Fail

Who are the best failures

While there is no exact annual number for new coffee ventures that fail, studies indicate high failure rates: some sources report that around 75% of new coffee shops fail within the first year, while others suggest a failure rate of over 50% within five years. This is higher than general small business averages due to factors like intense competition and challenges with financial management, operational efficiency, and customer retention. [1, 2, 3, 4]  

First-year failure 

• Estimates suggest 75% of new coffee shops fail within the first year. 

• Other data points estimate the first-year failure rate is closer to 56%. 

• This is significantly higher than the general small business failure rate, which is about 20% in the first year. [2, 3, 4, 5]  

Five-year failure 

• It is estimated that roughly 50% of new coffee shops fail within the first five years. 

• Some surveys of coffee shop owners believe that a figure as high as 56% to 73% will fail within five years. 

• Again, this is higher than the general small business failure rate, which is around 50% after five years. [1, 2, 5, 6]  

Reasons for failure 

• Competition: High saturation in the market. 

• Financial management: Poor cash flow, under-capitalization, and mismanaging costs. 

• Operational efficiency: Lack of consistent management and oversight. 

• Location: Choosing a location without sufficient research. 

• Customer retention: Failing to build a loyal customer base. 

• Lack of unique selling proposition: Not having a clear niche or unique offering. [1, 2, 5, 7, 8]  

AI responses may include mistakes.

[1] https://blog.dripos.com/opening-a-coffee-shop-heres-the-data-on-failure-rates-and-how-to-improve-your-chances-of-success/

[2] https://beanandbrewtech.com/why-coffee-shops-fail-the-top-15-reasons-and-how-to-avoid-them/

[3] https://www.reddit.com/r/business/comments/1h5c88e/how_do_good_coffee_shops_still_lose_money_in_the/

[4] https://qualityblends.coffee/en/blogs/noticias/por-que-el-75-de-las-cafeterias-fracasan-en-su-primer-ano-evita-estos-5-errores-comunes

[5] https://texascoffeeschool.com/5-reasons-why-cafe-startups-fail/

[6] https://www.soybrandon.com/blog/coffee-shop-startup-costs-real-numbers-30-locations

[7] https://coffeebusiness.com/starting-a-coffee-shop-why-do-coffee-shops-fail/

[8] https://www.owner.com/blog/restaurant-failure-rate

Henry McClure  
785.383.9994
sent from mobile 📱
time kills deals