Fluffy cats and cozy, warm beverages make a purrfect combination for a mood-boosting, uplifting environment. A cat café pairs a coffee shop experience with a niche type of pet rental. Patrons can watch, pet, snuggle, or play with cats but don’t have to scoop the litter box or vacuum their living room couch before guests come over.
Cat café businesses allow cat lovers to socialize and enjoy coffee while the owner cares for the cats, facilitates adoptions, and earns a satisfying income.
Starting a cat cafe isn’t just about brewing the perfect cup of coffee or pampering feline friends, although those are important. There’s much more to consider, from legal requirements to finding funding. In this guide, you’ll find an overview of the business, key steps for getting started, and answers to common questions.
Business Description
Coffee shops sell small bites and warm beverages (or cold ones, too; iced coffees are popular year-round in many areas) to be enjoyed in the café or to go. Cat cafés offer something a little extra.
A cat café is a coffee shop with a host of cats. These cafés either keep cats as pets or have cats available for adoption. Cats that remain at the store offer a form of entertainment for guests who can play or watch the cats while sipping their drinks and chatting with friends.
Patrons usually pay an hourly admission fee. So, in addition to food and drink sales, cat cafés also make money through their admission charges. Cat cafés that also function as adoption centers allow patrons to interact with the cats in the café before choosing one to take home.
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Industry Summary
The first cat cafe opened in Taiwan in 1998, but cat cafes didn’t start gaining worldwide popularity until around 2014. As of 2022, there are over 143 cat cafes operating in the United States, as well as hundreds more internationally. Cat cafes have become especially trendy in urban areas like New York City, Los Angeles, and San Francisco. Since a cat café is a niche enterprise, locating in areas with general tourist activity or higher populations will be advantageous and help draw in interest and customers.
The unique experience of interacting with cats in a cafe setting has proven popular, both with cat lovers who can’t have pets where they live as well as tourists looking for a fun and unconventional cafe. Cat cafes have also been embraced for their therapeutic benefits in relieving stress and anxiety. The market has continued to grow steadily in recent years.
Cat cafes can also rent out their space for events like children’s birthday parties, yoga classes, painting nights, and more. Embracing diverse revenue streams can help cat cafes stay competitive and reach profitability.
Steps To Start A Cat Cafe
Whether you’re a first-time business owner or starting your first cat cafe, there are a few things you need to know. We’ll outline the key steps involved in starting a cat cafe to help make the process easier.
Step 1: Research the Market
Starting a cat cafe may sound like a promising business idea; however, success depends on thorough market research to help you figure out if your community is craving a cat cafe or if your business idea is just chasing its tail.
Knowing who lives in your area should be the first step. Urban locations, filled with young professionals and families, often make for ideal settings. These groups are more likely to seek out unique experiences and value the emotional well-being that spending time with pets can offer. If you see a large population that seems to fit this lifestyle, you’re on the right track. Census data helps research local demographic information.
Conducting surveys, either in person or on local social media pages, is another effective way to quantify demand. You can ask questions like, “Would you visit a cat cafe?” and “How much would you be willing to pay for the experience?”. These insights can help determine the potential local interest in your cat cafe and inform your pricing strategy.
Next, it’s essential to research whether other cat cafes exist in your region. The presence of competitors can be a sign of market demand. However, an oversaturated market might make it challenging to differentiate your cafe. Also, check out how other cat cafes outside your area are doing by looking at their social media and reviews. This can tell you what customers enjoy and what they wish was different. Maybe it’s the selection of teas and coffees, or perhaps it’s how many cats are in the cafe. These insights can help you plan your own place better.
Step 2: Write a Business Plan
The next step in starting a cat cafe is creating a business plan. This written document outlines your goals, strategies, market analysis, and financial projections, serving as both a roadmap for starting the business and a tool for obtaining funding.
It’s super easy to get caught up in the fun parts of starting a cat cafe – the cute feline friends, the cozy atmosphere, the curated coffee menu. But a business plan forces you to sit down and tackle the less glamorous details. You’ll need to figure out things like how you’ll meet health and safety standards for animals and food, how many staff you’ll need, and what kind of permits are required. When you plan all this out, you get a much-needed reality check. It’s your opportunity to identify potential hurdles and make sure you have strategies to overcome them.
