The cat cafe industry is on the rise, with both cafes and animal-themed businesses growing in popularity. From 2021 to 2028, the cat cafe industry is expected to grow at a compound annual growth rate of 6.1%.
Have you ever wondered what it would be like to sip coffee while petting adorable rescue cats? If so, opening a cat café may be the perfect business for you. The cat café industry has been growing steadily over the past decade.
These unique establishments combine two popular pastimes—drinking coffee and interacting with friendly felines. For many millennials and cat lovers, cat cafés offer the ideal casual hangout spot and a memorable experience. This guide offers advice on how to open a cat cafe. Topics include market research, competitive analysis, marketing, registering an EIN, obtaining business insurance, and more.
1. Conduct Cat Cafe Market Research
Market research is important to start a cat cafe shop. It offers insight into requirements by the local health department, trends in services and products, decor ideas for a cat cafe concept, pricing guides, and more. It helps you build a thorough business model.
Several key factors demonstrate the sizable market opportunity for cat cafes across North America:
- There are over 94 million pet cats in the US, and 65% of US households own a pet.
- Desire for Experiences Over Products – Millennials now make up the largest pet-owning demographic.
- Visiting a cat cafe satisfies this increasing desire for share-worthy, Instagrammable experiences. You could even make the overall experience pop by including a game room, tarot reading room, or similar, making your cat cafe even more unique.
- While still a niche, cat cafes saw impressive growth pre-2020.
- As the novelty spreads, first-movers can capitalize on demand.
- Given the relatively few cat cafe locations currently operating, first-movers can establish territory and visibility before larger chains expand into more cities.
- Leasing commercial space also comes with negotiable terms, especially in a post-pandemic economy.
Combined, these factors demonstrate cat cafes represent a sizable and strategic business concept for aspiring entrepreneurs, especially those with a passion for coffee, cats, and delivering memorable customer experiences. The market growth potential remains promising.
2. Analyze the Competition
Given the niche nature of the cat cafe segment, conducting an in-depth competitive analysis is crucial before launching your cafe. Below are tips for assessing your brick-and-mortar and online competition:
Scope out existing cafes in your city and region through Google Maps, and Facebook searches. Look at key details like their location, spacing, layout, capacity, offerings, and safety protocols that you could learn from.
Visit competitor cafes as a “secret shopper” to evaluate positives and weaknesses from a customer perspective. Pay attention to their kitty area setup, food and drink menu, aesthetic design, cleanliness, staff friendliness, and cat knowledge. Identify any gaps that your cat cafe could improve upon.
Chat with the cat rescue organization partners of existing cafes to gauge initial launch challenges, health regulations, and recurring operational costs. These groups can provide insider expertise as you craft your business plan.
Search for established cat cafes on Instagram, Facebook and TikTok. Evaluate their follower counts, engagement levels, content strategies, and branding aesthetics. This gives you benchmark metrics to inform your own social media presence.
Claim and optimize Google Business and Yelp pages for your future location, even in the pre-launch phase. Check for duplicate or unrelated listings to minimize confusion.
Build an email list of interested supporters who want opening updates. Potential pet adoption partners, cat lovers, and coffee fans make ideal leads. Offer an incentive like 10% off for signing up early.
3. Costs to Start a Cat Cafe Business
When starting any small business, conducting in-depth financial planning and cost projections from the outset is essential. For a niche segment like cat cafes, budgeting for both initial investments and recurring overhead helps set realistic expectations.
Start-Up Costs
- Filing formation documents like articles of organization for your LLC or corporation involves state fees from $500-$800 on average.
- Some states may require food establishment or retail licenses adding another $300+ in upfront costs.
- Most commercial lease agreements require the first and last month’s lease deposit of $3,000-5,000 or more. Negotiate for tenant improvement allowances.
- Budget $100-$150 per sq ft for furnishings like display cases, counters, cat trees/play spaces, kitchen equipment, plumbing, lighting, decor upgrades, permit fees, and contractor labor.
- From quality coffee and tea inventory to treats, packaged snacks, and cat supplies, allocate $1,000-2,000 for initial food, beverage, and retail inventory.
- A tablet-based POS system tailored to food/drink ordering and inventory management represents an upfront software, hardware, and setup investment, costing $1,000-1,500.
