How To Build a Financial Model For a Coffee Shop

Every business needs a financial model. Whether you want to understand what’s your breakeven, your coffee shop valuation or create a budget for your business plan, you’ve come the right way.

In this article we’ll explain you how to create powerful and accurate financial projections for a coffee shop.

1. Forecast Customers

The first thing you must do to create a financial model for your coffee shop is to forecast the number of customers you will serve over time.

Forecasting customers can be done as follows. You must set the number of:

  • Customers you expect to serve on average on a weekday
  • Customers on a weekend day instead
  • Days you are open in a week on average (for example 5 weekdays and 2 weekend days if you are open 7/7)
Tip: the values you enter can be set over time, for example for each year as shown in the example below.
Source: Coffee shop financial model template

That way, you will be able to forecast accurately the number of customers you can serve over time, and so the revenues which we will now see.

Source: Coffee shop financial model template

2. Forecast Revenue

Now that we have the number of customers, we can calculate revenue easily.

Yet, before we do so, we must break down the number of customers into the different products they may buy. Indeed, most of you customers may buy a coffee at an average price of $4.00, yet some may also buy snacks for a average price of $5.50 and so on…

It’s very important to break it down right. Indeed, as you know all these products have very different unit economics (prices and profit margins) you need to forecast accurately. Let’s see now how.

First, break down the products into a percentage of your total customers. For example:

  • 80% of the customers may choose to buy a coffee at an average price of $4.00;
  • another 20% buy food to go at an average price of $9.50
  • In addition, 15% of customers also buy drinks for an average price of $5.50
  • Finally, 8% of customers buy snacks too, for $3.50 on average

That way, you can now multiply the number of customers for each product by their respective price to obtain revenue.

Now you can obtain your revenue projections broken down by the type of product as shown below:
Source: Coffee shop financial model template

3. Forecast Expenses

The last step of your financial projections is forecasting expenses. Like any other business, there are 2 main types of costs when you open a coffee shop:

  • Startup costs: these are the costs you incur before you can open your coffee shop and start selling coffee to your customers. For example, you would pay for furniture and renovation, you could also buy the real estate (or instead pay a refundable lease deposit if you rent). In addition to these startup costs, you can also expect to pay for intangible assets (licenses, legal costs, franchise fee if you go for a franchise, etc.)
  • Operating costs: these are the recurring or one-time expenses you pay after you’ve opened your coffee shop. You will need to pay expenses to run the business and make sales. A few examples here are salaries, rent, marketing, etc.

We’re including below the cost breakdown of a typical coffee shop in the US. For more information on how much it costs to open a run a coffee shop, make sure to read our complete guide here.

Coffee shop financial model template

If you want to save time, we have prepared a financial model template you can download and use for any type of sit-in or takeaway coffee shop business. We have included all the metrics and pro forma financial statements investors asks for.

Want to see more? Have a look at our video tutorial below.

Any questions? We’re here to help, contact us and we’ll answer your questions within 24 hours.