Coffee Shop Business Plan

Table of Contents:

• Coffee House Business Plan. 1
• Executive Summary: 2
• Founders: 3
• Financials: 3
• Mission: 3
• Objectives: 4
• Keys to Success Factors: 4
• Company Summary: 5
• The Coffee-House Concept: 6
• Company Ownership: 6
• Start-up Summary: 6
• Long Term Assets: Rs 92, 000. 6
• Short-Term Assets: Rs 15, 000. 7
• Start-up. 8
• Products: 12
• Vendors: 12
• Product Description: 12
• The Coffeehouse Menu: 13
• Coffee and Espresso Drinks: 13
• ESPRESSO.. 13
• COFFEE DRINKS. 14
• HOT COCOA DRINKS: 15
• SMOOTHIES: 15
• Teas: 16
• ICED TEAS: 16
• HOT TEA: 16
• Juices: 16
• Italian Sodas: 17
• Snacks and Pastries: 18
• Deli Items: 18
• Market Analysis Summary. 18
• Market Segmentation: 19
• Management and Staffing: 20
• Organizational Structure: 20
• Management Team: 20
• Staffing: 20
• Labor Market Issues: 21
• Target Market Segment Strategy. 22
• Industry Analysis: 23
• Competition and Buying Patterns: 23
• Strategy and Implementation Summary. 24
• Financial Plan: 30
• Projected Cash Flow: 33
• Projected Balance Sheet: 35

 

Executive Summary:

COFFEE SHOP BUSINESS PLAN explains that Every day, millions of people stops for an espresso-based coffee drink. People who would not have dreamed of spending more than $10 for a cup of coffee a few years ago now gladly pay $50 to $250 for their cappuccino, mocha latte or vanilla ice blended drink. Liberty coffeehouse is determined to become a daily necessity for local coffee addicts, a place to dream of as you try to escape the daily stresses of life and just a comfortable place to meet your friends or to read a book, all in one. With the growing demand for high-quality gourmet coffee and great service, Liberty coffeehouse will capitalize on its proximity to the to build a core group of repeat customers. Liberty coffeehouse will offer its customers the best prepared coffee within few seconds in the area that will be complimented with pastries, as well as free books that its patrons can read to enjoy their visit

The specialty-coffee business is growing at a healthy pace. During the past 5 years, there has not been a single year, despite war and recession, in which specialty coffee sales have not grown. In many years the increase has been in double digits. In addition, no coffeehouse chains have failed during this time, although the list of casualties in other industries is quite long.

The Coffee Day, Barista, Mocha… and other major chains serve average quality drinks in establishments that have the same generic design appearance. Indeed, Coffee Day and The Coffee Bean are often referred to as “fast food” coffeehouses due to their “cookie cutter” design. Now that  coffee preferences have broadened and matured, many are asking for more from their coffeehouse.

A niche exists that has yet to be filled for a high-volume, upscale, quality-driven coffeehouse with a warm, inviting atmosphere.

Liberty Coffee Shop meets this need and fills this niche. We offer high-quality products in an upscale environment. Furthermore, our high-profile location in Liberty Lahore provides a mixed customer base that will maintain high levels of business in every season, at all times of the day, every day of the week.

Note:

This Coffee Shop Business project is based on market assumptions and past data. The figures and amounts may vary as market trend changes with time.

Founders:
                     Liberty Coffee Shop has a long career as an entrepreneur and marketing executive. There are three main founders of coffeehouse business and we are also partner in our business.

• Peter
• Obama
• Abdul Hadi

Financials:

                     The company anticipates rapid acceptance of the Coffeehouse concept in selected area, with revenues of $60,000+ in the first fiscal year.Net profit is projected to be approximately $150,000 in year one.

An advanced and expandable point-of-sale system:

After carefully tracking the performance of the selected area store through an expandable and highly detailed point-of-sale system, we will use this as a “blueprint” for expansion. For example, daily sales are tracked and analyzed by item, time period and cost of goods. Labor requirements are matched to projected in-store sales based upon past performance for maximum efficiency. Even after paying higher than average wages, we expect to allocate no more than 25% to labor costs.

This Business Plan only provides data on the the area you select.

Mission:

Our goal is to be the coffeehouse of choice for the local Liberty community with new innovation we know the world has moving so fast so everybody wants quickness in everywhere of their life so all that things we know and bring innovation in our coffeehouse business that is Time, we know Time is money we have introduced for the first time the coffee which has no takes more time and just within few seconds coffee will be in your hand. Business workers, tourists who visit the city, and students, by providing a higher quality experience than any competitor. As a result, we intend to create coffeehouses that quickly achieve profitability and sustain an attractive rate of return (20% or more annually) for our investors.

We also want to make our contribution to the welfare of the local community by supporting charitable and civic activities. We will support the farmers who grow our coffee by using Fair Trade, Sustainable Production and Organic products whenever possible.

Liberty Coffee Shop also awards its business to as many local suppliers as possible, keeping the business in the community or, at the least, in the state.

Objectives:

• Make Liberty Coffee Shop the number one destination for coffee in every city.
• Sales of $60,000+ the first fiscal year, $75,000+ the second fiscal year and 1 Million the third fiscal year
• Achieve a 15% net profit margin within the first year and 30% by FY3
• Achieve a total net profit of $100,000+ in FY1 and $200,000+ by FY3
• Be an active and vocal member of the community, and provide continual re-investment through participation in community activities such as the Chamber of Commerce and financial contributions to local charities and youth organizations
• Create a solid concept in the industry and track performance in order to begin expanding to other markets within six month.
• Become selected as the “Best New Coffeehouse in the area” by the local restaurant guide.
• Turn in profits from the first month of operations.