- Print promotional materials like flyers and signage, invest in social media advertising, launch a user-friendly website, and host a buzz-building preview event for donors/press for $2,000-3,500.
Expect your total startup costs to run around $25,000 to $50,000 on average.
Ongoing Costs
- For a small leased space in an urban area, triple-net rents can range from $3,000-$7,000+ monthly depending on the market and terms negotiated.
- With 2-4 staff on payroll working various dayparts, including a manager, baristas, and a “Catmosphere Director”, payroll totals commonly land between $4,500-$9,000+ per month. These range based on hourly wages, staffing levels, and time off coverage.
- Litter, toys, beds, treats and vet bills for rescue cats add up monthly. Budget $500-1,500/month for this and a cleaning service to keep the cafe hair and allergen-free
- For any SBA-backed loans or financing locked in at startup, monthly payments commonly fall into the $2,000 – $4,000 range depending on amounts and terms.
- $500-1,500/month to boost social media ads, run retention promotions, partner with local businesses on cross-promotions, and refresh print materials seasonally.
The total estimated ongoing business expenses for a new successful cat cafe is between $12,000 and $25,000/month.
4. Form a Legal Business Entity
When starting a cat cafe, choosing the right legal structure impacts everything from daily operations to taxes, funding potential, and personal liability exposure. Below is an overview of common options entrepreneurs have for legally forming their business:
Sole Proprietorship
A sole proprietorship represents the easiest and most affordable option to set up. You simply start conducting business activities under your identity without needing to register a business name. However, sole proprietors face unlimited personal liability for debts and legal issues. Their personal and business assets get intermingled for liability and tax purposes.
Partnership
Forming a general partnership enables multiple owners to share control and split initial investments like a build-out. Partnerships can also tap a broader talent pool with different partners overseeing finances, marketing, or café operations. However, similar to sole proprietors, individual partners still assume unlimited financial and legal liability for the entire venture. The lack of protection can strain relationships if issues emerge.
Limited Liability Company (LLC)
For small businesses like cat cafes, LLCs offer the best of both worlds – the simplicity of sole proprietorships with built-in protections from incorporation. LLC owners face no personal liability for business debts and judgments. Only their initial investments into the LLC are at risk. Compared to corporations, LLCs involve less paperwork, lower state fees, and pass-through tax benefits.
Corporation
Fully incorporating as a cat cafe does limit liability and allows for raising investment capital by issuing company shares more easily than other entities. However, the administration involved with corporate directors, shareholder meetings, and extensive filings gives away flexibility. Combined with double taxation on company profits and dividends, incorporations better suit larger cafe chains rather than a single location.
5. Register Your Business For Taxes
Obtaining proper tax registrations and identifiers is a vital compliance step when founding any LLC business, including cat cafes. From federal Employer Identification Numbers (EINs) to state-level sales tax permits, staying tax-compliant protects your new company.
An EIN represents a unique 9-digit tax number that acts as an identifier for your LLC across governmental agencies. Even if you don’t plan to immediately hire W-2 employees, securing an EIN establishes key groundwork for your company’s finances and operations.
Every cat cafe LLC needs its own EIN before opening for crucial reasons like:
- Opening business bank accounts
- Applying for business licenses and permits
- Registering a point-of-sale system
- Establishing lines of credit
- Filing yearly tax returns
Obtaining an EIN is free through the IRS’s online application portal. Unlike cumbersome paper filings in the past, the streamlined web application takes under 10 minutes to complete.
You’ll need to provide your company’s legal name and address matching your formation documents, details on LLC structure, and the county/state where you organized the business.
The EIN is generated instantly upon submitting the form and should be documented for your records before applying for financial accounts and services using this new tax number.
In addition to an overarching EIN for federal tax purposes, cat cafe owners must also take steps to comply with state and municipal taxes in their geographic area. Key registrations needed include:
Sales Tax Permit: Since your cafe sells tangible goods like food, drinks, and retail products, charging local sales tax and remitting collections to the state is required by law. Securing a sales tax permit or seller’s license only takes submitting minimal application details and paying any sub-$100 state fees.
State Business License: If your state mandates registration of all in-state LLCs for an annual business license, complete this process early on. Fees are generally under $200 per year.
