How to Start a Coffee Cart Business in 2022
Written by: Parth Parth
Last Updated by Sabrina Giampaolo: July 2, 2022
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Coffee on wheels is an interesting concept. Coffee is one of the foods whose carts can go almost anywhere because people almost everywhere want caffeine. It is very similar to an ice cream truck. But you might want to set your coffee cart or truck in one location. You might also be open to people contracting with you to bring your cart to different venues like weddings, corporate retreats, etc.
Popular locations to place a coffee cart would be busy intersections, fairs, farmer’s markets, etc. This type of business provides a specialty product along with a unique experience, taking the place of a bar for daytime activities or alcohol-free events.
Contents
Coffee Cart in the Food and Beverage Industry
The Food and Beverage industry in the USA accounts for 13% of all manufacturing employment in the country. Around 1.46 million people are employed in this industry. Food franchises make up to 36% of the total franchise establishments in the USA and it is expected to create 1.6 million more jobs by 2027. The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3x for a single restaurant. Multiples can go up to 7x for 5+ restaurants.
One of the benefits of buying a coffee shop is that very little industry-specific knowledge is required.
Many first-time business owners buy coffee shops and this industry is very popular among first-time franchise owners. There is a lot of information about general business practices as well as coffee shop specifics, so the learning curve is less steep. Any owner in the industry is expected to be knowledgeable in the specifics of coffee, trends, and coffee-related drinks.
The coffee shop industry is characterized by high turnover and discretionary spending. This industry has experienced a period of rapid expansion over the last decade. The existing competition in the industry is expected to intensify. Industry profitability is expected to increase, recovering from the decline early in the period. International expansion is anticipated to be the largest source of revenue and profit growth.
Coffee Cart business
As a prospective small business owner, you can start a coffee cart business almost anywhere and in any form. You might buy a coffee cart for yourself and set yourself up in a new location, buy an existing coffee cart and benefit from an existing customer base or franchise a coffee cart from a big franchisor.
How to start a Coffee Cart Business?
There are a lot of steps involved in starting a coffee cart business and we’ll walk you through them.
First of all, it is very important to select a location and do some research for yourself before you start a coffee cart anywhere. It is very much possible that the location you have chosen does not get enough traffic for you to make enough money to be able to pay off the operating costs of your card or make enough profit to sustain your coffee cart business.
Like some other businesses, you also cannot be an absentee owner. As you will need to fully operate the card for as long as it is in operation. You may choose to hire someone to run your cart – but you will also have to factor in the wages of that person into operating costs if you do so.
Coffee Cart Business Costs
Once we have decided upon our location to place your coffee cart, you need to decide what kind of coffee cart you want to operate. There are three kinds of carts:
- Drip Coffee Carts: The simplest option out of the three, drip coffee carts require minimal equipment. You can serve this type of coffee on a table as well as from a cart, which gives you options to save money on your start-up costs.
- Espresso Carts: These carts serve only espresso-based drinks, such as lattes and cappuccinos. While they require more equipment and a higher budget than drip coffee carts, espresso carts can generate more customer interest – especially in areas with a strong coffee scene and footfall.
- Combination Carts: These carts serve several types of coffee. This is the most expensive option because it combines drip coffee and espresso drinks, which requires more equipment.
Other Business Costs
Some other costs you might incur are going to be a Coffee Cart, a Point-of-Sale (POS) system, an Espresso Machine (if you want to), a Drip Coffee Maker, Serving Items (E.g., Pitchers, Stirrers, Cups, and Lids), Steaming Pitchers, Water Pump, Refillable 5 Gallon Water Jugs, Coffee Milk, Drink Add-Ons (E.g., Syrups and Sugar).
At the very least you can get all of this in the ballpark of $16,000 to $20,000 when buying new. It might be cheaper if you buy used equipment. But that is going to need more maintenance and will be more prone to breaking down and producing a lower quality product.
Depending on how big you want your cart/truck to be, the following table is indicative of the price range you will be looking at for an initial investment:
| Type of Mobile Coffee Business | Cost Range (with equipment) |
|---|---|
| Mobile Coffee Kiosk | $10,000 – $30,000 |
| Small Coffee Truck | $15,000 – $50,000 |
| Large Coffee Truck | $35,000 – $120,000 |
| Coffee Trailer | $15,000 – $85,000 |
After your initial investment, you can expect ongoing business expenses. These will include the cost of buying ingredients for your products (coffee, milk, syrups), water jugs (refillable five-gallon jugs), transportation costs like gas and insurance, and employee wages if you have any staff members.
Coffee Cart Business Sales
Your sales volume will depend on the season, but this is a year-round business for most locations. Summer, for example, will likely be your most profitable season because it typically features many weddings, markets, and fairs. Winter may be your next busiest season if you network enough to secure bookings for company parties. The in-between seasons likely will require diligent budgeting as you focus on promoting your business, booking future events, and working on existing bookings.
The following table gives an idea of our projections of how much revenue will a coffee cart bring in in an area with heavy footfall and customer volume.
| Type of Mobile Coffee Business | Cost Range (with equipment) |
|---|---|
| Mobile Coffee Kiosk | $50,000 – $80,000 |
| Small Coffee Truck | $60,000 – $110,000 |
| Large Coffee Truck | $75,000 – $250,000 |
| Coffee Trailer | $50,000 – $145,000 |
So research in your area and create your own projections for breaking even and profiting off your business.
Paperwork Needed for a Coffee Cart Business
As with any business, you will need some paperwork to establish a Coffee Cart Business. The following is an indicative list of what are things you might need to do before you start your business. Again, check with a lawyer in your area to find out if you’re all set to start.
- Business License: Registering your business with the state, county, city, etc.