Keys to Success Factors:

The keys to our success will be:

• A superior-tasting product backed by a unique quality store
• A relaxing, upscale interior design
• Prime site selection with an upscale affluent population, year-round tourist activity, heavy pedestrian traffic by the site, a dynamic student population and a concentration of local businesses
• A market that exposes Coffeehouse to high-profile “trend-setters” and “key influencers”
• Ongoing, aggressive marketing
• Highly trained and friendly staff using best Talent Management Techniques.
• Multiple revenue streams including gift items, gift baskets and coffee gift/frequency cards in addition to coffee, pastry, chocolates, tea, juice, water and soft drinks
• A dynamic website with online sales capability
• Employee training to insure the best coffee preparation techniques.
• Marketing strategies aimed to build a solid base of loyal customers, as well as maximizing the sales of high margin products, such as espresso drinks.

Company Summary:

Liberty Coffee Shop launches with its first coffeehouse located in Seattle, WA. Liberty Coffee Shop will offer residents and visitors a totally new style of coffeehouse – one offering a uniquely flavorful coffee drink and a comfortable, upscale environment at which to socialize, relax or work.

• Variety: No other coffeehouse in the area will provide the time saving coffee and the range of coffee drinks, tea, cocoa, juice, smoothies and other products that Coffee Beans does.
• Location: Liberty Coffee Shop will be located in the prime section of Liberty Lahore in the heart of the shopping and entertainment district. Coffeehouse locations are designed for high volume year round, with revenues and profits to match.
• Expansion: Assuming this store is successful, it will be the first of a chain of Coffee Beans coffeehouses located in markets that have similar demographic profiles, significant traffic by the store, year-round tourist activity and a sizeable student population.

 

The Coffee-House Concept:

At one time Cadillac was the acknowledged quality automobile. Then came Mercedes-Benz. And then Lexus, with its superb product and service approach. Liberty Coffee Shop will be the first “Lexus” of the coffeehouse chain industry, offering a higher quality product and better quality service in an exceptional environment.

Liberty Coffee Shop offers a superior coffee product, delicious pastries, fresh juices, the finest tea drinks, cookies, gourmet chocolates and gift items.

The Coffee Beans staff members who prepare the coffee (baristas) are highly trained and experienced. They know how to prepare an excellent espresso-based drink and brew tasty coffee. We use the highest quality equipment and ingredients to deliver a noticeably superior product.

Our design style is different from all other coffeehouses, an upscale “Cote d’Azur” look. It features stained glass decorations, art glass-work, Mediterranean Riviera style furnishings and outdoor dining.

Company Ownership:

Liberty Coffee Shop is a privately held corporation.

COFFEE SHOP BUSINESS PLAN Start-Up Summary:

Start-up expenses are in line with those of other coffeehouse chains. For example, Coffee Day spends approximately $30,000 on average to build-out a new store location. Our costs are an estimated $15,000 for opening inventory and operating capital. Future stores should cost no more than $25,000 to build out since many of the costs incurred here will not have to be repeated later.

The Start-up requirements, below, include $46,500 of short and long-term assets.

Long Term Assets: $32, 500

Under counter Refrigerators	$3,000
Service/Prep Counter	$1500
Ice Machine	$2,000
Large Refrigerator	$1,500
Milk Coolers (3)	$1,000
Cash register (2) Point of Sale System	$2,000
Espresso Machine	$15,000
Fetco Coffee Brewer	$1,500
Counters/Condiment bar/shelving	$5,000

Short-Term Assets: $14, 000

Tables, Chairs, Furnishings	$10,000
Persian Carpet	$1,000
Lighting Fixtures	$3,000

Start-up
Requirements
Start-up Expenses
CONSTRUCTION	$. 0
Site design, architectural plan	$ 10,000
Demolition/Construction	$. 7,000
Electrical, Lighting	$. 5,000
Electrical, Other	$. 5,000
Flooring/installation	$. 5,000
Bathroom Construction	$. 8,000
Plumbing	$. 3,000
Fireplace Construction	$. 2,000
Painting	$. 2,500
City permits/licenses/fees	$. 1,500
Inserted Row	$. 0
LEGAL	$. 0
Accounting	$2,000
Legal	$ 1,500
Insurance	$ 2,500
Inserted Row	$ 0
MARKETING	$ 0
Opening marketing/advertising	$ 3,000
Graphic design for signage, menu boards	$ 2,000
Outside Signage	$ 1,500
Frequency Cards, Brochures	$ 1,500
Inserted Row	$ 0
OFFICE	$ 0
Office equipment	$ 600
Computer, scanner, printer	$ 2,000
Telephones/Fax/DSL	$ 500
Stationery etc.	$ 1,000
Gift item displays (3)	$ 500
Inserted Row	0
APPLIANCES, ETC	$ 0
Preparation equipment	$ 1,000
Dishwasher	$ 3,500
Blenders (3)	$ 2,000
Microwave	$500
Panini maker	$ 700
Storage racks	$ 1,000
Music system	$ 800
Food display case	$ 3,000
Storage room shelving	$ 2,000
Bulk bean grinder	$ 700
Sinks (2), prep counters	$ 1,200
Menu board construction	$2,500
Cups/Lids (50,000)	$4,500
Total Start-up Expenses	$ 95,800
Start-up Assets
Cash Required	$ 1,500
Start-up Inventory	$ 25,000
Other Current Assets	$ 15,000
Long-term Assets	$32,500
Total Assets	$ 103,500
Total Requirements	$ 177,500