Another benefit of a business plan is the financial section, where you get to project your income and expenses. This exercise helps you understand if your cat cafe idea is actually feasible from a financial standpoint. You’ll calculate how much you’ll likely spend on cat care, food inventory, staff wages, and rent. You’ll also estimate how much income you could realistically make based on your market research.
This step is useful because it helps you see whether your business can be profitable and how long that might take. Knowing this before you start is a big deal. You don’t want to invest time, effort, and money only to find out that the numbers don’t add up.
Related: How to write a business plan
Step 3: Source Funding
After validating the market for your cat cafe and crafting a robust business plan, the crucial step is securing funding. While it can be the most challenging aspect of starting a business, understanding the different options is helpful.
Personal savings: The first source of funding to consider is personal savings. However, if personal savings aren’t sufficient to cover startup costs, exploring external funding becomes necessary.
Bank loans: Banks and other financial institutions are traditional sources of business funding. They typically require borrowers to invest at least 15% of their personal funds towards the total project cost. Additionally, a good credit score and sufficient collateral are needed. If a bank considers the loan too risky, they might secure it using an SBA loan guarantee. This reduces the lender’s risk, making them more likely to approve your loan application.
Friends and family: Friends and family can be another source of funding. This method often involves less stringent requirements and potentially lower interest rates. Borrowing from loved ones can strain relationships if not handled properly, so all agreements should be put in writing to avoid misunderstandings.
Microloans: If your funding needs are relatively low or if you’re unable to secure credit through a lender, microloans could be a viable option. These are small loans typically offered by local economic development organizations and alternative lenders. Some of these institutions even provide business training in addition to funding, which can be invaluable for new entrepreneurs.
Crowdfunding: Crowdfunding platforms such as Kickstarter or GoFundMe offer a unique funding solution. By creating a compelling campaign, you can attract donations from patrons and cat lovers worldwide who believe in your vision and want to support your endeavor. Successful crowdfunding campaigns often require a compelling story and great marketing to get the word out and aren’t as easy as they may look.
Related: Finding the money to start a business
Step 4: Register the Business
The next step in the journey of launching your cat cafe is to make it all legal. This means you’ll need to decide on a business structure, register the name, and obtain the necessary licenses. Since requirements can vary by state, below is a general overview.
Choosing a business structure: The first decision you’ll need to make is choosing a business structure. Your options generally fall into four categories: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).
- Sole proprietorship: This is the simplest structure and usually involves the least amount of paperwork and cost. However, it doesn’t offer personal liability protection, meaning if the business faces debt or legal issues, your personal assets could be at risk.
- General partnership: Similar to a sole proprietorship but involves two or more people. Like the sole proprietorship, there’s no separation between personal and business assets.
- Corporation: This structure creates a distinct legal entity, separate from its owners, providing personal liability protection for the owner(s). However, it comes with more complex regulations and higher startup costs.
- Limited Liability Company (LLC): This option combines features of corporations and sole proprietorships/partnerships, offering liability protection without many of the corporation’s requirements.
Related: Comparison of business structures
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
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Business name registration: Coming up with a unique and fitting name for your cat cafe can be a challenge, but it’s an important step in shaping the identity of your business.
One approach is to focus on the cats themselves, perhaps using puns or playful language to convey the feline theme (think: “Purrfect Cup,” “Catpuccino,” “Meow & Brew”). Another option is to draw inspiration from your location or the design of your cafe, such as “The Cozy Cat Corner” or “The Kit-Tea House.” You could also choose a name that conveys the relaxed atmosphere of a cat cafe, such as “Zen Kitty” or “Paws & Relax.”
After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Related: Finding a domain name for your business
Obtain business licenses and permits: Depending on your location, there will likely be a variety of licenses or permits needed before opening.
The first step is to obtain a food license through your local health department, as cat cafes typically offer snacks and beverages to their customers. There may also be specific licenses or zoning requirements for housing animals on the premises as well.
Additionally, depending on where the café is located, there will be general business registration requirements as well. A few of these may include a local business license, Employer Identification Number (EIN), and sales tax permit.
It’s important to do thorough research and obtain all necessary licenses before opening the doors to your cat cafe, as failure to do so could result in fines and even the temporary closure of your business.
Related: State guides for general business licensing
Step 5: Acquire a Location & Begin Setting Up
There has been a lot of work to get to this point, but now comes the fun part – setting up the operations.
