Coffee Roasting Running Costs
Running a Coffee Roasting operation requires careful management of fixed overhead and high variable input costs Expect core monthly running costs (excluding green beans) to average around $21,600 in 2026, driven primarily by payroll and facility rent Your largest recurring cost will be raw material inventory (green beans) and labor, which are direct costs of goods sold (COGS) The model shows a fast path to profitability, with a Breakeven date achieved in February 2026 (2 months) This rapid return depends on achieving the forecasted annual revenue of $624,000 in Year 1 We defintely break down the seven essential monthly expenses—from $3,500 Roastery Rent to $14,583 in Wages—to help founders budget accurately and maintain the required working capital
7 Operational Expenses to Run Coffee Roasting
| # | Operating Expense | Expense Category | Description | Min Monthly Amount | Max Monthly Amount |
|---|---|---|---|---|---|
| 1 | Wages & Salaries | Payroll | Payroll totals $14,583 monthly in 2026, covering the Head Roaster, Operations Manager, and Packaging Staff. | $14,583 | $14,583 |
| 2 | Roastery Rent | Fixed Overhead | Fixed Roastery Rent is $3,500 per month, requiring founders to secure favorable lease terms early. | $3,500 | $3,500 |
| 3 | Green Bean Inventory | COGS | Raw material costs are the largest variable expense, estimated at $250 per 12oz bag, demanding strict inventory management. | $0 | $0 |
| 4 | Utilities G&E | Fixed Overhead | Monthly utilities are fixed at $800, but roasting operations can cause high seasonal spikes in gas and electric usage. | $800 | $800 |
| 5 | Payment Processing | Variable Overhead | Payment Processing Fees start at 25% of revenue in 2026, totaling $15,600 annually based on projected sales. | $1,300 | $1,300 |
| 6 | Acct & Legal | Fixed Overhead | Accounting and Legal Fees are budgeted at $400 monthly, covering compliance and financial oversight. | $400 | $400 |
| 7 | Equipment Maint. | COGS | Equipment Maintenance Allocation is a variable COGS expense, starting at 03% of revenue for essential roaster upkeep. | $156 | $156 |
| Total | All Operating Expenses | $20,739 | $20,739 |
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What is the total monthly running budget required to operate the Coffee Roasting business sustainably?
Sustainable operation for the Coffee Roasting business requires covering approximately $12,500 in fixed overhead while managing variable costs, mainly green bean procurement and packaging, which must stay below 45% of revenue. To understand if this model is viable long-term, you should analyze the unit economics closely; for a deeper dive into industry profitability, check out Is The Coffee Roasting Business Highly Profitable?. Honestly, managing that initial cash burn rate is defintely the hardest part of scaling artisan production.
Fixed Overhead Snapshot
- Monthly facility rent estimated at $4,500.
- Salaries for essential staff (owner plus one roaster) total $6,000.
- Utilities, software subscriptions, and insurance run about $1,000 monthly.
- Total fixed operating expenses are set at $11,500 before sales begin.
Variable Cost Levers
- Green bean Cost of Goods Sold (COGS) averages 35% of net sales.
- Packaging and labeling add a direct cost of $3.00 per 12oz bag.
- Target contribution margin (revenue minus variable costs) must exceed 55%.
- To cover $11,500 fixed costs, monthly sales must hit $20,909 minimum.
Which cost category represents the single largest recurring expense, and how can it be optimized?
Payroll at $14,583 per month is your single largest recurring cost, dwarfing rent ($3,500) and raw material spend, so managing labor efficiency is defintely critical for profitability in your Coffee Roasting operation; if you're planning expansion, Have You Considered The Key Components To Include In The Business Plan For Your Coffee Roasting Venture? This cost structure means small improvements in output per hour yield big margin gains.
Cost Hierarchy Check
- Monthly payroll of $14,583 is the primary expense anchor.
- Your rent commitment is only $3,500 per month.
- Payroll is over 4 times your fixed facility cost.
