SWOT Analysis for Opening a Coffee Shop: What You Need to Prepare and How Much Capital You Need

SWOT Analysis and Market Analysis for Opening a Coffee Shop

Strengths (S)

1. Lower raw material costs

2. Good location - geographically closer to the target audience, saving customers' time and making it convenient for consumers to visit the store

3. High foot traffic - there are also office workers around the school

4. Significant target customers - students tend to consume in groups, with concentrated customer base that easily creates demonstration and imitation consumption effects

5. Good prospects - affordable prices with great development potential among student groups

Weaknesses (W)

1. Fierce market competition - many well-known coffee shops in the surrounding area

2. Inferior strength compared to other famous coffee shops - insufficient management experience and relatively weak influence

3. Limited funds - unable to meet various needs of different consumer groups

4. Competitors opened earlier with skilled techniques and experience in making various flavored coffees

Opportunities (O)

1. High market demand for products - target groups have great need for product selection

2. Currently concentrated campus consumer groups with huge consumption potential. High traffic in commercial circles with great hope for market development

3. Consumers, especially university students, show significant growth trends in awareness and recognition of coffee

4. Most consumers are students and young office workers - once habits and consumption preferences are formed, they easily become loyal customers

5. Research studies show that a cup of coffee daily has various health benefits, and its advantages are widely available online

Threats (T)

1. Diverse and changing demands of consumer groups

2. Large market price fluctuations - unfavorable for stable store development

3. Many potential competitors - famous coffee shops easily divert consumers

4. Once successful, likely to attract other entrepreneurs to follow and imitate, adding new competitors

5. Low market share - no chain institutions, and surrounding milk tea shops all have coffee beverages that divert consumers

SO Strategy

1. Target fashion-conscious consumers, develop signature coffee beverages to create the store's flagship drinks

2. High consumer traffic and market demand - develop diverse desserts to attract customers' attention and stimulate potential consumers

3. Establish your own coffee brand and implement daily store operational target strategies

WO Strategy

1. Research successful experiences of other famous coffee shops and form a comprehensive operational plan for your store based on this

2. Learn from management experiences and coffee-making techniques of successful coffee shops

3. Introduce advanced technology and experience, improve innovation capabilities, and continuously launch new products

ST Strategy

1. Focus on advantages, capture loyal customers, and prevent loss

2. Win with specialization, win with uniqueness - cultivate customer groups

3. Adopt strategies for different consumption levels to expand consumer tiers and meet requirements of customers at various consumption levels

WT Strategy

1. Aim to form chain institutions, continuously increase market share

2. Optimize products, emphasize uniqueness, stand out in fierce competition, and prevent threats from external imitators

Mission Statement

1. The main target customers of this store are university teachers and students, providing them with fashionable, healthy, and leisurely communication spaces

2. Continuously update store products according to customer tastes to maximize satisfaction of different consumer needs

3. Always pay attention to market conditions, follow market pace, and gain consumer recognition

4. Introduce advanced technology, pursue optimal taste, and continuously innovate new flavors

5. The basic philosophy of this store is "everything for customers" - let customers feel warm and cared for, gain consumer recognition, and create more loyal customers

6. Adapt to different levels of consumers with different prices, maintain high reputation in cost-effectiveness, ensure quality, create healthy and delicious beverages, making customers come for our store's good reputation

7. Strive to achieve considerable income within one year, aim to open another branch within two years, and ultimately create a national chain institution

8. Civilization, health, and pursuit of quality assurance

9. For store employees, strive to improve employee value, continuously provide broad development space, cultivate their technical skills in various aspects, and provide excellent working environment and conditions

Every store has its own style, and some things still need to be decided independently. What's mentioned below may not be suitable for everyone, but everyone can use it as reference to conceive a store-opening plan that suits them.

Pre-Opening Research

Before opening, we need to think about what kind of place a coffee shop is? What kind of work skills are needed? Everyone should know that coffee shops require hands-on practice - it's not enough to watch others succeed in opening coffee shops or see others brew coffee simply and think you can do it just because your eyes have learned it.

Therefore, before opening a coffee shop, you need to collect extensive information and reserve knowledge to fully lay a good foundation for your store. The knowledge储备 mentioned here is not just about learning coffee brewing skills and coffee knowledge, but also understanding how to use funds, personnel arrangements, and specific operations needed to open a coffee shop.

Actually working in a coffee shop is a great learning process, but the premise is that it's a reliable coffee shop. Although working in a coffee shop may not meet everyone's expectations, as long as you calm down, observe and pay attention to things beyond the bar counter, learn to communicate with customers in advance, and gain service experience, it will be more important than just focusing on coffee brewing techniques. Some things that cannot be expressed in words but can only be understood intuitively require personal experience to comprehend. During this process, you will meet many like-minded friends, and perhaps these connections will bring great help when your coffee shop opens and operates.

About Coffee Shop Positioning

Regarding positioning, we need to think about what your motivation for opening a coffee shop is? How to concretize your ideas? Although opening coffee shops has some commonalities, if you're the owner, you definitely want your coffee shop to have its own characteristics. If you don't think about positioning and just open a shop impulsively, it's very risky.

Here we can use 6 Ws and 2 Hs to think about the questions: Why open a coffee shop? What do you hope to mainly sell to customers? When to open? Who do you hope will visit the shop? Whom will run this coffee shop? Where to open? How to - what style to adopt? How much - how much opening capital do you have?

