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How to Start a Cat Café

How to Start a Cat Café

Fluffy cats and cozy warm beverages make a purr-fect combination for a mood-boosting, uplifting environment. A cat café pairs a coffee-shop experience with a niche type of pet rental. Patrons can watch, pet, snuggle, or play with cats but don’t have to scoop the litter box or vacuum their living room couch before guests come over.

Cat café businesses allow cat lovers to socialize and enjoy coffee while the owner cares for the cats, facilitates adoptions, and earns a satisfying income.

Business Description

Coffee shops sell small bites and warm beverages (or cold ones, too, iced coffees are popular year-round in many areas) to be enjoyed in the café or to go. Cat cafés offer something a little extra.

A cat café is a coffee shop with a host of cats. These cafés either keep cats as pets or have cats available for adoption. Cats that remain at the store offer a form of entertainment for guests who can play or watch the cats while sipping their drinks and chatting with friends.

Patrons usually pay an hourly admission fee. So, in addition to food and drink sales, cat cafés also make money through their admission charges. Cat cafés that also function as adoption centers allow patrons to interact with the cats in the café before choosing one to take home. 

Industry Summary

In the U.S., there are over 89,000 coffee shops, which generate $51 billion per year. Now, cat cafes are a small pocket of coffee shops overall. According to meowaround.com, there are only about 143 cafes in North America. Although there are few cat cafés, they have been growing in popularity over the years.

Related Industries

Coffee Shop
Dog Walking
Pet Store

Industry Trends

Coffee shops have experienced several trends over the past few years that indicate growth and challenges. Cat cafés share much the same experience.

Growth

Coffee shops have proven to be less affected by recessions. During times of recession, people opt for cheaper dining. And since coffee shops have an overall lower average cost per order, coffee shops are less affected by changes in the economy. People are still willing to spend a few dollars on a cup of coffee or tea.

However, recessions can also pose a challenge to cat cafés with an admission fee. For instance, some patrons may opt for a coffee shop without an entrance fee over the cat café with an entrance fee. 

In addition to general protection from recessions, the U.S. population has been consuming coffee in increasing amounts. Moreover, coffee consumption is expected to grow in the coming years. According to the National Coffee Association (NCA), an average American drinks 3 cups of coffee each day. 

The NCA also notes that over half of coffee drinkers prefer coffee that is ethically sourced and good for the environment. So, cat cafés that double as cat adoption centers may attract environmentally friendly consumers.

Challenges

Competition is arguably the number one challenge for new coffee shops. The number of coffee shops in the U.S. grows each year. In fact, in 2022, the number of coffee shops has increased by 3.5%.

Due to the continued growth in coffee shops, the market is more competitive and challenging for new small shops to succeed and out-compete stronger, more established shops—especially chains.

Fortunately, cat cafés are in their own niche, so although they compete with coffee shops, they offer a unique experience. However, this trait can be a challenge because the café only appeals to a specific market of people. For instance, cat cafés likely won’t attract people with pet dander allergies. 

Target Market

Because cat cafés are unique, they should market to areas with a concentration of interest. Some populations that cat cafés appeal to include the following:

  • Cat lovers—Whether your customer loves watching and interacting with cats or is looking to adopt, a cat café will draw cat aficionados.
  • Those looking for an experience – A cat café is a one-of-a-kind coffee experience. People looking for a tourist activity, date night, or fun outing will be attracted to the idea of a cat café. And much like a museum or other experience, paying an entrance fee is often expected and accepted.
  • Those wanting a calm, therapeutic experience—Animals are known to bring relief and calm to those needing comfort. Although cats can certainly be busy at times, simply watching or petting a calm cat can help boost a person’s spirit. In this regard, cat cafés will appeal to those seeking a tranquil and therapeutic experience.

Since a cat café is a niche enterprise, locating in areas with general tourist activity or higher populations will be advantageous and help draw in interest and customers.

Checklist for Starting a Cat Cafe

Whether you’re a first-time business owner or starting your first cat cafe, there are a few things you need to know. We’ll outline the key steps involved in starting a cat cafe to help make the process easier.

Step 1: Write a Business Plan

A crucial step in starting a cat cafe is creating a comprehensive business plan. This written document outlines your goals, strategies, market analysis, and financial projections, serving as both a roadmap for starting the business and a tool for obtaining potential funding.

In addition to getting funding, a cat cafe, like any other type of business, can benefit from this strategic planning. It helps clearly define the mission and vision of your cafe, as well as considerations for factors such as location, menu offerings, and target market. Your business plan can also assist in determining start-up costs and creating a realistic budget for running the cafe. Ultimately, having this level of forethought and organization can set the foundation for long-term success in your cat cafe venture.

Related: How to write a business plan

Step 2: Pick a Business Name

Coming up with a unique and fitting name for your cat cafe can be a challenge, but it’s an important step in shaping the identity of your business.

