7 common challenges coffee shops face, and how to overcome them

If you’re running a coffee shop, you probably already have an idea of the challenges facing your business.

But, you’ve come here anyway! So you’re looking for advice, insights, and guidance.

Well, you’re in luck. In this article, we outline seven of the most common challenges coffee shops are facing right now, plus solutions for each problem.

Spoiler alert: Having a crew of Nory's AI assistants working 24/7 to manage your labour and food costs is pretty much the solution to most of your hurdles. More on this later. 😎

So, what are the most common challenges coffee shop owners face?

Over 60% of independent coffee shops close within the first five years. Why? Because it takes a huge amount of investment to get a store off the ground, build a team, perfect your offering, and build a loyal customer base that’ll drive your sales.

To grow and develop your coffee shop successfully, let’s walk through some of the hurdles you might face — and more importantly, how to overcome them.

1. Handling large amounts of throughput

With such a low transaction value, and the window for busy trade being narrow, driving high volumes of sales is crucial for any store to cover running costs.

This means being able to handle overlapping orders during peak times, with different tills, baristas, and coffee machines all running at once. It’s a lot to handle — and creating a highly efficient model whilst also producing a high-quality product isn’t easy for any business.

The right technology can be incredibly helpful when managing high volumes of orders during peak times. An ePOS like Vita Mojo or Lightspeed make it easier for staff to take orders, ensuring efficiency and allowing staff to provide customers with a smooth ordering experience.

Some systems can also predict demand during peak times, helping you stock up your cafe with the items you need. Nory's Forecasting Assistant, for example, predicts demand to the 15-minute level across every location — so you can prepare for high-volume periods with the right staffing and stock, without wastage.

You might also consider ways to spread peak times across different parts of the day to minimise the pressure on your workforce.

Pret a Manger is a great example of this — the company tweaked their subscription model due to sales volumes overwhelming stores in the morning. As a result, they encouraged customers to visit the stores at later times in the day.

2. Increasing customer retention

There are so many coffee shops to choose from (over 7,700 in the UK in 2023 to be precise), and customers will often choose the most convenient. This makes it hard to create loyalty and increase retention, ensuring customers keep coming back.

How to overcome this challenge

Creating a loyalty programme is a good place to start. It incentivises visits, offering customers a free item or discount code the more they spend in your cafe.

Many brands already use a loyalty system to build customer engagement and brand recognition. In cafes, these range from stamp-based and spend-based, all the way up to complex subscriptions, like Pret a Manger.

Hot tip 🔥 Use Nory to better understand customer preferences and behaviours! Get valuable insights to build loyalty programs and personalised marketing strategies that enhance brand recognition and customer retention.

3. Optimising labour costs

Labour represents an estimated 35-45% of coffee shops’ margin. That’s pretty high, especially when margins are already extremely tight for cafes and bakeries.

Balancing the right number of staff during peak and quiet periods can be a challenge. Plus, there’s a high amount of turnover of staff in this industry. Retaining skilled baristas, and ensuring locations are appropriately staffed at key times, is a major challenge.

How to overcome this challenge

Nory's Scheduling Assistant takes the demand forecast and builds optimal staffing plans in under 5 seconds — within budget, compliant with local working laws, and tuned to how each location actually operates. Customers typically see a 10–20% reduction in labour costs.

Nory also provides tools for effective staff training. Considering 45% of employees say they’d stay in their role if they received more training, this is a great way to encourage staff to stick around.

4. Building brand awareness

Building a brand that’s recognised for quality, price, and convenience is a big task, but it’s vital to coffee shop success.

Why?

Because it helps you build a loyal customer base that goes out of their way to spend at your store over the competition. This gives your business a steady base of sales, which keeps your business afloat.  

How to overcome this challenge

Digital marketing is a surefire way to get your brand out there. From posting on social media and sharing posts from real customers to creating paid ads — it increases your reach and gets your brand in front of more people.

It’s also a great way to engage with potential customers, building relationships, trust, and loyalty.

5. Choosing the right location

Choosing the right location can make or break the success of any coffee shop. In fact, it’s credited as one of the key factors for any coffee shop that closes its doors in the first year.

But why is it so important?

Because for most people, coffee is chosen for convenience. People rarely go out of their way to buy a coffee. So if you’re located in a place without passing customers, you might miss out on valuable footfall.

How to overcome this challenge

Make sure your venue is in a prime location for getting healthy footfall. A main high street in a city or close to a local tourist attraction are safe bets.

