Coffee Shop
Business Opportunity Profile
BOP391 · July 2014
Introduction
Coffee shops typically serve freshly ground coffees, such as espresso, latte and cappuccino,
filter coffee and other hot drinks, such as tea and hot chocolate, as well as iced coffee. They also
provide a limited selection of biscuits, cakes, muffins, savoury snacks, hot sandwiches and soft
drinks, while some are licensed to supply and serve beer and wine.
Coffee shops typically provide a seating area as well as drinks to take out. They usually operate an
at-counter service with drinks prepared by trained baristas.
The coffee shop market, which is increasingly competitive, is dominated by chains such as
Starbucks, Caffè Nero and Costa Coffee. There are estimated to be around 16,500 coffee shops in
the UK, and this number is forecast to continue rising to reach almost 21,000 by 2018.
This profile provides information about starting up and running a coffee shop. It describes the
skills required, the training available, the current market trends and some of the key trading
issues. It also identifies some of the main legislation that must be complied with and provides
sources of further information.
What qualifications and skills are required?
While there are no mandatory qualifications required to run this type of business, coffee shop
proprietors and their staff require a thorough and up-to-date understanding of food law and
practical food hygiene issues. Barista skills and training, and previous experience in customer
service and catering are also essential.
Suitable courses for a start-up coffee shop proprietor and their staff include:
•
•
•
The Level 2 Award in Barista Skills accredited by City & Guilds, which covers topics such
as ingredients and equipment, preparing and serving hot and cold drinks, and customer
service skills. Courses are delivered by training providers across the UK and fees vary. Go to
www.cityandguilds.com/Courses-and-Qualifications/hospitality-and-catering/hospitalityand-catering/7102-barista-skills for more information and to find local training centres.
An online Coffee training course provided by Flow Hospitality Training, which requires
around one-and-a-half hour's self-study and covers the origin of coffee, using and
maintaining coffee-making equipment, and coffee-making styles and techniques. Go to
www.flowhospitalitytraining.co.uk/hospitality-training/coffee-training to request more
information and details of training course prices.
Free barista training, which is provided by commercial coffee machine suppliers and
manufacturers to their trade customers. Examples of suppliers that provide training include
Caffe Society (www.caffesociety.co.uk/barista-training) and Brasilia Coffee (www.brasiliacoffee.co.uk/barista-training.html). The training covers the cleaning and maintenance of
coffee machines, producing specialty coffee, and the art of 'steaming' and 'foaming milk'.
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 1 of 19
•
•
Various short courses run by Limini Coffee, which are held regularly at a training centre in
West Yorkshire. They include the one-day How to Start a Coffee Shop course, which costs
£295 (excluding VAT) and covers finding a location, shop layout, purchasing equipment
and maximising sales; and a one-day course in Latte Art, which costs £75 (excluding
VAT) covering steaming milk, creating latte art and presentation techniques. Go to
www.liminicoffee.co.uk/training_overview.html for further information.
The Snack Bar/Café and Fast Food Management distance learning course provided by
Learning At Home, which covers topics including menus, purchasing, food preparation and
marketing. The course costs around £400 (www.learningathome.co.uk/Snack-Bar-Cafe-andFast-Food-Management).
Coffee shop proprietors and staff who serve or handle food products, such as pastries and cakes,
and prepare and grind coffee beans for drinks must be able to demonstrate appropriate food
hygiene knowledge. Although a formal qualification is not mandatory, obtaining a certificate in
food hygiene is a good way of demonstrating this knowledge. Suitable courses include:
•
•
•
•
•
The Chartered Institute of Environmental Health (CIEH) accredited Level 3 Award
in Supervising Food Safety for Retail. The course covers food hazards, techniques
for monitoring food safety, understanding cross-contamination issues, the role of
temperature in food safety and the importance of supervising high standards of cleanliness.
Course fees vary according to location and training provider (www.cieh.org/training/
level_3_food_safety.html).
The Level 2 Award in Food Safety for Retail accredited by the CIEH, which is suitable for
coffee shop staff. The course covers temperature control, refrigeration, food handling and
safety and hygiene hazards. Courses are delivered at training centres across the UK and fees
vary. Go to www.cieh.org/training/level_2_food_safety.html to search for a training provider
and request details about fees.
The Level 2 Award in Principles of Hazard Analysis and Critical Control Point (HACCP), which
is also accredited by the CIEH, covers the principles and purpose of HACCP and is aimed at
anyone who prepares, handles or serves food or drinks. Go to www.cieh.org/training/level-2award-in-principles-of-haccp.html to search for a training provider and request details about
fees.
Online food hygiene and safety training at levels 1, 2 and 3 provided by the
Nationwide Caterers Association (NCASS). The Level 3 course costs £125 (excluding
VAT) for non-members and is free to members (www.ncass.org.uk/content/
level_3_online_food_safety_training.aspx).
Other online courses run by the NCASS including First Aid for Caterers, Developing HACCP
(Hazard Analysis Critical Control Point) Training, and Health and Safety in Catering. Courses
cost between £25 and £100 (excluding VAT). Go to www.ncass.org.uk/training-area for more
information.
Some coffee shops serve a small range of alcoholic drinks such as wines and beers. By law, coffee
shop proprietors supplying alcohol in England and Wales must employ a Designated Premises
Supervisor (DPS), while in Scotland they must employ a Premises Manager. A DPS and Premises
Manager must obtain a Personal Licence, which requires them to hold a Level 2 Award for
Personal Licence Holders (APLH) or a Scottish Certificate for Personal Licence Holders (SCPLH)
respectively.
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 2 of 19
These qualifications involve between eight and ten hours of study, culminating in a one-hour
multiple choice examination. They cost from about £100 and are run by various accredited
providers who are listed at www.gov.uk/government/publications/accredited-personal-licencequalification-providers.
