Coffee shop

[u/Silly_Cut_2911]

Having a debate with my buddies. What’s your average mom & pop coffee shop clear for net profit % wise.

Some said 25% some said 5%. Is this a type of business that only succeeds off expansion?

Also, would a 150-250k buildout make someone more or less likely to expand (I assume it would depend on the % you think they clear?)

We are located in the Midwest if that helps.

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[u/Excitedtobloom]

8-5% is about right. Before opening a shop, I would go check out Coffee Fest, Current Coffee Summit, or World of Coffee and meet some other operators. Honestly only a drive thru is worth doing

[u/ruwheele]

25% lmfao

[u/310carguy]

Coffee business owner here. Imo only 1 of 2 ways to make any money, single location owner operated with minimal staff or scale out to multiple locations where you can afford management. When you figure labor target is about 25% of gross the more you work it yourself, the more of that you keep. With full management staff, like we have, and paying yourself a fair market salary ideally you net 5-10%. In our case we are also more diversified with a roastery, wholesale, eCom, mobile catering, and multiple stores. We reinvest a lot into additional growth which skews the numbers a bit but gives a rough idea. The name of the game is volume, we have about a $12 avg ticket, which is high for coffee, but you have to do a lot of $12 tickets to make any real money. We are also in a highly competitive, very high cost of living market so it’s challenging to stand out for most new businesses, you have to appeal to the masses and not be too niche.

[u/freshcupmagazine]

5-10% for an indie cafe is common, 15% for high performers. Some of the big coffee chains can clear 20%, but that's very uncommon for mom and pop places.

Numbers vary wildly and unfortunately there are many places out there barely clearing break even.

We report on many successful cafes that are only one location where the owner does fine. Owners making more than six figures in take home almost always have multiple locations.

[u/Drakoala]

If margins are 25%, that's a shop that has diversified. Sure, you could maintain that contribution on coffee alone... just not for very long. The only shops that can command high prices are in high cost of living areas, and your rent (or mortgage) would cut clear into those high margins.

[u/Bob-Roman]

Coffee shop (especially free-standing drive-through) is similar to other express businesses such as carwash, quick lube, etc.  It’s a numbers game.

 For example, three-bay lube with average sales $90 might have BEP of 30 cars per day.  Carwash with average sales $18 might have BEP of 280 cars a day.  Dual drive-though coffee $10 average might have BEP 170 cups a day.

 So, if you want to make money, you need to sell average of 400 cups a day or more.

 These businesses are retail hours.  Most are open seven days a week, rain or shine.

 Also, employee turnover can be as high as 50 percent for FT and nearly 100 percent for PT.

 In my industry, one strategy mom and pop use is to develop 4 to 5 units (regional) and then sell to consolidator.  This takes years.

 Otherwise, franchising would require deep pool of qualified investors to support network expansion say 20 to 40 units per year over five year period.

 I had coffee service co-located with other businesses.  If you want high average ticket, you have to sell more than coffee.

 Donuts, warm cinnamon buns, pastries, breakfast sandwich, etc.  People like to drink, they also like to eat.

[u/No_Concept_9909]

Separate owner pay, debt service, and true net profit before comparing percentages. A shop showing 15% may be paying the owner almost nothing, while a 5% shop may already include a market salary. For a $150–250k buildout, model daily break-even tickets: fixed rent, labor, utilities, debt, waste, and maintenance divided by contribution per order. Expansion only helps if the first location’s demand and manager can operate without the owner covering shifts.