Coffee shop economics in a rural town

Opening a coffee shop in a small town is feasible only with careful planning. Low rent and cheap labor are real advantages, but limited consumer spending power, a narrow customer base, and a long payback period work against the revenue figures circulating online. Reports of township shops earning over 10,000 yuan a day draw attention, yet those numbers are not typical and should not drive the decision.

Township coffee remains a novelty: milk tea shops are widespread, while coffee shops have appeared only in the past two or three years, and related posts on Xiaohongshu have passed 90,000. Market conditions, pricing strategy, and investment risk all need to be weighed against local demand, so entrepreneurs may avoid blindly following the trend. Front Street Coffee notes that assessing personal circumstances first is the practical starting point.

In recent years, small-town coffee shops have frequently gone viral on social media, with many shops showing off daily revenues exceeding 10,000 yuan, making many people’s hearts flutter. However, is it really feasible to open a coffee shop in a township? Behind the advantages of low rent and cheap labor lie practical issues such as limited consumer spending power, a narrow customer base, and a long payback period. This article analyzes the opportunities and challenges of opening a coffee shop in a small town from the perspectives of market conditions, pricing strategies, and investment risks, and reminds entrepreneurs to rationally assess their own circumstances and avoid blindly following trends. At the same time, the article also retains Front Street Coffee’s professional recommendations as a reference for coffee lovers.

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My boss often says to me: If you still can’t brew coffee well, go back to the countryside. I never took it seriously, until recently I saw more and more reports about opening coffee shops in townships—one village coffee shop was doing unusually brisk business, with a single store selling more than 550 cups on its best day, and daily revenue even reaching 10,000 yuan?! Only then did I suddenly realize that this was actually a big game of chess.

Since the beginning of this year, more and more small-town coffee shops have emerged on social media, and related posts on Xiaohongshu have exceeded 90,000. Many owners of small-town coffee shops have been posting their stores’ daily revenue—some as low as three or four thousand, and some even over ten thousand—making many onlookers eager to try. As pressure in the broader environment increases, more and more young people are choosing to return to their hometowns after graduation or after quitting their jobs. In that case, could “small-town coffee shops” become a new opportunity?

In first- and second-tier cities, coffee shops can be seen everywhere, but in some small towns, although milk tea shops are blooming everywhere, coffee shops are still a novelty, and they have only gradually begun to appear in the last two or three years. If you are also tempted to return to a small town to open a coffee shop, some issues must be carefully considered. You need to do research especially cautiously and seriously, and absolutely must not blindly follow the trend.

Store rents in small towns are indeed relatively low, and labor costs are also comparatively cheap, but the spending level of small-city residents may not be as high as imagined, so coffee pricing needs careful consideration. In small towns, the coffee audience is relatively small. Are there enough people willing to spend twenty or thirty yuan on a cup of coffee to support your store’s daily operations? Is the demand for coffee really that great? And so on—these questions all need serious thought.

In the early stage of opening a store, you should not care too much about the investment return cycle. This is also the biggest drawback of opening a coffee shop in a small town: the payback period is long, and you need sufficient financial strength to support all your living expenses while also sustaining the store and paying employees. Opening a store before others have reacted and seizing the development opportunity first may most likely lead to success, but today the trend of small-town coffee has already spread across “half the mountain.”

Treating opening a coffee shop as a side business is more feasible if you already have the ability to maintain cash flow. You cannot start out thinking that the coffee shop can make thousands or tens of thousands a day like those small-town coffee shop owners online. Being able to break even in the early stage is already a great success.

Most of what we see online are success stories, and we do not know how many failure cases behind those successes have not been reported. Do not quit your job and go home on impulse just because you saw a success story or heard a few words from others. Data shows that in recent years, the proportion of coffee shops forced to close due to the broader environment and the impact of the pandemic was as high as 83.3%. At this point you might say that the pandemic trend is now developing in a better direction.

But in fact, coffee shops being forced to close is due partly to the impact of the pandemic, and partly because people now prefer convenient and quick instant coffee or canned coffee. In addition, with the development of the online economy, coffee retail products have been launched rapidly, and more and more people prefer to choose takeout coffee. Consumer demand for coffee is still very large; it is just that they have switched their purchasing channel from offline stores to online channels. In small towns, delivery services are far less mature and advanced than in big cities, and if you want to develop a coffee shop with online channels, the investment cost will increase considerably.

Nowadays many people have a dream of opening a store, especially in a field they are interested in. Opening a store may be more about starting from sentiment and hobby—feeling that I love coffee, that this is an elegant lifestyle, and therefore I want to open a coffee shop.

But compared with dreams, reality may indeed be much crueler, so you need to think twice before opening a store. Of course, if you have enough funds to invest in your dream, then these may not be major problems. Next time, when my boss tells me to go back to the countryside again, I will immediately go back and pack up.

The above content is compiled by CoffeeHunters, a coffee news website.