How to Start a Coffee Cart Business in England and Wales

Are you looking to start a cafe but are wary of committing to a property lease? Alternatively, you may notice an area near you that is lacking a decent coffee cart. Perhaps, you think a coffee shop may work near a train station to serve the daily commuters. In this case, opening a coffee cart business, such as one out of out a trailer or van, could interest you.

This article will explore some common legal and commercial issues you should consider before launching a coffee cart business. 

Why a Coffee Cart Business? 

Coffee and tea businesses are known for their high margins. So, once you take into account any start-up costs and have a sound business model in place, you will likely see impressive returns. 

One key benefit of a coffee cart is that you can minimise the overhead costs that come with brick-and-mortar cafes by purchasing your cafe outright. For example, this could be your: 

• mobile coffee stand; 
• trailer; or 
• van. 

Having a Business Plan 

Indeed, nearly all businesses will benefit from having a business plan. At the most basic level, business plans should be able to account for:

• your business’ short, medium and long-term goals; 
• how you intend to market your business to customers; 
• your upfront, fixed, and variable costs; 
• your plans for growth and financing; and
• your unique selling proposition. 

When starting a coffee cafe, it may be beneficial to identify a deficiency or shortcoming in the market and exploit it. For instance:

• is there a cafe or coffee shop outside a commuter train station; 
• are there any coffee stands at the monthly neighbourhood fair; or
• do you have a successful cafe in town and are looking to leverage your brand on the go.

Whatever your business plan is, it must be unique to your business’ circumstances. Furthermore, the more you research, the more data points you will likely have. As a result, you will be in a better place to forecast your business’ success. 

Consider Startup Costs 

All business founders should have a solid grasp of the upfront costs of starting their business. Once you can generate enough cash to pay off your start-up costs, you will have overcome one of the most challenging stages in your business. However, you must first have a good model with low overheads and a steady stream of customers.

The most apparent upfront cost for coffee cart businesses is the cart itself. Therefore, to solve this issue, there are a few solutions you might consider:

• buying it outright;
• leasing it; or 
• buying it through a lending agreement. 

Ultimately, the correct answer will depend on the intentions you have with your business. Other things that may influence this include your savings and access to credit. Of course, the same goes for your espresso machine unless you intend to sell instant coffee!

Additionally, you will also want to consider:

• licensing application and certification fees; 
• other equipment, like carafes, grinders, storage, serving utensils, disposable goods, physical menus, counter equipment, and point of sale machines; 
• legal and other advisory services; and
• marketing fees, such as for sale signs, banners, and posters. 

What Business Structure Should You Adopt?

The four most common business structures are:

• sole-trader;
• unincorporated partnership;
• limited company; and
• limited liability partnership (LLP). 

Each structure comes with its advantages and disadvantages, and they will not all be relevant to your business. The structure that will work best for you will depend on your particular circumstances and intentions. However, as a business founder, you should familiarise yourself with the implications of trading through an unincorporated business structure instead of an incorporated one. 

The main benefit of an incorporated company is that you tend to benefit from the legal principle of limited liability. This means that your business’ assets and liabilities are separate from your personal ones. However, the downside to trading through incorporated structures is that they require more administration and management. As a rule of thumb, the more money you bring in and the larger your business, your liabilities will grow. As a result, this increasingly justifies the expense and admin of an incorporated business. 

Know Your Tax Liability 

The amount you will pay in tax will depend on what business structure you trade through, in addition to your income and expenses. Furthermore, you will want to check if the Value-Added Tax (VAT) is payable, given many of your customers will not be drinking on-premises. 

Insurance 

In its simplest form, insurance is a way to mitigate the risk that you will face financial liability if something goes wrong. 

There are three main kinds of insurance you will want to obtain for a coffee cart business:

• public liability insurance; 
• employers’ liability insurance; and 
• building & contents insurance.

Regulations, Licenses, and Certifications

Many important regulations exist to protect consumers if you serve food or beverages. If you fail to abide by these regulations, authorities can hold you criminally and civilly liable. 

Regulations 

There are several different laws in place to protect consumers. Various agencies will enforce these laws, although the local authorities will enforce most regulations. In most cases, you will need to legally register with your local authority to operate your coffee cart business. 

Licenses 

Further, you will also need to check with your local authority to comply with all licensing requirements. For instance, you may need a license to operate a mobile coffee business for a certain period or under certain conditions. 

Certifications 

Depending on what kinds of equipment you are operating in your new restaurant, you may need to obtain certain safety certificates. Usually, the local authority will regulate this. A common example is your gas certificate. 

Key Takeaways

You should ensure that you have a solid business plan in place before you begin your coffee cart cafe. Other important things to consider will include what business structure you will use and ensuring you understand all the licensing and regulatory requirements for selling food and beverages. Finally, it would help if you look into obtaining the proper insurance policies. 

If you need help with your start-up business, our experienced commercial lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Visit our membership page.

Frequently Asked Questions