In Northern Ireland, coffee shop proprietors supplying alcohol must hold a liquor licence. Liquor
licences are issued by county courts, which require applicants to demonstrate that they are fit
to hold a licence. Although there are no mandatory qualifications, the court will take account
of the proprietor's qualifications and experience or, if they are intending to employ a manager
to run the business on their behalf, the qualifications and experience of the manager. Go to
www.nidirect.gov.uk/law-on-licensed-premises-and-registered-clubs for more information about
licensing requirements in Northern Ireland.
Anyone starting up in business as a coffee shop proprietor will benefit from training in general
business and enterprise skills. Suitable courses include:
•
•
•
Free webinars provided by HM Revenue & Customs (HMRC) covering topics including
business expenses, self assessment online, VAT, self employment and becoming an
employer. Go to www.hmrc.gov.uk/webinars/topics.htm for more information.
The Stonebridge Associated Colleges online or paper-based distance learning
course entitled Contracts of Employment, Recruitment and Selection, which may
benefit coffee shop proprietors new to recruiting staff. The course costs £69. Go to
www.stonebridge.uk.com/course/contracts-of-employment-recruitment-and-selectionbyte-size for information.
The Digital Marketing Institute online social media marketing course, which costs £349. The
course covers the latest trends in social media marketing and using Facebook, Twitter and
LinkedIn for business. Go to http://digitalmarketinginstitute.com/uk/courses/social-mediamarketing for more information.
Industry awareness and product knowledge
Coffee shop proprietors and their staff can keep up to date with news and developments in their
sector and improve their awareness of trends by attending events and reading trade journals and
industry resources, including:
•
•
•
•
'Caffè Culture' (www.caffeculture.com), which is a trade journal for the café sector, featuring
news, articles and a supplier directory.
The Caffè Culture Show (www.caffecultureshow.com), a trade show held each May at
Olympia London, which includes a supplier exhibition, seminar programme and networking
opportunities.
'Beverage Standards News' (www.beveragestandardsassociation.co.uk/bsa-magazines.html),
which is the weekly newsletter published by the Beverage Standards Association (BSA). It
provides news and industry information that is useful for coffee shop proprietors.
The Food & Drink Innovation Network (www.fdin.org.uk/seminars), which provides news
and holds regular seminars for food business proprietors about topics including health and
nutrition, managing hygiene and packaging.
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 3 of 19
•
•
•
•
•
lunch! (www.lunchshow.co.uk), which is a trade event for the 'food-to-go' market, held in
London each September. It is relevant to coffee shop proprietors and provides opportunities
to network with suppliers and view new products.
'Boughton's Coffee House' (www.coffee-house.org.uk), which is a beverage trade journal
available in print or online, that includes industry news and product reviews. Subscribers to
the journal also receive regular e-mail updates.
Big Hospitality (www.bighospitality.co.uk), which is an online trade publication for the
hospitality and catering industry that provides news about product developments and
market trends.
'Essential Catering' (www.essentiallycatering.co.uk), which is a quarterly trade journal
covering topics such as equipment, events and market trends affecting food business
establishments including coffee shops.
'Retail Week' (www.retail-week.com), which is a trade journal providing a wider view of
the retail sector's performance and covering topics such as sourcing, marketing and visual
merchandising.
What are the key market issues and trends
Some of the key current market issues affecting coffee shop proprietors are as follows:
•
•
•
•
According to a survey by OrSaveIt published in January 2013, consumers in the UK spend
a total of £122 million on takeaway coffee each week, with each person spending an
average of £393 per year. However, 70% of takeaway coffee drinkers surveyed reported
that they were planning to cut down their spending on coffee in order to save money
(www.orsaveit.com/coffeefacts).
According to a 2013 study by market research firm Consumer Intelligence, more than 80% of
the UK population drinks coffee every day, and coffee could overtake the UK's current most
popular drink, which is tea. The study also found coffee drinkers consume more than two
cups per day and spend an average of almost £3 per cup, totalling £25 per week or £1,100 a
year when buying coffee in a café or restaurant (www.scotsman.com/business/finance/notime-for-tea-as-uk-turns-into-nation-of-coffee-lovers-1-2912138).
Research published in 2013 by the NPD Group revealed that between 2009 and 2012,
sales in the speciality coffee shop sector grew by around 5%. Meanwhile breakfast visits
to coffee shops rose by 9% each year during the same period, and the number of visits to
coffee shops made by 18 to 24 year-old consumers rose by 12% between 2011 and 2012
(www.catererandhotelkeeper.co.uk/Articles/3/6/2013/348773/sales-of-speciality-coffeereach-1-4b-cups.htm).
More than a third of the UK's leading cafés and coffee shops are struggling to survive,
according to a market report published in June 2014 by industry analyst Plimsoll. Of the
490 cafés and coffee shop companies reviewed in the report, Plimsoll gave 192 firms a
'danger' rating, indicating that they are struggling and at risk of going out of business,
with a further 54 receiving a 'caution' rating. Despite this, 164 cafés and coffee shops were
awarded a 'strong' rating for their financial health (www.plimsoll.co.uk/marketreports.aspx?
market=cafes_coffee_shops).
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 4 of 19
•
•
•
•
•
•
However, the Role of Coffee Shops on the High Street 2014 report, published by Allegra
Strategies in July 2014, found that the presence of a coffee shop on the high street is key
to encouraging consumers to visit towns. The research revealed that coffee shops boost
the local economy by between 2% and 4% (or by up to 28% in the case of branded coffee
shops) in relation to footfall, and lead consumers to spend longer in town. Almost 60% of
consumers surveyed for the research said they plan visits to coffee shops as part of their
high-street shopping trips and 18% said that their main reason for going into town was to
visit a coffee shop (www.bighospitality.co.uk/Business/Coffee-shops-boosting-our-highstreets).
Increasing consumer awareness of the ethical issues surrounding the production of coffee
has led to growing sales of Fairtrade and ethically sourced coffee. According to the Fairtrade
Foundation, total UK sales of Fairtrade products increased by 19% between 2011 and 2012
to reach £1.57 billion. Fairtrade coffee sales remained relatively steady over this period at
a value of £192 million, with consumers drinking a total of two million cups a year. Go to
http://blueandgreentomorrow.com/2013/02/25/fairtrade-fortnight-sales-growth for more
information.
