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Beans & Grounds

How to Start a Coffee Roasting Business In 2023

If you’re a bean counter, you might want to start your own coffee roasting business. After all, roasters earn much of the profit in the coffee world. 

Or maybe you’re just a bean enthusiast fascinated by the idea of roasting your own coffee for a local market. 

Whatever your goals, you need to understand the market. In this article, I’ll cover the essential steps of how to start a coffee roasting business. Soon you’ll know how to provide roasts that keep people coming back for more.

roasting coffees

How Much Does a Coffee Roasting Business Make in the USA?

An essential part of establishing a successful coffee roasting business is planning. This preparation goes beyond just understanding the startup costs involved. 

Knowing how much annual income you can expect to make is essential. It will help you determine spending power and how many employees to hire.

Let’s consider a 2021 Roast Magazine poll of the coffee industry. A quarter of roasters who participated earned an annual revenue between $100,000 and 500,000. Meanwhile, 23% earned less than $100,000. And 19% earned 1-5 million dollars. Almost half of the roasting business respondents had teams of 7 people or fewer.

The 2017 SCA financial benchmarking report showed that roasters and coffee shops reported a profit margin of around 8%. Roasters selling in both wholesale and retail markets earned a higher margin, almost 12%.

Margins will differ depending on the type of business model you set up. For instance, a coffee roasting business that sells in bulk to hotels or big chains may make more on each sale, even if each product has a lower price. The same may be true when selling to a chain or coffee shop with many retail locations.

The Coffee Business Is Huge in the United States

Just how big is the coffee business in the United States? In 2022, revenue in the coffee industry reached US$85.16 billion. 

And the market isn’t stagnating. In fact, it’s projected to grow every year by 6.34%.

Much of the growth trends are around coffee experiences. These experiences go beyond providing a quick caffeine fix. Instead, they create a sensation of comfort or luxury for specialty coffee drinkers.

Now let’s consider the US roasted coffee market. 

In 2022, it generated US $317.20 billion in revenue. Experts expect this market to continue to grow by 7.42% annually. So there’s plenty of room for new roasters and coffee-roasting businesses.

roasted coffee business

19 Checks When Starting a Coffee Roasting Business

When you learn how to start a coffee roasting business, you need to consider several factors. 

You need to understand the market and associated start-up costs and market. You need to make sure your business complies with local regulations. But most of all, you need to have a clear business plan. 

Let’s walk through the 19 steps one by one.

1. Conduct Market Research Checking Other Coffee Roasters

This first step is essential because it will determine all the next steps. You need to research how other coffee roasters already serve the market. 

For instance, are plenty of roasters offering dark roasts? If so, can you differentiate by selling a medium roast? 

Take note of retail prices and the range of products the competition offers. 

Are they focused more on online sales? Or are they selling roasted coffee wholesale? 

Do they have a retail outlet? Or do they sell to grocery stores?

Do they prioritize inexpensive coffee? Or have they expanded into the specialty coffee world?

While you’re researching the competition, consider their branding. What messaging are they using to reach their customers? 

What do you notice is missing in the market? Could you fill that void with different coffees or a distinct voice?

2. Review Potential Startup Costs & Economics

How much you’ll spend on startup costs depends on your business model, but we can consider some specifics. 

As a new roasting business, you’ll need to consider purchasing a commercial roaster. Otherwise, you’ll need to find another way to access roasting facilities. 

You’ll also need to buy green coffee beans and packaging supplies such as a heat sealer. You’ll need a grinder and shipping supplies. 

Don’t forget about the rent to set up your roaster business space and a warehouse area to store packaged coffee. 

You’ll also have administrative expenses. A computer, point of sale system, website, wages, and marketing are all necessary costs.

You’ll also need to consider the ongoing expenses of running a business. These costs will likely include equipment maintenance and fuel for the roaster. With energy prices running high, you have to calculate those monthly costs in advance.

If you focus on online sales, consider how you will deliver coffee. Shipping costs can vary dramatically depending on the size of your operation. 

Considering all of these expenses will also help you determine if you need business credit.

coffee team

 3. Figure Out Your Niche

There are many coffee companies out there. So you need to figure out how you can shine in the market. 

What makes your new coffee roasting venture different from other coffee roasters? What is something the roasted coffee market doesn’t currently provide? And how can you offer that missing thing to potential customers? 

These days, just having stories about the coffee farmers or saying you buy Fair Trade coffee isn’t enough. You need to be specific. 

Does your coffee focus on women coffee growers? Is it from a particular country or region? Do you support the local community in some special way?

Also, take note of the coffee quality your customers expect. For instance, do they want to receive freshly roasted coffee and see a roast date on the package? Are they looking for specialty coffee? 

And if you’re more interested in selling coffee in bulk, you need to consider who your wholesale customers would be.

4. Pick Your Business Name

Pick a name for your coffee roasting business that sums up your brand. 

Take time to brainstorm ideas that will appeal to your customers. Then, try them out on friends and family members. 

Once you’ve decided on the business name for your coffee company, register it to protect it.

5. Coffee Biz Branding

To do branding the right way, go back to point number 3. Who are you selling to? 

Do you want to sell online, at retail outlets, or in local coffee shops? Or do you want to set up your own shop?

