How to Start a Coffee Roasting Business

Are you a coffee fanatic? Do you love the smell of freshly roasted coffee? Then starting a coffee roasting business could be the right choice for you.

Coffee is the fourth most consumed beverage worldwide, with nearly two-thirds of American adults drinking coffee every day, according to the National Coffee Association. Millennials are willing to spend a bit more for their daily caffeine fix, with 70% of their coffee consumed being gourmet. 

But how can you start your own coffee roasting business? The answer is to start with step 1 below!

Step 1: Decide if the Business Is Right for You

Before you start dreaming of coffee roasting success, it’s important to understand the industry so that you can see where you fit best. 

Pros and cons

To get a balanced view of the coffee roasting industry, let’s look at both the positives and the negatives. 

Coffee roasting industry trends

Coffee is popular throughout the world, but Americans are the most committed drinkers, consuming 517 million cups a day, according to the National Coffee Association.((https://www.ncausa.org/Portals/56/PDFs/Communication/20220315_media_highlights.pdf?ver=Xz7bwWmt8eAtyGxkFp30bg%3d%3d))

A look at Google Trends shows interest in coffee roasting has been consistent over the last five years.((https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=coffee%20roasting))

Industry size and growth

• Industry size and past growth – The US roast coffee market is worth $74 billion, about a fifth of global revenue, according to German data firm Statista.((https://www.statista.com/outlook/cmo/hot-drinks/coffee/roast-coffee/worldwide)) 
• Growth forecast – The global roast coffee market is expected to expand around 5% annually through 2025. Demand for coffee roasters is also predicted to grow 6% through 2026 following a pandemic-driven decline, market analyst Research and Markets says.((https://www.researchandmarkets.com/reports/4602370/coffee-roaster-market-growth-trends-covid-19))
• Number of businesses – There are over 2,000 coffee roasters in the US((https://coffeebeaned.com/coffee-roaster-maps/))
• Number of people employed – More than 5,000 jobs for coffee roasters are expected to be created over 10 years to 2028.((https://www.zippia.com/coffee-roaster-jobs/))

Trends and challenges

Some of the latest trends in the industry include:

• Roasted coffee subscription model, with consumers getting high-quality beans shipped straight to their door on a regular basis.
• Introduction of value-added coffee-based RTD and flavor-added coffee

The industry faces some challenges such as:

• Short shelf life of roasted coffee
• Wide use of instant coffee

Consumer spending

• Average consumer spend – The average person in the US consumes at least two cups of coffee a day, spending around $2,000 a year.
• Potential customer base – 66% of Americans 18 years and older drink coffee.
• Average prices – A cup of coffee in the US costs an average of $2.70.((https://www.usnews.com/news/blogs/data-mine/2015/09/29/americans-pay-an-average-270-for-coffee-while-tipping-20-percent))

What kind of people work in coffee roasting?

Zippia.com is useful for this section.

• Gender – More than 75% of coffee roasters are male.((https://www.zippia.com/coffee-roaster-jobs/demographics/#gender-statistics))
• Average level of education – Nearly 60% of coffee roasters have a bachelor’s degree.((https://www.zippia.com/coffee-roaster-jobs/demographics/#degree-level-types))
• Average age – Almost half of coffee roasters are over 40 years old.((https://www.zippia.com/coffee-roaster-jobs/demographics/#age-statistics))

How much does it cost to start a coffee roasting business?

To start a coffee roasting business, you’ll need between $15,000 and $80,000, but the average investment is about $50,000.

Let’s see what your investment gets you: 

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$150 - $200	$175
Business licenses and permits	$100 - $300	$200
Insurance	$100 - $300	$200
Business cards and brochures	$200 - $300	$250
Commercial coffee roaster	$3,000 - $60,000	$31,500
Other tools	$700 - $1,500	$1,100
Green coffee and other supplies	$10,000 - $15,000	12500
Website	$1,000 - $3,000	2000
Total	$15,250 - $80,600	$47,925

You’ll need a handful of items to successfully launch your coffee roasting business. 

