The coffee shop business in the Philippines is one of the most in-demand businesses an aspiring entrepreneur can start today. It is a booming industry with over 2,752 café and coffee shops (2020 data source from PSA).
We are a country of coffee lovers. Nine out of 10 Filipino households consume coffee regularly. And total coffee consumption in the Philippines in 2020 alone was about 3.3 million 60-kilogram bags.
These speak volumes of the enormous potential of starting a coffee shop business.
Before jumping into the step-by-step guide on how to start a coffee shop business, let’s first see why you want to venture into this million-peso industry.
Why Start a Coffee Shop Business?
Like any business, you first start by defining your purpose.
If you know your purpose, you will quickly learn the nitty-gritty of starting a business.
In our survey of aspiring coffee entrepreneurs and franchisees on why they start a business, we summarize them into five primary reasons. Here are as follows:
Be An Entrepreneur
The majority of the people we surveyed want to experience dreamt of being entrepreneurs. They aspire to lead teams, make calls for important decisions, and leave a legacy through their business.
Increase More Income
Financial stability is also another reason why people start a coffee shop business. Most people want another income stream while working full-time in their corporate job. No hassle for them as they can have someone work in the industry.
Positively Impacts The Lives of Others
There is no better thing than providing other people with jobs. Giving others an opportunity to make an income is a good source of happiness and one that’s meaningful in your own life.
Unleashing Your Creativity
Maybe, you’re a barista from your previous coffee business. You may want to explore more creative opportunities for your career – having your coffee shop is an excellent way to unleash your barista skills. You can create different beverages based on your taste and preference and make them good on a menu.
Turning Your Dream into Achievement
You dreamt of owning a coffee shop. Hearing success stories of coffee shop owners is one thing. On the other hand, you probably have tasted good coffee, and it intrigues you to start a coffee shop business. That desire to turn your dream into a reality is your primary reason to create one.
You Get To Be A Part of Coffee Culture
The coffee culture here in the Philippines is interesting. Supplies, manufacturers, small coffee retailers, and baristas gather at conventions and seminars to learn more about each others’ best practices and the latest coffee industry trends.
By owning a coffee shop business, you become part of a coffee culture, helping each other grow in their business endeavor and making society a better place.
Flexibility For Your Family
Who doesn’t want flexibility? That freedom of time and money you can invest in your loved ones is precious. Anyone would want to sacrifice just to have it in their lives.
As a coffee shop owner, you can experience a flexible time when you have systems and processes in place. You can grow your café while having more time with your family.
Identify your reason for starting a coffee shop business. Be it your source of courage and determination as you grow your business.
The best part is learning the steps to starting one.
How to Start a Coffee Shop Business Philippines (7 Simple Steps)
In this section, we’ll go through the exact steps on how to start a coffee shop business in the Philippines.
I’ve taken the Filipino context to suit your needs as an aspiring coffepreneur. While we provide basic coffee business principles that apply when you start a café in other industries, you’ll find most of the actionable tips applicable in the Philippines.
1. Decide on a Budget
The first capital in any business is financial capital. Knowing your numbers, you can prepare well for any expenses you’ll incur as you start your coffee shop business.
What specific budget in mind do you have? It is best to start this conversation with yourself if you’re going solo, or if you have a family, best to discuss it first with your spouse.
How much are you willing to invest in a coffee shop? Set the amount and write it on paper. You may not have it now, but you can save money every month to reach your target budget.
How much capital is needed for a coffee shop?
It depends on whether you want to start your coffee shop brand (startup) or franchise an existing coffee shop business.
In most cases, you need a higher budget when you franchise a coffee shop business than when you create your own. There are franchise fees involved when franchising a business.
Net, you must decide what route to go: startup or franchise.
2. Choose Between Coffee Franchise Or Starting Your Own Brand
Once you have decided on a budget, your next step is to choose between coffee shop franchise in the Philippines or starting your own brand.
Both have benefits and drawbacks, which you must weigh to see what fits your needs and goals.