Income Tax Withholdings: LLCs are pass-through entities, so yearly profits/losses transfer to the personal returns of members. You’ll likely need to submit quarterly estimated income tax payments towards earnings. State requirements vary widely in forms and thresholds.
Coordinate all facets of tax compliance for your cat cafe LLC before opening doors to avoid missteps. The modest registration fees pale in comparison to penalties and back taxes if you get audited down the road.
6. Setup Your Accounting
With the flurry of initial tasks involved in launching a cat cafe, business owners often deprioritize accounting needs from the start. However, laying diligent financial foundations using the right tools and experts protects the future of your company.
Accounting Software
Early on, invest in a cloud-based accounting platform like QuickBooks to automatically centralize your finances. Connect integrations to your business bank and credit card statements to automatically download transaction activity. Generate automated reports on profit and loss, accounts receivable, accounts payable, cash flow statements, and more based on real-time data. QuickBooks plans start around $25/month.
Hiring an Accountant
While accounting software provides helpful DIY business financials management, partnering with an accountant enhances oversight for cat cafes. Specialists can handle crucial tasks like:
- Monthly bookkeeping – Recategorizing transactions, reconciling accounts
- Sales tax guidance – Collecting, filing returns, avoiding audit flags
- Payroll processing – Ensuring tax-compliant payments, filings
- Financial statement analysis – Evaluating margins, managing cash reserves
- Annual tax preparation – Income, employment taxes
Expect to invest around $200 – $400 per month for full-scope accounting support. For fledgling companies, even retaining help just for yearly tax filings can aid proper documentation.
Open a Business Bank Account
Mixing any personal bank cards or accounts with your cafe finances risks cumbersome untangling later for tracking obligations like lines of credit or expenditures. Open dedicated checking/savings accounts under your EIN. Never comingle funds.
Applying for a Business Credit Card
With a registered EIN, apply for a flexible corporate credit card carrying your LLC’s name with approval often based on your credit score initially. This supplementary plastic exclusively covers higher-limit operational purchases without tapping personal funds. Having a separate business credit card also facilitates transparent financial tracking.
7. Obtain Licenses and Permits
Once your LLC formation paperwork is complete, cat cafe owners must educate themselves on required operational permits and health department licenses pre-launch. Find federal license information through the U.S. Small Business Administration. The SBA also offers a local search tool for state and city requirements.
Food Service License As a cafe serving coffee, pastries, and other edible products, obtaining a retail food establishment license from your city or county health department proves mandatory. Applications require specifying details like:
- Proposed menu items and their sourcing
- Kitchen equipment like ovens, refrigerators, storage areas
- Countertop layout and dimensions
- Plumbing infrastructure for sinks, grease traps
- Plans for health standards like cleaning schedules, pest control
Based on submitted food safety protocols matching public health codes, health inspectors then review the premises in person. Pay any licensing fees that often range from $200 to $500+ depending on the municipality. Display your health grades publicly.
Fire and Building Permits If undertaking any construction as part of your cat cafe buildout installing walls, plumbing, and electrical – obtain the necessary fire and/or building permits first. Fire departments in particular will want to review projects involving cooking equipment, grease containment, ventilation hoods, and fire suppression systems.
Zoning Approvals Confirm that the physical location you intend to lease or purchase for the cafe allows for commercial occupancy and specifically food/drink establishments. Overlooked zoning restrictions that deem a space residential-only tank many small business plans.
8. Get Business Insurance
Securing adequate business insurance represents an essential, albeit often overlooked, step when founding a niche small business like a cat cafe. Too many enthusiastic entrepreneurs plunge into securing a prime location, extensive build-outs, and lavish grand opening marketing. Insurance keeps you covered no matter your cat cafe concept.
Whether a grease fire ruptures plumbing, a guest trips over a cat toy and threatens to sue or burglars target your expensive espresso machines, having policies covering repairs, legal judgments and replacement costs makes all the difference in rapidly reopening or closing your doors permanently. Even with the tightest profit margins, paying less than $100 per month.
The ideal approach involves bundling these tiered coverage areas:
- General liability insurance covers legal judgments from bodily injuries at a location like guests falling. This protects your assets when sued.
- Commercial property coverage replacing stolen or damaged equipment in incidents like kitchen fires. Safeguards your investments made into remodels, furnishings, and appliances.
