5 Hidden Expenses When Expanding A Coffee Shop
Whether you’re looking at expanding your current location or moving to a different venue, it’s generally an expensive proposition.
In this article, we look at five hidden expenses when expanding a coffee shop.
#1: Permits and Licenses
One of the often forgotten expenses of expansion is the permit or license. You may think that since you already got a permit the first time you opened your coffee shop that you don’t need one now.
To keep your new location or your remodeled shop from failing, it’s worth asking yourself the following things:
- Do I need a planning permit?
- Do I meet zoning requirements?
- Do I have to add more parking required by law?
- Do I need a building permit for my remodel?
- Does my expansion mean I need more exits, sprinklers or safety equipment to meet the fire code?
- How much are the development impact fees, if any?
- Do I need a construction permit? The likely answer here is absolutely if you are doing heavy construction work.
If you’re expanding your current coffee shop or designing the inside of your new location, you’ll also want to talk with a contractor, engineer or architect.
These folks can help you navigate city regulations and costs involved with the permits and licenses you’ll need.
Don’t forget that you’ll want to set aside money for not only the city requirements but the fees for your professional contractors or architects.
Some extra permits you might need include:
- New business license
- New food handler’s licenses for new employees
- Fire certificate
- Sign permits
- Music license
- ADA compliance
Another thing worth noting when it comes to permits is that their issuance time varies. Plan your budget accordingly so you don’t waste money before the permit arrives.
#2: Hiring New Staff
The second hidden expense, or one people tend to forget, is how much the expansion will cost you in terms of staff. If you’re expanding your current location, will you need additional staff to help you run it?
If you’re expanding into an all-new location, you are most likely going to need a manager as well as a team of people to run the location.
While it was easier for you to handle the business at your first coffee shop, you’ll most likely need additional staff to run two shops.
Consider job advertisements, hiring and training costs, and the benefits that go along with hiring new people. Make sure you have enough money set aside to handle the extra costs incurred.
Additionally, managing staff in multiple locations is a challenge. How will you handle it and make it work smoothly for everyone?
#3: Remodeling Overages
This could be a hidden expense for you if you’re remodeling your current coffee shop or opening a new one.
Before you start your remodel or the new shop, walk through with your general contractor.
Make sure they know everything you want to do:
- Are you just updating or completing overhauling the space?
- Are you making structural changes?
- Do you need new fixtures or equipment?
- How about the bathrooms or prep area?
Know exactly what your costs are so you can avoid unexpected expenses later.
Overages, or overruns, are incredibly common in the construction industry.
You can avoid them or limit their impact on your budget by being very specific and looking over your contract thoroughly before signing your name. Hire an experienced, respected contractor you can trust and plan for any eventualities.
#4: Additional Insurance
You already have property insurance, but you’ll need to find out if you need to increase it on an in-house expansion.
If you’re opening an entirely new coffee shop, you need property insurance on this space as well.
Don’t wait until you’ve signed the contract to learn about these expenses. You need to know upfront what they are and if you can afford them.
Contact your insurance agent in your initial planning stages and get your quote in writing.
Don’t forget to plan for the additional utility expenses if you expand your current location. More space means more heat and more air conditioning. Extra bathrooms and space means more water costs.
If you’re opening a new location, contact your electric, gas and water companies to find out average costs. Make sure you have some capital set aside to cover these extra expenses.
A note of caution – If you are opening a new location in the same space as a previous coffee shop or restaurant, you may be obligated to pay any past due electric, gas or water service the previous owners neglected to pay. Contact the utility companies to check on any issues.
Now that you know five hidden expenses when expanding a coffee shop, we’re going to leave you with one last piece of advice.
Seek the counsel of other restaurant or coffee shop owners who’ve gone through the process of expansion.
Find out what worked well for them and what they wished they’d done differently.
Lastly, do all you can to consider every factor associated with expanding your coffee shop to alleviate the stress of hidden and unaccounted for expenses.
Have you expanded a coffee shop or restaurant? We’d love it if you’d share your experiences with our readers. Please comment below to share your tips with others.