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Private Label Coffee vs. DIY Roastery

So you're thinking about starting a coffee brand, but you're trying to determine whether or not you should do it yourself by starting your own coffee roastery. Or maybe you're considering working with a private label coffee company. This is one of the topics that I've seen coming up a lot in some of the chat groups that I'm in, and I'm here to answer a bunch of questions for you so that you can make that determination for yourself.

Before opening your own coffee roastery and deciding to do your own coffee brand yourself there's a lot of things that you have to consider. Those being; the cost of a coffee roaster, the availability of a coffee roaster, and also the availability of a space that you can actually use to roast coffee in. It's not as simple as just buying a coffee roasting machine from whichever manufacturer you like the most, and then going down the street and finding a space to plug your roaster into.

There's a lot that goes into it. We're going to talk about all that and hopefully help you in determining whether or not opening a coffee roastery is for you or not.

All right. Let's talk about some of the costs that are going to be associated with building out a roastery. You can follow along with all of the costs in this linked PDF.

Now keep in mind that this list is not fully exhaustive because there are some other things on here that are not shown, but we'll try to fill in those blanks when we can.

Okay. First and foremost, this is all of the equipment that I needed just to build the miscellaneous things in the shop.

I think I label all these things as like the lab equipment. This is basically everything that you're going to need to be able to make and serve coffee in your coffee roastery so that you can see what your coffee tastes like. So $7,811. So that right there is your initial cost. Now let's go over to the packing and shipping station -- Bean scoops, bag formers, label printer, scales, bag sealers, etc. That gets pretty darn expensive as well at $3,304. However, recently I upgraded a lot of my equipment and added some new tables and added some racks from Uline for $4,000.

So now lets look at all of the build-out costs. All of the stuff that the contractor needed to do, like running electricity, running the gas, running the water, putting in a hot water heater, etc, and then the plans, permits and architect. And the exhaust pipe... Just the exhaust pipe that I have on my coffee roaster cost as much as a lot of the coffee roasters that people start off with. 

Then there's miscellaneous improvements to consider, which is like paint and doorknobs, and all the other stuff to clean up the space up a little bit. And then we have our most expensive purchase, $29,000 for a Giesen W6. 

I believe from the time that I paid for my machine until it arrived at my doorstep was about nine months. And as you can see, it cost me 1900 dollars to get that roaster sent here from the Netherlands. Now, keep in mind, this is $29,000 for a six kilo roaster. I have a new roaster coming that does 35 kilos and that's $146,000.

So there's another number for you to put into your spreadsheet when you start trying to figure out your cost.

The other expenses that you have to figure out are your operating expenses. I would suggest you budget for at least three months worth of operating expenses. There's a lot of costs that we have included. $800 for the LLC fee. My rent for the first three months, some marketing, deposit on the renting or the roasting space that I'm in. Some media, and organic certification, a $3,000 organic certification that's actually a little bit higher than what I paid. I think 1800 is about where I was, but we also had to pay for a lot of other food and health related licenses as well.

So $3,000 is probably pretty safe to expect for all of the licensing that you will see. So you can see right here $12,000 for that.

And then we need to get some coffee. We haven't even gotten there yet. So brewing equipment. You got to be able to make the coffee. I know we talked about that earlier in the lab expenses, but I ended up needing more stuff, which was a coffee brewer.

I ended up getting a Curtis Coffee brewer. Now I have a Fetco, but expect to pay about $2,000 for a commercial level coffee brewer and grinder to go with that. And then you have your green supply. This is only five bags. That's like 700 pounds of coffee. Not a lot, $2300 just to get started, those are all of the cost that you're looking at.

Let's tally them up here. $7,800 for the lab equipment. The packing station was 3304 plus 4025. And then you have your buildout costs, which was 47,948, and then your first quarter expenses of 12,160. And then your cost of goods are 4310. That is a lot of money.

So if you're thinking about doing a coffee brand, private label might be the way to go. If you don't have an extra $100,000 sitting around and a year or two of time to get to market.

Okay, Now that we've seen what it cost to start a coffee roasting business, I'm going to go through some of the cost associated with getting started with a private label program with Calioh Coffee.

Now let's talk about the prices of private label. The prices that we charge for the services that we offer is $650 for an account management fee, $5 a month to store your packaging, or $15 if you have a lot if you need to put a pallet up on the rack and then every order is $3 per order for pick-pack and kitting is $1.

If you want us to do a digital marketing package for you, it's $450 and graphic design package is $360. Now we do add 10% to the total of all packaging cost if we take care of that for you That just covers our overhead for getting the products in the door for you. That's really it. The prices of coffee is pretty much the same across the board now that you've got all the information, if you want to get started with private labeling with us, here's our information.

Okay. So now that we've talked about some of the cost associated with opening a coffee roastery, let's talk about some of the advantages of just partnering with somebody that already has a coffee roasting operation in place who you can private label through. Some of the pros of partnering with somebody who's already in operation is you eliminate all of the entry to market time that it would take you otherwise to start your own coffee roasting business.

This business took me six months minimum as soon as I signed the lease on this space, but I had ordered my coffee roaster, I want to say nine months before that. We actually have a new roaster that's coming to replace this one soon and we ordered that one more than 13 months ago and it's still not going to be here for a few more months.

There's a lot that goes into it and if you don't have a year or two to wait to go to market, maybe partnering with somebody who's already doing it can get you a little bit of a head start and see if this is actually something that you want to do. All right. So if you have any other questions on the cost associated with starting a coffee roastery, you can put those in the comments or you can send us a direct message and I'll try to get back to you on that.

However, hopefully by now you're able to get an idea of how much it's going to cost you to have a coffee roasting business from start to finish and then how much it's going to cost you to get started with Calioh Coffee with a private label coffee program.

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