Start-up Funding
Start-up Expenses to Fund	$ 95,800
Start-up Assets to Fund	$ 103,500
Total Funding Required	$ 199,300
Assets
Non-cash Assets from Start-up	$ 102,000
Cash Requirements from Start-up	$ 1,500
Additional Cash Raised	$ 0
Cash Balance on Starting Date	$ 1,500
Total Assets	$ 103,500
Liabilities and Capital
Liabilities
Current Borrowing	$ 0
Long-term Liabilities	$ 0
Accounts Payable (Outstanding Bills)	$ 0
Other Current Liabilities (interest-free)	$ 0
Total Liabilities	$ 0
Capital
Planned Investment
Investors	$ 250,000
Other	$ 500
Additional Investment Requirement	$ 0
Total Planned Investment	$ 250,500
Loss at Start-up (Start-up Expenses)	($ 95,800)
Total Capital	$ 154,700
Total Capital and Liabilities	$ 103,500
Total Funding	$ 258,200

Products:

Liberty Coffee Shop sells high-quality specialty coffee beverages, tea, juice, water, soft drinks, pastries, chocolates and gift items. Despite being an upscale coffeehouse, our prices are in line with the leading national chains. Coffeehouse will offer its customers the best tasting coffee beverages in the area. This will be achieved by using high-quality ingredients and strictly following preparation guidelines. The store layout, menu listings and marketing activities will be focused on maximizing the sales of higher margin espresso drinks. Along with the espresso drinks, brewed coffee and teas, as well as some refreshment beverages, will be sold in the coffeehouse. Coffeehouse will also offer its clients pastries, small salads and sandwiches. For the gourmet clientele that prefers to prepare its coffee at home, Coffeehouse will also be selling coffee beans.

Vendors:

• Coffee roasting is provided by Grizzly Mountain Coffee Company.
• Tea is primarily supplied by Q-mart.
• Our water vendor is Kinley.
• Juices are provided by pure o natural (fresh orange juice and lemonade).
• Pastries are provided by local bakery, Swiss Castile.
• Chocolates and cocoa are from Q-mart.
• Gift items are from various vendors
• Soft drinks are provided by Sprecher’s, reliance fresh.

Product Description:

The menu of the coffeehouse will be built around espresso-based coffee drinks such as lattes, mochas, cappuccinos, etc. Each of the espresso-based drinks will be offered with whole, skimmed, or soy milk. Each of these coffee beverages is based on a ‘shot’ of espresso, which is prepared in the espresso machine by forcing heated water through ground coffee at high pressure. Such espresso shots are combined with steamed milk and/or other additives like cocoa, caramel, etc., to prepare the espresso-based beverages. Proper preparation techniques are of paramount importance for such drinks. A minor deviation from the amount of coffee in the shot, the size of the coffee particles, the temperature of milk, etc., can negatively affect the quality of the prepared drink.

The Liberty Coffee Shop Menu:

The Coffee house business plan menu sets us apart from other coffeehouses, giving us a competitive edge.

• We offer six groups of drinks—coffee, tea, Italian sodas, smoothies, juice and cocoa—with several choices within each group. This enables us to provide more variety than our competitors while keeping the preparation of the drinks easy to execute.
• We are taking advantage of the immense popularity of flavored drinks and tea by offering a product mix that includes items the other coffeehouses don’t carry as well as more familiar drinks.
• We are the only coffeehouse to have a wide range of gourmet hot cocoa.
• Coffee Beans offer several smoothie drinks and Italian sodas.
• We carry the highest quality fresh juices.

Prices have been determined after a thorough analysis of all food costs for every item in each drink. In some cases, an average price has been calculated and applied to all similar drinks in order to keep the menu from confusing the customer.

Coffee and Espresso Drinks:

COFFEE

Coffees of the day:  Coffee Beans Blend, Riviera Roast, and Molokai Swiss water process DeCaf.

$2.3 Regular $3.3Large

ESPRESSO

Name	Description	Regular	Large
Espresso	A double shot of straight espresso.	$2.4 Double
Coffee Indiano	Espresso combined with hot water, a gourmet brewed coffee.	$2.5	$3.5
Cappuccino	Espresso with a smooth topping of milk foam.	$2.6	$3.7
Coffee Latte	Espresso combined with steamed milk, topped with a small amount of velvety milk foam.	$2.62	$3.55
Coffee Mocha	A Coffee Latte combined with Ghirardelli chocolate, topped with whipped cream and chocolate shavings.	$2.71	$3.81
Espresso Macchiato	A straight shot of espresso topped with a spoonful of rich milk foam.	$2.72	$3.85
Espresso Con Panna	A straight shot of espresso topped with a generous dollop of whipped cream.	$2.75	$3.85
Espresso Latte Breve	Our famous latte made even more creamy with half and half.	$2.75	$3.85
Espresso “Red Eye”	Espresso combined with our gourmet coffee of the day to get your day going.	$2.75	$3.85

COFFEE DRINKS

Name	Description	Small	Large
The Banana Nut	Coffee. Warm milk. Banana, macadamia nut and vanilla syrups. Topped with whipped cream and cinnamon dusting.	$2.7	$3.8
The Cafe Milano	Coffee. Warm milk. Amaretto and vanilla syrups topped with whipped cream and almonds.	$2.74	$3.95

FLAVORED ESPRESSO DRINKS
all flavored drinks feature quality Monin and Ghirardelli syrups.