One approach is to focus on the cats themselves, perhaps using puns or playful language to convey the feline theme (think: “Purrfect Cup,” “Catpuccino,” “Meow & Brew”). Another option is to draw inspiration from your location or the design of your cafe, such as “The Cozy Cat Corner” or “The Kit-Tea House.” You could also choose a name that conveys the relaxed atmosphere of a cat cafe, such as “Zen Kitty” or “Paws & Relax.”

Keep in mind that whichever name you choose is that it should not only be easy for customers to remember and visually appealing for signage and marketing materials, but needs to be available to use.

Related: Tips on naming a business

Step 3: Form a Legal Entity

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a cat cafe, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Select Your Location

Starting a cat cafe can be a fun and rewarding business venture, but finding the right location is key to its success.

First, consider what type of neighborhood would attract potential customers. It may be tempting to locate near pet stores or animal shelters and rescues, but it may not be a desirable location for your customers.

It’s also important to have enough foot traffic, as well as access to public transportation, in order to have visibility of your cafe.

Next, think about the layout and size of the space. It should have enough room for both seating and play areas for the cats.

Once you’ve found a suitable location, it will be time to start planning and preparing for your feline friends!

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

While cat cafes are certainly a fun and unique concept, they require careful planning in order to meet all necessary legal requirements.

The first step is to obtain a food license through your local health department, as many cat cafes offer snacks and beverages to their customers. Additionally, depending on where the café is located, a business license, Employer Identification Number (EIN), and sales tax permit may be necessary to operate. Also, there may be specific licenses required for housing animals on the premises.

It’s important to do thorough research and obtain all necessary licenses before opening the doors to your cat cafe, as failure to do so could result in fines and even the temporary closure of your business.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 7: Open a Business Bank Account

When opening a cat cafe, one of the biggest challenges can be securing enough funding. However, there are several options for financing your furry business venture.

One option is to apply for small business loans from banks and other financial institutions. Another possibility is crowdfunding through platforms such as Kickstarter or GoFundMe, where patrons and cat lovers can donate money to support your endeavor. You could also approach local businesses and individuals for sponsorship or partnerships.

Related: Finding the money to start a business

Step 8: Get your Marketing Plan in Place

A cat cafe is a unique and adorable way to attract customers, but it’s important to find out who your target audience is and how to reach them.

One way to promote your cat cafe is through social media platforms like Facebook, Instagram, and Pinterest by posting cute pictures of your furry friends and advertising any special events like kitten adoption days.

Another idea is to partner with other local businesses, like animal shelters and pet stores, to host events or adoption days. This not only brings potential customers to your establishment but also helps spread awareness about the importance of adopting shelter animals.

Being active in the community can generate positive word of mouth, so hosting events like fundraisers for animal welfare organizations can also draw in potential customers. And don’t forget about traditional advertising options like flyers or newspaper ads. However you choose to promote your cat cafe, remember to highlight the adorable cats as the main attraction!

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.

Step 9: Get Business Insurance

While the idea of cuddling with cats while sipping your latte may seem harmless, running a cat cafe comes with its own set of risks.

In addition to the standard business liability insurance, in case a customer is injured by a cat, you’ll also want to make sure you have property insurance to cover damage that may occur to the building and workers’ compensation insurance, which helps to cover medical expenses and lost wages for employees injured while on the job.

Protecting yourself and your business with comprehensive insurance can give you peace of mind and ensure that everyone – from customers to cats – has a safe and enjoyable experience at your cat cafe.

Related: Types of insurance your business may need

Step 10: Hire Employees

When hiring employees for a cat cafe, it’s important to keep in mind the specific needs of both customers and cats. You’ll want to prioritize individuals with previous experience working with animals, as well as those who demonstrate patience, friendliness, and a love for cats.

It’s also crucial to have employees who are willing to clean litter boxes and perform other cleaning duties, as maintaining a clean and sanitary environment is essential for both the cats’ and customers’ health and enjoyment.

Asking for references from past employers or seeking recommendations from your network can also be helpful in finding suitable candidates. And, of course, don’t forget to have potential hires complete a trial shift in order to assess their skills firsthand. By keeping these considerations in mind, you’ll be able to hire the perfect team for your cat cafe.

Related: Hiring your first employee

Step 11: Set up an Accounting System

When starting a small business, one important element to consider is setting up an effective accounting system.

As a cat cafe owner, you’ll need to track income from customers, expenses for food and care supplies, and any other financial transactions. A good place to start is by creating separate accounts for each category of expenditure and income. For example, you could have one account for cat food purchases and another account for sales of coffee and pastries. It’s also helpful to set up a system for recording transactions on a regular basis, whether it’s daily or weekly. This ensures that the information remains accurate and up-to-date.

It may also be beneficial to consult with a professional accountant or bookkeeper to make sure your accounting system is organized and in compliance with any relevant regulations. Taking the time to properly set up your accounting system at the beginning will save headaches in the long run and help ensure the success of your cat cafe.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

Common Questions When Starting A Cat Cafe

How much does it cost to start a cat cafe?