Coffee Shop Franchising
This is the most common type of coffee business, given that most aspiring entrepreneurs want a brand with existing systems in place. They don’t have to worry about starting from scratch. Instead, they can rely on the coffee franchisor for operations, marketing, and business support.
Here is a contrast of the effects of coffee franchising in the Philippines:
Benefits of Coffee Shop Franchising
Established Brand Reputation – By joining the franchise family of a popular coffee shop, you can benefit from the reputation and brand recognition in the local market. This is best as marketing your product and increasing daily sales for your coffee shop business will be easy.
Proven Business Model – The coffee shop franchise has a successful business model that has been tested in the market. This reduces your risk of failure when you jump into a business venture.
Training and Support – The best coffee shop franchise in the Philippines offers comprehensive training and ongoing support to its franchisees to make their operations run smoothly. With business support, coffee franchisees are more confident in leading their baristas and conducting their operations properly.
Scalable Marketing and Support – With brand recognition and a good reputation, coffee franchisees can benefit from their franchisor’s national and regional marketing and advertising campaigns. All benefits from their marketing campaigns can affect the sales generated from every coffee branch.
Drawbacks of Coffee Shop Franchising
High Initial Investment – Starting a coffee franchise requires a higher upfront investment, as it includes franchise fees to pay for using the trade name and all of its products. It is not negative, as you’ll add only more to the tested business model the franchisor has made over the years.
Royalty Fees – Some coffee franchising agreements have franchisees pay their franchisor ongoing royalty fees, ranging from 3 to 8% of the monthly gross sales. It is best to ask for this percentage from your potential coffee franchisor.
Limited Control Over The Business – Franchisees are required to operate their business within the boundaries set by the franchisor. Franchise agreements have guidelines and standards that may limit your flexibility as a coffee franchise. For example, in most cases, you can’t simply add any products to the menu, as the franchisor himself will provide new products for their coffee franchises.
Restrictions On Location and Territory – Franchisees may be restricted in operating a business in a certain location to not compete with similar branches. However, you can agree with your franchisor on the number of franchised branches you want to put up in specific areas.
Hills & Valleys: Best Coffee Shop Franchise in the Philippines
If you’re considering franchising a coffee shop in the Philippines, Hills & Valleys may be a great option. Here are some reasons why:
Proven Profitable System: Hills & Valleys Coffee has a proven track record of success in the coffee industry. By offering affordable yet high-quality coffee beverages, you can attract and retain a solid customer following for your business.
Targeted Market: Hills & Valleys Coffee focuses on serving the rural markets that other expensive competitors may not be catering to. This makes it a strategic choice for entrepreneurs looking to tap into these markets while being located in high-traffic areas.
Holistic Approach: Hills & Valleys Coffee offers a holistic approach to franchising as one of the best coffee franchises in the Philippines. In addition to sharing our knowledge, we provide skills training for your staff, including barista training, and help you market our best-selling products through an effective marketing strategy.
By becoming one of our franchisees, you will receive support every step of the way, from training and marketing to ongoing assistance in running your business.
Startup Coffee Shop
This is another route that you can take if you want to start a coffee shop business. There are many benefits of doing so, while a list of drawbacks to balance it out.
Benefits Of Startup Coffee Shop
Creative Control. As a startup coffee business owner, you have complete creative control over the menu, branding, and the entire direction of your business. You can decide where your next branch will be and what type of decor and coffee theme you wish to create. All this is one primary benefit of a startup coffee business.
Flexibility. This is related to the first benefit but more to the constraints of a franchise agreement. In a startup coffee business, you can experiment with new products, menu items, and even the latest marketing strategies to find what works best for your business.
Lower initial investment. Starting a coffee business from scratch can be less expensive than getting a franchise of a popular brand. Depending on the size and scope of your operation, you can choose a more affordable option that fits your budget.
Strong Customer Relationships. Given that you’re starting, you can build a loyal customer base by implementing personalized service options and creating a unique atmosphere inside the cafe.
Potential for Higher Profits. A startup coffee business has the potential to generate higher profits as you don’t have to pay royalty fees to your coffee franchisor. You can even put new branches in your store without paying additional franchise fees. All these can lead to decreasing the cost and getting more profit for your coffee business.