Name	Description	Regular	Large
Vanilla Cappuccino	Cappuccino made with vanilla flavored milk foam.	$2.3	$3.00
Vanilla Latte	A Coffee Latte with vanilla essence added.	$2.45	$3.45
White Chocolate Latte	Espresso, white chocolate flavoring and steamed milk topped with velvety foam and white chocolate shavings.	$2.62	$3.45
The 50/50 Latte	Espresso. Vanilla and orange syrups, steamed milk and whipped cream topping.	$2.62	$3.45
The Raspberry Mocha Latte	Coffee. Raspberry and chocolate syrups. Half and half. Whipped cream topping.	$2.62	$3.45
Tea Latte	Espresso. Tea. Steamed milk and whipped cream.	$2.7	$4.00

HOT COCOA DRINKS:

all hot cocoa drinks are $2.75

Name	Description
French Vanilla Cocoa	Hot cocoa with vanilla and whipped cream.
White Chocolate Cocoa	Hot cocoa with white chocolate and whipped cream.
Chocolate Truffle Cocoa	Rich dark hot cocoa with whipped cream topping.
Holiday Spice Cocoa	Rich hot cocoa and holiday spices. Topped with whipped cream.
Peppermint Cocoa	Rich chocolate and refreshing peppermint. Topped with whipped cream.
Ovaltine	Ovaltine Chocolate Malt and milk.

SMOOTHIES:

All smoothies are $3.00

Name	Description
The Espresso Chocolate Malt	Chocolate malt for grownups.
The Double Dutch Chocolate Smoothie	Very chocolaty!
The Mocha Smoothie	An all-time favorite.
The Vanilla Smoothie	Rich natural vanilla flavor.
50/50 Smoothie (Orange and Vanilla)	A 50’s favorite.

 

 Teas:

ICED TEAS:

Classic Iced Tea, just like you remember as a kid.
$2.7 Small, $3.8 Medium, $4.25 Large

HOT TEA:

Rs30 Regular

• Earl Grey
• English Breakfast
• Peppermint
• Herb Apricot
• Earl Grey Lavender
• Darjeeling
• Formosa Oolong
• Golden Flowers Herbal
• Herbal Lemon
• Tropical Green

TEAS (hot or ice blended)

Tea Original (regular or decaf):    $1.5 Regular $2 Large

Vanilla Tea:     $1.5 Small $1.8 Medium $2 Large

Juices:

Name	Description
Fresh squeezed orange juice	Exclusively from Longhorn Orchards, Corpus Cristi, TX
Old-fashioned Lemonade	Made fresh daily from Pleasant County lemons.
Genesis Juice	Protein Boost, Green Machine, Mango and Guava.
Martinelli’s Apple Juice (regular and sparkling)	A San Francisco favorite.
Crystal Geyser Juice Squeeze

 

Italian Sodas:

ICED ITALIAN SODAS

Sparkling spring water, flavoring and ice. Blended or on the rocks.

Medium $2, $2.8 Large

• Orange Soda
• Strawberry Soda
• Lemon Soda
• Cherry Soda
• Raspberry Soda
• Cream Soda (made with half & half)
• Peach Soda
• Kiwi Soda
• Melon
• Apple

SPECIALTY ITALIAN SODAS
All $3.5 Regular, $4.5 Large

Name	Description
The Dreamsicle Soda	Sparkling spring water, ice, half and half, vanilla and mandarin orange syrups.
Cherry Vanilla Soda	Sprite, ice, cherry and vanilla syrups.
The Chocolate Soda	Our version of an egg cream.

 

Other Drinks

Name	Description
Geyser Peak Natural Spring Water	From Northern California mountain springs.
Soft drinks from Sprecher’s, Stewart’s and Thomas Kemper.	Root beer, Orange Cream, Ginger Ale, Vanilla Cream and Key Lime.
Crystal Geyser Te Tea
RockStar Energy Drink
Orangina Citrus Drink

Snacks and Pastries:

Item	Price
Liberty Cheesecake made just for us by Pleasantville Cheesecake Company.	$7.5
Fresh scones, hot from the oven.	$6
Bagels	$2.4
Brownies	$3.2
Blueberry Muffins	$3.5
Croissants	$4
Black Forest chocolate-covered espresso beans	$8
Best Ever Bakery Fancy Cookies	$2

Deli Items:

Item	Price
Sandwiches:  Turkey, Roast Beef, Ham and Salami.	$6
Soup	$3.2
Quiche	$9

 

Market Analysis Summary

Coffee Beans launches with an exciting new coffeehouse concept in a receptive and steadily growing market segment—the specialty coffee retail business.

Despite economic downturns in recent years the specialty coffee business has been a bright spot. While literally hundreds of businesses in many categories are facing poor sales, negative balance sheets and even bankruptcy, coffee chains continue to show strong growth.

It’s clear that America’s love for good coffee continues during good times and bad.

Seattle:  The Perfect Launch Market

By launching Coffee Shop in Seattle we maximize our potential for success due to several factors:

• The highly affluent local population
• Year-round tourist activity
• Ever-changing upscale student population
• Excellent auto and pedestrian traffic by our location
• Low media costs
• High number of local special events
• Prime site location

Coffeehouse is located at what is arguably one of the best locations for a coffeehouse in Seattle—in the heart of the tourist and business district, adjacent to fine dining and shopping.

