Can’t function well without a caffeine shot? Does your house resemble a coffee shop already because of all the coffee equipment and cups you own? Do you have dreams of being a barista and coffee shop owner?
If you answered yes to all three questions, then why aren’t you running your own coffee shop yet?
Yes, it’s easier said than done. We know that it’s a major undertaking that requires a lot of planning, resources, and money. But if you’re seriously considering it, read on and learn how to start a coffee shop business in the Philippines.
Why a Coffee Shop is a Good Business
The Philippines is a country of coffee lovers. In fact, nine out of 10 Filipino households consume coffee on a regular basis.[1] In 2020 alone, the total coffee consumed in the Philippines was about 3.3 million 60-kilogram bags.[2]
With this big coffee habit (and Filipinos’ coffee consumption that continues to grow each year), it’s the perfect opportunity to put up your own coffee shop.
For coffee lovers, any day is a good day for coffee. The rainy season is perfect for hot coffee, while the summer season is peak season for iced coffee.
In short, coffee will always be in demand (and will always be in style!). With a high-commodity product like coffee, you’ll be guaranteed a high volume of customers.
Moreover, depending on the type or size of coffee shop that you plan to have, it’s also an affordable business idea. There are many coffee shop business options depending on your business capital, and you can easily and quickly get yours running.
How to Start a Coffee Shop Business in 7 Steps
Want to know how to start a coffee shop in the Philippines? Here are the things you should do and the things you should prepare for.
1. Start with a Business Plan
Just like with any business endeavor, having a solid business plan is the first and most important step. If you want to know how to start a coffee shop business, you should have all your objectives, ideas, sales and marketing strategies, and projections all in one well-thought-out business plan. (Of course, it doesn’t hurt if you’re a coffee lover, too!)
Your business plan should include your coffee shop’s business structure. What type of business is a coffee shop, you ask? The answer will depend on the scale of your coffee shop business.
In the Philippines, coffee shops fall under the service industry, which is the largest business sector. And the most common organization types for a coffee shop are sole proprietorship, partnership, and corporation.[3]
- Sole proprietorship - Most basic organization type in the Philippines where a business is established by just one person (the sole proprietor). All assets and liabilities are also the assets and liabilities of the sole proprietor.
- Partnership - Involves two or more people who contribute assets and divide profits among them
- Corporation - Comprised of a maximum of 15 individuals acting as a single entity; can be non-stock or stock corporations
- Cooperative - Individuals who have joined together on a voluntary basis to achieve social or economic goals
Once you decide on the business structure, also consider the tax and legal implications of your coffee shop business, especially if you’re going to franchise a coffee shop or start your own corporation.
More importantly, know how you’re going to fund your coffee shop business and what options you have if you need outside capital for your business expansion down the road.
How much does it cost to start a coffee shop in the Philippines?
Again, this depends on the type of coffee shop. For example, if you’re going to franchise a known coffee shop brand, the cost can be from ₱6 million to ₱12 million.
But if you’re going to open your own coffee shop, a small 30-sqm coffee shop without a kitchen in a bustling business district can cost roughly ₱950,000 for the fit out, equipment, and business permit, and approximately ₱600,000 for monthly operational expenses (rent, utilities, supplies, marketing, monthly staff cost for four baristas etc.).
A medium-sized coffee shop with a small kitchen (approximately 50 sqm that can seat 18 people and employ 10 staff) can require a capital of ₱1.5 million and have a monthly operating expense of approximately ₱493,000.
If you’re planning to open a large coffee shop (150 sqm) with a full kitchen (12 staff and up to 60 seats), this can require a capital of ₱4.5 million and have a monthly operating expense of ₱997,500.
How much money does a coffee shop make?
It really depends on the type of coffee shop you're operating, how many cups of coffee you sell, where your coffee shop is located, your price points, your operation costs, and many other factors. For our coffee shop business example cited above, the daily revenue can be anywhere from ₱13,500 to ₱63,000.[4]
A coffee shop business is definitely a sizable investment. But if you want to start small, you can always put up your own coffee shop on wheels or a pop-up coffee shop in your unused garage or garden. It costs significantly less, and it’s quite a unique and cost-effective way to own a coffee shop.