While there are benefits to starting your own coffee business, there are also drawbacks you have to consider, mainly:
Drawbacks of Startup Coffee Shop
Lack of Brand Recognition: At the start, you have to put a hundred percent effort into building your brand by establishing a customer base from the ground up. This may be challenging, but you can build brand awareness for your startup coffee business with effective marketing strategies.
Limited support and resources: If you’re a sole proprietor, this is even more challenging as there is only one mind thinking about what to do in your operations, marketing, and other important things in running the business. You don’t have access to the resources and support offered by a larger franchise network.
Higher risk of failure: Starting a business from scratch involves more risk than getting a franchise. There is no proven track record or business model you can replicate, which means you’ll have a 50/50 chance of succeeding in a startup cafe.
Limited Bargaining Power: You also have to build relationships with suppliers from scratch, which is crucial in lowering the cost of goods sold. If you can negotiate better, you can have lower operating costs, which means higher profit for your business. Otherwise, supply costs can eat up largely your profits.
Time-intensive: Starting a coffee business requires significant time and effort, from looking for the right suppliers to creating a menu and marketing your brand. All these are necessary to ensure you’re likely to succeed as a coffeepreneur.
Types of Coffee Shop Businesses
Whether pursuing a franchise coffee shop or starting your coffee business from scratch, you need to identify the type of coffee shop business that suits your preference, style, and taste.
Coffee Bar, Cart, or Kiosk
A coffee bar, cart, or kiosk is a small, compact coffee shop offering customers grab-and-go beverages. These coffee shops are popular in urban areas, airports, and train stations, where people always hurry and need their coffee fixed quickly.
You can choose this type of coffee shop if the location has a fast-moving flow of foot traffic. This means that people are less likely to dine in and enjoy their coffee inside the store. You may not maintain your customers longer as they either rush home or have errands.
Coffee Store
A coffee store is a more traditional coffee shop with indoor seating and a relaxed atmosphere. Customers can sit, enjoy coffee, socialize with friends, or work on laptops. Coffee stores often have a wider selection of food items, such as pastries, sandwiches, and salads.
Choose this coffee type if you dreamt of interacting with your customers, making them feel at home, and creating an atmosphere of true coffee lovers you’d love to serve with your coffee.
Drive-thru Coffee Shops
Drive-thru coffee shops are perfect for customers who are on the go and don’t have the time to sit down and enjoy their coffee. These shops offer a convenient way to grab a quick cup of coffee without leaving the comfort of their car.
Some popular coffee brands here in the Philippines, like Starbucks, The Coffee Bean and Tea Leaf, and Dunkin Donut, combine both a coffee store and a drive-thru, making them cater to both markets of people wanting to dine in and on the go.
Pop-up and mobile coffee shops
Pop-up and mobile coffee shops are a newer trend in the Philippines and other Asian countries. These coffee shops, such as farmers’ markets, festivals, or special events, are usually located temporarily. They are designed to offer customers a unique coffee experience and often serve specialty drinks unavailable in traditional coffee shops.
If you want to locate your shop in major locations with a wide range of customers, the pop-up and mobile coffee shop is for you. It is also good for anyone who is looking for a lesser cost on their rent.
3. Comply with Legal and Regulatory Requirements
The registration process here in the Philippines can be quite complex, so it’s important to be prepared and know what documents you need to secure.
First, if you’re setting up a corporation or partnership, you must secure the SEC Articles of Incorporation. This document proves that your business is registered under Philippine laws. You will need to provide documents such as a name verification slip, articles of incorporation, joint affidavit of two incorporators to change the corporate name, and more.
If you’re registering as a sole proprietorship, you’ll need to get a DTI Registration Certificate, which authorizes you to use your trading name and secures it from being used by someone else.
You will also need to get a BIR Clearance, which is required before you can get other permits. This clearance is issued by the Bureau of Internal Revenue and can be obtained by filling up one of the BIR forms depending on your business type.
You also need to secure a Barangay Clearance, which certifies that your business complies with the local requirements of the barangay where your business is located.
