Are you passionate about coffee, from the intricate process of brewing to the art of roasting beans to perfection? Have you dedicated time to studying the science behind crafting blends that your family and friends can’t get enough of? If you also have a strong business sense, you’re in the right place.
This guide is specifically designed to show you how to start a coffee roasting business. It’s a comprehensive resource that combines your love for coffee with practical business strategies, setting you on the path to entrepreneurial success in the coffee industry.
First, there are the essential steps to start this type of enterprise.
Important Steps for Starting a Coffee Roasting Business
Small business owners looking to sell roasted coffee should invest in a large coffee roaster that can handle a capacity of 15 kg.
Before making that big purchase, there are many steps you can take to get your coffee roasting venture off to a good start.
Carry Out Market Research on Other Coffee Roasters
Who else is roasting coffee in your area? If you find that there are no local roasters, consider what sources are being used by those selling coffee nearby. Where do the local coffee shops source their coffee?
If the local market is flooded, don’t despair. Shift your focus to online sales.
Consider Potential Startup Costs
(See 11 for specific costs)
The initial equipment investment includes commercial-sized coffee roasters and grinders.
Ongoing expenses include:
Coffee beans
Fuel for the roaster (electric, propane, etc.)
Rent/mortgage and utilities
Shipping and delivery
Equipment for packaging coffee
Vehicle or fleet (if you plan to deliver your freshly roasted coffee)
Choose a Niche
Consider the diverse sales avenues in your commercial coffee business. Are you aiming to supply individual customers, or are you looking at coffee shops as your primary market? Perhaps your vision includes serving coffee directly to patrons in your own coffee shop. Or, you might be inclined to cater to elite lodging establishments and restaurants with your specialty roasts.
Also, consider whether you will sell to grocery stores. Wholesale accounts? Retail locations?
Before you make your initial investment and begin to spend time roasting, imagine your ideal customer. As your business grows, keep that focus to the forefront.
Decide on a Business Name
Before finalizing a name, small businesses should verify multiple sources to ensure that the name is not already in use. This includes checking state business records, as well as federal and state trademark databases. Additionally, it’s important to confirm the availability of the web domain and on social media platforms like Facebook.
Brand Your Business
There are two primary methods to establish your business name as a recognizable brand: through your selected logo and color scheme. Recently, as the demand for high-quality coffee has surged, competition among coffee companies has intensified. If you’re not interested in building your own brand, you might consider exploring coffee franchise opportunities.
Kenya, South America, and Jamaica are the top single-origin bean growers and suppliers. Brazil leads the way.
Write a Business Plan
Key elements of your plan are:
- Pricing
- Packaging supplies
- Logo for packaged coffee
- QR code
- Marketing/promotion materials
Set Up a Business Bank Account
In addition, get a separate business credit card.
Get Your Taxes in Order
You’ll need to pay:
- Sales tax – you’ll need an EIN to pay. You can get the EIN from the IRS.
- Business structure – You will have different tax obligations in line with your business setup. You may choose to be a limited liability company, a sole proprietorship, an S Corp, or a corporation. Unless you’re well-versed in this topic, enlist the services of a tax professional.
- Commercial real estate taxes
Choose a Venue
Are you going to sell to individuals or businesses? Or are they going to come to you? Do you want to set up your business selling different coffees in a refurbished warehouse or factory building? Or from a downtown bistro?
Find Good Suppliers
Coffee is commercially cultivated in 45 countries, with Brazil being a leading producer. You have the option to purchase directly from farmers or through coffee traders and government agencies that are involved in the supply chain.
You’d think finding a reliable supplier would be easy, but it isn’t.
Places that are prime for growing coffee often have a climate that’s dicey. The weather and/or pests can destroy a crop. A coffee crop can be robust but not available due to economics or politics.
Stock Up on the Necessary Equipment
You’re going to need some of this vital equipment to get a coffee roasting business off the ground:
- Commercial roaster $25,000 and up.
- Coffee Grinder $500 to $1,000.
- Heat sealer – $30 to $300.
- Green coffee – $3 to $4.50 per pound.
- Packing supplies and labels.
Register Your Business
In addition to registering as required at your state, county, and city levels, you must pursue Fair Trade certification. To become certified, you must follow fair trade guidelines. Savvy coffee aficionados want to protect the local farmers who are growing this product and purchase from companies who are certified.
Purchase Business Insurance
These types of insurance policies will be necessary to start this business:
- General liability – A basic policy needed for nearly all businesses.