Coffeehouse has all the ingredients necessary for immediate success.

Market Segmentation:

Coffeehouse’s customer base in Seattle is comprised of five target groups.

1. Affluent local residents
2. Tourists
3. Local business people
4. Students
5. Travelers passing through

These groups are all potentially strong customer segments. The benefit of this mix of customers is that it helps maintain consistent business throughout the year. For example, while tourism is strong all year long in Seattle, it peaks during the summer months. Conversely, the student population is not as strong during the summer as it is from September through June of each year.

The other customer segments (local residents, local business and pass-through traffic on US 66) provide a consistent foundation all year long.

Also, by appealing to several market segments, Coffeehouse does not become overly dependent on any single consumer group. For example, several local coffeehouses with primarily student customers do poorly during the non-school months. They must also market themselves anew each year to the incoming students. Coffeehouse will avoid these peaks and valleys in business with a mix of customers.

• Affluent locals. Within five miles of Liberty Coffee Shop are 200,000 of the most affluent people. Homes in adjacent Nice burg sell for $1 million to $50 million. Key influencers, trendsetters, artists, writers and celebrities have homes in Liberty.
• Tourists. More than 19 Million tourists visit Seattle every year. Most will pass by the Coffeehouse location. Tourist come to “Seattle” for the shopping, dining and nearby multiplex.
• Local business people. Liberty Coffee Shop is located on the corner of ‘A’ Street and First Avenue in the heart of the prime downtown business district. It’s across from the exclusive, chic, Descartes (I Spend, Therefore I Am) department store, and one block from the number one shopping destination in Seattle, Lucre Gallery. ‘A’ Street and First Avenue are the two most heavily traveled streets in Liberty.
• Students. Dozens of other schools, including many prestigious private schools and academies. School is less than a mile from Coffeehouse.

Management and Staffing:

Organizational Structure:

Our organizational structure will be a simple pyramid style with the owners putting in as much work as the employees.

Management Team:

Peter and Abdul Hadi will share management and supervisory responsibilities equally. Abdul Hadi for the morning shift. Obama for the afternoon shift.

Staffing:

We will hire three inter level students and two waitresses; these will be recruited from the local Colleges.

Labor Market Issues:

In this area there are many high school students looking for work, part time or full time, we want to fill that need.

Market Analysis
		Year 1	Year 2	Year 3	Year 4	Year 5
Potential Customers	Growth						CAGR
Local residents	2%	75,000	76,500	78,030	79,590	81,181	2.00%
Tourists	5%	100,000	105,000	110,250	115,763	121,551	5.00%
Travelers	5%	20,000	21,000	22,050	23,153	24,311	5.00%
Students	10%	100,000	101,400	105,804	108,212	110,624	10.0%
Local businesses	1%	20,000	20,200	20,402	20,606	20,812	1.00%
Total	23.2%	255,000	263,100	271,536	280,324	289,479	23.2%

Target Market Segment Strategy

Overall, our strategy is to maintain a constantly high customer count by leveraging our appeal to five groups of potential customers.

Local Residents:

Approximately 200,000 people live within five miles of our Coffeehouse location. The most affluent of these live even closer, within three miles. It is a short 5 minute drive to Coffeehouse for most of our potential local customers. Excellent public parking is available within 100 yards.

Local customers form the loyal core of our business. We will reach out to them through local marketing, involvement in the Chamber of Commerce, support of local charitable organizations and sponsorship of events and youth sports teams.

Tourists:

Seattle has excellent year-round tourist activity. About 5 million people will visit the area during the next year. While hotels are virtually sold out during the summer months, tourism all year is exceptionally strong. This is due in large part to the temperate climate, weekend or day-trip visitors from the greater Onto polis area and an unusually large number of special events (e.g. film festivals, concerts, art shows) scheduled throughout the year.

With a troubled economy and fears of terrorism, more people are opting for the relatively inexpensive, easy and safe short trip to Seattle for recreation. And, according to the Chamber of Commerce, 90% of all tourists visiting Seattle will pass by the Coffeehouse location. We will target these potential customers with ads in local tourism guides.

Local Business:

Many local businesses, both private and government, are within two blocks of Coffeehouse. Lucre Gallery, the prime shopping center of Seattle, is one block away. The county courthouse is two blocks away. Coffeehouse is in the heart of the shopping and dining area. Because much of the employee parking is out of the immediate area with shuttle service to downtown, most people stay near their place of employment during breakfast, lunch and for after-work relaxing. A significant number of these local business people find Coffeehouse an inviting and convenient destination.

We also offer coffee service to local restaurants, night spots and businesses. Coffee service brings in additional revenue and promotes Coffeehouse among employees at these businesses.

We will also reach business customers through Chamber of Commerce activities and by personally visiting the shops and businesses to distribute discount coupons and menus.

Students:

The area has more than 30,000 students in several schools, including nearby Colleges and Universities. Students have few places they can go to meet their friends. Coffeehouses have proven to be very popular with students—even high school students—as an “in” place to go that’s also affordable.

To reach students we offer special student discount cards, pass out free coffee coupons at student events and offer entertainment on weekends.

Students represent an excellent customer segment for several reasons:

• Students bring an energy and youth to the coffeehouse
• By attracting students we generate excellent word-of-mouth
• Students represent a large base of potential part-time employees

Industry Analysis:

In coffee shop business plan we made a industry analysis research that Coffee shops in Seattle have existed since, and the coffeehouse concept is more than 400 years old. In the United States, even as recently as the 1970’s, coffeehouses have been primarily independent businesses, typically with an eclectic Bohemian style.

