A coffee shop's plan looks easy on the drinks and hard on everything else. A 12-ounce latte costs about $1.37 to make, coffee, milk, the cup and the card fee, and sells for $5, so the drinks keep around 70 cents of each dollar. The plan turns on what comes out of that: wages, the biggest cost by far, because a café needs two people behind the bar at the morning rush and someone there from open to close; rent for a spot people walk past; and the cash it takes to get through the first months before the regulars find you. Pastries bought from a bakery keep much less of each dollar than drinks, but they lift the size of each order. The plan below works in categories per $100 of sales. In the example, a Fort Collins coffee shop opens with $168,000, ends its first year about $18,400 behind before the owner's pay while sales build, and makes about $4,500 a month at full speed. Below is each part of the plan, the first year month by month, the startup budget, and a free template.
The short version
- Describe the shop in a paragraph: the street, who walks past at 7 a.m., what's missing nearby, the goals.
- Cost each drink: coffee by the gram, milk by the ounce with a little for pitcher waste, the cup, the card fee.
- Plan sales by category per $100: espresso drinks, drip, pastries, food, bagged coffee, catering boxes.
- Wages are the biggest cost; staff the rush, not the whole day.
- Budget working cash for the slow first months, and check it against the lowest cash point.
- Oat milk costs more than whole; price the upcharge to cover it, with the card fee.
- TaroStack makes each drink a recipe, so its true cost follows the price of coffee and milk. More below.
Part 1: the business description
Old Town Coffee House, a made-up coffee shop in Fort Collins, Colorado, writes:
Old Town Coffee House is a 1,300-square-foot coffee shop on a busy corner near the university, serving espresso drinks and drip coffee from a local roaster, pastries from a nearby bakery, breakfast sandwiches made in house, bagged coffee to take home, and coffee boxes for office meetings. In its first year it aims to reach $45,000 of sales a month.
Part 2: what a drink costs
| Drink | Coffee | Milk, with 10% pitcher waste | Syrup | Cup and lid | Card fee | Cost | Price | Cost share |
|---|---|---|---|---|---|---|---|---|
| Latte, 12 oz | $0.63 | $0.39 | $0.20 | $0.15 | $1.37 | $5.00 | 27.4% | |
| Oat latte, 12 oz | $0.63 | $0.69 | $0.20 | $0.17 | $1.69 | $5.75 | 29.4% | |
| Vanilla latte, 12 oz | $0.63 | $0.39 | $0.30 | $0.20 | $0.17 | $1.69 | $5.75 | 29.5% |
| Drip coffee, 12 oz | $0.62 | $0.20 | $0.10 | $0.91 | $3.25 | 28.1% | ||
| Cold brew, 16 oz | $0.93 | $0.24 | $0.14 | $1.31 | $4.75 | 27.5% |
Coffee at $16 a pound for espresso, 18 grams a shot, and $14 for drip; whole milk at $4.50 a gallon, oat at $3.99 a half gallon. The oat latte's 75-cent upcharge more than covers its dearer milk, 30 cents more, though its cost share still rises two points. What a café counts each week is in coffee shop inventory spreadsheet, and a good food cost share in what is a good food cost percentage.
Part 3: customers and staffing
Mornings are the business: the plan expects half the day's sales before 11 a.m., two baristas from open to 1 p.m., and one after that. A breakfast sandwich made in house sells with a drink and keeps more of each dollar than a bought pastry. Bagged coffee and catering boxes for nearby offices fill the slow afternoons.