- Green Bean spend must be benchmarked against labor hours to find true efficiency.
Optimizing Labor Spend
- Schedule staff tightly around peak roasting and shipping windows.
- Cross-train employees for roasting, packaging, and fulfillment tasks.
- Automate order processing to reduce administrative time spent by staff.
- If onboarding takes 14+ days, churn risk rises for new hires.
How much working capital (cash buffer) is necessary to cover operations if sales lag for six months?
The required working capital buffer for the Coffee Roasting business is $195,000, covering six months of total cash outflow, including both fixed overhead and the cost of goods sold, which is a key metric when assessing if Is The Coffee Roasting Business Highly Profitable?. This calculation assumes a steady monthly burn rate of $32,500 until sales defintely normalize.
Buffer Calculation Breakdown
- Fixed Overhead runs about $15,000 monthly.
- COGS is estimated at 35% of sales volume.
- Total monthly cash need is $32,500.
- Six months requires $195,000; that's your minimum runway.
Managing Lag Risk
- If onboarding specialty cafes takes longer than 90 days, churn risk rises.
- Negotiate Net 30 terms with green bean suppliers now.
- Targeting 150 daily direct-to-consumer orders helps cover fixed costs.
- Review variable packaging costs; they might be higher than 8%.
If revenue is 25% below forecast, what immediate operational costs must be cut or deferred to maintain solvency?
If revenue is defintely 25% below forecast, immediate solvency requires freezing all non-essential hiring and deferring capital expenditures, focusing only on protecting direct variable costs like green bean procurement.
Freeze Discretionary Headcount
- Halt hiring for the planned Marketing/Sales Manager position scheduled for 2027.
- Suspend all travel and professional development budgets until Q3 projections are met.
- Review all software subscriptions; cancel anything not directly supporting roasting or fulfillment.
- If you're curious how much owners typically earn in this space, check out How Much Does The Owner Of Coffee Roasting Business Typically Make?
Cut Non-Essential Overhead
- Postpone any capital expenditure not immediately required for current production runs.
- Reduce overhead marketing spend by 50% instantly; focus only on retention marketing.
- Renegotiate payment terms with non-critical vendors, pushing for Net 45 cycles.
- If onboarding takes 14+ days, churn risk rises, so streamline that process now.
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Key Takeaways
- The core monthly running overhead for a coffee roasting business, excluding raw materials, averages approximately $21,600 in 2026.
- Payroll is the single largest fixed expense category, consuming $14,583 monthly to support necessary operational staffing.
- The financial model projects a rapid path to solvency, achieving the breakeven date just two months after launch, contingent on hitting $624,000 in Year 1 revenue.
- Green bean inventory stands as the largest overall recurring cost, demanding strict inventory management despite being a variable expense.
Running Cost 1 : Wages & Salaries
2026 Payroll Snapshot
Your 2026 payroll commitment is fixed at $14,583 per month. This covers three core roles: the Head Roaster, Operations Manager, and the Packaging Staff needed to fulfill your 'Roast-to-Ship' promise. This is a significant fixed operating expense you must cover before profit.
Cost Breakdown
This $14,583 monthly expense represents your core human capital investment for 2026. It directly funds the specialized labor required for production and logistics—the Head Roaster manages quality, the Operations Manager handles flow, and Packaging Staff ensures timely fulfillment. This cost is independent of sales volume.
- Covers three essential roles.
- Fixed cost base for 2026.
- Crucial for meeting freshness SLA.
Managing Labor Costs
Managing this cost means optimizing staffing levels against throughput rather than simply cutting salaries. Avoid the common mistake of underpaying the Head Roaster; quality control depends on expertise. Consider staggered shifts or part-time packaging staff until order density justifies full-time hires. Defintely watch utilization rates closely.
- Tie packaging hours to daily volume.
- Cross-train staff early on.
- Delay hiring the manager if possible.
Annual Commitment
The total annual payroll commitment for these three roles in 2026 will reach $174,996 ($14,583 x 12 months). This figure must be covered by gross profit before you can begin servicing your $3,500 monthly rent or variable COGS expenses.