You need to brand your coffee in a way that will appeal to that market niche. Your design and message will be different if you’re focusing on 20-year-olds than if you’re focusing on senior citizens.

branding coffee

6. Write Your Business Plan

A business plan is essential for your own roasting business. It consolidates your business ideas and outlines the company mission. 

Consider it a guide for how the business will function.

It will also detail how much money it will take to set up, providing a basis for future growth.

7. Set Up Your Business Bank Account 

You’ll need to set up a business bank account that offers you liability protection. 

To open a business account, you’ll generally need a Social Security number or an EIN. You’ll also need the documents you used to set up your business and your business license.

8. Look Into Taxes & CPA

You’ll need to research local tax requirements for coffee roasting businesses. (This research should include sales tax.) Set up a bookkeeping system and bring on a CPA to help guide you through it.

coffee team

9. Choose Your Location

When choosing a location, think again about your customers. Do you want to sell coffee to the local market? Will you sell to people in your neighborhood? Is the location convenient for your potential customers? 

Will you be competing with local roasters or other coffee shops? Will you also serve coffee to customers? 

Would you rather sell online? If you sell wholesale, does the location work for transportation and shipping?

Remember that the location will determine many aspects of your business. Location will determine the laws governing roasting businesses. Taxes, licenses, permits, and zoning will all vary based on location.

10. Find Reliable Suppliers

When deciding who to buy green coffee from, you can go in a number of directions. 

First, decide if you want to buy directly from coffee producers or cooperatives. It might be tempting to buy direct from coffee-growing countries. But you need to consider complicated contracts, shipping delays, and quality issues.

If you buy from an importer, one of your main concerns might be the high costs of green coffee.

11. Buy Roasting Equipment & Other Sunk Costs

You’ll need to buy a commercial roaster to start a coffee roastery. This purchase involves arranging for installation and ventilation. 

You will also need a coffee grinder if you’re selling ground coffee as well as whole beans. You also need to factor in equipment for packaging coffee and warehouse or storage space.

grinding equipment

12. Register the Business

To register your roasting business, check what steps are required in your area. You may need to register on a state or federal level, and you may need to allow regular inspections of the premises.

13. Buy Business Insurance

Business insurance protects you from unexpected situations like lawsuits or accidents. 

The type of insurance you need depends on a few factors. Company size, number of employees, and state regulations will all impact business insurance.

14. Decide on a Business Structure

The kind of business structure you use will depend on where you set up your roasting business. Will you need an LLC? Or will you set up a corporation?

 Deciding on the correct business structure helps you while setting up operations. But it can also help you in case something goes wrong (like getting sued).

15. Permits and Licensing

The permits and licenses you need will depend on your area. Check with your local health department. Make sure you understand the requirements before you start operating.

business license for coffee roasters

16. Hire an Experienced Roasting Team

Here’s something I always emphasize in my coffee business coaching and barista training sessions. The roasting process is an art. 

Roasting coffee is not learned in a couple of days or even a few months. Consistently roasting coffee well requires training and many hours of practice. 

You’ll need to hire a team that has experience roasting coffee so that you can meet your customer’s needs. Not just once but shipment after shipment. 

You can decide to start roasting on your own. But keep in mind that you may waste a lot of green coffee beans during the learning curve.

17. Set Up Your eCommerce Website

Setting up a website that allows eCommerce is necessary in the 21st century. Fortunately, it’s something that you can do yourself if you have experience and time. 

Otherwise, you might want to hire a web designer. Experience designing coffee websites is always a plus. That way, they’ll be able to understand the type of website you want to establish.

18. Market Your Coffee Roaster Business

Marketing can be a fun part of your business. It’s the part where you can show the world your mission and values. This promotion involves setting up a website and social media accounts. 

It may also involve participating in and hosting local and community events. In my experience, tastings or competitions are fun promotions for a coffee roaster. 

It takes time to build a following, so you might want to start early with this aspect of your business.

19. Scale Your Coffee Business

Once you have your own brand and an established presence, you may want to scale your coffee business. Remember, your business plan should include your strategy for scaling. 

How will you increase your market share? Will community involvement be the key? Will you transition into wholesale roasting? Or will you sell to grocery stores? 

Can you conquer markets beyond your local community?

Frequently Asked Questions

Can You Roast Coffee at Home To Sell?

That depends on where your home is. Some states allow you to roast coffee – or produce other food or drink items – from home. 

Some areas allow you to produce those items but limit where you can sell them. And some areas simply won’t let you roast for commercial use. 

Also, consider that the coffee roasting process produces chaff and strong odors. Odors that your family and neighbors might not appreciate.

How Much Does It Cost To Set Up as a Coffee Roaster?

Setting up your own roasting business can cost $10,000 if you keep your initial investment to a minimum. The exact price tag will vary depending on your particular business model. 

You will need to buy a roaster, a grinder, beans, packaging, labels, and a heat sealer. You will also have admin costs: a computer, internet, point of sale system, website, and marketing systems. And don’t forget to calculate employee or freelance wages. 

You can save on some of these expenses by doing them yourself (such as the website and marketing). Using rented facilities for roasting will also reduce upfront costs.