- Purchase price: The amount required to acquire the coffee shop, including any agreed-upon sales price with the seller.
- Renovations and improvements: Costs associated with renovating or improving the coffee shop’s interior, exterior, or equipment to meet your standards or comply with regulations.
- Equipment and inventory: Expenses for purchasing or upgrading coffee-making equipment (e.g., an espresso machine), furniture, fixtures, and inventory such as coffee beans, syrups, and other supplies.
- Licenses and permits: Fees for obtaining licenses, permits, and certifications required to operate a coffee shop legally, such as health permits, business licenses, and food handling certifications.
- Operating expenses: The ongoing costs of running the coffee shop, including rent or mortgage payments, utilities, insurance, payroll, marketing, and advertising expenses.
- Contingency fund: A reserve fund to cover unexpected expenses or emergencies that may arise during the coffee shop’s startup or operation.
- Legal and professional fees: Costs associated with hiring attorneys, accountants, or consultants to assist with legal, financial, or regulatory aspects of the coffee shop purchase.
Sources of financing for a coffee shop may include:
- Personal savings: Utilizing personal funds to invest in the coffee shop purchase.
- Bank loans: Seeking loans from traditional banks or financial institutions for restaurant financing.
- Investors: Attracting restaurant investors willing to provide capital in exchange for equity or a stake in the business.
- Small Business Administration (SBA) Loans: Applying for loans through SBA programs designed to support small business owners.
Create a comprehensive coffee shop business plan and financial projections to present to potential lenders, demonstrating the viability and profitability of your venture.
For more ideas on where to get coffee shop financing, check out our article on how to start a coffee shop with no money.
Step 6. Do your due diligence
When purchasing a coffee shop, conducting thorough due diligence is crucial. This entails examining every aspect of the business to understand its current state and potential risks comprehensively. Here are key factors to consider during this process:
- Financial performance: Review the coffee shop’s financial records, including revenue, expenses, and profit margins, to assess its cash flow and overall financial stability.
- Lease agreement: Review the terms and conditions of the coffee shop’s lease agreement, including rent, lease duration, renewal options, and any restrictions or obligations, to assess its impact on profitability and long-term viability.
- Regulatory compliance: To avoid legal issues and fines, ensure the coffee shop complies with all relevant regulations and licenses, including health and safety standards, food handling regulations, zoning laws, and permits.
- Customer base: Understand the coffee shop’s target demographic and customer preferences through demographic analysis and customer feedback to gauge its market appeal and potential for growth.
- Inventory and equipment: Assess the condition and value of the coffee shop’s inventory, equipment, and supplies to ensure they are well-maintained and sufficient for business operations.
- Brand reputation: Research the coffee shop’s reputation and online presence, including customer reviews, social media engagement, and brand image, to assess its competitive position and potential for building customer loyalty.
- Staffing and management: Evaluate the coffee shop’s staffing structure, employee training programs, and management practices to determine its ability to deliver quality service and maintain operational efficiency.
- Growth potential: Identify opportunities for business expansion, such as introducing new products or services, expanding marketing efforts, or diversifying revenue streams, to maximize the coffee shop’s growth potential and long-term success.
Step 7. Hire a lawyer for contract negotiations
When acquiring a coffee shop, it’s imperative to enlist the expertise of a seasoned business attorney to manage contract negotiations. This legal professional will protect your interests and secure favorable terms within the purchase agreement. Their expertise is essential in preventing misunderstandings with the current owners and ensuring a smooth transition.
- Referrals: Ask friends, family members, or colleagues for recommendations. Personal referrals can provide insight into a lawyer’s reputation and expertise.
- Referrals from coffee shop owners: Reach out to other coffee shop owners. They may have worked with lawyers during their own business transactions.
- Local business directories: Check local business directories or online listings specific to your area. Look for lawyers specializing in business law or commercial transactions.
- Online Legal Platforms: Explore online legal platforms such as
where you can search for lawyers by practice area and location, read reviews, and compare profiles.
- Chamber of Commerce: Contact your local Chamber of Commerce or small business association for referrals to lawyers who work with small business owners, including coffee shop acquisitions.