Online retailer Amazon has a range of coffee roasting equipment including both basic and professional machines. Most other supplies can be found at local stores or from Amazon as well. Finding a reputable green coffee supplier is the most important part of this step. You can check out suppliers such as Benchmark and Intercontinental Coffee Trading.

How much can you earn from a coffee roasting business?

The key, of course, is how much coffee you sell and at what price. The World Economic Forum estimates that roasters typically make $0.44/lb of roasted beans. An estimated $8.73/lb cost and a wholesale selling price of $9.40/lb results in a 7% profit margin.((https://www.weforum.org/agenda/2020/10/economics-coffee-cup-costs-break-down/)) 

In your first year or two, you could work from home without any staff, bringing up your profit margin to around 30%. If you roast one 110-pound bag of coffee a day for five days in a week and sell your roasted coffee for $10/lb, you’d earn more than $280,000 in annual revenue and around $85,000 in profit, assuming that 30% margin.

As your brand gains recognition, you could increase your capacity to five 110-pound bags a day and extend operating hours to six days a week. At this stage, you’d rent a commercial space, hire staff and invest in a bigger roaster, reducing your profit margin to 7%. With annual revenue of $1.7 million, you’d make a tidy profit of more than $120,000.

What barriers to entry are there?

While starting a coffee roasting business may seem straightforward, there are a few barriers that you should be aware of: 

• Finding a suitable roasting location due to smoke and fumes
• The initial learning curve can be steep, from sourcing beans to roasting
• Gaining brand recognition can be difficult in a crowded market  
• Securing relevant permits and abiding by regulations

Step 2: Hone Your Idea

Now that you know a bit more about the industry let’s start refining your business idea. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Before you become a coffee roaster, you’ll need to find out who your competition is. Are they beginning roasters like yourself, or are they an established brand? Are there a lot of local roasters in your area? Who buys their beans? 

Knowing these answers will help you find your unique value proposition that you can share with potential customers. 

You might also be able to learn about the beans they source, their roasting process, and the equipment they use. All this information will help you to capture your market share of the coffee industry. 

What? Determine your products

There are four color categories for roasted coffee beans, according to the National Coffee Association — light, medium, medium-dark, and dark. 

Light is generally preferred for milder coffee varieties, medium for stronger flavor, medium-dark for a slight bittersweet aftertaste, and dark for pronounced bitterness like espresso.

You should consider creating a niche for yourself by specializing in one or two of these roasted coffee categories. This could jumpstart your word-of-mouth marketing within your niche market.

How much should you charge for roasted coffee?

How much you charge will depend on the products you sell and the costs involved in the process. Beans vary in price depending on their origin, weather, and supply & demand, but on average, a coffee roaster can sell a pound of beans for $10 – $15. 

Ensure that your product prices leave you with a healthy profit margin so that the fluctuations in green coffee bean prices won’t erode your profits. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Identifying your target market is important because these are the customers to whom you will tailor your marketing strategies.

Do you want to target restaurants, cafes, or even sell directly to the public? Will you target high-end retailers, or do you want to make your coffee more affordable? These are some of the questions you can ask yourself while identifying your target market. 

By having an idea of who your customers will be, you can create a brand and marketing plan that will resonate with them. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a storefront or production facility. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Coffee Roasting Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “coffee” or “beans”, boosts SEO
• Name should allow for expansion, for ex: “Bold Bean Roasters” over “Single Origin Roasters”
• Avoid location-based names that might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Coffee Roasting Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: A brief overview of the coffee roasting business, highlighting its key elements and objectives.
• Business Overview: Detailed information about the coffee roasting business, including its mission, vision, and key values.
• Product and Services: Explanation of the types of coffee products offered, the roasting process, and any additional services provided.
• Market Analysis: A thorough examination of the coffee market, identifying target customers, trends, and potential growth opportunities.
• Competitive Analysis: Evaluation of competitors in the coffee industry, analyzing their strengths and weaknesses.
• Sales and Marketing: Strategies for promoting and selling the coffee products, including target marketing and promotional activities.
• Management Team: Introduction to the key members of the management team, outlining their roles and qualifications.
• Operations Plan: Details on the day-to-day operations of the coffee roasting business, from sourcing beans to the roasting process and distribution.
• Financial Plan: A comprehensive financial forecast, including startup costs, revenue projections, and profit margins.
• Appendix: Supplementary materials such as supporting documents, market research data, and any additional information relevant to the business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to coffee roasting. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your coffee roasting business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.