Make Your Goals Future-Proof with a Citi Personal Loan
Still, many loan providers in the Philippines can help you fund your business. Consider applying for a Citi Personal Loan for your coffee shop business. You can borrow as much as ₱2 million.
If you sign up (and get approved subsequently), you can get rewards upon your Citi loan disbursement.
And if your savings aren't enough to start a coffee shop business, you can also easily compare and apply for other personal loans through Moneymax.
Read more: Business Loan in the Philippines: Complete Guide for New Entrepreneurs
2. Decide on What Type of Coffee Shop You Want to Open
The next thing you need to do is know what type of coffee shop you want to open. There are quite a few options available:
☕ Cafe
It sells coffee drinks and offers breakfast, lunch, and dinner menus. A cafe is very close to being a full-service restaurant and is the costliest to start.
☕ Coffee Shop Franchise
Franchising a popular coffee shop business such as Tim Horton’s, UCC, or Coffee Bean and Tea Leaf is easy and not that stressful, and you already have an established business model.
☕ Coffee Bar/Cart/Kiosk
It focuses on selling brewed coffee and usually offers muffins, cookies, and cake slices to go with the coffee. There’s limited seating and are usually at high-traffic locations such as malls and public transportation hubs and stations. It’s also potentially very profitable even with just a small investment.
☕ Coffee Shop
It sells coffee drinks and sometimes light fare meals for coffee pairings. It’s designed to be a social hub and make customers stay longer to talk, work, and hang out. A coffee shop can be great in both busy cities and outside the metro.
☕ Drive-Thru Coffee Shop
The best locations for drive-thru coffee shops are on busy commuter roads.
☕ Pop-Up and Mobile Coffee Shops
These are the cheapest coffee shops to start and offer the most flexibility. You can simply set up in busy and profitable locations such as events, festivals, trains and bus stations etc. or anywhere there’s high foot traffic.
You’ll also need to come up with a name for your coffee shop and decide on the products and services of your coffee shop.
3. Determine Where You’re Going to Put Up Your Coffee Shop
Next, pick the best location for your coffee shop. Remember: location is key. If you’re opening a coffee shop, consider these things:
- The size of your coffee shop - Your coffee shop should have enough space where the barista/s can prepare the drinks efficiently and comfortably and where customers can enjoy their coffee.
- Accessibility - Anyone should be able to go to your coffee shop. A parking space and a bike rack are nice to have. Nice and comfy seats are also a must. Your coffee shop should also be easy to find, especially for food delivery riders.
- Rent - This will take up a huge portion of your operation costs, so make sure to pick the best location that will also be right for your budget.
4. Choose a Coffee Shop Theme
Notice how coffee shops are sprouting everywhere in the country, and how these coffee shops are so aesthetically pleasing? They’re so visually pleasing that even non-coffee lovers go out of their way to visit and have a cup (and maybe take a few photos and videos for their Instagram and TikTok).
The Benefits of a Themed Coffee Shop
With a theme-based coffee shop, you can easily establish your coffee shop’s brand and image, especially if you have quite a unique and niche theme.
It also makes people very curious and excited to try what your coffee shop can offer. These days, it’s not enough that you serve really good coffee. You must give customers the complete experience―interior design, ambiance, menu, music, free Wi-Fi, and customer service, just to name a few.
Lastly, making changes, renovations, or additions to your themed coffee shop will be easier because you just need to work along the lines of your coffee shop’s theme. No need to spend a lot of time on research and experimentation. You already know what’s going to work with your theme and what will not.
Top Coffee Shop Themes in the Philippines
You can let your personal tastes (and biases!) come into play when choosing a theme for your coffee shop. When you’re setting up a coffee shop, consider some of these popular themes:
Rustic
A rustic style of coffee shop is perfect if you’re a fan of old-school decor, plants, wood, and bricks. Use classic pieces and comfortable furniture that will evoke a kind of speakeasy, boutique-style vibe in a coffee shop setting.