- Workers’ compensation insurance – Needed if you hire employees.
- Commercial property and liability insurance.
Decide on a Business Structure
The majority of new roasters choose the LLC for the business structure. The limited liability company protects your personal assets.
Get Permits and Licenses
Since you will be dealing with a “food” product, your facility must be approved by your local health department. While laws may differ depending on the town, county, and state, this regulation is consistent: you will not receive a certificate of occupancy until you successfully pass a health inspection.
Hire an Experienced Team
Roasting isn’t simple. You’ll need experienced employees who will expect to earn about $20 hourly.
Set Up a Business Website
This should be lively with frequent updates.
Market Your Coffee Roaster Business
A popular method for expanding your customer base is to host “cuppings.” As the name suggests, these are tasting events. You can organize “cuppings” featuring coffee from a particular region or showcasing unique blends you’ve developed.
If you have a brick-and-mortar location, you can offer this service there. Also, consider offering free “cuppings” at meetings such as the Chamber of Commerce and other business-based boards. Attend conventions, art shows, and similar events in and around your community. Free samples should be offered with a business card.
Scale Your Business
Remember, timing is critical. Coffee quickly loses aroma and flavor. Many in the business put the roast date on the bags.
If coffee gets a bit past its prime date, donate to local food banks and shelters. This will boost the reputation of your successful coffee roasting business.
What is a Coffee Roasting Business?
A coffee roasting business processes green coffee beans at three different levels: light (also known as city), medium (full city), and dark (full city plus).
Coffee roasting businesses use large machinery, including a roaster and grinder, to turn the beans into the finished product. The finished specialty coffee product is bagged. The bags can be sold to individual people or business entities, such as coffee shops and wholesale customers. If you are doing your research, remember this is completely different than how to open a coffee shop.
How Much Does a Coffee Roasting Business Make?
When you’re doing calculations, here’s an important fact to remember: one pound of green beans, after going through roasting, becomes 12 ounces of roasted coffee. The beans lose 25% of their weight as they’re roasted.
Beans, sold in 100-pound bags, typically cost from $3 to $4.50 a pound. Many roasted coffees are sold in 12-ounce bags at a price of $12 to $20 a bag (or $6 to $12 for wholesale prices.) Net profit margin on a per bag sale could range from $9 to $17.
How much can you make? That depends on how much demand you create. A coffee roasting business owner shouldn’t start small.
Here’s how to lose fledgling customers in two easy steps:1. Get in the door by delivering a delicious batch of specialty coffee that customers love, and 2. Be unable to resupply in a timely manner.
It’s tricky. Coffee is best when it’s fresh. You want to work ahead, but not too far ahead, because the product will lose flavor. This is a juggling act, especially as you’re getting started.
In real-world examples, here’s a basic formula. Let’s say you get a 15kg coffee roaster. That is equivalent to 33 pounds. Those in the business say that the roasters work best when operated at 70% of capacity. Using the 15 kg (33 pounds) model, the best batch size is about 23 pounds. On average, you can expect to make $5 for every pound you roast.
It’s important to know that roasting time varies by the type of roaster and by the type of fuel it uses. To make a medium (full city) batch in a 15kg roaster, on average, will take from 15 to 18 minutes.
Provide a steady stream of quality coffee, and orders – along with a steady, stable income stream – will follow.
The Coffee Biz in the United States
The roasting coffee industry is fueled by the coffee-drinking industry. How much coffee do we drink? Americans drink an average of 3.2 cups a day, according to statistics on coffee consumption.
The coffee roastery is an expanding franchise opportunity, offering various options for individuals looking into how to start a coffee roasting business. Some of these franchises focus specifically on contract roasting, where they prepare beans for other businesses.
In the stock market, Arabic coffee futures have reached a 10-year high and are expected to keep rising. As a result, retail prices are also on the rise.
An offshoot of our coffee use growth – and source of more new business ideas – is the change to how it’s bagged. Upgraded packaging includes bags that can be sealed and resealed to stay fresh longer. The bags are flexible and often flat-bottomed for easier storage. Making specialty bags is a business unto itself.
