Coffee Roasting Business Overview
Coffee roasting businesses play a role in converting raw coffee beans into aromatic, flavorful products enjoyed by millions of coffee drinkers each day. The process requires careful attention to temperature, timing, and technique to achieve consistent results that satisfy customer preferences. From small-batch roasters serving local communities to large operations supplying national retailers, coffee roasting provides opportunities at various scales.
The main business models seen in the coffee roasting industry include:
- Private Label: Roasts and packages coffee for other brands or businesses that sell under their own labels
- Wholesale Roasting: Focuses on roasting coffee beans in large quantities for cafes, restaurants, and retailers
- Direct-to-Consumer: Sells freshly roasted coffee directly to individual customers through online sales or local markets
- Retail Roasting: Combines a coffee roasting operation with a retail coffee shop where customers can purchase beans and coffee drinks
Related: Checklist to Start a Business
How Do Coffee Roasters Make Money?
The primary source of income for coffee roasting businesses comes from selling roasted coffee beans. Roasters purchase raw green coffee beans, roast them to bring out desired flavors and characteristics, then sell the finished product at a markup that covers their costs and provides profit.
Additional revenue sources for coffee roasting businesses include:
- Equipment Sales: Coffee roasters often stock brewing equipment like grinders, French presses, pour-over devices, and espresso machines. These sales provide supplemental income while helping customers properly prepare their coffee beans.
- Coffee Subscription Services: Monthly or weekly subscription programs deliver freshly roasted coffee directly to customers. This creates predictable recurring revenue and helps maintain steady production schedules.
- Training Programs: Many roasters offer classes teaching proper brewing methods, coffee cupping, and basic barista skills. These educational sessions generate extra income while building customer loyalty and appreciation for quality coffee.
- Merchandise: Branded items like t-shirts, mugs, and tote bags provide additional revenue while helping to build brand recognition. These items often appeal to loyal customers who want to show support for their favorite roaster.
Industry Statistics
Coffee roasting falls under NAICS Code 311920 – Coffee and Tea Manufacturing. This segment includes businesses that roast coffee beans, manufacture coffee products, and blend tea.
Below are several informative statistics about the coffee roasting industry.
Coffee Roasting Industry Size & Growth: The coffee roaster market produced revenue of $289.4 million, with projections showing growth to $482.9 million by 2030. The sector has maintained steady forward movement, with an expected yearly increase of 6.6% through 2030. This growth stems from rising coffee consumption, as data shows that 66% of people drink coffee daily – surpassing all other beverages, including water. The market is expected to grow by 6.3% annually through 2030 due to the continued expansion of specialty coffee shops and interest in premium coffee products. (Grand View Research)
Number of Coffee Roasters: The industry has a mix of small independent and large commercial operations, with estimates of 1,500 and 2,000 roasters in the U.S. Major companies include Nestle SA, Coffee Holding Co Inc, and Probat, though no single company dominates the market. Independent roasters continue to flourish, particularly in areas with strong specialty coffee cultures. (Coffee Intelligence)
Coffee Roaster Average Profit Margin: Coffee roasting businesses typically see profit margins of 8.8%, with variation based on factors like bean quality, roasting volume, and market positioning. (Bellwether Coffee)
Startup Stories
Costs To Start a Coffee Roasting Business
The total cost to launch such a coffee-roasting business can vary widely depending on factors like location, scale, and equipment quality. The initial investment can typically range from $30,000 to over $100,000. Here’s a breakdown of the estimated costs involved:
Roasting equipment: The most significant expense in starting a coffee roasting business is the roasting equipment. Commercial coffee roasters can range from $5,000 for a small roaster to $50,000 or more for larger, more advanced models.
Additional Equipment: Other items like grinders, scales, and packaging equipment can add another $1,000 to $5,000 to your startup costs.
Location: The cost of a location, including initial deposits for rent or purchase, can also be considerable. Rent for a small to medium-sized space can range from $1,500 to $5,000 per month, depending on the location, with initial deposits often equalling one to two months of rent. The price of purchasing can vary significantly based on size and location.
Renovations and setup: Setting up your space for roasting, storage, and potential retail operations might require renovations. This can cost anywhere from $5,000 to $20,000, including the cost of electrical upgrades, ventilation systems, signage, and decor.
Green Coffee Bean Inventory: Initial inventory of green coffee beans requires substantial investment. A starting inventory often costs between $5,000 to $20,000. This includes various bean varieties from different regions to offer customers diverse options.
Packaging Equipment: Professional packaging equipment helps maintain coffee freshness and quality. A basic packaging setup, including heat sealers, bags, labels, and storage containers, ranges from $3,000 to $15,000.
These estimates provide general guidelines for planning purposes. Actual costs will vary based on location, size, and equipment choices.