The Secret to Finding the Best Location for a Coffee Shop

Your clear vision of a swanky coffee shop tucked into a quiet neighbourhood could be getting a little foggy as you start looking for a business location. While shopping around for a location sounds easy (and even fun), finding the best location for a coffee shop can quickly become frustrating due to limited availability, high rent prices and finding the right landlord.

Don’t let some of these challenges hinder your location hunt. To find the right business location, you have to think beyond rent prices and physical space. Here are the top five things to consider when selecting a coffee location.

1. Demographics

Foot traffic is important when you’re picking a location for your coffee shop. But a tonne of foot traffic doesn’t matter if those people aren’t your target demographic.

Understanding your target market is a crucial step when you’re starting a coffee shop and it should largely influence your location decision. Where is your customer going when they pass your coffee shop and make the decision to purchase your coffee? They could be on their way to work, school, university or potentially on their way home after dinner. Dissecting your customer helps you better determine the best location for your coffee shop.

For example, if you’re targeting employees on their way to work, opening your coffee shop in a shopping centre that opens after the morning rush hour won’t work. You’d be better off opening in an area close to a station or in a business district. Similarly, if you’re targeting the local lunch crowd, that same shopping centre might be ideal.

2. Neighbouring businesses

When you’re determining the best location for a coffee shop, neighbouring businesses can also affect your profitability — both negatively and positively.

It might be obvious to research other local coffee shops to find out where they are established, but your competitors aren’t limited to other coffee shops. If your coffee shop targets customers looking for a quick breakfast, you should keep your eye on the alternatives on offer including smoothie joints, juice bars, bagel places and even fast food chains. While these businesses are all in different categories, they could all be competing with the products you serve.

Neighbouring businesses can also help your coffee shop by complementing your offerings. If your coffee shop has a large study space, it might be smart to open near offices or a university. This provides an ideal area for employees or students to come in and get work done before or after hours. If you’re targeting customers who seek a midday caffeine buzz, you may want to look at shopping areas where customers need a pick-me-up while walking around and shopping.

The standard of neighbouring businesses should also inform your decision. If you have chosen a particularly affluent area with a local customer base that favours artisan or organic fare, then your own offerings need to reflect these values. A high street flanked by an organic green grocers, vegan fast food restaurant and healthy smoothie bar, for example, would suit a coffee shop that concentrates on high quality, single origin coffees or trendy cold press coffee. A family-friendly area, like near a local park or shopping centre, would be better for business that offer products that are great for parents and kids alike.

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3. Accessibility

Your shop should make allowances for customers with limited mobility. When looking for a property, avoid those that lack step-free access. An absence of steps is as vital to wheelchair users as it is for parents with push chairs - the second in particular may be a frequent visitor before or after the school run, and unlikely to make a quick visit if they can’t bring their buggy with them.

Remember, if your store isn’t easily accessible, you’ll often lose your customers to competition.

4. Building infrastructure

Coffee shops require a unique building infrastructure that not all commercial spaces can accommodate. Ideally, you’re looking for a cosy space that fits an optimal amount of customers without feeling overcrowded. Coffee shops are often a mix of oversized soft chairs and slimline stools at bars, so you need to consider the installation of all these fittings as your scout a property. You also need room to set up your coffee shop equipment comfortably so baristas have sufficient space to move around.

In addition to the actual space, some commercial spaces don’t allow food permits licenses on their property. Make sure you inquire about this information, and consider engaging a legal or business expert to determine what permits or licenses you may need.

5. Terms of the lease

It’s the most obvious question that comes to mind when you’re searching for the right business location: can you afford it? And more importantly, can your customers afford it?

If you select a coffee shop location with a high rent, that cost will be reflected in your coffee prices. While that’s not a bad thing, you have to keep in mind your target customer.

You also need to determine if a location requires any renovations. Small business loans can be used to help finance building costs if you feel financially strained. When analysing loan offers, there are a few things to check out, including the total payback amount, ease of payback and the lender’s reputation.

Aside from the cost of your building, there are various terms to be aware of that can help you determine the best location for a coffee shop. Some of these include:

  • Length of the lease. Commercial leases are legally binding contracts and you generally cannot easily break or change the terms. Make sure you talk to a lawyer before signing any agreements.

  • Rent increases. Landlords typically have their properties reviewed every five years, this allows them to revaluate the rental value of the property and raise their rental rates if it is found to have increased. Be prepared for this, especially if you are moving in just before a review is due.

  • Insurance requirements. Some leases require specific insurance coverages that increase your overall costs.

  • Security deposit and conditions for its return. It’s important to know how much you have to pay up front and the process of receiving that deposit back.

  • Maintenance and repair terms. Find out who is responsible for the maintenance of the space and who pays for this (you or the landlord).

This guide is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.