Like most coffee lovers out there, most of us have dreamed also of putting up our own café business. Starting a coffee shop business in the Philippines involves careful planning, a clear financial roadmap, and a unique approach to attract customers in a competitive market. So the first question you have to answer is:
Is there a lucrative coffee market in the Philippines?
The short is answer is YES! The coffee market in Southeast Asia has been on a growth trajectory, with consumer demand and café culture steadily rising. In 2023, Southeast Asia’s coffee consumption amounted to around $3.4 billion, with Indonesia and Thailand leading the region in market share. In the Philippines, coffee consumption is projected to reach 7,358.2 metric tons by 2025, marking a 32% increase from recent years. This surge is driven by a growing urban middle class and the increasing appeal of specialty coffee shops, which are particularly popular among younger demographics who favor the social experience that coffee culture provides.
Additionally, the per capita coffee spending in Southeast Asia remains low compared to global averages, suggesting a strong potential for further growth. Coffee chains in the Philippines and neighboring countries are capitalizing on this by expanding their presence and introducing new products that cater to evolving tastes. This trend supports the potential success of local coffee shops, as rising coffee interest and spending habits create a promising landscape for new entrants into the market.
So how do you start a coffee shop business in the Philippines?
1. Plan well and conduct market research
Research is essential for understanding the local demand, customer preferences, and competitor landscape. The coffee industry in the Philippines is booming, with a strong preference for specialty and artisanal coffee.
Identifying a niche—such as local beans, vegan options, or themed café experiences—can set your shop apart. Well-known examples include Bo’s Coffee and Café Tribu, which have successfully tapped into Filipino tastes and aesthetics.
2. Choose a business model and location
Determine if you’ll operate a kiosk, a traditional coffee shop, or a mobile setup. Each has different capital requirements: an online coffee shop can start from ₱10,000-₱50,000, 1 small kiosk can start at ₱50,000-₱300,000, while a full café may need ₱500,000-₱2 million depending on location and scale.
High-foot-traffic areas near schools, business districts, or tourist spots can boost visibility and revenue. However, it’s vital to assess the rent and negotiate lease terms to align with your budget.
3. Prepare your capital and monthly budgets
Besides the initial capital, budgeting for monthly expenses like rent, utilities, and salaries is crucial. Small cafés in high-traffic locations can earn around ₱200,000-₱500,000 monthly, with larger ones earning more, but profit margins generally sit between 10%-20%. Setting financial goals, such as a target revenue and growth rate, can guide your business towards sustainability and profitability over time.
4. Secure business permits and ensure regulatory compliance
Register your business with the Department of Trade and Industry (DTI) or the Securities and Exchange Commission (SEC) if applicable, depending on the ownership structure that you plan to put up. This is mostly done online now, so you don’t need to hire a third-party firm to do it.
Ensure you have a Barangay clearance, Mayor’s permit, and BIR registration. Additional health and safety compliance may be required, especially for serving food. Prepare to keep your accounting books diligently to avoid paying penalties on taxes and fees.
5. Design an inviting pace and unique brand
A welcoming, Instagram-worthy design can attract and retain customers. Themes such as industrial, garden, or cultural Filipino styles can add uniqueness, which can be a significant draw, especially among younger audiences who value aesthetic spaces. Also, a unique menu with local flavors or themed events can make the coffee shop a social media hotspot.
6. Setup a menu and source suppliers of quality ingredients
Selecting a supplier is vital, especially for quality coffee beans. Many shops prefer local beans, such as those from Benguet or Sagada, to create an authentic Filipino coffee experience. Offering a variety of beans and customizing your menu to include locally-inspired drinks can enhance the brand identity while supporting local farmers.
7. Plan your marketing activities and customer engagement initiatives
Use social media marketing to engage customers and create a loyal following. Highlight unique products, engage with customer feedback, and consider partnerships with local influencers to promote your café. Engaging customers through events, such as barista workshops or seasonal offerings, can also help in building a community around your brand.
8. Ensure operational efficiency
Efficient workflow, inventory management, and a reliable POS system are critical for day-to-day operations. Hiring skilled baristas and customer service staff and ensuring consistent product quality will help build a loyal customer base. Customer service remains crucial, as positive experiences can lead to repeat visits and referrals.
Starting a coffee shop in the Philippines can be rewarding but requires detailed preparation and flexibility to adapt to changing customer demands and industry trends.
If you’re looking for a coffee supplier for your business, we at Milagros Coffee Roastery can help you kickstart your dream enterprise!