- Business interruption insurance helps replace income lost from disasters forcing closures. Keeps payrolls and bills paid if repairs shutter operations.
- Commercial auto insurance handling delivery vehicle incidents for catering gigs.
- Workers compensation for staff injuries and rehabilitation.
- Specialized animal bailee policies cover vet bills for injured rescue cats in your custody.
For each policy type, tailor claim limits and deductibles based on your budget and risk tolerance. Building coverage gradually over time helps minimize initial premium spending too.
9. Create an Office Space
While cat cafes center around welcoming public storefronts, having a private back office area proves useful for admin tasks like payroll, vendor calls, staff meetings, and securing valuables. Weigh options like:
Home Office
Using a spare bedroom as a home base office offers convenience for solo founders to handle daily paperwork, though scaling multiple employees would quickly feel cramped. Budget $200-$500 to set up a desk, file cabinet, computer, phone line and basics. However, blending business and personal spaces can complicate taxes, zoning laws, home insurance, and security.
Coworking Space
Joining a hip shared workspace like WeWork allows meeting, printing, and office supply access for around $300-$800 monthly. However, the open concept doesn’t suit sensitive calls. Storage also gets limited for cat food supplies and cafe items. While you can be more hands-off daily when members handle space upkeep, it loses security.
Retail Back Area
If square footage allows, sectioning off 100-200 square feet behind counters as a tiny office, whether with a door or makeshift divider, grants owners and managers some onsite seclusion for immediate needs. Inventory also stays secured on the premises. Just $500-$2,000 covers build-outs and reserving a room for a desk and tech. Tradeoffs come through noise and cramped quarters as you scale staff.
10. Source Your Equipment
Launching cat cafes requires extensive specialty infrastructure from commercial espresso machines, glass merchandising displays, and POS systems to kitty condos and splash-proof furniture. Cats and kittens turn to animal shelters. Local animal shelters always have cats in need of care. Check out their social media accounts and cat lover groups online to find cats in need.
For equipment related to the cafe side of your business, source smartly across these categories:
New Purchases
Scout small business retailers like WebstaurantStore for appliances, while boutique shops like CatScapes and Kitty Mansions offer theme-friendly feline furniture. Expect new cafe gear to carry the highest costs, $10,000 for a full outfit.
Used Marketplaces
Search used listings on Facebook Marketplace, Craigslist, and eBay using keywords like “cafe equipment” or “cat furniture” in your area for discounted finds, especially shelving and small wares. OfferUp and LetGo also help uncover local sellers. Inspect the condition and clean it thoroughly before integrating it into your space.
Rentals
Renting essential machines through companies like Tapingo buys flexibility with contracts as short as 12 months covering maintenance/repairs, reducing risks for new entrepreneurs. This lets you pivot offerings or space needs more easily without sunk costs into appliances. Monthly rental fees are often comparable to or less than leasing.
Leased Equipment
Work with equipment finance companies to lease necessary café gear over 2-5 years. Payments spread out upfront capital expenditure into predictable installments while building a business credit history. Leasing high-ticket items like commercial espresso machines often runs $200-$500 monthly. Ownership transfers upon completion of the term or buyout option.
11. Establish Your Brand Assets
Crafting a distinctive brand identity from day one helps cat cafes connect with patrons in crowded hospitality markets. From logos to websites, unifying visual elements breed recognition.
Getting a Business Phone Line
Acquire a dedicated business phone number (separate from any personal cell you list online) through providers like RingCentral. Choose an easy-to-recall local area code. Set up voicemail greetings on the line sounding professional. Print the cafe phone number prominently on all materials.
Creating Brand Logos and Assets
Design a logo encapsulating your cat cafe’s vibe, like an adorable cartoon feline holding a coffee mug. Experiment with concepts using DIY sites like Looka but ideally invest in a professional graphic designer familiar with branding.
Business Cards and Signage
Order stacks of quality business cards to exchange when networking. Cat cafe details like your phone number, website, social media links, and address should all prominently appear on cards from affordable printers like Vistaprint.
Purchasing Domain Names
Secure a primary .com domain name that matches your café’s name using registrars like Namecheap. If taken, adjust with prefixes like “the original” or local geo-locations. Also, buy misspellings that could divert visitors.