Independent coffee shops face competition from leading coffee pod brands, such as
Nespresso and Tassimo, which provide consumers with a convenient way to prepare
espresso coffee at home. According to Kantar World Panel, Britons spent up £56 million
on pods between February 2012 and February 2013 (www.packagingnews.co.uk/design/
markets/coffee-craze-hits-new-highs-cover-feature-hot-beverages).
Independent coffee shops face increasing competition from both mobile coffee carts and
major national chains, including Costa and Starbucks. According to research by Allegra
Strategies published in January 2014, the value of the total UK coffee shop market (including
sales in independent coffee shops) rose by 6.4% to reach £6.2 billion during 2013, while sales
in branded coffee shop chains such as Costa Coffee and Caffè Nero rose by over 9% during
the same period. The research estimated that there were around 16,500 coffee shops in the
UK, and predicted that this would rise to over 20,500 by 2018, with a market value of £8.7
billion. Go to www.bighospitality.co.uk/Business/Branded-coffee-shop-sales-up-9.3-in-2013
for more information.
Severe weather can impact on the wholesale price of coffee and therefore on coffee shops'
profitability. In January 2014, Brazil's coffee region experienced the worst drought in
decades, causing the price of arabica coffee beans to rise by 50% (www.bbc.co.uk/news/
business-27623535).
In July 2014, there were over 25,800 coffee shops listed on Yell.com in the UK, indicating the
highly competitive nature of this sector.
What are the main trading issues?
Some of the main trading issues faced by coffee shop proprietors include:
Food business registration
Under EC Regulations 852/2004 and 853/2004, all business premises where food and drink
is prepared, served, handled or displayed, must be registered with the environmental health
department of the local authority in the area where they are located.
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 5 of 19
A coffee shop proprietor must submit an application for registration at least 28 days before they
begin trading. There is a guide to registering as a food business at http://food.gov.uk/businessindustry/caterers/startingup.
As part of the registration process, proprietors must produce a written Food Safety Management
System (FSMS). The system must be based on Hazard Analysis Critical Control Point (HACCP)
principles, which require the coffee shop proprietor and any staff who prepare or handle food or
drink to follow procedures that ensure it is safe to consume. Go to www.food.gov.uk/businessindustry/caterers/haccp for information.
Following registration, a local authority environmental health officer will inspect the kitchen
and proposed preparation areas, as well as the storage areas where supplies are kept. They will
continue to inspect the premises, and any statutory documentation systems, on a regular basis.
The Food Standards Agency (FSA) has published a guide to 'Food Hygiene for Businesses' at
www.food.gov.uk/business-industry/caterers/food-hygiene and has a 'Safer Food Better Business'
initiative aimed at small food business retailers. Go to http://food.gov.uk/business-industry/
caterers/sfbb for more information.
Other food safety requirements
Coffee shop proprietors must comply with strict rules regarding the safety, presentation,
traceability and withdrawal and recall of food products such as pannini ingredients and readymade snacks, cakes and muffins that they have purchased from other suppliers. In England the
Food Safety and Hygiene (England) Regulations 2013 apply, and in Scotland, Wales and Northern
Ireland the General Food Regulations 2004 and Food Hygiene Regulations 2006 apply (http://
food.gov.uk/enforcement/regulation/foodlaw).
To comply with the Regulations, proprietors must keep detailed records of their suppliers. These
traceability records should include the name and address of the supplier, the nature and quantity
of the order and the date of the supply. There is FSA guidance about food safety, traceability,
product withdrawal and recall at www.food.gov.uk/multimedia/pdfs/fsa1782002guidance.pdf.
Food labelling regulations
The Food Labelling Regulations 1996 in Great Britain and separate but similar legislation in
Northern Ireland require coffee shop proprietors to ensure that all pre-packed food sourced from
external suppliers, such as wrapped cakes and biscuits, are labelled with a name, ingredients
(including allergens), best before date, storage instructions and the name and address of the
manufacturer, packer or retailer.
However, from December 2014 the Food Information Regulations 2014 will require information
about allergens to be provided for products supplied loose, for example where trays of loose
cakes or biscuits are displayed in the coffee shop. Go to http://food.gov.uk/science/allergyintolerance/label, www.food.gov.uk/business-industry/allergy-guide and http://ec.europa.eu/
food/food/labellingnutrition/foodlabelling/proposed_legislation_en.htm for details.
Information about allergens can be provided on labels on a voluntary basis before the legislation
comes into force and the FSA has published best practice guidance about voluntary provision
of allergen information for non-packaged foods at www.food.gov.uk/business-industry/
guidancenotes/labelregsguidance/nonprepacked.
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 6 of 19
Gluten-free cakes and biscuits are also subject to strict labelling rules, and any food product
described as gluten free must contain no more than 20 parts per million of gluten. For more
information about the labelling of gluten-free or low-gluten products, go to www.food.gov.uk/
business-industry/allergy-guide/gluten.
Local authority trading standards officers in the area where the coffee shop is located enforce
the Regulations and can be contacted for guidance about food labelling requirements. For an
example, go to www.cornwall.gov.uk/default.aspx?page=22151.
Organic retailing
Under the Organic Products Regulations 2009, food products supplied and marketed in the UK
as organic must originate from growers, processors and importers who are registered with an
approved organic 'Control Body' (CB) such as Soil Association Certification (www.sacert.org).
Imported organic foods must have been produced and inspected to standards equivalent to
those in the UK. There must also be full traceability of organic ingredients.
Suppliers such as coffee shops marketing food and drink as organic must also be registered with
a CB and subject to an annual inspection to maintain their organic certification.
Foods such as cakes, bread and biscuits must contain certain proportions of organic ingredients
if they are to be awarded organic certification. Go to www.gov.uk/organic-certification-andstandards for more information.
Food hygiene ratings
The Food Hygiene Rating Scheme (FHRS, www.food.gov.uk/business-industry/caterers/
hygieneratings) is currently run by almost all local authorities in England and Northern Ireland,
and is mandatory in Wales under the Food Hygiene Rating (Wales) Regulations 2013.