The first step in setting up operations for your cat cafe is to acquire a suitable property. Location plays a big role in the success of any retail business, and cat cafes are no exception. When selecting a location, consider the type of neighborhood that would attract your potential customers. While it may be tempting to locate near pet stores or animal shelters, such locations may not always be desirable for your customers.
It’s also important to consider factors such as foot traffic and access to public transportation. A location with high visibility can help attract more customers, while easy access to public transport can make your cafe more accessible to a broader range of people.
Once you’ve secured a property, the next step is to design the facility layout. For health, safety, and legal reasons, the cafe space must be kept separate from the food preparation and dining areas. This ensures that the cats have a safe and comfortable space while also maintaining a hygienic environment for food and drink preparation.
In addition, consider investing in a high-quality HVAC system and air purifiers. Not only do these things keep your human customers comfortable, but they also create a healthier environment for the cats.
Finally, creating an enticing menu is another crucial aspect of setting up your cat cafe. The menu should complement the overall theme and atmosphere of your cafe. Whether you choose to offer a variety of gourmet coffees and pastries or prefer to focus on health-conscious options like organic teas and vegan snacks, your menu should provide something for everyone. Remember, your customers will come for the cats, but they’ll stay (and return) for the excellent food and drink offerings.
Step 6: Hire Staff
Bringing in staff for your cat cafe is another step to make sure everything runs smoothly. Before you start hiring, there are several legal requirements to consider as an employer.
You’ll need to get an Employer Identification Number (EIN) from the IRS, which is used for tax reporting. You must also verify that potential employees are eligible to work in the U.S., often requiring forms like the I-9. State-specific reporting is another factor; each state has its own set of employment rules that you need to follow. Most states require businesses to have worker’s compensation in case of employee injuries. Finally, familiarize yourself with labor laws, which cover things like minimum wage, to make sure you’re in compliance.
Related: State guides for hiring your first employee
Step 7: Create a Marketing Strategy
A cat cafe is a unique and adorable way to attract customers, but it’s important to find out who your target audience is and how to reach them.
One way to promote your cat cafe is through social media platforms like Facebook, Instagram, and Pinterest by posting cute pictures of your furry friends and advertising any special events like kitten adoption days.
Another idea is to partner with other local businesses, like animal shelters and pet stores, to host events or adoption days. This not only brings potential customers to your establishment but also helps spread awareness about the importance of adopting shelter animals.
Being active in the community can generate positive word of mouth, so hosting events like fundraisers for animal welfare organizations can also draw in potential customers. And don’t forget about traditional advertising options like flyers or newspaper ads. However, you choose to promote your cat cafe, remember to highlight the adorable cats as the main attraction!
Related: Low-cost ideas to market a new business
Step 8: Prepare to Open!
As you edge closer to turning the “Open” sign on for the first time, there are several crucial steps you’ll likely still need to tackle.
Business insurance: Operating any business, especially one involving animals, necessitates comprehensive insurance. In addition to general business liability insurance, in case a cat injures a customer, you’ll also want to make sure you have property insurance to cover damage that may occur to the building and workers’ compensation insurance, which helps to cover medical expenses and lost wages for employees injured while on the job.
Setting up bookkeeping: You’ll need accounting software and systems to manage daily transactions, track expenses, and prepare for tax time. Keeping a tight financial ship is key to long-term success.
Partner with local animal shelters: If you plan on having adoptable cats, you’ll want to work closely with local animal shelters or rescue groups. Make arrangements for the cats’ care and set up an adoption process.
Opening a business bank account: Keeping your personal and business finances separate is essential. A business account helps you manage funds, issue payments, and receive income.
Accepting credit cards: Setting up a credit card processing system is pretty much a given at all retail establishments. Services like Square or Stripe can help you accept credit card payments smoothly and securely.
Preparing for the grand opening: Finally, plan a memorable grand opening event to attract your first wave of customers. Have some special deals ready, and maybe even a few cat-centric activities or giveaways.
Common Questions When Starting A Cat Cafe
How much does it cost to start a cat cafe?
