How to Start a Coffee Roasting Business: 9 Steps to Success

Part 1 - How to start a Coffee Roasting Business: 9 Steps to Success business - Background

Coffee beans are actually the pit of coffee cherries. They’re green, hard and un-brewable in their raw state. A coffee roasting business roasts green coffee beans to light (city), medium (full city) and dark (full city+) roast levels so that they can be brewed. Roasters may sell their roasted coffee directly to individuals, or through coffee shops, grocers and other retailers.

If you want to find out how to start a successful coffee roastery business, this article covers the basics you’ll need to know, from crafting a business plan, to startup costs, to common business licenses required in the coffee industry.

Recommended: Read our full, in-depth How to Start a Coffee Shop Business guides, inspired by coffee professionals, they will help make your coffee dreams real, from sourcing beans to hiring baristas, choosing the best POS system, forming an actual company, and everything in between.

Our guide is in 3 parts:

• Part 1 - How to start a Coffee Roastery business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a coffee roasting business?

The startup costs associated with opening a coffee roasting business are significant. In addition to commercial space, business owners must also purchase:

• A coffee roaster, which can cost up to $25,000 or more

• Green coffee, which usually costs ~$3.00 to $4.50 per pound but is bought in large bags (e.g. 50-kilogram (110-pound) sacks)

• Packaging supplies (a few cents per bag or box)

• A POS system

• Labels (a few cents each)

• A heat sealer, which may cost anywhere from $30 to $300 or more

• A coffee grinder, which might cost between $500 and $1,000

Businesses will also need a computer and internet access to accept orders, and a vehicle to make deliveries.

There are two ways that business owners who have limited capital can significantly reduce their startup costs.

First, business owners can “contract roast.” In contract roasting, a business pays a rental fee to use a more established roaster’s facilities. The roaster of the established company may also be involved in the roasting process. The roasted coffee is sold under the renting roaster’s brand, regardless of whether another roaster is involved. This solution not only greatly reduces startup expenses, as there’s no need to purchase a roaster, heat sealer or coffee grinder, and it lets inexperienced business owners lean on the expertise of more experienced roasters.

Alternatively, roasters can start with lower-priced equipment. Driftaway Coffee is an established commercial roaster that roasted its first commercial batches with a Behmor 1600 — a roaster that’s marketed to hobbyists and typically sells for far less than $1,000. Businesses can also purchase less-expensive grinders and heat sealers.

What are the ongoing expenses for a coffee roasting business?

The ongoing expenses for a coffee roasting business include:

• Purchasing green coffee

• Purchasing fuel for the roaster (which may use propane, natural gas, electricity or another fuel source)

• Buying packaging supplies

• Rent and utility costs

• POS System monthly/annual fee

• Employees’ wages

• Shipping and delivery costs

• Equipment service calls

Who is the target market?

A coffee roasting business’ ideal customer is a business that sells a lot of specialty coffee. Coffee shops, certain grocery stores and a few boutiques may go through a lot of coffee. While these types of wholesale customers won’t pay as much as individuals who pay retail prices, wholesale customers provide a more stable income stream.

How does a coffee roasting business make money?

A coffee roasting business makes money by selling roasted coffee to individuals (retail) and businesses (wholesale).

How much can you charge customers?

Retail prices for roasted coffee are often between $12 and $20 for 12-ounce bags. Wholesale prices are often $6 to $12 per pound. The quality of coffee is one of the main factors that determine where within these ranges a roaster’s prices fall. (A few roasters have prices outside of these ranges.)

Lots of roasters offer retail bags in sizes other than 12 ounces, but most roasters use 12-ounce bags as their main retail package. They do this because about 25 percent of green coffee’s weight is lost in the roasting process, so 1 pound of green coffee becomes approximately 12 ounces of roasted coffee. Prices can be varied based on the reports generated by the POS system. If there is a significant demand for a product, the price may be increased. 

How much profit can a coffee roasting business make?

A coffee roasting business’ profit potential depends on how many outlets into which it can get its coffee. A roaster that has coffee in lots of retail locations may earn hundreds of thousands of dollars, or more, each year. However, many don’t make quite this much, but bring in closer to tens of thousands of dollars annually.

How can you make your business more profitable?

A coffee roasting business can increase its coffee sales and add additional revenue streams by opening up its own coffee shops.

Day-to-Day and Growth

What happens during a typical day at a coffee roasting business?

As a coffee roasting business owner, you’ll spend a lot of time roasting and packaging coffee. In a typical day, you may:

• Sort and weigh green (unroasted) coffee out into batches (often 5 to 20 pounds)

• Roast batches of coffee

• Sort and weigh roasted coffee into retail and wholesale packages (often 12-ounce and 5-pound bags)

• Accept and fulfill orders using a POS system

• Clean the roastery

Deliveries to wholesale customers are often made weekly.

At least monthly, and perhaps more often, you’ll receive shipments of green coffee and send invoices to wholesale customers.

What are some skills and experiences that will help you build a successful coffee roasting business?

Roasting coffee requires a lot of knowledge about coffee and the roasting process. Roasters should be familiar with everything from the cultivars of coffee and growing regions to how to cup coffee and when to increase heat during roasting.

Both the Roasters Guild and the Specialty Coffee Association of America offer classes on coffee and roasting.

Business owners who want to learn to roast coffee without paying for formal classes can apply to work as a profile roaster at an area coffee roasting company. Profile roasters don’t come up with new roasts, but they roast coffee according to the parameters set forth by a head roaster. This can be a good introduction to the fundamentals of roasting, especially if the head roaster is willing to teach and answer questions.

Sweet Marias, an online retailer of green coffee, also has a lot of free resources. These are targeted toward home roasters, but can also be beneficial to novice roasters who are exploring opening a commercial roastery.

What is the growth potential for a coffee roasting business?

A coffee roasting business can be a small, local business or it can be a large national company. Two large companies that both started as small roasteries include Starbucks, which sells its roasted coffee through its cafes and retailers, and Green Mountain Coffee, which doesn’t have cafes.

How and when to build a team

As a coffee roasting business grows, there are four key positions to hire people for:

• Sales and marketing, which grows a roastery by seeking new customers

• Packaging, which packages up roasted coffee

• Delivery and customer service, which delivers packaged coffee and answers customers’ inquiries

• Profile roasting, which roasts coffee according to set parameters

The first three positions let you focus on finding new coffees, developing new blends and growing the business. Hiring a profile roaster ensures coffee will still be roasted if you become sick and provides you with an opportunity to take a vacation.

Part 2 - Is a Coffee Roasting Business: 9 Steps to Success business the right fit for you?

Part 3 - Action plan to launch your Coffee Roasting Business: 9 Steps to Success business in 90 days