All food retail, catering and hospitality services (including coffee shops) located in local authority
areas that participate in the FHRS are inspected and issued with a rating based on their standards
of hygiene and food safety.
As part of the FHRS, all coffee shop proprietors are subject to inspections of their equipment,
premises where food and drink are stored, and food hygiene systems to ensure they meet the
standards required by food hygiene laws. Following inspection by a food safety officer, coffee
shops are given a rating from zero to five.
In Wales, proprietors are required to display their rating on the premises in a prominent place
that is clearly visible to customers. Proprietors of coffee shops in England and Northern Ireland
are not required to display their rating, but it is considered good practice to do so.
In Scotland the Food Hygiene Information Scheme (FHIS, www.food.gov.uk/scotland/
safetyhygienescot/foodhygieneinfoscot) operates with similar requirements and inspections.
Alcohol licensing legislation
The Licensing Act 2003 (the Act) established a single licensing system for licensable activities in
England and Wales. Licensable activities include the retail sale of alcohol, and the provision of
late-night refreshment.
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 7 of 19
In Scotland the sale and supply of alcohol is regulated under the Licensing (Scotland) Act 2005 as
amended by the Alcohol etc. (Scotland) Act 2010.
In Northern Ireland the sale and supply of alcohol is regulated under the Licensing (Northern
Ireland) Order 1996.
Types of alcohol licence
In England, Wales and Scotland local authorities act as Licensing Authorities and control the
licensing system and process applications for alcohol licences. For more information, go to
www.gov.uk/alcohol-licensing and www.scotland.gov.uk/Topics/Justice/law/Licensing/alcohol.
In Northern Ireland the county courts act as the licensing authority.
There are two main types of licence authorising the sale or supply of alcohol in England, Wales
and Scotland:
•
Premises Licence. This is required to authorise the sale or supply of alcohol from business
premises on a permanent basis. A coffee shop proprietor applying for a Premises Licence
must name in the licence application a Designated Premises Supervisor (DPS) in England and
Wales or a Premises Manager in Scotland, who must hold a valid Personal Licence and who
will be named on the Premises Licence.
The DPS or Premises Manager is the key person responsible for day-to-day management
of the licensed premises. They provide a point of contact for Licensing Authorities, and
they also authorise the sale of alcohol by other staff that do not hold personal licences. Go
to www.gov.uk/government/uploads/system/uploads/attachment_data/file/98116/roledesignated-premises-super.pdf for details about the role of the DPS.
Premises Licence initial application fees vary from £100 to £1,905 in England and Wales and
from £800 to £2,000 in Scotland. Annual fees for Premises Licences range from £70 to £1,050
in England and Wales and from £155 to £788 in Scotland.
•
Personal Licence. This qualifies an individual to authorise the sale or supply of alcohol (by
themselves or by other staff who are not Personal Licence holders) in any business that holds
a Premises Licence.
Personal Licences are issued subject to the applicant holding an accredited qualification and
being aged 18 or over. As Personal Licences are individual licences, a Personal Licence holder
can be appointed as a DPS or a Premises Manager for any licensed premises.
Applications for a Personal Licence in England and Wales must also be accompanied by
a criminal record check. In England and Wales, this is known as a Disclosure and Barring
Service (DBS) check. Individuals cannot apply directly for DBS checks, but can obtain basic
checks via 'umbrella bodies', such as APCS CRB Checks (www.criminalrecordchecks.co.uk).
Go to www.gov.uk/find-dbs-umbrella-body for details.
In Scotland a separate criminal record check is not required, although applicants must
provide details of any relevant convictions on their application form.
At the time of writing the initial application fee for a Personal Licence is £50 in England,
Wales and Scotland.
In Northern Ireland, the proprietor of a coffee shop must hold a Liquor Licence in order to
sell alcohol, and the applicant must demonstrate that they are fit to hold a licence and that
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 8 of 19
their premises are suitable for the sale of alcohol. Go to www.nidirect.gov.uk/law-on-licensedpremises-and-registered-clubs for more information about liquor licensing in Northern Ireland.
At the time of writing the initial application fee for a liquor licence in Northern Ireland is £432.
Premises and business rates
A coffee shop proprietor will need to budget for the costs associated with leasing or buying
premises including solicitor's costs, rent, utility bills, water rates and business rates. The shop
premises will require adequate counter space for brewing coffee, displaying produce and serving
customers, as well as space for food preparation and storage. Depending on location, both
indoor and outdoor seating areas will be required.
The location of the shop is important, as it will be necessary to attract a mix of regular customers
and passing trade. It will need adequate access or parking for deliveries and a storage area large
enough for both perishable and non-perishable stock.
In England and Wales the Valuation Office Agency is responsible for determining the rateable
value of retail premises based on their size and rental value, and this figure is used by local
authority valuation officers to set local business rates (www.2010.voa.gov.uk/rli/static/HelpPages/
English/help/help057-how_we_rate_shops.html).
In Scotland this is the responsibility of the Scottish Assessors (www.scotland.gov.uk/Topics/
Government/local-government/17999/11199/brief-guide) and in Northern Ireland it is dealt
with by Land & Property Services (LPS), part of the Department of Finance and Personnel
(www.dfpni.gov.uk/lps/index/property_rating.htm).
Change of use planning permission may be required if the premises were previously used
other than for food retail or similar business purposes, and planning permission will also be
required if tables and chairs are to be placed on the pavement outside the coffee shop. Go to
www.planningportal.gov.uk/permission/commonprojects/changeofuse for more information.
Signage and pavement furniture licensing
Coffee shop proprietors often display signage (such as A-boards) on the pavement outside their
premises.
Under the Highways Act 1980, coffee shop proprietors must be granted permission from their
local authority before displaying A-boards on the public highway.
The Town and Country Planning (Control of Advertisements) Regulations control the display of
outdoor advertising and, in certain circumstances, require proprietors to obtain permission from
their local authority planning department before displaying outdoor advertisements such as
fascias.
