How To Start A Coffee Roasting Business For Sale: Do you also have a good head for business? Add those traits together, and you may have what it takes to start your coffee roasting business—got that Full of Beans feeling? Let’s look at how to start a coffee roasting business for sale.
What is a Coffee Roasting Business?
A coffee roasting business roasts green coffee beans on three levels: light (also called city), medium (whole city) and dark (whole 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 individuals or business entities, such as coffee shops and wholesale customers. If you are doing your research, remember this is entirely 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 pounds bags, typically cost from $3 to $4.50 a pound. Many roasted coffees are sold in 12-ounce bags for $12 to $20 a bag (or $6 to $12 for wholesale prices.) The 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 on time.
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 flavour. 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% 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 type of roaster and by the kind of fuel it uses. To make a medium (whole city) batch in a 15kg roaster on average, will take from 15 to 18 minutes.
Provide a steady stream of quality coffee and orders and a regular stable income stream will follow. 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 in your area? If there aren’t any local roasters, what sources are used by those selling coffee in your area? Where are the local coffee shops getting 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
Where will you make sales in your commercial coffee business? Do you want to sell coffee to an individual or to a coffee shop? Do you want to serve coffee to customers at your coffee shop? Or do you want to deliver coffee to elite lodging establishments and restaurants?
Will you 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 locking in on a name, small businesses need to check several locations to ensure the name isn’t already taken. Check the state business records, as well as federal and state trademark records. Check web domain availability as well as social media platforms such as Facebook.
Brand Your Business
There are two main ways to help your business name get established as a recognizable brand – by your chosen logo and colours.
In the past few years, as the demand for great-tasting coffee has increased, the competition has increased between one coffee company and another. If you don’t want to establish your brand, you can also look into coffee franchise opportunities.
Kenya, South America, and Jamaica are top single-origin bean growers and suppliers. Brazil leads the way.
Write a Business Plan
Critical elements of your plan are:
- 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 the following:
- 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 restaurant?
Find Good Suppliers
Coffee is grown commercially in 45 countries, with Brazil a leader. You can buy directly from a farmer or from coffee traders or government agencies, which are part of 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 dicey climate. The weather and 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 level, 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 that 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 assets.
Get Permits and Licenses
Because you’ll be handling a “food” product, your premises must be certified by your local health department. Laws can vary by town, county and state, but this regulation is uniform – you won’t get a certificate of occupancy until you pass a health inspection.
Hire an Experienced Team
Roasting isn’t simple. You’ll need experienced employees who expect to earn about $20 hourly.
Set Up a Business Website
This should be lively with frequent updates.
Market Your Coffee Roaster Business
A common way to grow your customer base is holding “cuppings.” As it sounds, these are tastings. You can offer “cuppings” from a specific region or with particular blends you’ve created.
If you have a brick-and-mortar location, you can offer this service there. Also, consider offering free “cuppings” at meetings such as Chamber of Commerce and other business-based boards. Attend conventions, art shows and similar happenings 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 flavour. Many in the business put the roast date on the bags.
Donate to local food banks and shelters if coffee gets a bit past its prime date. This will boost the reputation of your successful coffee roasting business.
Coffee Roasting & Distribution Company: Rochester, NY
- Coffee Roasting Business in the Rochester, NY area producing coffee roasted in-house, packaged and sold locally.
- 112 Wholesale large accounts that provide coffee service to (restaurants, cafés, hospitals, resorts/hotels, office coffee service, and gift shops/stores.
- Online sales have increased 241% from 2018-2021.
- Steady growth for 12 years with no advertising.
- Online sales for 2021 were $31,933, up from $13,222 in 2018.
- Online sales have had steady growth with repeat and new customers each year with no online advertising.
Provides café products and coffee brewing/grinding equipment for exclusive accounts.
- Foodservice distributor partnership which creates many new accounts as an off-brand.
- Current manufacturing equipment is operating at 25% output capacity. (All fill-manufacturing packagers, industrial high volume stand-alone grinders, and roasting equipment)
- Current manufacturing equipment and automation allow this business to maintain labour expense at 4% of overall gross sales. Unmatched in the industry.
- Location: Rochester, NY
- Inventory: Included in the asking price
- Real Estate: Leased
- Building SF: 4,200
- Employees: 3
- Furniture, Fixture & Equipment (FF&E): Included in Asking Price
- Facilities: 4,200 square foot steel building on 2.92 acres
- Growth & Expansion: A trendy business that has shown steady growth. Established accounts create consistent sales volume from year to year that is steady and guaranteed. New accounts create additional volume and increase sales year to year. Many opportunities to expand this business into a large-scale operation if the owner wishes to take the next step of expansion. Great opportunity for someone that loves Coffee.
- Support & Training: The current owner will do everything necessary to ensure a smooth ownership transition.
- Reason for Selling: Concentrate on other businesses.