How to Start a Coffee Shop

How to Start a Coffee Shop
With the industry taking off, now is a great time to get into coffee. Learn exactly how to start a coffee shop and become extremely profitable.
by Square Feb 08, 2023 — 7 min read
How to Start a Coffee Shop

Owning and running a coffee shop means searching for the highest quality beans, the most talented baristas, and the newest flavors to spice up your drinks. A great customer experience is what truly makes all the difference. A coffee shop point of sale (POS) system can be the cornerstone of your successful coffee shop, allowing you to efficiently process transactions and keep track of inventory, among many other things.

While you’re busy creating the best latte and developing a trendy atmosphere, evaluating what you need from a coffee shop POS can take some doing. This guide will walk you through crucial aspects of getting the most from your POS system, so you can serve your customers better and have more control over your cafe through speed of checkout, check sales reporting to inform business decisions, and grow your business by driving repeat customers.


How to take payments at your coffee shop

Coffee shops need to adopt modern and popular ways to take payments, giving customers all options of payment. When customers can easily pay for their coffee and other items, it reduces hassle and increases the chance that they’ll shop with you again. This results in a streamlined customer experience and happier customers, which equals more customers and sales.

Evaluate a payment processor

Before you can start to accept payments at your coffee shop, choose a payment processor. A payment processor is necessary to process transactions between your small business and your customers’ banks. When it comes time to evaluate your payment processor options, you’ll want to:

Consider your business needs, like what forms of payment do you want to accept, do you want to accept mobile payments, and will you be offering gift cards or loyalty programs.
Consider the payment processor fees, services offered, and their customer support availability and reputation.

Once you’ve chosen a payment processor, open a merchant account or use a payment services provider. A merchant account is a type of bank account that will allow you to accept credit and debit card payments. A payment services provider is a company that will provide payment processing services without the need for a merchant account of your own.

Square POS software is an all-in-one solution for coffee shops and other small businesses. Square offers a suite of tools that make it easy to accept payments, manage inventory, and track sales. While Square does charge a fee for processing payments, you won’t need to pay a monthly fee nor be tied to a long-term contract. This means you’ll pay no setup fees and no hidden fees, so you can focus on providing the best experience for your customers.

Decide what forms of payment to take at your coffee shop

With the right payment processor in place, it’s time to decide what forms of payment to accept at your coffee shop. There are more ways to accept payments from your customers than ever before, from cash to mobile contactless payments. Here are some common forms of payment that some of our coffee shop sellers accept:

Credit cards

Accepting credit cards can increase sales volume and make it easier for your customers to pay for their purchases. Be aware of any credit card processing fees that may apply. These fees are typically a percentage of the sale and can add up over time.

Card on file

Allowing your customers to keep their card on file takes convenience to the next level. This feature allows you to securely store their credit card information, making it easier for customers to make repeat purchases without re-entering their payment information every time.


Contactless or chip payments are increasingly popular as Apple Pay and Google Pay become more accessible. Your customers don’t have to carry their wallets. Contactless options also offer them a faster way to pay with just their smartphone or smart watch and is a more secure way to pay than with their physical card.

Gift cards

Gift cards are a great way to attract new customers and boost sales. Customers can purchase gift cards for themselves or as gifts for others. With Square Gift Cards, you can sell and redeem gift cards online or in-store, giving customers flexibility.

Loyalty programs are another excellent way to boost sales and incentivise repeat customers. Square Loyalty, also part of Square POS, allows you to create a customer loyalty program for your coffee shop, offering rewards for purchases that they can redeem for discounts or free items.

Online payments

If you accept online orders through your coffee shop’s website, make sure you have a payment gateway set up to let your customers securely enter their credit card information on your site. Square Online has a built-in payment gateway that makes this process easy and secure. More importantly, your online and in-person payment gateways are all integrated, so your payments all go to one place and sales reports automatically reflect that.

Additionally, with tools like Square Marketing, you can promote special offers and new products through online checkout links. You can set up links within your emails or texts that customers can click to purchase items directly, making it easier for them to buy and easier for you to target a larger audience.

Debit cards

Debit cards are still popular today, and your customers will still use them. Don’t rule out accepting these types of payments.

Good, old cash

They still say cash is king, right? Some of your customers may want to pay in cash. Easily log your cash payments to get full visibility into your sales.

How Square Point of Sale software works with your hardware options

Square Point of Sale (POS) software can also seamlessly integrate with various existing POS hardware options, including countertop POS systems and handheld terminals.