Go to www.gov.uk/government/uploads/system/uploads/attachment_data/
file/11499/326679.pdf for a guide to displaying outdoor signs.
Coffee shop proprietors intending to place tables and chairs on the pavement outside their
premises must first have been granted planning permission and must then apply for a licence
or permit from their local authority authorising them to do this. Licence fees vary according to
the local authority but are typically around £350. Go to www.nelincs.gov.uk/business/transport-
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 9 of 19
streets-and-parking/permits-and-licences/placing-tables-chairs-public-highway for an example
of one local authority's licensing procedures and fees.
Premises security
In addition to an alarm system and security features such as grilles and roller shutters it may be
necessary to install CCTV to protect the premises, depending on location. The British Security
Industry Association (BSIA) provides details of suppliers at www.bsia.co.uk/company-finder.
A safe (from around £75) can be used to keep small amounts of cash secure up to the limits
of insurance cover for cash held on the premises. Typical policies provide cover for £1,000
kept in a safe and a further £500 out of the safe. Cash should be banked regularly to keep the
amount on site to a minimum. For examples of suppliers of safes go to www.securesafe.co.uk and
www.acesafes.co.uk.
Shop fixtures, fittings and equipment
Coffee shop proprietors need to budget for the cost of fixtures, fittings and equipment for their
premises.
A typical budget (excluding VAT) for fixtures and fittings includes:
•
•
•
•
•
•
•
•
•
•
•
•
•
Coffee machine for making barista-style cappuccino, espresso and latte coffee (from £1,000
to £3,000 or often available on a lease-purchase or hire basis).
Coffee grinder (from £350 to £850).
Commercial filter coffee machine (from £350 to £700).
A double sink unit (costing from £400) and a separate wash-hand basin in the work area or
very close to it (from £50).
A service counter (from around £250).
Tables and chairs (depending on quality and design, from around £130 for a fast-food
modular diner set including a table and four chairs, to around £140 each for fabric covered
tub chairs and around £100 each for small coffee tables).
Commercial fridge freezer (from around £550 to £1,000).
Commercial dishwasher (from around £850 to £1,000).
Heated deli display counters (from around £800 to £1,000).
Refrigerated deli display counters (from £900 for an open-fronted unit).
Panini grill (from £150 to £200).
Commercial hot water boiler (from £270 to £700).
Commercial under-counter fridge (from £300 to £1,200).
Specialist suppliers of coffee shop equipment and fixtures include:
•
•
Caffe Society (www.caffesociety.co.uk).
Alliance Online (www.allianceonline.co.uk/cafe-shop/cafe-equipment.html).
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 10 of 19
•
Cater Equip (www.caterquip.co.uk).
There are details of catering equipment suppliers on the website of the Catering Equipment
Suppliers Association (CESA, www.cesa.org.uk).
The Shop and Display Equipment Association is a membership organisation for suppliers
of shop fittings and equipment. There is a directory of members at www.shopdisplay.org/
viewmembers.php.
Suppliers of café seating and tables include www.cafereality.co.uk, www.furniturerealm.co.uk and
www.onlinereality.co.uk.
There are specialist shopfitters that supply and install coffee shop counters, such as
www.counter-fit.co.uk and www.matconshopfitting.com. Prices usually vary according to the
shop layout and are available on request from suppliers.
Proprietors will also need to source appropriate workwear for staff, including aprons, caps and
protective wear to prevent injuries, for example from hot ovens. Examples of catering workwear
suppliers include:
•
•
•
Matrix Uniforms (www.matrixuniforms.co.uk).
NextGen (www.nextgenclothing.co.uk).
Alexandra (www.alexandra.co.uk).
Sourcing supplies and consumables
Coffee shop proprietors need to budget for and source a wide range of supplies and ingredients
from reliable trade suppliers, some of which may specify minimum order levels.
Ingredients for sandwich and panini fillings such as cooked continental meats and cheeses, or
ready-made sandwiches, crisps and confectionery can be sourced from national wholesalers such
as Booker (www.booker.co.uk), Bestway (www.bestway.co.uk) and Costco (www.costco.co.uk),
which have outlets throughout England, Wales and Scotland. Musgrave Marketplace is an
example of a wholesaler based in Northern Ireland (www.musgravemarketplace.ie).
Some coffee shops use local suppliers to source fresh ingredients and differentiate their range.
Typical stock that can be sourced locally includes cheese, milk, eggs, cream, bread, and artisan
bakery products. The Sustainable Restaurant Association (SRA) maintains a directory of local
suppliers at www.thesra.org/suppliers/supplier-directory.
Prices (excluding VAT) of typical supplies and consumables include:
•
•
•
•
•
•
Coffee beans (from around £9 for 1kg).
Filter coffee (from £85 for six 1kg packs).
Coffee filter papers (from around £5 for 250).
Decaffeinated coffee (from around £25 for 500g).
Sugar (from £10 for 1,000 sachets).
Hot chocolate (from £15 for 100 sachets).
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 11 of 19
•
•
•
•
•
•
•
•
•
•
Tea bags (from around £65 to £77 for 1,000 speciality tea bags such as Darjeeling or Rooibos
Earl Grey).
Standard tea bags (from around £18 for 1,100 breakfast tea bags).
Paper cups (from £50 for 1,000).
Plastic lids (from £25 for 1,000).
Coffee machine cleaner (from £6 for 900g).
Frothing jug (from £6.99).
Spatula (from £2).
Thermometer (from £10).
Coffee tamper (from around £16).
Topping shaker (from around £6).
Specialist coffee supplies are available from suppliers such as:
•
•
•
•
Caffe Society (www.caffesociety.co.uk).
Coffee Buyers (www.coffeebuyer.co.uk).
A1 Coffee (www.a1coffee.co.uk/index.php/brands.html).
Espresso Services (www.espressoservices.co.uk).
Fairtrade coffee and tea suppliers include Cafeology (www.cafeology.com) and Pennine
(www.pennineteaandcoffee.co.uk).