Last, you must secure a Mayor’s Permit, also known as a business permit. This permit ensures your business is safe to operate under your city’s ordinances. You can only obtain this permit after you’ve registered your business with DTI and SEC, and secured the necessary clearances.
It’s important to note that compliance with local zoning and building codes is also essential in setting up your coffee shop. You should be aware of the tax requirements for your business. By ensuring you have all the necessary permits and clearances, you can ensure that your coffee shop is legally registered and operating smoothly.
Here are resources you can check out for more references on how to register your business:
- https://www.securitybank.com/blog/how-to-register-your-online-business-in-bir-and-dti/
- https://grit.ph/register-corporation/
4. Learn About Cafe Management
Cafe management is a huge part of running a coffee shop business in the Philippines. There is where you learn about hiring and managing employees, inventory management, bookkeeping, accounting, and maintaining a clean and safe environment.
Let’s first start with hiring and managing employees.
Hiring and Managing Employees
The coffee shop is a service business and will require tremendous time to invest resources in your people. They’ll be the ones to brew coffee and serve your customers, so it’s important to have the right people in your cafe.
In hiring good employees, you must first set the criteria for an employee who works in your coffee shop. You can use the Iceberg Model of Competencies to identify an ideal employee. Competencies include knowledge, skills, social role, self-image, traits, and motives.
Here are some actionable tips for choosing the right barista based on each competency.
Quick note: Set expectations for the required experience you’re looking for in a potential candidate. For startup and even franchise coffee shop businesses, you can consider fresh graduates with no skills and knowledge in coffee brewing.
This list below gives you ideas about the competencies you should aim for your baristas for training.
Knowledge:
- Look for applicants who understand coffee brewing techniques and espresso-based drinks well.
- Consider applicants who know different coffee beans and their flavor profiles.
- Give preference to applicants who have some knowledge of the history and cultural significance of coffee.
Skills:
- Look for applicants with latte art experience who can make drinks quickly and efficiently.
- Look for applicants with a strategy for managing multiple drink orders simultaneously.
- Consider applicants who have experience dealing with difficult customers and complaints.
Social Role:
- Look for friendly, approachable applicants who can create a positive customer experience.
- Consider applicants who have experience working collaboratively with other baristas and team members.
- Look for applicants who understand and can represent the coffee shop brand and culture.
Self-Image:
- Look for applicants who can stay calm under pressure and handle unexpected situations.
- Consider applicants who have experience staying organized and efficient during busy periods.
- Look for applicants who have a positive attitude and energy throughout their shifts.
Traits:
- Look for detail-oriented and focused applicants who take pride in their work.
- Consider applicants who are adaptable and able to handle unexpected situations.
- Look for applicants who have a friendly and approachable personalities.
Motives:
- Look for applicants who are passionate about the coffee industry and motivated to learn and improve their skills.
- Consider applicants who have experience staying motivated during slower periods.
- Look for applicants open to feedback and willing to learn and improve continuously.
This list may not be exhaustive, but enough to give you a head start for your exam and/or interview process.
For franchise coffee shops, you mostly get assistance and support when hiring baristas. This lessens the workload you need to start your cafe.
Inventory Management
Inventory management is another critical competency in running a successful coffee shop. This includes managing the supply of coffee beans, milk, syrups, sauces, and other ingredients you need to craft your beverages.
You must also monitor other supplies, such as cups, napkins, straws, and stirrers.
It is important to keep track of supplies and have your own inventory management system and documents to ensure you’re not completely running out of stock.
For franchise coffee shops, there is an advantage of having specific inventory management from the franchisor to help you monitor all ingredients and supplies.
Effective inventory management can help organize your supplies, keep track of inventory levels, and avoid waste.
Bookkeeping and Accounting
Bookkeeping and accounting are essential in keeping accurate records of sales and expenses, managing payroll, and paying taxes.
To keep track of sales, you can have Point of Sale software to capture every transaction and its corresponding amount easily. So you can easily export a file whenever you want, such that at the end of every month, to know your gross sales.