Bank and SBA loans are probably the best options, other than friends and family, for funding a coffee roasting business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Coffee Roasting Business Licenses and Permits

Starting a coffee roasting business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your coffee roasting business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Artisan, Cropster, or DEAR  to manage your inventory, purchasing, costs, and waste management.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

For your coffee roasting business, the marketing strategy should focus on highlighting the quality and uniqueness of your coffee beans, your roasting process, and the flavor profiles of your products. Emphasize your commitment to sourcing sustainable, high-quality beans and the artisanal aspect of your roasting. Here are some powerful marketing strategies for your future business:

Kickstart Marketing

• Professional Branding: Your branding should reflect the artisanal, premium quality of your coffee, from your logo to your packaging and overall aesthetic.
• Direct Outreach: Network with local cafes, restaurants, and specialty food stores to introduce your products and explore wholesale opportunities.

Digital Presence and Online Marketing

• Professional Website and SEO: Develop a website that showcases your coffee varieties, shares the story of your brand, and sells your coffee online. Use SEO best practices to optimize for search terms related to specialty coffee, artisan roasting, and online coffee sales.
• Social Media Engagement: Utilize platforms like Instagram, Facebook, and Pinterest to share beautiful images of your roasting process, coffee beans, and the people behind your brand.

Content Marketing and Engagement

• Coffee Education Blog: Share articles about coffee sourcing, the roasting process, brewing guides, and the stories behind your coffee varieties.
• Customer Reviews and Testimonials: Feature positive feedback from customers and businesses that use your coffee.
• Video Content: Create engaging videos that take viewers behind the scenes of your roasting process and share insights into what makes your coffee special.

Experiential and In-Person Engagements

• Coffee Tasting Events: Host coffee tastings for the public or potential wholesale customers to sample your range of coffees.
• Participation in Food and Coffee Expos: Attend food and coffee expos to showcase your products and connect with a wider audience.

Collaborations and Community

• Partnerships with Local Businesses: Team up with local bakeries or restaurants for coffee pairings or collaborative products.
• Community Engagement: Get involved in community events, sponsor local activities, and collaborate with local artisans to build brand recognition.

Customer Relationship and Loyalty Programs

• Subscription Services: Offer a subscription model where customers can receive a regular delivery of fresh coffee.
• Loyalty Rewards for Repeat Customers: Implement a rewards program for customers who frequently purchase your coffee.

Promotions and Advertising

• Targeted Online Advertising: Use digital advertising platforms to target coffee enthusiasts, gourmet food lovers, and business owners.
• Email Marketing: Keep your customers informed about new coffee releases, special events, and educational content through a regular newsletter.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your coffee roasting business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your coffee roasting business could be:

• Offer unique coffee blends only found in your roastery
• Invest in the most eco-friendly coffee roasting machine
• Create an efficient coffee subscription plan
• Expand your services to coffee consulting and training

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a roastery, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in coffee roasting for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in coffee. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from home, you may not need any employees and roast the coffee beans yourself. But as your business grows, you will likely need workers to fill various roles. Potential positions for a coffee roasting business would include:

• Coffee Roasters – handle the roasting operations
• Salespeople – sell to coffee shops and retailers
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Coffee Roasting Business – Start Making Money!

Keep in mind, not all coffee roasts are the same. It’s important that you know the difference between light and dark roasts. It’s also wise to determine from the start what kind of coffee roast you want to do and sell. You might want to do just the light roast or focus on medium-dark and dark roasts.

This is how you can set your business apart from the competition and increase your chances of success. Offering your own unique product or innovating on an existing product will help jumpstart your word-of-mouth marketing. 

You’re now ready to start your entrepreneurial journey with your coffee roasting business!