Fresh, ready-made sandwiches and paninis can be sourced from suppliers such as Anchor
Catering (www.anchorcatering.co.uk) and Impress Sandwiches (www.impress-sandwiches.com).
The British Sandwich Association (BSA) maintains a directory of sandwich manufacturers at
www.sandwich.org.uk/index.php/member-directory/membership-category/recommended-bsasandwich-manufacturers.
Coffee shop proprietors usually source biscuits, cakes, tray bakes and pastries from wholesale
suppliers including Tray Bakes (www.traybakes.com), Fudge Factory (www.fudge-factory.co.uk)
and Truly Treats (www.trulytreats.com).
Typically, for the first few months' trading, trade suppliers and wholesalers will only deal with
new trade customers using pro forma invoices. Payments must be made upon purchase and
before delivery of stock. Suppliers usually carry out credit checks on new customers applying for
trade accounts. This includes taking up references, reviewing published accounts (if available)
and checking public registers such as County Court Judgments.
Pricing, markups and VAT
Coffee shops typically charge from £2 to £3.50 per cup of coffee, depending on the size of the
cup, coffee blend, type and quality. A gross profit of around £1.75 per cup is usually achieved on
sales of coffee drinks such as espresso, where the cost of a double shot of coffee is around 25p
and the retail price of the drink is £2.
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 12 of 19
The wholesale cost of ingredients for sandwiches and hot snacks such as paninis varies according
to the type of bread and fillings used, but typically ranges from around 50p to £1.50, while
sandwiches and paninis are retailed at average prices ranging from around £2.00 to £3.00.
Average markups vary from around 100% to 400% in relation to the cost of ingredients, but
prices charged need to reflect the labour involved in making the sandwich, as well as the
overhead costs of running the business including rent and rates.
Coffee shop proprietors must register for VAT once their turnover reaches the mandatory
threshold and must then ensure that prices charged for drinks, sandwiches and other items
include VAT at the appropriate rate.
Non-alcoholic beverages including coffee, tea, milk and milk shakes are zero-rated for VAT,
however mineral and spa water and carbonated soft drinks are standard-rated for VAT. Go
to http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?
_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000118&propertyType=document
for more information.
Cold sandwiches sold for consumption off the premises will usually be zero-rated for VAT.
However, hot sandwiches and any sandwiches supplied as part of a catering service must be
charged at the standard rate. Go to www.hmrc.gov.uk/manuals/vfoodmanual/VFOOD4220.htm
for details.
Most bakery products are zero-rated for VAT, with the exception of some confectionery including
biscuits wholly or partly covered in chocolate. Cakes, including sponge cakes and fruit cakes, are
zero-rated for VAT. HMRC provides guidance and examples on the definition of 'cake' for VAT
purposes at www.hmrc.gov.uk/manuals/vfoodmanual/VFOOD6200.htm.
Taking payment
A till (from £70) will handle basic transactions. Go to www.cashregistergroup.com and
www.buyatill.com for examples of suppliers.
A Chip and PIN machine will be required to process credit and debit card payments.
Examples of providers include www.lloydsbankcardnet.com, http://sme.streamline.com and
www.chipandpinsolutions.com. Alternatively, they can be leased from banks. Equipment rental
costs between £15 and £35 a month (prices vary according to the supplier and whether the
terminal is portable or fixed on the countertop), plus per-transaction charges of around 2%.
Traders are increasingly taking payment via smartphone apps and keypads. Examples of
providers include iZettle (www.izettle.com), which charges variable rates on a percentage
basis depending on sales figures, and WorldPay Zinc, which charges around £60 for a chip and
pin keypad and 2.75% per payment with no monthly fees. Go to www.worldpayzinc.com for
details. PayPal Here also provides a free app, which requires a card reader costing £99. A fee of
2.75% applies to all payments accepted with chip and pin cards or via 'PayPal Check-in'. Go to
www.paypal.com/uk/webapps/mpp/how-to-use-paypal-here#welcome for more information.
Tips and gratuities
Some customers leave tips for coffee shop proprietors or their staff and the proprietor must
comply with the tax and National Minimum Wage (NMW) issues involved. Staff do not have to
pay income tax via their wages on tips given directly to them by customers but are responsible
for declaring tips to HMRC, which may affect the employee's tax code. However, if the tip is
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 13 of 19
passed on via the employer, tax must be deducted from staff pay under the Pay as You Earn
(PAYE) system.
Tips and service charges cannot be used to make up employees' NMW pay. For more information,
go to www.hmrc.gov.uk/payerti/payroll/special-pay/tips.htm.
Music licensing
Coffee shop proprietors that play background music in their premises must hold licences from
PRS for Music and the Phonographic Performance Limited (PPL). PRS licences cost from around
£154 per year (excluding VAT) at the standard rate for an audible area of up to 100 square
metres. Go to www.prsformusic.com/users/businessesandliveevents/musicforbusinesses/
Shops_and_stores/Pages/shopsandstores.aspx for information. PPL licences cost from around
£126 per year. Go to www.ppluk.com/I-Play-Music/Businesses/How-much-does-a-licence-cost/
Business-type-123 for information.
Health and safety
According to the Health and Safety Executive (HSE), the main risks associated with running a
food business establishment are slips and trips, burns, dermatitis, musculoskeletal conditions and
injuries caused by knives. The HSE has published a guide to health and safety for catering services
at www.hse.gov.uk/catering/index.htm.
Under the Management of Health and Safety at Work Regulations 1999, all employers, including
those who are self employed, are required to undertake a risk assessment of their workplace
and provide employees with adequate health and safety training. The HSE has published an
example risk assessment for food preparation and service at www.hse.gov.uk/risk/casestudies/
foodprep.htm.
Under the Control of Substances Hazardous to Health Regulations 2002 (COSHH) in Great Britain
and equivalent legislation in Northern Ireland, coffee shop proprietors must have health and
safety measures in place to protect themselves, any employees and customers from health risks
arising from exposure to potentially harmful substances, such as cleaning products that contain
chemical irritants.