A cat café business has various startup costs, such as business formation costs and equipment purchases. In this section, we will discuss some of the primary costs to help plan your initial budget:

Business Formation. When you open a new business, you must acquire a license (and sometimes a permit) from the state. Each state varies in how much the license costs; this information is detailed on the state’s website. In addition, your business needs insurance. It’s best to contact a few insurance companies to compare quotes.

Location. Location costs include lease costs or property purchases. It also entails construction costs for required modifications to the space. For example, some commercial areas are not equipped to accommodate a coffee shop, so expect to pay for some construction costs to build cabinets and countertops.

Typical rental rates for retail space cost, on average, $10 – $40 per square foot per year. The price per square foot is higher when you purchase versus rent. Be sure to also factor in the cost of utilities such as internet, water, and electricity.

Equipment
Some of the equipment you will need include:
– Commercial espresso machine—$5,000
– Cooler—$2,500
– Glass case to display food—$2,000 – $10,000
– Point-of-sale system (POS) – $100 – $1,000

Furniture. In addition to construction and equipment costs, your cat café needs furniture. So, whether you go for a classic coffee-shop look with tables and chairs or a living room vibe with couches and coffee tables, you will need to budget for furniture.

Many pieces can be thrifted to keep costs low, but if you are going for a specific look, you may opt to purchase brand-new ones. For example, low-end coffee tables may cost around $80 each, whereas nicer tables may cost $200 – $300. Similarly, new chairs cost between $60 – $70 on the low end.

Cats and Supplies.
Many cat cafés take in unwanted cats or cat donations. So, in many cases, the amount you spend on acquiring cats could be little to none. However, you will need to initially budget money for:
– Food – $200+ monthly
– Medicine and vaccines – $500
– Litter boxes, scratching posts, toys – $500

How profitable is a cat cafe?

Cat cafés make regular income by charging an hourly entrance fee or cover charge, plus charging for food and beverages. The store could generate $182,000 or more on admission charges alone. Let’s look at the math:

If your coffee shop is open for 10 hours a day and charges an hourly rate of $10 per person for admission, your store generates $100 daily if you only have one person there each hour. 

On the other hand, if you have a minimum of five people every hour, your store makes $500 per day, or $3,500 per week (assuming the café is open seven days a week) 

With five people in the café every hour, the annual income on admissions is $182,000. Increasing the number of customers each hour will boost your income quite a bit.

On top of admission revenue, cat cafés make money from coffee sales. Coffee shops typically have a higher gross profit than other restaurants because the cost of producing drinks remains relatively low. Case and point, water is the main ingredient for many beverages, including tea, americanos, drip coffee, iced coffee, and iced tea.

For example, a one-pound bag of coffee can make about 32 eight-ounce drinks. So, if you buy a one-pound bag of coffee for $10 and sell each eight-ounce cup for $2, a one-pound bag of coffee earns you $54 profit ($64 total profit minus the $10 investment).

Are there grants to start a cat cafe?

It’s extremely rare to find a grant to start a cat cafe. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.

What skills are needed to run a cat cafe?

You will need a few skills to properly run a cat café. Many small coffee shops close within their first few years of business, so having a few essential skills in place can help set your business up for success.

Cat Knowledge. Every cat has its own personality and temperament. Some may be calm and love being held, while others prefer a look-don’t-touch interaction. So, understanding general cat behavior and body language can help you care for your café’s cats and keep customers safe.

Further, if your cat café is also an adoption center, knowing a cat’s history and temperament can help you place the cats with suitable homes. Along the same lines, it is also essential to spot illnesses and fleas to prevent spreading to other cats.

People Management Skills. The ability to interact with customers and manage employees is another crucial skill. For example, some employees may not be cat experts or professional baristas. So, your ability to train and build up your employees will greatly benefit the culture of your business and its efficiency.

Similarly, handling customer disputes gracefully can earn loyal customers and encourage positive reviews. Of course, incidents occur, but your ability to care for your customers, even during a disagreement, will positively affect your business.

Design. Cat cafés are known for having specific themes. For example, the original cat café was considered a cat garden. Other cat cafés design their space like a cozy living room, an English High Tea, or a cat’s-paradise jungle. Planning the décor and menu to match your theme will make your business cohesive, stand out, and an experience to remember.

Marketing. Because cat cafés are a specific style of a coffee shop, it is essential to have a solid marketing plan. This includes employing marketing skills like advertising, promotions, and specials to boost awareness and interest.

What is the NAICS code for a cat cafe?

The NAICS code for a cat cafe is 722513, which is classified under Limited-Service Restaurants.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

Final Thoughts

Cat cafés are a great opportunity for entrepreneurs passionate about cats and coffee. The entrance fees make these cafés a lucrative opportunity, even when your overall customer base may be smaller due to its niche café experience.

So, with some creativity and inspiration, starting your own cat café may be your next perfect opportunity.

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