Determining the Coffee Shop Menu

The most indispensable thing for a coffee shop is the menu, which is comparable to the store's signature. Remember! The menu should be determined when you decide to open the shop, not when the store is already ready to operate. When thinking about the menu, you need to comprehensively consider regionality, customer class, surrounding store characteristics, and nearby customer needs/requirements. After fully grasping regional demands, then create a menu that everyone can accept.

Once you have the menu, you need to consider pricing. What price level is appropriate? If judging from raw material prices, you need to refer to the cost rate formula: Cost Rate % = Raw Material Cost ÷ Selling Price × 100%. Generally, the cost rate should not exceed 30% of the selling price. But this is just thinking from material cost perspective - we also need to add costs like rent, labor, water and electricity, which needs to be calculated according to your specific situation.

Coffee Shop Location Selection

Location selection is particularly important - this is the factor that determines whether your coffee shop can thrive. Therefore, when selecting a location, first consider the region and do more field research. After finding a shop that suits your preferences, determine whether the shop is suitable/can be used as a food and beverage establishment, whether water, electricity, and gas are normal, what restrictions exist on internal and external decoration, and whether the shop rent and deposit are appropriate.

Essential Funds for Coffee Shop Opening

The money for opening a coffee shop doesn't come from nowhere, so before opening, the most important thing to consider is funding. Therefore, it's recommended to make a detailed plan sheet, which includes these funds that every coffee shop must use: rent, internal and external decoration costs, equipment and tableware purchase costs, advertising and promotion costs, material procurement costs, and store operation funds.

Fund Management After Coffee Shop Opening

Opening is easy, operating is difficult. After the coffee shop opens, the indispensable monthly expenses are rent and labor (even if you operate alone, you must calculate your own time cost). At this time, if there's no corresponding turnover, you'll easily fall into the path of losing money... So before opening, learn more about how to adjust the ratio of expenses to income, and when necessary, learn to adjust the coffee shop's positioning in a timely manner.

First, you need to clarify the monthly fixed expense expenditures, which need to calculate rent, labor, and depreciation expenses of fixed assets - that is, the monthly depreciation expenses allocated over a certain number of years for decoration and equipment put into use. Then there's turnover forecast, where turnover equals "average consumption per person × average daily customer traffic." Average daily customer traffic can be calculated through "number of seats × table turnover rate × seat utilization rate" or "store front foot traffic × attraction rate." This average daily traffic needs to be calculated in detail according to weekdays, weekends, and holidays. Finally, there's the break-even point setting. Before this setting, see how much working capital you can provide, then use fixed expenses ÷ (1 - working capital ÷ turnover).

When calculating these, don't be too idealistic - you must determine the fund management after coffee shop opening based on actual situations.

Obtaining Coffee Shop Operating Qualifications

The most time-consuming and effort-intensive part of opening a coffee shop is obtaining operating qualifications. Different places have different regulations, and different coffee shop positioning will have different requirements, but two certificates are essential: one is the food business license, and the other is the shop's business license. These need to be applied for from relevant departments and require a round of verification and inspection. Therefore, when you determine the coffee shop opening time, it's recommended to apply in advance to give yourself sufficient time.

Equipment Investment

Act according to your means - it's not that the more expensive the better. High cost-performance within your affordable price range is the most important thing! It's not recommended that everyone blindly invest in expensive equipment when opening a shop. You really don't need to throw all your funds into equipment when opening! It's not too late to slowly upgrade equipment after your operation stabilizes. A coffee shop should try its best to save costs in the early stages of opening. Don't be too optimistic about future days - this isn't discouragement, this is reality~

Coffee Shop Design and Decoration

Before doing this, you must clarify and solidify the store's style, then make design plans according to the actual situation of the store. Besides considering the store's style and decoration, we also need to fully consider the space allocation between customer areas and the bar/kitchen, as well as workflow design.

Employee workflow design needs to fully consider how staff can operate efficiently after receiving orders, so starting from the placement of equipment, you need to consider how to make the process from operation to food delivery more seamless. Customer workflow needs to consider whether the placement of tables, chairs, and decorations will block customers' movement, and whether the indoor lighting positions can achieve the effect of guiding customer routes.

Selection of Material Procurement Channels

Whether it's coffee beans or other material procurement, you must choose suppliers, manufacturers, and brands with legal production qualifications! This is very important!!!

Final Pre-Opening Inspection

Check whether all equipment in kitchen, bar, customer area, restroom and other areas is functioning normally, whether ingredients and materials are fully prepared, whether ingredients are within their expiration dates, whether cleaning supplies are complete, whether the cash register system is working, and whether personnel are ready to enter operational status.

About Service

Regardless of your personality, the basic principle of serving customers is enthusiasm and generosity, truly making customers convinced and satisfied. Believe it or not, in any industry, service determines whether a store, company, or brand can survive long-term. With good service, congratulations, you're 99 years away from becoming a century-old store!!!

Although this article is a bit long and wordy, the fact that everyone can read to the end proves that you really have perseverance and want to open your own coffee shop. So here, I'd like to wish everyone prosperity in advance! May wealth roll in! I hope everyone can stick to their dreams and do something they won't regret~

If anyone has any store-opening or operational experiences to share, you can leave a message in the comments section~ I! Will! Immediately! Select!!

Important Notice :

前街咖啡 FrontStreet Coffee has moved to new addredd:

FrontStreet Coffee Address: 315,Donghua East Road,GuangZhou

Tel:020 38364473