If you’re not getting enough footfall, is there a way to increase it? Offering an incentive, for example, could drive footfall to your venue — like a free mini cookie with every coffee. Give people a reason to stop by, and you might increase traffic and boost your coffee sales.

6. Scaling the business

For most consumers, coffee is all about convenience. So, it makes sense that having multiple stores in your target cities is a good next step.

It builds an image of always being available when customers need you the most (usually before 9am on a weekday 😴 ). Plus, the more locations you have, the more likely you are to appear top of their mind when they want to purchase.

It’s for this reason that brands like Costa Coffee and Starbucks become the ‘go-to’. There will always be one nearby.

But scaling a coffee shop isn’t easy, especially if you’re in the early stages of your business and are running the ship by yourself.

How to overcome this challenge

The answer is simple: have the right technology in place. Without it, you won’t have the insights you need to scale successfully. Plus, technology can streamline certain processes, like sharing menus and recipes across sites.

For brands looking to scale, take a look at Nory. Our crew of AI assistants works across every location. Each one tuned to that site's nuances, targets, and trading patterns. Consistent decision-making at every site isn't about luck; it's about having the right system in place.

Nory success story 🥳 Find out how Grolliadh grew their restaurant franchise by 3x with Nory!

Nory has been with us every step of the way. It’s been incredibly helpful to the business, and has played pivotal role in the successful franchising of Griolladh.
Jacob Long, co-founder of Griolladh

7. Analysing and using customer insights

Understanding who your customers are and what they want is crucial for any hospitality business owner. For example, knowing their habits, demographics, location, purchasing behaviour, and preferences.

All of these metrics play a crucial part in what you offer, how much you charge, and where you might expand if you plan to franchise.

But accessing this data isn’t easy. And even if you do have access to it, it’s hard to analyse and pinpoint key trends.

How to overcome this challenge

Yet again, technology is the answer to your problems! With an intuitive system, you can quickly and easily analyse key customer insights to inform your business decisions.

With Nory, for example, you can visualise key customer insights in a dashboard. With one quick look, you can see vital information in real-time. This helps you better understand what your customers want, how to create targeted marketing campaigns, and informs your product offering decisions.

Coffee shop management software: why should you use Nory?

Nory is an agentic AI restaurant operating system. A crew of AI assistants — Forecasting Assistant, Scheduling Assistant, Ordering Assistant, and more — work 24/7 to make sure your coffee shop is as profitable as possible.

In practice, that means:

• Connect your labour, inventory, and sales data in one place — so your AI assistants have everything they need to build accurate demand forecasts, optimise schedules, and manage ordering automatically.
• Integrate with your POS (like Toast) to feed real-time sales data into staffing and stock decisions across every site.
• Scale confidently across multiple locations, with each site running on the same AI logic — your rules, your targets, your way of operating.

Nory success story 🥳 See how Roasting Plant Coffee uses Nory to improve their workforce management across 18 locations, reducing labour costs by 18% in just two months!

I can see where our general managers are saving a huge amount of time making their rotas. It frees up their time to focus on other crucial aspects of their role.
Kallie Kocourek, Vice President of the UK Market

Oh, and one more thing — we can support any size of coffee shop.

Are you running a large commercial coffee shop with multiple locations? We can provide operational efficiencies and analytics to help you:

• Manage high-volume, low-cost operations effectively
• Optimise staffing and inventory for peak and off-peak times

Are you in charge of an independent, specialty coffee shop? Nory’s detailed analytics and inventory management can support the emphasis on quality and uniqueness, helping you focus on quality and maintain your distinct market position.

Reach out to the team to find out more about using Nory in your coffee shop, no matter how big or small. Focus on the quality of your coffee, while we take care of the rest. ☕

FAQs about challenges facing coffee shops

What are the weaknesses of a coffee shop?

Honestly, it depends. Typical challenges include ineffective cafe operations management, high competition, seasonality affecting sales, and challenges in maintaining consistent quality amidst fluctuating demand.

But really, weaknesses vary from location to location. A popular city-centre cafe is likely to generate more sales than a coffee shop off the beaten track.

What is the biggest factor affecting the coffee market?

Consumer preferences is one of the biggest factors at the moment, with younger generations spending more money on coffee as they’re moving away from drinking alcohol. Climate change is also impacting the industry, making it harder for coffee farmers to grow beans at lower levels.