HOW CAFES MAKE MONEY

They don’t. Coffee shops are one of the easiest and most attractive brick-and-mortar businesses to open due to their theoretically low startup costs, and one of the hardest to make profitable. If you have a degree in business, a lot of flexible cash, an equally motivated leadership team with the same or similar competencies as you, OR you’re like me: incredibly passionate and too stubborn and proud to eat shit and let a dream die a cold, humiliating death… then here’s what you need to create a financially sustainable coffee business.

If you’re impatient and want numbers right now, here: you need to make $2,500 - $5,000 every day, or $83,333.33 every month before you can even think about having a 4-5 day work week with weekends off to spend time with family.

In case you can’t do math, $83.3 x 12 is one million dollars annually. Almost none of that will end up in your pocket though.

55% of your gross income goes to Cost of Goods (COG’s), this is coffee, cups, pastries, anything you sell.

20% goes to labor (15% is ideal but nearly impossible for most cafes at the moment)

14% goes to rent, electric, gas, internet, property tax and misc bills

~12% goes to taxes (depends on where you are) and employee benefits

1-3% goes to maintenance and repairs (you won’t spend this every month but this WILL get used)

the last 3-5% goes to you. That’s about $60k a year if you don’t want to bank any profits to expand or upgrade your business.

So now you can see that if you have a family, or a studio apartment in a major city, that $60k is not enough to live off of. However, if you open a second cafe that performs the same, you’re looking at $120k. A third gets you to nearly $200k.

CREATE A MONSTER

I use the term ‘monster’ when referring to incredibly risky and ambitious companies that think big and execute effectively and timely.

Some companies I consider ‘Monsters’ are Corvus Coffee, Death & Co, Fox in the Snow, and Proud Mary. All of these companies share similar mentalities and prioritize the same key elements:

• clearly define your identity and mission

• identify your market and location

• approach with enough capital to expand quickly

• never settle for good enough.

These companies defined their Big Hairy Audacious Goal (BHAG) and spread like a controlled fire, all while staying aligned with their initial mission. They’re not afraid to be innovative and creative, they’re confident in their product and community, and they guard their reputation with their life. All of these companies opened not just 1, not 2, but 3+ storefronts and continue to expand.