At our coffee shop in Bulacan, we use Utak POS, an affordable POS most coffee shops here in the Philippines use for in-store transactions.
For expenses, you can hire a bookkeeper or a professional accountant to help you organize all receipts and track all expenses. This would allow you to focus on other cafe management areas, helping you grow your business further.
Maintaining a clean and safe environment
Customers want a clean and safe environment inside coffee shops. So it’s critically important to have a system to maintain cleanliness.
Here are simple tips for maintaining a clean and safe environment post-pandemic:
- Regularly clean and sanitize all surfaces and equipment, including countertops, tables, chairs, and coffee machines.
- Ensure that all food is stored and handled properly and that all staff is trained in food safety and hygiene practices.
- Implement regular hand washing and sanitizing protocols for both staff and customers.
- Use disposable or single-use items, such as paper cups and utensils, to minimize the risk of contamination.
- Provide customers with a welcoming and comfortable atmosphere by maintaining a clean and tidy shop and offering high-quality coffee and food. This can help to build a loyal customer base and attract new customers.
5. Find a Suitable Location and Select the Right Equipment
If you find a great location for your coffee shop business, you win 50% of the battle. The reason is that physical stores in locations where there is medium to high foot traffic get more customers than those in distant areas.
Here are two location points where you can place your cafe to make it a winning coffee shop, even if you’re not starting yet.
Best Nearby Locations
Near hospitals/schools/parks
Set up your coffee shop near hospitals, schools, or parks where there is a high volume of foot traffic. Scout the area first and see the flow of potential customers in your target location. The higher volume of foot traffic, the higher chances you can attract more customers and increase your sales.
Inside malls
Malls can be a good location for a coffee shop business as they already have a steady stream of customers throughout the day. However, you need to take note of the sale percentage the mall requires, as it can affect your profit margin.
Purchasing Equipment and Supplies
A huge part of your investment if you decide to start your coffee shop from scratch goes into purchasing equipment and supplies.
This is where you should be most careful, as the right equipment and supplies can affect the quality of your coffee.
Here is the top equipment you’ll have to purchase for your cafe:
Coffee brewing equipment: Invest in high-quality coffee brewing equipment that can produce consistent, great-tasting coffee. This could be coffee makers, French presses, and drip machines.
Espresso machines: If you plan to offer espresso-based drinks, invest in a good quality espresso machine. The better your espresso machine is, the better quality of coffee you can make. Example is this list of Starbucks drinks in the Philippines.
At Hills & Valleys Cafe, we prefer to purchase espresso brewing machines.
Some good recommendations for brewing machines are:
- Breville
- La Marzocco
- Nuova Simonelli
- Rocket Espresso
Coffee grinders: A coffee grinder is another essential piece of equipment that helps you grind coffee beans to the perfect consistency for your brew.
Refrigerators and freezers: You’ll need refrigerators and freezers to store milk, cream, and other perishable items.
Cups, saucers, and utensils: Don’t forget to stock up on cups, saucers, and utensils. Choose sturdy, high-quality options that can withstand repeated use.
Coffee beans and other ingredients: Invest in high-quality coffee beans and other ingredients, such as syrups, to create delicious drinks that keep customers returning.
The Philippines produces several types of coffee beans, including:
- Arabica: This type of coffee is grown in the highlands of the Philippines and is known for its mild, fruity flavor and aroma.
- Robusta: This type of coffee is grown in lowland areas and is known for its strong, bitter flavor and high caffeine content.
- Excelsa: This coffee is grown in the southern part of the Philippines and has a unique flavor often described as fruity and smoky.
- Liberica: This type of coffee is grown in the Batangas region of the Philippines and has a distinctive aroma and flavor, often described as nutty and floral.
In coffee shops in the Philippines, you will typically find a variety of coffee beans available, including blends that combine different types of beans to create unique flavors and profiles.
Marketing materials and suppliers: You’ll also need to find suppliers for menu boards, A4 posters, and other marketing suppliers. Finding a good graphic designer to help you with your daily social media content to attract new customers to your cafe is best.
