Over the last decade, cafe culture has really taken flight in the UK and worldwide, for that matter. As it stands, the café and coffee shop market in the UK is around £5.3 billion, with continual growth projected for the foreseeable future. All in all, it’s high time for opening a cafe in the UK.
This article explains how to start a cafe business in 2024. What are the costs? What licences and certificates do you need? We have answered these questions plus more in the article below. Whether a seasoned entrepreneur starting a business or a passionate coffee connoisseur, these tips and tricks will give you the strategies to brew success in the cafe business.
Step-by-Step Guide to Opening a Coffee Shop
Step 1: Cost Analysis
As any good entrepreneur will tell you, any venture needs to start with a cost analysis. This analysis shows whether you’re able to take on the financial requirements or whether you need to find another business opportunity that promises similar profit margins but is more within your financial reach. It’s worth noting that opening a cafe involves significant upfront and ongoing expenses.
Market research and development of a business plan costs can range from £5,000 to £20,000. Meanwhile, licences and permits will cost between £1,000 and £5,000. Legal fees, will depend upon your locality, but might be as high as £5,000. Then, there’s the initial deposit for rent, which can be anywhere from £10,000 to £100,000, depending on location. Insurance can set you back from $1,000 to $10,000 too.
Once these things have been set up, you need to think about costs for equipment and furniture, plus interior design. This is often between £10,000 to £150,000 depending on how extravagant or minimalistic you want to keep things. Then comes your initial inventory and supplies. This will cost around £5,000 - £20,000.
Finally, you will be looking at a bill of £1,000 - £5,000 for POS systems and other technological solutions such as a website and delivery services. Make sure to get yourself a the best POS system for cafe, such as 3S POS, which can be used for numerous purposes, such as workforce management, inventory management, payroll management, and more to save on additional costs. Find out more about why cafes need a POS system in our previous blog.
Overall, the answer to how much does it cost to start a cafe in the UK in 2024 can vary between £36,000 and £270,000.
But that’s not all. You’ll have to cover ongoing operational costs right after your very first month as well. These include rent and utilities (£1,000 - £10,000), payroll and staff costs (£5,000 - £20,000), food and drinks (20% - 35%) of revenue, and a marketing plan (£500 - £5,000). You can consider getting a business loan to cover the costs.
Step 2: Market Research
Next, you need to do a full-scale market research to uncover your location’s demographics. Analyse demographics such as age groups, preferences, and lifestyles of your market. Are they students, professionals, families, or tourists?
Once you’ve pinpointed their demographics, find out the preferred food trends. What sort of cafe and food resonates with your targeted audience? Do they want vegan delights? Is the market largely burger fans? Or do they desire a laid-back open-air cafe to relax after a long day of work?
For example, analyse how cultural preferences in the areas you’re targeting influence cafe choices; some places may prefer alcohol, while other areas could be quick to avoid it. You can also see what existing cafes are in place as potential competition. Look for gaps that you can exploit, as well as areas where the competition is vulnerable. Write a business plan.
Step 3: Mark a Location
Now that you have your market research data in hand, you can move on to finding a location. Look for critical factors like population density, average income, and foot traffic. Make sure the location is appropriate for your target audience.
If, for instance, you’re hoping to cater to students, the best place for your cafe will, of course, be near a university or school. If you’re seeking tourists, you’ll want your cafe near a tourist location.
Consider the safety of the neighbourhood and the ease of access by your intended customer base. And, remember to take a look into overhead costs of the area such as the rent or lease you’ll have to pay, the layout and size of the space you’ll get for your budget, and the potential for expansion.
Step 4: Acquire Licences & Permits
There are a number of legal and licensing requirements you’ll have to meet in order to open a cafe in the UK. First, you’ll have to decide how you intend to operate your small businesses—as a sole proprietorship, partnership, or limited company. Based on your decision, you must register your business with the Companies House and HM Revenue & Customs (HMRC).
If the selected location isn’t already categorised as a coffee shop, you may need to seek planning permission from the local council. You can use the Gov.uk licence finder to establish the correct classification. Even though a cafe usually falls under the A3 Use Class, the actual class can be different in different regions.
Acquire a Premises License from the local council that covers the provision of food, alcoholic and non-alcoholic beverages. Depending on the area, you might also require a licence for the provision of late-night entertainment and late-night refreshments. Other licences you may need include an Alcohol License, a Music Licence, and Outdoor Seating Licence.
Aside from licences and permits, ensure that all your bases are covered with insurance. You’ll need Public Liability Insurance, Employer’s Liability Insurance, and Property Insurance for your cafe business.
Step 5: Concept & Branding
On the next step, you will have to work on the concept and branding for your cafe business. Start by identifying the niche that will set your cafe apart from the restaurant down the street. Is it the homemade pastries or the cosy reading nook that will be the draw for your visitors?