Part 4: what each category earns
| Category | Sales | Variable cost | Contribution | Margin | Hundreds a month at full speed |
|---|---|---|---|---|---|
| Espresso drinks | $100.00 | $28.00 | $72.00 | 72.0% | 250 |
| Drip coffee and tea | $100.00 | $26.00 | $74.00 | 74.0% | 60 |
| Pastries bought wholesale | $100.00 | $55.00 | $45.00 | 45.0% | 70 |
| Breakfast sandwiches made in house | $100.00 | $38.00 | $62.00 | 62.0% | 40 |
| Bagged coffee and merchandise | $100.00 | $60.00 | $40.00 | 40.0% | 20 |
| Coffee boxes for catering | $100.00 | $28.00 | $72.00 | 72.0% | 10 |
Variable costs include cups, card fees and waste. At full speed the shop sells $45,000 a month and keeps $29,590, 65.8%; espresso drinks bring $18,000 of it.
Part 5: the first year, month by month
Fixed costs are $25,050 every month: rent ($4,500), wages ($17,500), utilities ($1,100), insurance ($300), the register and software ($250), espresso machine service ($400), ads ($400), and other costs ($600). Sales start at half of full speed:
| Month | Sales | Profit | Cash, year to date |
|---|---|---|---|
| 1 | $22,500 | −$10,255 | −$10,255 |
| 2 | $25,200 | −$8,463 | −$18,718 |
| 3 | $27,800 | −$6,755 | −$25,473 |
| 4 | $30,700 | −$4,878 | −$30,351 |
| 5 | $33,300 | −$3,170 | −$33,521 |
| 6 | $36,000 | −$1,378 | −$34,899 |
| 7 | $38,400 | $196 | −$34,703 |
| 8 | $40,100 | $1,318 | −$33,385 |
| 9 | $41,900 | $2,497 | −$30,888 |
| 10 | $43,200 | $3,373 | −$27,515 |
| 11 | $45,000 | $4,540 | −$22,975 |
| 12 | $45,000 | $4,540 | −$18,435 |
The year's sales are $429,100, and the shop ends it $18,435 behind, before the owner's pay. It breaks even at about $38,100 of sales a month, in the seventh month. The lowest cash point, −$34,899 in month 6, is covered by the $35,000 of working cash with $101 to spare, so the owner kept a line of credit open in case the first months come slower. Wages are 70% of the fixed costs; a schedule that puts two people on only during the rush is the biggest lever in the plan.
Part 6: the startup budget
| Item | Example |
|---|---|
| Build-out and signs | $60,000 |
| Espresso machine and grinders | $28,000 |
| Refrigeration and dishwasher | $14,000 |
| Furniture | $12,000 |
| Lease deposit and first month | $9,000 |
| Opening inventory | $6,000 |
| Register | $2,500 |
| Licenses and permits | $1,500 |
| Working cash | $35,000 |
| Total to start | $168,000 |
The $133,000 before working cash is earned back in about two and a half years at full speed. A smaller start, a cart instead of a shop, is in coffee cart business plan.
Get the template
Download the coffee shop business plan workbook. Four sheets: your categories, each per $100 of sales with its variable cost and hundreds a month at full speed; the first year, month by month, with sales ramping up, profit, cash, the first profitable month, the lowest cash point and whether the working cash covers it; your fixed costs; and the startup budget. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The plan uses one cost a latte. The bar uses a different one every week: coffee prices move, milk gets dumped at close, and nobody knows how much oat milk the shop actually went through until the order is short.
How TaroStack does it
TaroStack makes each drink a recipe, so its true cost follows the price of coffee and milk.
Drinks as recipes. A latte is a recipe by weight and volume: 18 grams of espresso, 10 ounces of milk, a cup and a lid, so its cost moves when the roaster's price does.
Counts with no signal. The back room and the milk fridge can be counted on a phone with no signal, and the reorder list shows milk, beans and cups in days of cover.
Pastries received by lot. Each bakery delivery is received with its date, and the oldest goes out first.
| The job | Notebook | In TaroStack |
|---|---|---|
| What a latte costs this month | Worked out once | True cost from the recipe |
| Milk and beans before Friday | A guess | The reorder list |
| Which pastries are oldest | Remembered | First-expired-first-out |
Recipes, counts and the reorder list are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.