Coffee Day’ success has encouraged others to enter this potentially lucrative business. Today there are more than 50,000 coffeehouses in the US However, compared with Italy, which has 200,000 espresso bars and coffeehouses; there is still much room for growth. The Specialty Coffee Retailers Association believes the market has not approached maturity and, as yet, no coffee chain has differentiated itself significantly from the others.

While overall coffee sales have not grown significantly in recent years, the specialty coffeehouse segment is growing steadily at a healthy pace every year.

Competition and Buying Patterns:

FACT:  The coffeehouse business has grown every year since 1986.

Despite major economic recessions, terrorist attacks and two wars over the past two decades, the specialty coffee industry has grown every year. One industry observer said, “When times are good the coffeehouse industry is great. And when times are bad the coffeehouse industry is great.” America’s love for good coffee is stronger than ever and increasing in size faster than any other industry.

Lifestyle factors converge to make the coffee industry strong at all times. The stimulant effect of coffee is an important reason why many hard-working, fast-paced Pakistanis consider a stop at their local coffeehouse a necessary part of their day. Conversely, coffeehouses provide calm, inviting environment for people to socialize, relax or catch up on work.

Entertainment on weekend nights draws a young group of enthusiastic customers. The surge in interest in coffee drinking among young people assures a diverse, receptive, sophisticated customer base now and in the future.

Quality is deteriorating even as the industry is growing.

Coffee drinking is now an all-day activity.

Strategy and Implementation Summary

The Coffee Beans coffeehouse uses a strategy of total quality—in product and service. Our promise is in our location, the products we sell, the people we attract and the atmosphere we create.

Strategic Assumptions:

• People want a better-tasting coffee drink
• Coffee drinkers want a more inviting coffeehouse environment
• Coffee drinks are considered an affordable luxury
• The coffeehouse industry is largely unaffected by the economy and world events

Launch Marketing:

Launch marketing will promote awareness, build immediate traffic and establish our brand image via several methods:

• Public relations/publicity
• Direct mail
• Local print and broadcast media
• Design and packaging
• Community involvement
• Sampling
• Superior location
• Desirable store ambiance

Public Relations:

A strong public relations/publicity program uses as its primary “hook” these three main points:

1. Our unique quality products
2. No commitment on taste

The goal of the PR/publicity is to achieve local market awareness and establish the brand on a wider scale to set the stage for future expansion. Local market awareness is vital because more than 50% of sales will come from people living within a 5-mile radius of the store.

National awareness will help drive the expansion by generating opportunities created by the media buzz and familiarizing people with our brand name. It will help set the stage for future brand identification.

Local Media:

• Newspaper
• Magazine
• Posters
• TV add
• Radio

Regional/National Print Media:

• Business week
• Newsweek
• express News
• Entrepreneur
• Fortune

National Broadcast Media:

• 8 radio stations nationwide

Direct Mail:

• Ongoing direct mail generated from our website data
• Visa or MasterCard local direct mail program

Design style:

The interior design of Coffee Beans is unlike any other coffeehouse chain. While there are some upscale designs, they are the entire modern Italian or Coffee Day look. Our upscale stylized “Cote d’Azur” Mediterranean Riviera design, featuring stained glass decorations, art glasswork, differentiates us from all others.

Gift Items:

We carry a wide variety of quality gift items, including gift baskets. Gift basket business could eventually grow to be substantial. However, since it is difficult to project at this time we have not included it in the financial computations. We also offer sales of stained glass and glass artwork by the artisans who produced our decor furnishings.

Location:

The location of the first Coffee Beans in Liberty is a prototype of future sites. We will build Coffee Beans coffeehouses in the best locations possible, as this is the key element in a successful operation.

Site selection criteria include:

• High traffic location
• Small or mid-size affluent market
• Year-round tourist activity
• Nearby (within 5 miles) student population
• Outside dining

Sampling:

We will engage in several sampling activities to introduce potential customers (and current customers) to Coffeehouse’s range of drink options.

• Samples will be distributed at the coffeehouse
• Samples will be given to passers-by on the street
• Discount coupons will be distributed on the street, via direct mail and at special events
• Complementary coffee will be served at charitable and civic events

Sales Strategy:

Our sales strategy includes:

• Staff salaries that are 10% above the industry average in order to attract the best people
• Hiring for attitude so that we always have a friendly, enthusiastic staff to make customers feel welcome and appreciated; constant staff training to assure the best quality possible
• State-of-the-art sales/inventory system to (A) reduce customer waiting time, and (B) create efficient product ordering
• Create a mobile kiosk to take Coffee Beans into the community at special events, farmer’s markets, art shows, etc.
• Sell coffee, gift baskets and glass artwork on our website
• Establish coffee service at local businesses
• Sell gift cards, frequency cards, pre-paid cards, and offer discounts to key groups
• Create an ongoing sampling program
• Conduct a consistent, aggressive marketing program
• Be an active member of the community; be visible at charitable functions
• Solicit customer feedback to constantly improve and streamline our operation

Key Strategy: an advanced and expandable point-of-sales system

After carefully tracking the performance of the Liberty store through an expandable and highly detailed point-of-sale system, we will use this as a “blueprint” for expansion. For example, daily sales are tracked and analyzed by item, time period and cost of goods. Labor requirements are matched to projected in-store sales based upon past performance for maximum efficiency. Even after paying higher than average wages we expect to allocate no more than 25% to labor costs. Cost of goods can be monitored for increased efficiency too. As we continually research methods of delivering a high quality but cost-efficient product, and by making small incremental improvements in the costs of items we expect to increase overall COG by a minimum of 5% during the first year of operation.