Want to learn more about coffee and the roasting process? Go to the specialty coffee association. Make sure you drink coffee as you do the research!
| Topic | Description |
|---|---|
| Coffee Consumption in the US | Americans drink an average of 3.2 cups of coffee per day, driving the demand for coffee-related businesses, including coffee roasteries. |
| Coffee Roastery Franchise Business | The coffee roastery industry is witnessing growth in the form of franchise businesses. Entrepreneurs interested in starting a roasting business have several franchise options, including those specializing in contract roasting. |
| Arabica Coffee Futures in Stock Market | Arabica coffee futures are at a 10-year high and projected to continue rising. This trend is influencing retail prices, indicating a favorable market for coffee roasting businesses. |
| Upgraded Packaging Trends in Coffee Industry | The growth in coffee consumption has led to innovations in packaging. Specialty coffee bags with resealable options and flat-bottomed designs for improved storage are becoming popular, creating new business opportunities. |
| Specialty Coffee Association | For those looking to learn more about coffee and the roasting process, the specialty coffee association offers valuable resources and information. Coffee enthusiasts can enhance their knowledge while conducting research. |
Can you roast coffee at home and sell it?
Anyone can get a stovetop model. These are saucepans with a tight lid and a special handle. The handle allows you to stir the beans, and a built-in thermometer keeps the temperature prime.
But you won’t keep up with orders that way. Even the largest stove top size – which is about 250 grams – won’t supply even the smallest cafe.
If you have the space for a commercial roaster and packing area, you can do the business at home. But remember, your premises will have to pass muster with the Board of health.
Frequently Asked Questions (FAQs)
What does a coffee roasting business do?
A coffee roasting business roasts green coffee beans to different levels (light, medium, or dark) using large machinery like a roaster and grinder. The finished specialty coffee product is then bagged and sold to individual customers or business entities, including coffee shops and wholesale clients.
How much profit can a coffee roasting business make per bag of roasted coffee?
The net profit margin per bag can range from $9 to $17. However, the overall income depends on the demand created and the quantity of coffee roasted and sold. One pound of green beans yields approximately 12 ounces of roasted coffee after roasting, and the average income can be around $5 for every pound roasted.
Is there a potential market for a coffee roasting business in the United States?
Yes, the coffee roasting industry is fueled by the growing coffee consumption in the United States. Americans drink an average of 3.2 cups of coffee per day. The industry is witnessing a surge in demand, and the trend is expected to continue, making it a lucrative opportunity for coffee roasting businesses.
What are the startup costs involved in a coffee roasting business?
The initial equipment investment includes a commercial-sized coffee roaster and grinder. Ongoing expenses involve purchasing coffee beans, fuel for the roaster, rent/mortgage, utilities, shipping and delivery, packaging equipment, and vehicles for delivery, if applicable.
How can I find reliable coffee bean suppliers?
Finding a reliable coffee bean supplier can be challenging due to the impact of climate, weather, and politics on coffee crops. Researching coffee traders and government agencies or directly connecting with farmers in top coffee-growing countries like Kenya, South America, and Jamaica can be helpful.
What steps do I need to take to start a coffee roasting business?
The process includes conducting market research on existing coffee roasters, estimating potential startup costs, choosing a niche, deciding on a business name and branding, selecting suppliers, purchasing necessary equipment, registering the business, obtaining permits and licenses, hiring experienced staff, setting up a business website, marketing the business, and scaling operations.
Can I roast coffee at home and sell it?
While home roasting is possible with stove-top models, it is not practical for commercial quantities. For commercial operations, a proper coffee roaster and packing area are required, along with compliance with health department regulations. Home roasting can be a starting point, but scaling the business will require a more significant investment and setup.
What are the key factors to consider when choosing a location for a coffee roasting business?
When selecting a location for your coffee roasting business, consider factors such as accessibility to suppliers, proximity to potential markets (like coffee shops or retail stores), local competition, and compliance with zoning laws for manufacturing and food processing. Additionally, the space for adequate ventilation, storage, and roasting facilities should be evaluated.
How important is sustainability in the coffee roasting industry, and how can I incorporate it into my business?
Sustainability is increasingly important in the coffee industry. To incorporate sustainability, consider sourcing beans from fair trade and organic certified suppliers, implementing energy-efficient roasting practices, using eco-friendly packaging, and minimizing waste. Engaging in transparent and ethical sourcing can also appeal to environmentally conscious consumers.
What are the most effective marketing strategies for a new coffee roasting business?
Effective marketing strategies for a coffee roasting business include developing a strong online presence through a well-designed website and active social media channels. Networking with local businesses, participating in community events, offering coffee tastings, and leveraging word-of-mouth through exceptional customer experiences are also key.
Additionally, consider email marketing, collaborations with influencers or local businesses, and creating educational content about coffee and roasting processes.
Image: Depositphotos
This article, “How to Start a Coffee Roasting Business” was first published on Small Business Trends