- Bond: You may need to pay a bond before you can get a license to operate a food cart (coffee cart) business in your area.
- Sales Tax Registration: Register your business with the Internal Revenue Service (IRS) for tax purposes.
It is very necessary to have insurance when you run a business. You do not want yourself to be liable for any damages you cause – or at least not pay for all of it.
There are three types of insurance you need to worry about:
- Liability insurance covers any damage you might incur while running your business.
- Workers’ compensation to cover for injuries to you or others while on the job.
- Equipment insurance to cover damage on equipment or if they are stolen.
We also recommend that you establish an LLC and do all of your business through it. If you do not, you can be sued for any damages caused. And your property can be used to cover any damages you cannot pay. If you’re working through or for an LLC, only the LLC can be sued and only its property can be used to cover the damage.
This is not legal advice – none of it is – definitely talk to a lawyer about all of these topics before starting your own Coffee Cart business.
Can I buy an existing Coffee Cart?
Yes, you can! Look for existing carts in your area that might be willing to sell. There are also listings on BizBuySell you might want to look at – these listings come and go so keep your eyes out for people wanting to sell their existing coffee cart businesses:
Well Established Turn-key Coffee Cart For Sale
| San Diego, CA (San Diego County) |
|---|
| Asking Price: | $250,000 | Cash Flow: | $0 |
| Gross Revenue: | $0 | Inventory: | N/A |
| EBITDA: | $0 | Rent: | N/A |
| FF&E: | $0 | Established: | 2009 |
How to franchise a Coffee Cart?
Franchising a Coffee Cart is an easier option to start a Coffee Cart business than starting from scratch. Because you benefit from an established support network of coffee vendors. The caveat is that you will not pocket all revenue, some of it is going to go to the franchisor. Let’s look at some Coffee Cart Businesses.
Maui Wowi
Maui Wowi is a smoothie and coffee cart chain based in Scottsdale, AZ. As a franchisee, you will operate a restaurant called Maui Wowi, preparing and serving fresh fruit smoothies, Hawaiian coffee and related espresso beverages, a variety of Hawaiian products, other beverages, and food items, and other products and services
The initial Maui Wowi Franchise Fee is between $24,000 and $50,000. You have to pay this upfront fee when opening a Maui Wowi franchise. If you are currently an active or active reserve member of the U.S. Armed Forces, have been honorably discharged from the U.S. Armed Forces, or are a 501(c)(3) organization, you will receive a 20% discount on the Initial Franchise Fee.
The company charges no Royalty Fee. Instead, they say that “Instead of charging you a royalty on the gross revenues resulting from your sales of Maui Wowi Products, certain of our designated suppliers make payments to us based on purchases by our franchisees.
Certain food and drink item suppliers pay us a rebate equal to approximately 45% of the prices paid by our franchisees for purchases. Our uniform supplier pays us a rebate equal to 5.56% of the prices paid by our franchisees for uniforms purchased. These payments are in addition to the Advertising Fee payable to us based on purchases by our franchisees.”
There are continuing costs to running a Maui Wowi Franchise. Advertising Fee: 15% of the purchase price of Maui Wowi Products and Maui Wowi Supplies and Equipment. Optional Snack Program Fee: $150 per month. Technology Fee: $99.95 per month.
Maui Wowi Franchise
The estimated total investment necessary to begin the operation of a Maui Wowi Franchise ranges from $28,900 to $193,050. The following costs are part of the upfront costs included in the initial investment for a Maui Wowi. The huge range is mainly due to the optional costs of $69,000 for a mobile unit and $16,000 for a coffee machine. For the purposes of this article, we will factor these costs in as you want to start a coffee cart business. Many of these are one-time fees that are needed to launch the franchise.
Review the chart below to see how much it costs to buy a Maui Wowi franchise in 2022.
Estimated Initial Investment
| Type of Expediture | Amount (low) | Amount (high) |
|---|---|---|
| Initial Franchise Fee | $ 24,000 | $ 50,000 |
| Travel and Living Expenses (2 persons) while training, not including salaries, if any, for you and your employees | 650 | 3,550 |
| Mobile Operating Unit | 0 | 69,000 |
| Coffee Equipment | 0 | 16,000 |
| Optional Equipment | 0 | 15,000 |
| Opening Inventory | 1,500 | 7,000 |
| POS System, Credit Card Processing and Back Office Computer Equipment (Optional) | 0 | 10,000 |
| Miscellaneous Opening Costs | 1,750 | 5,000 |
| Additional Funds – 3 months | 0 | 13,500 |
| Concession License Fee | (Note 19) | (Note 19) |
| Business Insurance | 1,000 | 4,000 |
| TOTAL | $ 28,900 | $ 193,050 |
Maui Wowi does not provide any information about the sales and finances of its franchises. While individual profit margins are going to differ, we estimate profit margins between 10% and 20% for Coffee Cart franchise businesses.
Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace.
The presence of other coffee stores; the extent of market penetration and brand awareness that Maui Wowi stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Maui Wowi is a good option if you want to franchise a coffee cart. But it will obviously take you longer to make your initial investment back than if you run a business yourself with the same initial costs.
Xpresso2U
They offer a variety of coffee cart and truck franchises all throughout the USA. Xpresso2U franchises are in the range of $25,000 to $90,000.
The Rush Coffee
The Rush Coffee also offers franchises for Coffee Carts. It was founded by Claire and Parseigh Oksayan in 2017.
Conclusion
If you like coffee and want a customer-facing business where you can make some money once you recover your initial investment. You can also franchise a coffee cart from a number of businesses. Make sure to have your paperwork and permits in order and speak to a lawyer in your area.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Food and Beverage Industry.