If you offer full-service or have a sit-down cafe, Square offers hardware solutions like our Register and Stand. These countertop options allow you to accept payments and manage your coffee shop’s operations, like tracking inventory and employee work hours. The Square Register also comes with a built-in card reader, making it a sleek and convenient option.

Taking your coffee service on the go to events or using tableside service at your cafe? Square Terminal allows you to take payments anywhere in your coffee shop, giving your customers the flexibility and convenience they want.

Why taking payments efficiently is vital to a great customer experience

Quick payment processing isn’t just efficient for your coffee shop; it provides a smoother experience for each of your customers. It’s hassle-free, keeping your wait lines down and reducing any frustration with unforeseen payment processing issues. It lets you offer a variety of payment options to accommodate each of your customers’ individual preferences. That seamless and personalised experience helps retain customers by promoting positive interactions, increased word of mouth reviews, and improved customer loyalty.

How to choose the best POS for your coffee shop

With various options on the market, how do you choose the best POS system for your coffee shop? Think of your coffee shop POS software as the central nervous system of your cafe, responsible for communicating across each part of your business. A well-designed POS system can significantly improve your coffee shop’s effectiveness, keep the line moving, and provide a seamless customer experience.

From assessing your coffee shop’s specific needs to comparing different software options, you need to have the knowledge and tools to make an informed decision.

How to choose a coffee shop POS

When looking for the best POS system for your coffee shop, there are several factors to consider. First, how does it let your cafe take payments? Find a system that accepts various types of payment methods, like contactless, credit cards, and even online ordering or order-ahead features. Ensure that the payment processor is secure, reliable, and offers reasonable transaction fees.

Since we know a positive customer experience is essential, prioritise customer service next. Does it let customers pay quickly and get them in and out of your cafe without any hassle or issues?

Hardware features and integration between any current software or hardware is essential. Choose hardware that is reliable and simple to integrate with your other business needs. Square Point of Sale software offers a range of compatible hardware such as Square’s Register, Stand and Terminal. Additionally, you’ll want to ensure that software integrations are available and make it easy to use with platforms and systems you may already have in place.

Remember, payment processing fees can add up quickly. Consider any fees or costs associated with using the POS system, including monthly fees, card processing fees, and any transaction fees. While some fees may be inevitable, choose a system that provides the right value for the cost.

Loyalty programs are an excellent way to create repeat customers and increase sales. Look for a POS system that can support a loyalty program, such as Square Loyalty, and can sell and accept gift cards or discounts.

For a smooth experience for your customers, your staff will need to successfully use the POS system. Pay attention to how user-friendly the software and hardware are. Is the checkout functionality easy for your staff to use? Can you quickly train your staff on editing your item library and how to operate the POS during rush hour or when customers are placing complex orders? This can save you and your employees time during training and increase productivity.

Another element of the ease of use is on the customer-facing side. Will guests have a difficult time understanding how to pay at the register or how to order online? Are they able to see a tipping option on-screen? If you have a high volume of orders, a self-ordering kiosk option can help reduce wait times and improve overall efficiency. However, if the checkout process isn’t intuitive, it could lead to a loss in sales.

Efficient operations and inventory management are crucial to the success of your coffee shop. Square Point of Sale software features advanced analytics and insights right from the Square Dashboard, including stock alerts and downloadable sales reports. Along with these features, create an efficient sales system and order customisation that you can pull data from to see what products are your biggest sellers. A strong POS solution needs to have features like order notes, size options, customisable orders, and daily specials to produce an efficient sales process.

If you have back-of-house food or kitchen production, you’ll need a kitchen display system to automate order firing. Square for Restaurants’ Kitchen Display System has helped some of our sellers streamline their order processing, reduce errors in the kitchen, and improve overall back-of-house efficiency.

Customer reports are a valuable source of insights into your guests’ purchasing behavior and preferences. By learning which customers buy coffee most often or what products are purchased the most, you can take this data to develop an email or SMS marketing program to send offers, newsletters with promos, and discounts. Square Marketing is a great tool that helps generate customer reports and automate your email and SMS marketing campaigns.

Do you sell products other than coffee, such as pre-packaged food or drinks, that require barcodes? You’ll need a barcode scanner. Square for Retail allows you to scan these barcodes, manage inventory, create purchase orders, and track your sales.

The Bottom Line is brought to you by a global team of collaborators who believe that anyone should be able to participate and thrive in the economy.


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