A cat café business has various startup costs, such as business formation costs and equipment purchases. Every business is unique and may have additional costs specific to its needs, but some of the primary costs to help plan your initial budget include:
Starting a cat cafe can be a costly undertaking, with expenses ranging from $40,000 to $60,000 depending on various factors like location, size, and the scope of services you plan to offer. Let’s break down some of the main costs you’ll need to consider:
Business registration: When you open a new business, you must acquire a license (and sometimes a permit) from the state. Each state varies in how much the license costs; this information is detailed on the state’s website. Fees for registering your business can vary by state, but generally, you should expect to pay around $100 to $500 for initial filing fees.
Location: Initial deposits for renting a commercial space could cost anywhere between $2,000 and $12,000, depending on the area and the size of the property. This often doesn’t include the first and last month’s rent.
Facility setup: Designing and zoning your cafe to separate the cat area from the food area can be expensive. For the HVAC system and air purifiers alone, you might be looking at $5,000 to $15,000. Furniture and decor can add another $3,000 to $10,000.
Initial cat care costs: Depending on your partnership with local animal shelters, you may or may not have to pay for the cats. However, the initial setup for cat trees, beds, and toys could be around $1,000 to $2,000.
Business insurance: Initial insurance payments can be around $2,000 to $4,000, depending on the coverage you choose.
Marketing: For the initial launch, between the cost of a website, logo design, and initial advertising, you might spend $2,000 to $5,000.
Inventory: Initial stock of food and beverages could set you back another $1,000 to $2,000, while cat food and supplies might cost an additional $500 to $1,000.
How profitable is a cat cafe?
Cat cafés make their money by charging an hourly entrance fee or cover charge, plus charging for food and beverages. The profitability of a cat cafe varies based on several factors, including location, pricing, and operating expenses.
Let’s break down the potential profit with a simplified example. Suppose your cat cafe sees an average of 40 customers a day, and each customer spends around $20 for admission and drinks. That would amount to daily revenues of $800, or approximately $24,000 per month and $288,000 annually.
Now, let’s consider expenses. Assuming a modest rent of $3,000 per month, utilities around $500, and wages for a few employees amounting to $5,000 per month, we get fixed costs totaling $8,500 monthly. Add in variable costs like inventory, which could be around $2,500 per month, and we arrive at total monthly expenses of $11,000. Annual expenses would then be $132,000.
Finally, let’s calculate the potential profit. Taking the annual revenue of $288,000 and subtracting the annual expenses of $132,000, we get an annual profit of $156,000 before taxes.
These figures are, of course, rough estimates, and the actual numbers could be significantly different based on your specific circumstances. However, this example provides a baseline idea of the profit potential for a cat cafe.
What skills are needed to run a cat cafe?
You will need a few skills to properly run a cat café. Many small coffee shops close within their first few years of business, so having a few essential skills in place can help set your business up for success.
Cat knowledge: Every cat has its own personality and temperament. Some may be calm and love being held, while others prefer a look-don’t-touch interaction. So, understanding general cat behavior and body language can help you care for your café’s cats and keep customers safe.
Further, if your cat café is also an adoption center, knowing a cat’s history and temperament can help you place the cats with suitable homes. Along the same lines, it is also essential to spot illnesses and fleas to prevent them from spreading to other cats.
People management skills. The ability to interact with customers and manage employees is another crucial skill. For example, some employees may not be cat experts or professional baristas. So, your ability to train and build up your employees will greatly benefit the culture of your business and its efficiency.
Similarly, handling customer disputes gracefully can earn loyal customers and encourage positive reviews. Of course, incidents occur, but your ability to care for your customers, even during a disagreement, will positively affect your business.
Design: Cat cafés are known for having specific themes. For example, the original cat café was considered a cat garden. Other cat cafés design their space like a cozy living room, an English High Tea, or a cat’s-paradise jungle. Planning the décor and menu to match your theme will make your business cohesive, stand out, and an experience to remember.
Marketing: Because cat cafés are a specific style of a coffee shop, it is essential to have a solid marketing plan. This includes employing marketing skills like advertising, promotions, and specials to boost awareness and interest.
What is the NAICS code for a cat cafe?
The NAICS code for a cat cafe is 722513, which is classified under Limited-Service Restaurants.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?
Final Thoughts
Cat cafés are a great opportunity for entrepreneurs passionate about cats and coffee. The entrance fees make these cafés a lucrative opportunity, even when your overall customer base may be smaller due to its niche café experience.
So, with some creativity and inspiration, starting your own cat café may be your next perfect opportunity.