6. Select Your Ideal Coffee Shop Aesthetics and Concept
Your cafe design and theme will determine the atmosphere you want to set for your customers. It is best to choose it based on what your customers want in your city or location. An appropriate cafe design and theme makes it more enticing, plus gives the vibe you’re caring for your customers.
There are several popular coffee shop themes in the Philippines, including minimalist, Korean, rustic, industrial, boho chic, indoor garden, and pop culture-themed.
Here is a run-down of what each of these types means for you:
A minimalist coffee shop theme is characterized by clean lines, neutral colors, and simple decor. This cafe type is ideal for customers who want a quiet and calming environment to work or relax in.
Korean coffee shops are inspired by the trendy cafes in Seoul, focusing on minimalist design, pastel colors, and unique food and beverage offerings.
Rustic coffee shops often have a cozy and inviting atmosphere, with wooden furniture, exposed brick walls, and vintage decor.
Industrial coffee shops feature raw materials like concrete and metal, giving them a modern and edgy vibe.
Boho chic coffee shops are characterized by bright colors, bold patterns, and an eclectic mix of furniture and decor.
Indoor garden coffee shops incorporate plants and natural elements into the design, creating a serene and refreshing atmosphere.
Pop culture-themed coffee shops are perfect for customers who are fans of movies, TV shows, or music. These cafes often have decor and menu items inspired by popular franchises or artists.
7. Understand How Sales and Marketing Work
Sales are the lifeblood of a coffee shop business. Marketing drives new customers to your cafe. These two key business components are essential to growing your coffee business, whether a startup or a franchise.
As an aspiring entrepreneur, you can apply sales forecasting to your business.
Sales Forecasting
Sales forecasting is estimating how much revenue you can expect to generate. Though many variables affect sales, it is still important to have a good sales number in mind to target every month.
Coffee shops typically consider the number of customers served daily, average ticket price, and operating hours to calculate sales.
To calculate profit, coffee shops subtract their total expenses from their revenue. This includes the cost of goods sold (COGS), rent, labor, utilities, and other operating expenses.
Here are more resources to learn basic knowledge about sales forecasting:
Factors That Affect Sales of Coffee Shops in the Philippines
Several factors can impact the sales of a coffee shop in the Philippines.
One primary key factor is location. If a cafe is easily accessible and located in high-traffic areas, you can expect it will have more sales as it attracts more customers.
Another thing to do considers is customer demographics. Coffee shops cater to different age groups or interests and may have different loyal customer bases.
If you have identified your target customer and ensure you’re doing the right marketing strategy to appeal to them, you’ll get more sales in return.
Lastly, competition. The higher the competition in your location area, the more challenges you may have to attract customers.
Effective Marketing Strategies
You need to promote your coffee shop and attract customers to get more in-store and delivery sales.
There is a misconception for franchise coffee shops that they don’t need to do any marketing campaigns. Partly true, given that the main branch or franchisor has an existing marketing team and effective marketing campaigns to promote every brand, including its franchise cafes.
However, it is best to own your franchise store and do the necessary marketing to attract new customers – aligned with your franchisor’s overall marketing strategy.
For startup coffee shops, here are some ways to get new customers and entice existing customers to buy more from you.
Social Media Marketing Strategies
Invest in creating social media posts that are appealing to your target audience. You can hire a freelance graphic designer or do it yourself with Canva. Then, write captions that entertains or educates, alongside call-to-actions, to encourage your audience to visit your stores.
Social media platforms like Facebook, Instagram, and Tiktok are some places to publish content to bring more awareness to your brand.
You can invest in Facebook Advertising to push more discount promos and holiday or seasonal promotional campaigns to get more reach in your target area.
In the Philippines, you can use Facebook Ads to get as low as Php10.00 to acquire a customer by sending you a message on your Facebook page.
Customer Loyalty Programs
Customer loyalty programs are another effective marketing strategy as you encourage customers to return to your cafe and make repeat transactions. You can add freebies to every number of purchases they make; this gives your customers a reason to buy more from you.