As expansion occurs, the POS system can be adapted to each individual location and allow the central office to monitor the stores remotely as well as the overall combined operation. Close monitoring will allow us to achieve a high level of communication between stores as well as spot problems immediately and take corrective action.

Sales Forecast:

Conservatively, we are forecasting an average of 300 customers per day during the first year with average guest check expenditure for all items of $4.10. This figure was arrived at by surveying the customer traffic at the nearest competing coffeehouses which have a range of 150 – 500 customers per day and an average customer expenditure of $4.10. We have estimated our customer expenditure to be slightly higher (2.5%) due to the premium price we will charge for some of our items. Total cost of sales is approximately 25%.

We expect growth to occur across all categories at about 10% annually as the business becomes more established and well-known, reaching 400+ customers per day within a year and more than 500+ within three years. These estimates are likely conservative. However, it is possible we could attain a 1,000-per-day customer count within three years.

Sales Forecast
	Year 1	Year 2	Year 3
Sales
Coffee drinks	$265,101	$344,631	$448,021
Tea, soft drinks, water, juice	$167,007	$217,109	$282,241
Pastries, food items	$154,126	$200,364	$260,473
Coffee beans	$2,105	$2,526	$3,031
Events/mobile kiosk	$0	$0	$0
Coffee service to businesses	$3,300	$3,630	$3,993
Internet sales	$8,500	$10,625	$13,281
Gift items	$6,440	$7,728	$9,274
Total Sales	$606,579	$786,613	$1,020,314
Direct Cost of Sales	Year 1	Year 2	Year 3
Coffee drinks	$43,828	$44,266	$44,709
Tea, soft drinks, water, juice	$26,054	$26,315	$26,578
Pastries, food items	$55,241	$55,793	$56,351
Coffee beans	$1,280	$1,293	$1,306
Events, mobile kiosk	$ 0	$ 0	$ 0
coffee service to businesses	$760	$768	$775
Internet sales	$3,925	$3,964	$4,004
Gift items	$10,109	$10,210	$10,312
Subtotal Direct Cost of Sales	$141,197	$142,609	$144,035

 

Financial Plan:

• Sales growth will be a minimum of 15% annually, margins excellent, profits at approximately 20% – 25%, cash flow adequate.
• Marketing will remain below 5% of sales.
• The company will invest residual profits into financial markets or real estate.
• Future cash investments will use NPV projections to achieve maximum return with limited risk.

Important Assumptions

• The 20-year record of positive growth for specialty coffee drinking will continue at a healthy rate. The Specialty Coffee Association says that the market is far from saturation and will not reach maturity until at least 2019.
• The resilience of the coffeehouse industry to negative national and world events will continue. Despite recession and war the coffeehouse industry has shown strong growth every year for the past two decades.
• The quality of national chains will remain the same or decline slightly rather than improve as they standardize their stores, increase automation of espresso drinks and mass-produce the roasting process.
• Coffee drinks will continue to be considered an “affordable luxury.”
• 15% minimum sales growth rate over the next three years as Coffee Beans becomes well known.

General Assumptions
	Year 1	Year 2		Year 3
Plan Month	1	2		3
Current Interest Rate	3.00%	3.00%		3.00%
Long-term Interest Rate	3.00%	3.00%		3.00%
Tax Rate	20.00%	20.00%		20.00%
Other	0	0		0
Break-even Analysis
Monthly Revenue Break-even			$ 34,422
Assumptions:
Average Percent Variable Cost			23%
Estimated Monthly Fixed Cost			$ 26,409

Projected Profit and Loss:

We project high net profits starting in the first year. Our growth rate is based upon industry averages, factoring in the local conditions. We expect growth of 15% annually for the first three years before leveling off at the 800 – 900 customers per day average traffic rate.

First fiscal year gross revenues are expected to exceed $600, 000 and after-tax net profits of approximately $99, 000—increasing to more than $260, 000 by the third fiscal year-end.

Our margins are very good. This is due in large part to the low direct cost of sales as well as the low operating costs in general for coffeehouses.

Higher staff salaries, owner/operator salaries, marketing costs and rent for a premium location depress profits but, conversely, they also ultimately contribute to higher earnings and profits.

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$ 606,579	$ 786,613	$ 1,020,314
Direct Cost of Sales	$ 141,197	$ 142,609	$ 144,035
Other Costs of Goods	$ 24,000	$ 28,000	$ 32,000
Total Cost of Sales	$ 165,197	$ 170,609	$ 176,035
Gross Margin	$ 441,382	$ 616,004	$ 844,279
Gross Margin %	72.77%	78.31%	82.75%
Expenses
Payroll	$ 183,400	$ 337,000	$ 339,400
Sales and Marketing	$ 12,500	$ 8,000	$ 8,000
Depreciation	$ 6,000	$ 4,000	$ 4,000
Rent	$ 45,900	$ 55,000	$ 60,000
Utilities	$ 9,200	$ 14,000	$ 16,000
Insurance	$ 2,400	$ 2,400	$ 2,500
Legal/accounting	$ 6,000	$ 6,000	$ 6,000
Payroll Taxes	$ 27,510	$ 50,550	$ 50,910
Mobile Kiosk	$ 0	$ 0	$ 0
Misc – maintenance, cleaning, training, fees	$ 24,000	$ 25,000	$ 25,000
Total Operating Expenses	$ 316,910	$ 501,950	$ 511,810
Profit Before Interest and Taxes	$ 124,472	$ 114,054	$ 332,469
EBITDA	$ 130,472	$	Rs. 336,469
Interest Expense	$ 0	$ 0	$ 0
Taxes Incurred	$ 24,894	$ 22,811	$ 66,494
Net Profit	$ 99,577	$ 91,243	$ 265,975
Net Profit/Sales	16.42%	11.60%	26.07%

