Want to turn your home coffee roasting hobby into a cash-generating full or part-time business? With the demand for coffee projected to grow by 25% over the next few years, there's never been a better time to jump into this exciting and profitable industry!
Here are our quick guide and proformas to help you determine if a home-roasting business is right for you!
Step #1: Understanding the Time Commitment and Profit Potential
With any business venture, one must first understand if the profit potential is reasonable based on the amount of time and effort required. Assuming you have a viable sales channel (more on that below), the profit generation per hour of roasting will vary greatly based on the type of roasting equipment you purchase:
Profit Per Hour By Roaster Type
As you can see, the higher capacity of a larger machine like the Sonofresco (which is still small by commercial roasting standards) gives business owners the potential to make significantly more profit dollars per roasting hour, but at almost 4 times the cost the Sonofresco also increases the initial investment from the business owner. This leads us to......
Step #2: Determining the Start-Up Costs
Relatively speaking, the investment in equipment and working capital (supplies) to start a home coffee-roasting business is very low. Additionally, even if your business does not succeed, your investment can still be used to produce a low-cost, high-quality home brew that can recover your investment over time through reduced personal coffee expense!
As a minimum investment, you will need the following initial supplies:
Start-Up Investment Costs by Item
Per Step #1 above, the $1,100 Hottop output will limit your profit potential to around $20 per roasting hour, but is ideal for business owners with ample time, limited cash for investment, or low sales projections. Owners can always upgrade later to a higher capacity roaster once their business begins to grow.
The Hottop is also perfect for people who want try running a roasting business but are not 100% sure if it is the right path for them long-term.
Step #3: Choosing a Sales Channel
The economics of coffee are dynamic, and the average Profit Per Bag (PPB) sold will vary greatly depending on your business model. While your cost per bag may vary by $3-5 dollars depending on purchase volumes, the biggest differentiation in PPB will come from who you are selling to. For the sake of simplicity, our model assumes that the business has no outside labor costs, and that the owner is personally handling all of the necessary roasting, packing, and shipping.
Profit Per Bag (PPB) by Channel and Volume
This is obviously a simplified model, but one can quickly see that the profit potential per bag is potentially much higher selling directly to the end-consumers. Doing so, however, may also require a much larger portion of your time, or add additional shipping and handling expenses.
As an additional consideration, the total potential for bag sales may be much higher through a wholesale channel, offering a higher total profit potential even if the PPG is lower (low-margin, high-volume).
We hope this helps, but it's just the beginning!
We're just getting started! There's so much more to learn about choosing the right path in your new home coffee roasting business. Check out our other guides for more detail to help you minimize costs and maximize profits!
If you have any questions about the above topic, please let us know using our Contact page. We're always happy to help however we can!