Can Running a Coffee Shop be a Profitable Business?

It’s hard to imagine that once upon a time there was a Canada where café culture was a foreign term. Nowadays, every street corner in even small cities have some kind of café or a coffee shop. Thanks to franchises like Starbucks, the café culture is here to stay in Canada. Now that you see there’s big demand for coffee shops in the country, you may also wonder whether it’s profitable to actually start your own café in Canada. Could it be a good idea?

The answer to that question depends on many factors. Just because there’s demand for a certain industry, that doesn’t mean all businesses in that industry become successful. If you want to ensure that your coffee shop becomes successful, you should be aware of the following:

It’s All about the Location

Coffee shops serve more than coffee. They facilitate a certain culture and social interactivity. You cannot expect people to go out of their way to come to your coffee shop for a cup of espresso every morning. If you want your shop to be successful, it has to be located in a highly commercial or urban area. You need to grab the attention of workers in the morning on their way to work. So, being located in a major commuting or transit area is extremely important to the success and profitability of your coffee shop.

Cornering a Niche Market is Key

The thing about commercial locations is that your shop will be competing with a local Starbucks and numerous other coffee shops in the area. Therefore, if you want people to pay attention to your shop, you need to offer them something they need. You need to corner a niche market.

For example, there might be customers who avoid the other coffee shops because they are crowded. You can offer a quiet atmosphere to meet this demand. You can also offer premium coffee, or really cheap coffee. Also, you can add your coffee shop to a credit card rewards program:

In Canada, credit cards rewards programs are immensely popular: If people get cashback or similar rewards for using their credit cards to buy coffee at your shop, they will be more likely to choose yours over the competition. The point is that you will need to offer something unique with your brand to turn a profit.

Quality of the Product Matters

Branding aside, the quality of your product also matters. If the coffee isn’t great, the location and the atmosphere won’t matter. Therefore, you need to truly invest in offering a top-notch product that customers can’t live without. This is how Starbucks became successful: Their branding was great, but so was the product behind it. If your product is awful, the initial hype behind your brand will eventually dissipate.

If your coffee shop is located at a great place, offers quality products, and is marketed towards a specific customer base, it will most likely be a huge success. If you know your coffee shop idea meets these requirements, now it’s time to find financing for your venture:

Financing an Independent Coffee Shop

There’s really only one way to finance a food and drinks industry venture like a coffee shop: business loans. Unlike with tech gadgets, your chances of finding angel investors or crowd sourcing donors for a coffee shop are slim.

You can apply for business loans with a Canadian bank or a reputable lending institution. First, you need a well-written business plan to convince the lenders. Second, you need to have a solid credit history. Banks and lenders do not like to make bets with business loans. Lenders offer loans to responsible business owners with viable business ideas. Therefore, you will need to portray yourself as a responsible borrower and a good manager in order to secure a loan.

You may not get the first business loan you apply for. But you need to keep trying. Adjust your business plan to make it more attractive if your loan requests keep getting turned down.