According to guidance from the HSE, coffee shop proprietors must ensure areas used for storing
cleaning products are well organised and well ventilated. Containers should be clearly labelled
and heavier containers stored on lower shelves. Go to www.hse.gov.uk/pubns/guidance/
ocm8.pdf to view the guidance.
Proprietors and staff who prepare snacks and drinks, and therefore wash their hands frequently,
are at increased risk of dermatitis and skin conditions through regular contact with water and
soap. The HSE provides advice on preventing dermatitis at www.hse.gov.uk/skin.
The Provision and Use of Work Equipment Regulations 1998 and the Personal Protective
Equipment at Work Regulations 1992 set out requirements regarding the use and maintenance
of work equipment and protective clothing and the training of employees to use them safely.
The proprietor of a coffee shop should ensure that staff wear protective clothing such as aprons,
and gloves when appropriate. There are guides to the Regulations on the HSE's website at
www.hse.gov.uk/pubns/indg174.pdf and www.hse.gov.uk/pubns/indg291.pdf.
Under the Health and Safety (First-Aid) Regulations 1981, coffee shop proprietors are required
to provide first aid equipment, such as a first aid kit, in case of employee illness or injury. Kits
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 14 of 19
generally cost from around £10 and can be sourced from online suppliers such as First Aid Direct
(www.firstaid-direct.co.uk) and Safety First Aid (www.safetyfirstaid.co.uk).
Waste disposal
Under the Environmental Protection Act 1990 and the Controlled Waste (Duty of Care)
Regulations (Northern Ireland), coffee shop proprietors have a duty of care to ensure that any
trade waste they produce in the course of their business is properly and safely disposed of.
Some local authorities provide collection services for general trade waste produced by coffee
shops. Alternatively, a licensed waste carrier can be contracted directly to do this. There is a
directory of licensed waste carriers at http://epr.environment-agency.gov.uk/ePRInternet/
SearchRegisters.aspx.
Under the Water Industry Act 1991, all waste water produced by coffee shops is classed as 'trade
effluent' and, depending on the scale of their activities, proprietors may require formal consent
from their water company to dispose of waste water on their premises.
In England and Wales coffee shop proprietors should find out whether they need trade
effluent consent by contacting their local water company, for example Northumbrian
Water (www.nwl.co.uk/business/trade-effluent.aspx) or Welsh Water (www.dwrcymru.com/
en/Business/Trade-Effluent.aspx). In Scotland this is handled by Scottish Water
(www.scottishwater.co.uk/business/our-services/compliance/trade-effluent) and in Northern
Ireland by Northern Ireland Water (www.niwater.com/trade-effluent-charges).
Trade associations
Membership of a trade association can provide a wide range of business benefits. Relevant
associations include:
•
•
•
•
The Beverage Standards Association (BSA, www.beveragestandardsassociation.co.uk),
which is the trade body representing retailers of beverages. Membership benefits include
networking and promotion opportunities, barista training and industry information. The
annual membership fee for a retailer with one outlet is £69 (excluding VAT).
The Café Society, which is a retail trade body (run in association with the British Sandwich
Association), which promotes good practice in the café industry. Membership benefits
include discounted business and legal advice, a listing in the members' directory and free
copies of Café Culture magazine. The annual membership fee is £42 (www.thecafelife.co.uk/
index.php/cafe-society/information/retail-membership).
The Speciality Coffee Association of Europe (SCAE, http://scae.com), which is a professional
body representing baristas and retailers. Benefits of membership include speciality coffee
events, workshops and networking events. The annual membership fee varies with turnover
and starts from £150 (excluding VAT).
The Nationwide Caterers Association (NCASS), which is the UK trade body representing
outdoor caterers and those with fixed-site premises including coffee shop proprietors.
Membership benefits include hygiene training, discounts on public liability insurance and a
listing in the NCASS caterers' directory. Standard membership for a fixed site such as a coffee
shop costs £219 per year. Go to www.ncass.org.uk for more information.
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 15 of 19
•
The British Independent Retailers Association (bira) provides advice and guidance to a wide
range of specialist independent retailers. Membership fees are tiered depending on the
turnover of the business and start from £185 (excluding VAT) for retailers with an annual
turnover of up to £200,000. Go to www.bira.co.uk for more information.
Promotion
Opportunities for promoting a coffee shop include:
•
•
•
•
•
•
•
•
Advertising in specialist directories such as www.just-eat.co.uk, and Shop Safe
(www.shopsafe.co.uk/faddeli/), which provide pricing information on request.
Operating a loyalty card scheme to reward regular customers, for example by issuing a
card that is stamped each time a hot drink is purchased and offering a free drink after a
certain number of stamps has been collected. Custom-made loyalty cards can be sourced
from suppliers such as Vista Print, which sells basic matt-finish cards for around £15 for 250
(www.vistaprint.co.uk/loyalty-cards.aspx).
Offering breakfast deals comprising a snack and a hot drink to attract early morning trade.
Networking and building contacts with other local business owner/managers to encourage
lunchtime orders or beverage and snack catering for business events.
Creating a five-minute video demonstrating barista skills, uploading it onto online video
sharing websites such as YouTube and including a link back to the business's website. Go
to www.youtube.co.uk and enter 'barista skills UK' in the search box for examples of other
coffee shops and baristas doing this.
Uploading images of coffee drinks to photo-sharing websites such as Flickr (www.flickr.com),
Tumblr (www.tumblr.com) and Pinterest (www.pinterest.com). Go to www.flickr.com and
enter 'coffee shop' in the search box for examples of other coffee shops doing this.
Creating a Facebook business page to encourage customer referrals. Facebook pages can be
customised with the coffee shop's name, logo, and other information, and regularly updated
with photos, trends, articles and special offers. Go to www.facebook.com/108Coffee and
www.facebook.com/HaggiesCoffeehouse for examples of other coffee shop proprietors
doing this.
Advertising in the hard copy and online versions of local business directories such as
Yellow Pages (www.yell.com) and Thomson (www.thomsonlocal.com). Google Places
(www.google.com/lbc) provides free listings for coffee shops by location.