Projected Cash Flow:

We are positioning ourselves in the market as a low to medium risk concern with relatively steady cash flows. Accounts payable is paid at the end of each month, while sales are in cash, giving Coffee Beans an excellent cash structure. Fifty percent of cash above $ 20, 000 will be invested into semi-liquid stock portfolios to decrease the opportunity cost of cash held. Our initial investor contributions are designed to provide us with a strong cash position at all times.

Pro Forma Cash Flow
	Year 1	Year 2	Year 3
Cash Received
Cash from Operations
Cash Sales	$ 606,579	$ 786,613	$ 1,020,314
Subtotal Cash from Operations	$ 606,579	$ 786,613	$ 1,020,314
Additional Cash Received
Sales Tax, VAT, HST/GST Received	$ 0	$ 0	$ 0
New Current Borrowing	$ 0	$ 0	$ 0
New Other Liabilities (interest-free)	$ 0	$ 0	$ 0
New Long-term Liabilities	$ 0	$ 0	$ 0
Sales of Other Current Assets	$ 0	$ 0	$ 0
Sales of Long-term Assets	$ 0	$ 0	$ 0
New Investment Received	$ 0	$ 0	$ 0
Subtotal Cash Received	$ 606,579	$ 786,613	$ 1,020,314
Expenditures	Year 1	Year 2	Year 3
Expenditures from Operations
Cash Spending	$ 183,400	$ 337,000	$ 339,400
Bill Payments	$  275,940	$ 358,649	$ 406,457
Subtotal Spent on Operations	$ 459,340	$ 695,649	$ 745,857
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$ 0	$ 0	$ 0
Principal Repayment of Current Borrowing	$ 0	$ 0	$ 0
Other Liabilities Principal Repayment	$ 0	$ 0	$ 0
Long-term Liabilities Principal Repayment	$ 0	$ 0	$ 0
Purchase Other Current Assets	$ 0	$ 0	$ 0
Purchase Long-term Assets	$ 0	$ 0	$ 0
Dividends	$ 17,600	$ 26,400	$ 26,400
Subtotal Cash Spent	$ 476,940	$ 722,049	$ 772,257
Net Cash Flow	$ 129,639	$ 64,564	$ 248,057
Cash Balance	$ 131,139	$ 195,703	$ 443,761

 

 Projected Balance Sheet:

All of our tables will be updated monthly to reflect past performance and future assumptions. Future assumptions will not be based on past performance but rather on economic cycle activity, regional industry strength, and future cash flow possibilities. We expect solid growth in net worth beyond the year 2013

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets
Current Assets
Cash	$ 131,139	$ 195,703	$ 443,761
Inventory	$ 16,591	$ 16,757	$ 16,925
Other Current Assets	$ 15,000	$ 15,000	$ 15,000
Total Current Assets	$ 162,730	$ 227,461	$ 475,685
Long-term Assets
Long-term Assets	$ 62,000	$ 62,000	$ 62,000
Accumulated Depreciation	$ 6,000	$ 10,000	$ 14,000
Total Long-term Assets	$ 56,000	$ 52,000	$ 48,000
Total Assets	$ 218,730	$ 279,461	$ 523,685
Liabilities and Capital	Year 1	Year 2	Year 3
Current Liabilities
Accounts Payable	$ 33,253	$ 29,140	$ 33,790
Current Borrowing	$ 0	$ 0	$ 0
Other Current Liabilities	$ 0	$ 0	$ 0
Subtotal Current Liabilities	$ 33,253	$ 29,140	$ 33,790
Long-term Liabilities	Rs. 0	Rs. 0	Rs. 0
Total Liabilities	$ 33,253	$ 29,140	$ 33,790
Paid-in Capital	$ 250,500	$ 250,500	$ 250,500
Retained Earnings	($ 164,600)	($ 91,423)	($ 26,579)
Earnings	$ 99,577	$ 91,243	$ 265,975
Total Capital	$ 185,477	$ 250,321	$ 489,896
Total Liabilities and Capital	$ 218,730	$ 279,461	$ 523,685
Net Worth	$ 185,477	$ 250,321	$ 489,896

Some Useful Tips to consider before starting a Coffee Shop Business:

• Try to give a relax and friendly atmosphere as people would come and sit with a thinking to get a calm and quiet atmosphere.
• Try to avoid loud music and speakers.
• Use soft paint colors indoor to give a soft touch to environment.
• Place some books at a specific corner for self reading.
• Don’t use hard material furniture as it’s not comfortable.
• Don’t use air fresheners because beans have there own aroma.
• If possible try to outdoor sitting as well.
• Other than occasional and normal flavors, add some signature coffee or special coffee item in your menu.
• Make your staff wear local uniforms/dress. It will add a different look and also be considered by customers.
• Take some useful tips from Event Management Business Plan as it will help you explore more ideas.

Also study: Coffee Shop Industry Analysis & Trends