Live Events
Live music performances are one of the trending and effective marketing strategies of coffee shops in the Philippines. By giving their customers free entertainment and good vibes, they improve their customer experience.
Ask For Google Business Reviews
If you’ve made a great customer experience, it is best to ask your customers for a review on your Facebook page or, better, on your Google Business.
First, you have to set up your Google Business. You can read this guide to start your own.
You can create an A4 poster with a QR code and/or link to your Google Business review section. Your customers can scan the QR code, go to the link, and write a review about their experience in your coffee shop.
Customer reviews serve as testimonials of the level of experience and quality of products your cafe offers to customers. This brings in new customers when people search for specific keyphrases, looking for available coffee shops within the area (e.g. coffee shop san jose del monte bulacan).
8. Familiarize Yourself With Cafe Operations and Customer Service
Cafe Operations
Cafe operations refer to the various activities involved in running the day-to-day workflow of a coffee shop or cafe.
These include menu planning and pricing, food safety and sanitation, workflow optimization, quality control, staff training and development, and customer experience (more on this topic later).
Menu Planning and Pricing
You must offer a range of beverages and pastries catering to your target market’s tastes and preferences. This will comprise your menu. Knowing what type of menu and its inclusions is critical to ensuring your customers get the best products from you.
It is best to conduct market research among all coffee shops in the Philippines, as well as upcoming trends in the global coffee scene, to get insights into what beverages and food you should cater to your customers.
Aside from menu planning, consider the pricing of your coffee. Pricing your products affects your monthly profits. So ensure you know what your target product pricing is.
Here is an example of a menu for a coffee shop in the Philippines:
| Item | Price (PHP) |
|---|---|
| Espresso | 90 |
| Americano | 120 |
| Cappuccino | 140 |
| Latte | 150 |
| Mocha | 160 |
| Iced Coffee | 120 |
| Cold Brew | 140 |
| Hot Tea | 80 |
| Iced Tea | 90 |
| Fruit Smoothie | 180 |
| Classic Milkshake | 140 |
| Special Milkshake | 180 |
| Chocolate Drink | 120 |
| Matcha Latte | 150 |
| Chai Latte | 140 |
| Hot Chocolate | 120 |
| Fresh Juice | 100 |
| Bottled Water | 40 |
| Pastry | 60-120 |
| Sandwich | 120-200 |
| Salad | 150-250 |
| Pasta Dish | 200-280 |
| Cake Slice | 100-150 |
Food Safety and Sanitation
For any food-related business like a coffee shop, maintaining high food safety and sanctification standards is critical to success. Look for the basic and advanced relevant regulations and guidelines to protect your customer’s health.
Workflow Optimization
Streamline your coffee shop’s workflow to serve your customers quickly and efficiently. If you can reduce wait teams, this can increase customer satisfaction and thus, improve their overall customer experience.
Analyze your operations. Check your production areas. What are the things you can improve to remove any inefficiency and things which may be causing delays? Consider rearranging your furniture and equipment to develop a more efficient store layout.
Quality Control
Consistency in product quality is essential in a coffee shop. This is particularly important if you’re expanding your coffee shop to other locations, i.e. adding more branches for your startup coffee shop.
You want to ensure all your products meet the same high standards every time. So seek quality control by regularly conducting a taste test of your coffee and other products to ensure they’re up to par.
Customer Service and Experience
The coffee shop with the best customer experience wins. Why? It is simply because if your customers feel they’re being served well and have the highest level of customer touch and experience, they’re likely to return to your store, increasing your overall sales.
So, think of ways how to create a positive customer experience. Consider factors such as ambiance, music, lighting, vibes, and anything else to design your coffee shop well.
You can also engage with your customers and ask for direct feedback, so you know any room for improvements in their customer experience.
It is also important to train your baristas to deal with customer complaints. Not all customers you’ll be able to please, so have your staff trained enough to handle complaints effectively and empathetically. Develop a process for resolving issues quickly.
Coffee Shop Success Factors and Challenges
What Makes a Cafe Successful?
What makes a cafe successful is the quality of products and services, atmosphere and ambiance, location and accessibility, and strong customer base.