Insurance
A coffee shop requires a number of insurance policies, including:
•
•
•
Public liability insurance, which covers a business against claims from customers, suppliers
and members of the public injured or adversely affected as a result of its activities.
Employers' liability insurance, which is mandatory as soon as the business employs staff.
Cover for any vehicles used for business purposes, which must include a minimum of third
party cover.
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 16 of 19
•
•
Cover for the theft of stock or cash by staff as well as cover for the loss of cash and cheques
from the premises.
General commercial cover, which will be needed to cover the business's premises,
equipment and stock against spoilage, accidental damage, fire, flood, theft and any business
interruption arising as a result.
Specialist insurance for coffee shops is available from the NCASS (www.ncass.org.uk/content/
insurance.aspx) and CIA (www.cia-commercial-insurance.co.uk/shopscafesinsurance.aspx).
Legislation
This section is intended as a starting point only. It provides an introduction to some of the key
legislation that regulates the activities of a coffee shop. Professional advice about the impact of
legislation should always be obtained before making any business decisions. Relevant legislation
includes:
•
•
•
•
•
•
•
EC Regulation 852/2004 and 853/2004 covers food hygiene, registration of premises,
cleanliness, provision of equipment and facilities and temperature control. It introduced the
concept of Hazard Analysis Critical Control Point (HACCP), which involves documenting food
safety management practices.
The Food Safety and Hygiene (England) Regulations 2013, and the General Food Regulations
2004 and Food Hygiene Regulations 2006, which apply in Scotland, Wales and Northern
Ireland, require that food provided by food business establishments such as coffee shops
is safe, that labelling and presentation does not mislead customers, that the proprietor can
trace the origin of their supplies and that they withdraw or recall any unsafe food.
The Food Labelling Regulations 1996 set out the requirements for the labelling of food in
Great Britain and stipulate that suppliers only sell products that have been correctly labelled.
A separate but similar law applies in Northern Ireland; the Food Labelling Regulations
(Northern Ireland) 1996.
The Food Information Regulations 2014, which are to be introduced in the UK in stages
between 2014 and 2016 will extend current food labelling laws and place additional legal
obligations on coffee shops in relation to the provision of allergen and nutrition information
on loose products, improved date marking and clarity and legibility of information provided
on food and drink labels.
The Organic Products Regulations 2009 outline details of the registration and inspection
system for organic food produced and sold in the UK, define 'organic' and implement the EU
directive on labelling and storing organic food products.
The Management of Health and Safety at Work Regulations 1999 require employers and selfemployed people in Great Britain to carry out health and safety risk assessments and provide
adequate health and safety training for employees. In Northern Ireland the Regulations are
the Management of Health and Safety at Work Regulations (Northern Ireland) 2000.
The Control of Substances Hazardous to Health Regulations 2002 (COSHH) require
employers in Great Britain to reduce the risk posed to employees and customers by
identifying health hazards, introducing controls and monitoring their effectiveness. In
Northern Ireland, the Control of Substances Hazardous to Health Regulations (Northern
Ireland) 2003 (COSHH) apply.
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 17 of 19
•
•
•
•
The Provision and Use of Work Equipment Regulations 1998 apply in Great Britain and
require equipment used in the workplace to be suitable for its purpose, maintained in good
working order and inspected regularly. Employees should be trained to use equipment
safely. The Provision and Use of Work Equipment Regulations (Northern Ireland) 1999 apply
in Northern Ireland.
The Personal Protective Equipment at Work Regulations 1992 apply in Great Britain and
specify the circumstances in which protective equipment must be supplied and used, such
as in situations where employees may be at risk from exposure to hot temperatures or
contact with corrosive materials such as cleaning products. In Northern Ireland, the Personal
Protective Equipment at Work Regulations (Northern Ireland) 1993 apply.
The Highways Act 1980 applies in England and Wales and gives local authorities in charge
of public highways the power to require traders to seek permission to place A-boards or
outdoor furniture outside the premises. Similar but separate legislation applies in Scotland
and Northern Ireland.
The Environmental Protection Act 1990 applies in Great Britain and governs the handling
and disposal of trade waste. In Northern Ireland, relevant legislation includes the Waste and
Contaminated Land (Northern Ireland) Order 1997, the Pollution Prevention and Control
Regulations (Northern Ireland) 2003, and the Waste Management Licensing Regulations
(Northern Ireland) 2003.
Further information
To access hundreds of practical factsheets, market reports and small business guides, go to:
Website: www.scavenger.net
UK Market Synopsis 92 Food and Grocery Retail
BOP 16 Contract Caterer
BOP 85 Fast Food Takeaway
BOP 86 Mobile Takeaway
BOP 87 Tea Room
BOP 140 Sandwich Shop
BOP 295 Sandwich Delivery Service
Useful contacts
Beverage Standards Association (BSA)
Tel: (01364) 645761
Website: www.beveragestandardsassociation.co.uk
Café Society
Tel: (01291) 636338
Website: www.thecafelife.co.uk
Speciality Coffee Association of Europe (SCAE)
Tel: (01245) 426060
Website: http://scae.com
Nationwide Caterers Association (NCASS)
Tel: (0121) 603 2524
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 18 of 19
Website: www.ncass.org.uk
British Independent Retailers Association (bira)
Tel: (01295) 712277
Website: www.bira.co.uk
Chartered Institute of Environmental Health (CIEH)
Tel: (020) 7928 6006
Website: www.cieh.org
DISCLAIMER While all reasonable efforts have been made, the publisher makes no warranties that this
information is accurate and up-to-date and will not be responsible for any errors or omissions in the information
nor any consequences of any errors or omissions. Professional advice should be sought where appropriate.
Cobweb Information Ltd, Unit 9 Bankside, The Watermark, Gateshead, NE11 9SY.
Tel: 0191 461 8000 Website: www.cobwebinfo.com
BOP391 · Coffee Shop
© Cobweb Information Ltd, 2014
Page 19 of 19