Building a Responsive Website
Founders can utilize user-friendly website builders like Wix for DIY design solutions or hire web developers on Fiverr for fully customized, responsive sites. Optimize sites for mobile visibility and ease of updates via CMS backends.
12. Join Associations and Groups
While competitive, the niche cafe and pet industries contain a myriad of experienced voices willing to provide tips to rookies on everything from permitting hurdles to adoption partner relations. Seek both local and niche online networks.
Local Associations
Look into general small business alliances like your city Chamber of Commerce for networking events and percent-off vendor partner perks. Attend any food/restaurant associations if eligibility requirements align to access industry insights through mixers and conferences.
Consider joining regional pet-centric groups like the Pacific Northwest Cat Club Council which rally around animal welfare initiatives that could guide your cat rescue partnerships.
Local Meetups
Use listing sites like Meetup to find both general and niche entrepreneur-focused gatherings nearby open to anyone. For instance, Cafe Owner Bootcamps, Lady Boss Mixers, or Introvert Entrepreneur Lunches could expose you to like-minded owners from varying sectors tackling shared business hurdles.
Relevant Facebook Groups
For conversations around the clock from your phone, tap into some of the most active online small business communities housed on Facebook. Start with groups like Cat Lovers Community In the USA and Independent Coffee Shop & Cafe Owners with thousands of global members.
13. How to Market a Cat Cafe Business
Allocating a healthy marketing budget ensures new cat cafe ventures build sustainable awareness from launch rather than relying solely on word-of-mouth referrals. Crafting comprehensive digital and traditional campaigns pre-launch and maintaining engagement post-launch proves critical.
Personal Networking
Tap into your current network of friends, family members, and past colleagues to help spread the word about your new business idea. Friends and family make a big impact by sharing your business on social media, leaving reviews, handing out business cards, and even just visiting your cat cafe website.
Digital Marketing
Digital strategies in particular help rising cat cafes stand out from longstanding nearby coffee houses. Savvy owners experiment with tactics like launching Google Ads campaigns targeting local searches for cat cafes to monitor resulting clicks and conversions closely for positive ROI.
Cafe owners build engaging email newsletter sequences that introduce their rescues’ stories over time, merged with promos nudging revisits from past patrons. Part of your cafe business plan should include pursuing partnerships with prominent regional pet influencers on Instagram Takeovers to showcase their spaces through expanded reach.
Some coffee shop owners even produce YouTube videos spotlighting their vibrant latte art and menu items, embedding their website links across all video descriptions for amplified visibility.
Traditional Marketing
Even traditional marketing retains relevance when thoughtfully targeted. Creative cat cafe owners secure prominent highway billboard placements with succinct branding for mass exposure. Some ways to embrace your cat cafe business plan in a traditional marketing sense include:
- Distribute unique flyers at veterinary offices, pet stores, and shelters detailing adoption options.
- Purchase chunks of time on local radio stations to run adoption event ads before drive periods.
- Mail postcard promotions to residential areas announcing themed events like kitten yoga classes.
- Sponsor environmental cleanups and food drives to amplify community values.
Baking robust marketing campaigns into launch plans prevents scrambling to stay solvent when sales slow. Allot 15-25% of revenue towards multi-channel experiments, measuring analytics closely over the first 12-24 months to determine ROI.
14. Focus on the Customer
In an indulgent environment like a cat cafe centered around creature comforts, ensuring every guest leaves with a memorable experience should remain priority one. When patrons feel valued they become loyal brand devotees referring everyone in their networks.
Some ways to enhance customer focus amongst your target market of cat lovers include:
- Baristas go the extra mile learning customers’ names and usual orders.
- Products get merchandised for natural discoverability and grab-and-go convenience.
- Signage offers clever café rules guiding safe interactions with felines.
- Website and social channels stay responsive to inquiries about adoption options.
- Make repeat business feel effortless through loyalty programs like a 10th visit garnering a free accompaniment.
- Send annual birthday emails with exclusive coupon codes.
- Offer novice cat owners post-adoption guidance to answer questions.
When your first-time patrons become weekly regulars actively promoting your cafe’s differentiators to others (and booking events there), you expand reach exponentially sans excessive marketing costs. New visitors walk through the door pre-qualified having heard rave reviews, curious to personally experience the buzz.