Running Cost 2 : Roastery Rent
Roastery Rent Impact
Fixed roastery rent is a major overhead commitment at $3,500 monthly. Founders must nail down favorable lease agreements right away. This cost hits the bottom line before the first bag of coffee is even sold, making lease negotiation key to early profitability.
Cost Breakdown
This $3,500 covers the physical space for roasting and storage. It is fixed overhead, hitting the budget regardless of sales volume. To estimate this, you need a signed lease agreement showing the base monthly rate. This cost is critical for calculating the break-even point early on.
- Covers facility lease payments.
- Fixed at $3,500 monthly.
- Needed before production starts.
Lease Management
Reducing this fixed cost means negotiating better lease terms or finding smaller space. Founders should defintely push for shorter initial terms, perhaps 12 months with renewal options, to manage risk. Overpaying for space you won't use for 18 months sinks early cash flow.
- Negotiate shorter initial lease length.
- Avoid signing for excess capacity.
- Benchmark against similar industrial spaces.
Overhead Pressure
Securing a favorable rate of $3,500/month directly impacts how quickly you cover payroll and inventory costs. If you start at $5,000 for the same space, your break-even sales volume jumps significantly, delaying profitability by months. This negotiation is an early CFO win.
Running Cost 3 : Green Bean Inventory (COGS)
Inventory Cost Control
Green bean cost drives profitability because raw materials are your biggest variable hit. At $250 per 12oz bag, inventory control isn't optional; it's the main lever for margin defense. You must manage this expense tightly to protect your gross profit.
Cost Breakdown
This $250 per 12oz bag estimate covers the purchase price of the raw green coffee, including sourcing premiums for sustainable, single-origin beans. Since this is a Cost of Goods Sold (COGS) item, it scales directly with sales volume, unlike fixed Roastery Rent of $3,500 monthly. If you overbuy or waste beans, this cost immediately crushes your contribution margin.
- Units: Green beans needed for 12oz bags.
- Price: Current contracted rate of $250/unit.
- Impact: Directly affects contribution margin per sale.
Managing Material Spend
Managing this high-cost inventory means locking in forward contracts when prices dip, not just buying spot market. Avoid holding excessive stock past 60 days, as freshness is your core promise. Poor rotation leads to spoilage or needing to discount old stock, defintely eroding profit.
- Negotiate volume discounts on quarterly buys.
- Implement strict FIFO inventory tracking.
- Test small batches before committing to large orders.
Forecasting Risk
Your ability to forecast demand accurately dictates inventory holding costs versus stockout risk. Since beans are perishable, carrying too much inventory ties up cash and risks quality degradation, directly undermining your 'Roast-to-Ship' promise. This is a cash flow risk hiding inside your COGS.
Running Cost 4 : Utilities Gas & Electric
Utility Baseline
Utilities are a blend of predictable base costs and volatile operational expenses. Expect a baseline of $800 monthly, but high gas and electric usage from roasting will create significant, unpredictable seasonal spikes you must budget for.
Cost Drivers
This cost covers essential gas and electric services for the roastery space. The baseline is $800 per month, but the actual spend depends heavily on the heat required for bean roasting cycles. You need historical usage data from similar equipment to model the peak load accurately.
- Baseline monthly cost: $800.
- Gas usage per roast batch.
- Electric draw of machinery.
Spike Control
Managing spikes means optimizing the roasting schedule to avoid peak demand charges if applicable in your utility zone. Don't let equipment idle while hot, as that wastes energy. A defintely overlooked area is ensuring roasters are properly maintained for efficiency.
- Schedule high-draw roasts midday.
- Investigate energy-efficient roasters.
- Negotiate off-peak usage rates.
Budget Buffer
Treat the $800 as your minimum monthly commitment, but plan your working capital buffer around the highest expected seasonal usage, which could easily double or triple that fixed amount during peak production months.
