Start, Scale, Sustain
How to start a commercial coffee roasting business?
How hard is it to roast coffee commercially?
A roastery is typically easier to set up than a burger joint, but tracking down regulatory requirements can sometimes be tough because your local authorities are usually much more familiar with burger joints.
Here is a short list of things to consider:
Facility: Roaster set up: gas, ventilation, electrical service.
Food service equipment/facility: 3-compartment sink, hand wash station, slop sink; a space with walls, ceilings, and floors that can be washed; glass bulbs covered in plastic, dunnage racks for greens and storage for bulk roasted coffee and packaged coffee, and scales certified for commerce.
Procedures: Sanitation, personal protective equipment (PPE), pest control, etc.
Permitting: Local, state, and potentially federal regulations concerning food safety, environmental concerns (smoke), and employees.
Financial: Bank account, tax ID number, sales tax, liability insurance.
Ironically, all of this stuff is relatively easy compared to learning to source and roast greens and packaging and selling roasted coffee. For as complex as this may seem, it is a finite list of things you know about, a couple of things you will need to find out about, and then a thing or two that will take you completely by surprise.
Starting a commercial coffee roasting business from scratch is not particularly easy, but if you don’t quit, you win. It’s not enough to try. You have to try UNTIL. Find a loose thread and keep pulling until the whole thing unravels.
In the end, you’ll be the kind of person that finds ways to do things, not reasons not to do things. Along the way, you’ll probably become kind of a professional overcomer.
Long hours? Frustration? Anxiety? Serial failure? Sure. Glutton for punishment? Maybe. Worth it? IMO, totally.
How much money can I make?
The super simple, rough, back of the napkin calculation is a gross net of about $5 per pound.
On that basis, a 10-12 kg roaster has a potential productive capability of about 80 lbs or $400 per hour. A single owner operator will be able to roast about 4 hours a day with the balance of the time (probably 10 or 12 hour days, btw) packaging, cleaning, delivering, and marketing. That’s about $1600 per day ($8k per week or $400k per year) and about the minimum level an owner operator needs to take a paycheck, pay the rent, and pay taxes.
How do you get from roasting coffee in your basement part time to roasting for a living?
Most people start roasting part time as a side hustle with a small machine just to figure out the business. Part time operation can teach you how to source greens, produce a quality roast, and secure and retain quality accounts. Basically it’s a case of finding out what works to generate cash flow and simply doing more of that. I’ve spoken to more than one person that started a successful roastery with a $300 Behmor.
If you’ve got the expertise and the accounts already, you either put up or borrow the money to set up shop -somewhere between $30k to $100k for a 10-12 kg based facility depending on the scope of your vision and your checking account balance or credit limit.
The primary source of capital for most people as they build their business is “sweat equity” and re-investment of earnings. This means starting small, working uncompensated hours, and using profits to finance the purchase of equipment and infrastructure. Ultimately, it’s a case of having the vision and courage to start at whatever level you can afford and grow from there.
How do I know if I will succeed?
Obviously, not everyone will create a successful business. Certainly not the first one anyway. That’s not necessarily the end of the story, though. Remember the weird “try UNTIL” idea? If it helps, think of falling flat on your face as “paying your dues.”
Besides the intangible benefits of self employment like self actualization and self determination or actually making a little money, you’ll quickly learn the lesson that people do business with people they like and trust. A guy named Zig Ziglar used to say “You’ll get everything you want in life, if you help everybody around you get what they want”. If your job is to be likeable and trustable enough to make a good partner, additional opportunities are likely to present themselves. Self employment often gives you the opportunity to earn your place at the table.
Spend some time on Daily Coffee News and read about the career paths of the shops and roasteries they feature. These are success stories and you don’t get to hear about the failures, but most of them started on a small scale and expanded when someone offered them the chance to buy or partner with other businesses.
As a near total misfit and unemployable, I’ve been doing this type of thing for over 30 years and have won some, lost some, and screwed a couple up. I’ve also sometimes been simply too stupid to give up and, although once or twice it nearly killed me, once or twice it actually paid off. Candidly, the older I get the more certain I am that most success is directly attributable to luck. But luck happens. Starting your own thing (at whatever level) is one way to make sure you are positioned to take advantage of it when it does.
Thanks for the great article Steve. Does “gross net” include marketing/packaging and other overhead with the exception of rent? What would you anticipate a net before taxes would be using the numbers above?
Gross net is the sale price less cost of goods sold. In this case, green coffee and bags. Overhead is subtracted from gross net to determine overall profitability. We use gross net for marginal analysis of profitability and for general business planning purposes.
DAVID N KRIDLER
Wow, nearly two years later and this piece is still encouraging!
I’m still early in my roasting career, I’ve been working on building my business for less than a year. I’m hitting some low points, particularly in dealing with the government and licensing bureaus among other things, to the point where I started to wonder if I’m cut out for this. Then I read:
“You have to try UNTIL.”
Wow, what a reminder. I’ve always been tenacious when I’m after something, but this isn’t easy. You have to try until. When you try and fail, then try and fail again, you have to try until. This is going up on my wall as a daily reminder. Maybe you should get shirts made!
Thanks for your dedication to not only your own business, but also to helping others succeed as well.
Great advice. As a guy in business (not roasting yet) I’ve learned that “luck” will find you if you’re there to be found and you’re doing a good job that you have a passion for, usually when you least expect it or if you “tweak” something. Nothing ventured nothing gained.
what do you mean by “gross net”? I am familiar with “gross” and “net”; but as separate terms. Are you referring to net profit before owner draw/salary?
Emily Roberts Whitaker
Thanks for the encouragement. I am committed and hope my tenacity lasts! KY regulations have now brought the cost of installing a manufacturing kitchen in my home to over $4k in addition to roasting! Seems so nuts because my cleanup is mostly done with a wet-vac and I don’t want too much coffee dust down my septic system!
Oh well. Better roast some coffee and keep that roaster in good repair.
“As a near total misfit and unemployable, I’ve been doing this type of thing for over 30 years and have won some, lost some, and screwed a couple up.”
To the point Steve!
Your candid style and uncompromising dedication that you and the rest of the Mill City team has for adding value to this special place we call coffee is truly appreciated. Keep the good stuff coming.
great read, thanks!