Industrial
It's one of the most popular and sought after themes these days because of the exposed architecture. If you dig exposed ceiling beams, bricks, and pipes and warm lighting with modern elements, an industrial-style coffee shop is best.
Boho Chic
This is your best bet if you want something fun and vibrant. And it’s so easy to achieve with just a few well-curated rugs, crochet curtains, fairy lights, and wooden furniture.
Indoor Garden
During the pandemic, a lot of Filipinos became plantitos and plantitas. Just imagine if you can entice all these plant-loving Pinoys to come out and have a coffee at your indoor garden-themed coffee shop.
Pop Culture-Themed
You may also consider a book, music, movie, or TV-inspired cafe to target its legions of fans, just like the BTS fan who opened a BTS-themed cafe[5] in Tomas Morato, Quezon City.
5. Register Your Coffee Shop Business
For your coffee shop business to become legit, you need to register it. If you don’t have a business registration, you can’t legally operate. Make sure to secure the following documents:
- Barangay registration
- Business permit (also known as Mayor’s Permit)
- DTI registration
- BIR registration
6. Buy Your Coffee Equipment and Supplies
The most important thing that your customers will be looking for is the coffee, of course. That’s why you need to find suppliers who will provide you with consistent high-quality coffee and ingredients. Moreover, you need to purchase good quality and reliable coffee equipment.
If you’re franchising a coffee shop, you don’t have to worry because these will all be provided. But if you’re starting your coffee shop from scratch, you’ll have to do your own research, sourcing, and testing to find the right products at the best prices.
You can opt to buy second hand coffee equipment as well. There are many sellers of coffee equipment online that sell them at discounted prices (Check out Facebook and Carousell). You can even rent these coffee equipment if you don’t want to make an outright purchase yet.
And in case you’re wondering what equipment you’ll need for your coffee shop setup, here’s a basic list:
- Automatic drip coffee maker
- Espresso machine
- Industrial coffee grinder and blender
- Oven toaster
- Refrigerator
- Freezer
7. Recalculate Your Figures
Before you open your coffee shop business, you study the figures. Once you start operating, it’s highly recommended to recalculate your figures with the new information that you’ll gather.
Doing so will more accurately help with your potential future projections. Unlike in the planning stages, you’ll clearly see which aspects in your business operations need some adjustments.
Here are some of the things that you’ll need to take a look at:
- Projections for the next three years
- Marketing and advertising expenses
- Space and coffee equipment maintenance
- Utilities and rental cost
- Prices of supplies and coffee equipment
- Takeout/delivery costs
- Franchise fee (if a franchise coffee shop)
- Break-even point
- Profit reinvestment plan
Related reading:
- Own a Food Franchise in the Philippines for Less than ₱1 Million
- 18 Golden Rules for Starting a Small Business in the Philippines
Final Thoughts
Nowadays, a coffee shop is not just about a good cup of coffee. A lot of people consider coffee shops as chillax places, or places where they can work, catch up with friends, or just enjoy a solo date.
Now that you know how to start a coffee shop business in the Philippines, you’re one step closer to turning those coffee shop business ideas into reality. Whether it’s a small business coffee shop or a big retail coffee shop franchise, the type of coffee shop you choose will determine your startup costs and profits. But at the end of day, your skills, knowledge, and passion will spell your coffee shop business success!
Sources:
- [1] Toward productivity and inclusiveness in PHL coffee (Business Mirror, February 2018)
- [2] Total coffee consumption in the Philippines from 2011 to 2020 (Statista, May 2022)
- [3] What type of business entity is right for me? (DTI Negosyo Center)
- [4] How Much Does It Cost to Start a Coffee Business in the Philippines? (Bean & Barley, March 2019)
- [5] LOOK: This BTS-themed cafe in Tomas Morato is back and bigger than ever (L!fe The Philippine Star, May 2022)
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