When hired to assist in the purchase of a coffee shop, a lawyer will typically perform the following tasks:
- Review legal documents: The lawyer will review all legal documents related to the purchase, including contracts, agreements, leases, and financial statements, to ensure that your interests are protected and that all terms are fair and favorable.
- Negotiate terms: The lawyer will negotiate terms with the seller or their legal representatives on your behalf, aiming to secure favorable terms and conditions for the purchase agreement, including price, payment terms, warranties, and contingencies.
- Assist with financing: If financing is involved in the purchase, the lawyer will help you navigate the financing process, review loan agreements, and ensure compliance with lender requirements.
- Facilitate closing: They will oversee the closing process, ensuring all legal requirements are met, documents are properly executed, and funds are transferred securely.
- Address legal issues: Throughout the purchase process, the lawyer will address any legal issues or obstacles, providing legal advice and guidance to help resolve them.
Step 8. Complete coffee shop purchasing
After you made due diligence (or your business attorney did it on your behalf), and your lawyer has reviewed all legal documents, negotiated terms, and assisted with financing, the next step in completing the purchase of the coffee shop involves finalizing the transaction and officially transferring ownership
When purchasing a coffee shop, you usually sign a purchase agreement that details the sale’s terms, such as the purchase price, payment arrangements, and any potential contingencies.
Following the signing of the purchase agreement by both parties, the transaction progresses to the closing phase. During closing, the legal transfer of ownership occurs, and the buyer officially takes over the coffee shop.
Step 9. Prepare a plan for reopening your coffee shop
After buying a coffee shop, the next step is to plan its reopening. This means developing ideas and implementing them to ensure the reopening goes well. Important things to think about include:
- Decide on the menu items that align with the coffee shop’s theme and restaurant target market. For inspiration, check out this list of coffee shop ideas.
- Determine staffing requirements and provide necessary training for the reopening.
- Assess and address any necessary renovations or maintenance tasks.
- Develop a restaurant marketing plan to promote the reopening through various channels, such as social media. Check out this guide on the restaurant’s social media for more information.
- Manage inventory levels and order supplies in preparation for the reopening.
- Implement health and safety protocols to protect customers and staff.
- Plan logistical details such as operating hours and seating arrangements.
Step 10. Open your coffee shop
With the coffee shop reopening plan finalized and all prior tasks accomplished, you’re ready to open your coffee shop.
For an unforgettable launch event, explore these grand opening ideas for restaurants.
- Decide between an existing or new coffee shop
- Do market research
- Find a coffee shop
- Evaluate the business
- Secure coffee shop’s funding
- Do your due diligence
- Consider hiring a business attorney
- Complete a coffee shop purchase
- Prepare a coffee shop reopening plan
- Open a coffee shop
Key Takeaways
- Before purchasing a coffee shop, thoroughly research the established coffee shops and market trends.
- Evaluate the coffee shop’s financial records, including revenue, expenses, and profit margins, to determine its profitability and potential return on investment.
- Analyze the coffee shop’s location, visibility, and surrounding demographics to assess its potential customer base and market demand.
- Inspect the quality and condition of the coffee shop’s equipment, furniture, and inventory to ensure they meet your standards and requirements.
- Familiarize yourself with local laws, regulations, and permits governing coffee shop operations to ensure compliance and avoid potential legal issues.
- Consider hiring a business broker, accountant, or attorney specializing in business acquisitions to navigate the buying process and mitigate risks effectively.
Frequently Asked Questions (FAQ)
How profitable is owning a coffee shop?
The profitability of a coffee shop can vary widely depending on factors such as location, competition, operating expenses, marketing strategy, and overall management. It can fluctuate significantly, typically with an average profit margin between 15% and 25%. Here you can read more about how much coffee shops make.
How much money should you have to open a coffee shop?
- A Coffee shop with seating only costs range from $80,000 to $330,000.
- A drive-thru coffee shop only costs range from $80,000 to $230,000.
- A coffee shop with seating and a drive-thru costs range from $80,000 to $400,000.
- A coffee kiosk/coffee stand/mobile coffee cart costs range from $60,000 to $125,000.
- A mobile coffee food truck costs range from $50,000 to $175,000.
