With more and more people able to work from home, the local coffee shop is sure to be one of the bounce back success stories now that most Covid-19 restrictions have been lifted.
And that has understandably gotten a lot of people who are seeking a new challenge in life thinking – ‘Hey, why don’t I start my own coffee shop?’
Well before you begin scouting for a prime coffee shop location, you may want to crunch the numbers and count the beans (pun intended) to find out how much money a coffee shop actually makes a year.
When a coffee shop first starts out, it has little to no brand awareness. Beyond foot traffic and the initial social media marketing, a coffee shop has to rely on loyal customers who want to avoid the big brands and buy local while supporting small businesses.
The average coffee shop in the UK has a turnover between £100,000 & £150,000. Some make more, some make a lot less. These figures take into account all coffee shops in the UK (roughly 10,000 in total) covering the big cities like Manchester, Edinburgh and Glasgow as well as the Towns and Villages like Perth, Dumfries and Dundee.
Based on this, the average salary for a Coffee Shop Manager is just over £30,000. You may be thinking that on a turnover of £100,000, why would you only be receiving £30,000? Well overheads have to be taken into account because coffee shop rent and staff costs do add up. This can leave you with slim margins.
The good news is that the profit margins on coffee and tea are very high, so if you can get good foot traffic through the door, there is scope to make a healthy daily profit.
This all means that for those that want to take over an existing coffee shop instead of starting from scratch, you will have to fork out a decent slice of cheddar. The average value of a coffee shop for sale in the UK is around £70,000 depending on size and location.
But the easiest way to figure out how much you can make owning a coffee shop comes through doing the maths and crunching the numbers.
Pick a location, take into account the potential foot traffic, how many rival coffee shops are near to you and what prices you would charge. The more precise you can be, the more accurate your estimates will be calculating your gross profit margin. If you aim for a gross margin of 75% on everything you make and sell while remembering to add the VAT (though there are specific VAT rules for catering) it will give you the basis for some number crunching. Using this and the expected number of customers per hour, per day, per week will allow you to put together a profit and loss statement to help you gain a more accurate picture into how much money a coffee shop can make.
This may all start to sound quite complicated but then running a business is not easy. But at Glasgow Bookkeepers, our goal is to make it easier for you.
Whether it’s getting paid by your customers on time, completing your VAT returns, processing payroll or submitting your annual accounts and tax returns, the demands on businesses can seem endless. And it’s almost certainly not why you got into business in the first place. It is, however, exactly why we got into business. We do the things you avoid because where your business is concerned, you do the real work, we do the paperwork.
Since we first began our journey, we have been steadily grown (and building momentum) from dealing exclusively with like minded kitchen table sole traders into a nationwide bookkeeping service renowned for it’s skill and expertise.
Covering the full range of bookkeeping services that the typical business would require, Momentum Bookkeeping go a step further by offering not just what you expect, but what you need (even if you didn’t know you need it).
From VAT returns and payroll services to custom built MySQL databases as part of our Bespoke Bookkeeping Services; from a once a year service (such as annual accounts) to a daily interaction service into your business; we can be as integrated with your business as you want us to be.
If you are given serious thought to starting up a coffee shop then we are just a phone call away to answer any and all bookkeeping questions you may have.