Let’s dive into each coffee shop’s success factors.
Quality of products and services. The quality of your coffee, pastries, and service will greatly impact the success of your coffee shop. People buy your products, so use high-quality ingredients, invest in quality equipment, and always train your staff to provide excellent customer service.
Atmosphere and ambiance: Create an inviting atmosphere where customers love to enjoy, relax, and return for more. Consider decor, lighting, music, and seating arrangements to create a safe and positive vibe that people will want to invest time in your store.
Location and accessibility: Choose the right location with high foot traffic to attract more customers. Always consider the demographics of your customers and ensure you’re hitting it head-on with the proper location.
Strong customer base: Apply the marketing strategies shared earlier to attract new customers and retain your existing customers. By providing customer loyalty programs, live events, and social media promotions, you can create a marketing campaign appealing to your target market.
Challenges Faced by Coffee Shop Businesses
Starting and running a coffee shop business in the Philippines can be challenging. Here are some of the most pressing challenges faced by coffee shop owners.
High competition: High demand for coffee equates to high competition in the number of coffee shops constantly opening up. So you must find ways to differentiate your coffee shop from others in your location.
Rising costs of ingredients and supplies. With inflation and many other factors, the costs for ingredients like coffee beans and milk can fluctuate, impacting your cost of goods sold and profit margins. It’s important to regularly review your costs and adjust your prices accordingly to remain profitable.
Customer retention and loyalty: It is not easy to retain customers today. The more options your customers have, the fewer chances it is to get customer loyalty. Creating a solid customer atmosphere and developing new marketing strategies can build a great customer experience and customer base.
Employee turnover: Hiring and training new employees is resource-intensive. And thus, you need to retain your employee as long as possible to reduce employee turnover and training costs.
These challenges can be difficult to overcome, but staying current on current industry trends and best practices can improve your operations and properly set up your coffee for success.
Coffee Shop Philippines Frequently Asked Questions
How much does it cost to open a coffee shop in the Philippines?
Opening a coffee shop in the Philippines can cost around ₱1,250,000 for the shop setup, equipment, and permit, plus about ₱155,000 for monthly expenses like rent, utilities, supplies, marketing, and staff costs.
How to start a small coffee shop business in the Philippines?
To start a small coffee shop business in the Philippines with a low budget, carefully plan your expenses, choose a strategic location, and consider offering specialty coffee or unique blends to attract customers. Additionally, consider cheaper alternatives for furniture and equipment, utilize social media marketing, and establish relationships with local suppliers to minimize costs.
Is a coffee shop a profitable business?
Yes, a coffee shop can be a profitable business. Generally, most coffee shops start to generate profits within the first few years, with sales expected to double by year five. To ensure profitability, managing startup costs, budget contingency funds, and carefully monitoring operations costs in the first year is important.
What qualifications do you need to run a cafe?
There are no specific qualifications required to run a cafe in the Philippines.
However, it can be helpful if you attend training, seminars, workshops, and certifications to have experience in the food and beverage industry.
Is owning a coffee shop stressful?
Owning a coffee shop can be stressful, especially starting it from scratch.
However, with careful planning and proper execution, many coffee shop owners find it to be a rewarding and fulfilling business.
Is coffee a good investment?
Coffee can be a good investment, as it has a high demand and profit margin.
What percentage of cafes fail?
Some studies show up to 60% of cafes fail within the first year. This highlights the importance of careful planning, management, and market research before starting a coffee shop.
Can I run a cafe with no experience?
You can run a cafe with no experience.
However, having enough experience or a business background is important to avoid mistakes and succeed early in running a cafe.
What does a small cafe need?
A small cafe needs basic equipment such as an espresso machine. It also needs a menu, a point-of-sale system, and business permits and licenses to operate legally.
What are the problems in a coffee shop business?
Some common problems in a coffee shop business include high competition, rising costs of ingredients and supplies, customer retention and loyalty, and employee turnover.
Do coffee shop owners make money?
Coffee shop owners can make money, depending on location, competition, pricing, and management. It’s important to plan and manage the business to ensure profitability carefully.
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