Design a memorable logo that reflects your niche and cafe personality. Choose a few colours that would best represent what your cafe is about. You could use earthy, warm tones to evoke a feel of cosiness, energetic hues for warmth and light colours, or calming blues and greens for an air of cool refreshment.
Develop a memorable tagline that your customers can instantly associate with your cafe. Your tagline should give your customers a friendly welcome and tell a bit of your cafe’s story at the same time – “Home Away from Home” or “Tired? Let’s Brew.” It should sum up the promise of your cafe – “Artisanal Brews, Locally Roasted.” Also, tell the backstory of your cafe – people love connecting to a narrative.
Use the logo, colour palette, and tagline to design matching packaging, menus, glassware, crockery, and linens such as napkins, tablecloths, and placemats to further solidify your brand.
Step 6: Interior Design & Decor
Next, you will enter the interior design and decor phase. Your interior design should align with your cafe’s niche and theme. For a rustic, classy outlook, consider exposed bricks, real-wood furniture, and vintage decor. For more modern aesthetics, go with clean white walls and minimalistic furniture choices. The industrial outlook can be complemented by metal accents, open ceilings, and minimalistic aesthetics.
Invest in furniture and arrange seating to encourage conversations. Leave cosy corners for customers looking for solitude. For the ones arriving in a group, place communal tables. If you intend to serve families, it’s a great idea to have a children’s play area. If it is going to be a beer cafe, consider putting on a big screen to attract sports fans.
Music, lighting, and aroma are also fairly important factors to consider at this stage. A coffee shop should, of course, have to be brightly lit with a rich aroma of freshly crushed coffee beans with soft acoustic tunes or jazz playing in the background. A cafe bar might want to go with a leathery aroma, dim lighting, and upbeat music.
Acquire kitchen equipment such as a fryer and espresso machine and make your kitchen functional. Make sure to follow legal regulations for fire and kitchen safety. Install fire alarms and fire fighting equipment. Also, ensure proper ventilation.
Step 7: Deciding the Menus
Now, you are in the most important phase – deciding on the menu. Consider your cafe’s identity and target audience. Are you a cosy neighbourhood spot, a trendy espresso bar, or a health-focused food cafe? Think about the intended customer base. Do they love coffee, or are they looking to eat something healthy after a long hike through the mountains?
You can opt for a rich menu that includes various brews and drinks (espresso, cappuccino, latte, hot chocolate, chai, tea, fresh fruit juices, and nutritious options), pastries (croissants, muffins, Danish), salads, desserts, and specialty items (signature drinks, offerings, specials), but remember, the longer your menu, the more complicated it is to manage. It’s always best to keep things as simple as possible and only deliver items that your intended audience is looking for. Small menus often means better quality.
Step 8: Start Cooking
With your menu decided, it's time to start cooking. Hire your head-cook, if you aren't cooking yourself. Acquire fresh, local ingredients and experiment with recipes until you find the perfect balance. Gather your family and friends for a taste test and review.
This step also provides you a chance to assess total costs of ingredients and labor before starting a cafe. You can use the information to better price your menu. Make sure that the prices are well within the affordability of intended customers while being profitable for you.
Step 9: Market Your Cafe
Marketing will be the best way to get people through your doors initially. Ensure that you build a strong social media presence on platforms such as TikTok, Instagram, and Facebook. You could even get a local celebrity as a marketing strategy for your grand opening. Plan something different for the opening night and advertise your plans through social media. Try to build some hype and customer engagement.
Focus on local SEO to start attracting customers from the local community. Claim your cafe on Google Maps and provide accurate information about the offerings and prices. Engage with local influencers and food bloggers for reviews and shoutouts. Reach out to the local communities for ideas. Offer discount prices, loyalty programs, or free coffee for the first 50 customers to get the buzz going.
Step 10: Grand Opening
With the starting a cafe checklist fully marked, it's now time for the grand opening. Plan this wisely as it can make or break your new cafe. Ensure you deliver high quality customer services throughout opening day. Consider doing a rehearsal a day before the opening to make sure your team is in sink and ready to roll.
Conclusion
Opening a cafe requires flawless planning and execution. From overhead costs to crucial licences, there are so many things that can go wrong. Following the above steps will put things in perspective so you’ll have a clear idea of how to start a coffee shop and be successful in the UK in 2024.
If you are looking for a Cafe POS System or a Handheld Ordering System, contact 3S POS!
For almost 20 years, 3S POS has offered one of the most flexible EPOS systems to international brands such as Caffe Concerto, Maroush, Comptoir Libanais, Pepe’s Piri Piri, GDK and thousands more delighted customers.
If you are looking for a EPOS system that will not just help you accept payments but effectively manage your menu, inventory, and much more, speak to our sales for a free demo.