Running Cost 5 : Payment Processing Fees
Fee Impact
Payment Processing Fees are projected to hit 25% of revenue in 2026, immediately costing you $15,600 annually based on current sales estimates. This high initial rate demands immediate attention because it directly eats into your gross margin before other operating costs.
Fee Breakdown
These fees cover the cost of accepting electronic payments from customers, like credit cards or digital wallets. To estimate this, take total projected revenue and multiply it by the agreed-upon percentage. For 2026, 25% of revenue equals $15,600, making it a significant line item right out of the gate.
- Input: Projected 2026 Revenue.
- Rate: Currently set at 25%.
- Impact: Directly reduces cash flow from sales.
Cutting Fees
A 25% processing fee is extremely high for standard transactions; you need to negotiate better terms fast. Look into alternative payment methods or direct bank transfers for B2B clients to bypass interchange costs. Defintely review your payment gateway provider before scaling up sales volume.
- Benchmark: Aim for 2.5% to 3.5% standard rates.
- Action: Push for lower tiered pricing immediately.
- Tactic: Offer small discounts for ACH payments.
Margin Pressure
If your revenue projections change, this $15,600 annual cost will shift proportionally. Given that green bean inventory is your largest variable cost, absorbing a 25% processing hit puts serious pressure on your contribution margin early on. Watch this metric closely as you scale.
Running Cost 6 : Accounting & Legal Fees
Fixed Compliance Cost
Your startup budget must defintely allocate $400 monthly for essential accounting and legal services. This fixed cost covers necessary compliance filings and basic financial oversight required to operate legally as a roastery.
What $400 Buys
This $400 covers core compliance needs, like annual state filings and monthly bookkeeping review for your coffee roasting operation. Inputs are usually based on fixed monthly retainers, not transaction volume. It’s a small, predictable overhead against high variable costs like Green Bean Inventory, estimated at $250 per 12oz bag.
- Covers basic compliance checks.
- Includes monthly oversight review.
- Fixed cost against variable COGS.
Managing Legal Spend
Keep this cost contained by using fractional CFO services initially instead of full-time hires for oversight. Avoid scope creep by clearly defining the legal work needed versus standard accounting tasks. If you manage payroll in-house, ensure your accountant only reviews, not processes, to save on service fees.
- Use fractional support first.
- Define scope clearly upfront.
- Avoid processing tasks if possible.
Risk of Underfunding
Under-budgeting this item risks penalties that quickly dwarf the initial savings you see elsewhere in the budget. If your legal needs grow due to complex sourcing contracts for rare beans, this $400 budget point will break fast. Plan for a 20% increase by year two.
Running Cost 7 : Equipment Maintenance
Maintenance as Variable Cost
Equipment upkeep isn't fixed overhead; it’s a variable Cost of Goods Sold (COGS). For this coffee roasting operation, budget 03% of revenue specifically for essential roaster maintenance. This cost scales directly with production volume, unlike fixed rent. You must track this percentage against actual repair invoices to ensure accuracy.
Roaster Upkeep Inputs
This 03% allocation covers preventative maintenance and emergency repairs for the core roasting machinery. To estimate the dollar amount, you need your projected monthly revenue figure. If 2026 revenue hits $130,000 monthly, maintenance is about $3,900. This is critical because unlike green beans, these costs hit after the sale is made.
Managing Repair Spend
Don't wait for the roaster to break down; that causes downtime and expensive emergency service calls. Implement a strict preventative schedule based on the manufacturer's guidelines, maybe every 500 operating hours. A good service contract can lock in predictable rates instead of variable spot quotes. This defintely avoids surprises.
Margin Impact
Because maintenance is a variable COGS, it directly impacts your gross margin, unlike fixed costs like the $3,500 monthly rent. If your actual maintenance runs closer to 5% during high-volume months, your contribution margin shrinks immediately. Monitor this line item weekly against the 03% standard.
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Frequently Asked Questions
Core monthly running costs (excluding raw materials) average $21,600, primarily driven by $14,583 in payroll and $3,500 in Roastery Rent;