Coffee Shop Business Plan

 
 

Coffee Shop Business Plan

Want to start your own coffee shop but struggling to put your business plan down
on paper? We’ve taken the guess-work out of it for you by writing a coffee shop
business plan that you can adapt to suit your own needs.

1Executive Summary
An example company – “Java Culture coffee” bar 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, Java
Culture will capitalize on its proximity to the University of Oregon campus to build a
core group of repeat customers.

Java Culture will offer its customers the best prepared coffee in the area that will be
complimented with pastries, as well as free books that its patrons can read to enjoy
their visit.

The company will operate a 2,300 square foot coffee bar within a walking distance
from the University of Oregon campus. The owners have secured this location
through a three-year lease with an option for extending.

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The have also provided R1,4 Million of the required R1,7 Million start-up funds. The
remaining capital will be obtained through Bank of America commercial loans.

The company is expected to grow sales revenue from R584 000 in FY2001 to R706
000 in year three. As Java Culture will strive to maintain a 65% gross profit margin
and reasonable operating expenses, it will see net profits grow from R1 Million to
R1,25 Million during the same period.
1. Objectives

Java Culture’s objectives for the first year of operations are:

 Become selected as the “Best New Coffee Bar in the area” by the local
restaurant guide.
 Turn in profits from the first month of operations.
 Maintain a 65% gross margin.

2. Keys to Success

The keys to success will be:

 Store design that will be both visually attractive to customers, and

designed for fast and efficient operations.
 Employee training to insure the best coffee preparation techniques.
 Marketing strategies aimed to build a solid base of loyal customers, as
well as maximising the sales of high margin products, such as espresso
drinks.

3. Mission

Java Culture will make its best effort to create a unique place where customers can
socialise with each other in a comfortable and relaxing environment while enjoying
the best brewed coffee or espresso and pastries in town.

We will be in the business of helping our customers to relieve their daily stresses by
providing piece of mind through great ambience, convenient location, friendly
customer service, and products of consistently high quality.

Java Culture will invest its profits to increase the employee satisfaction while
providing stable return to its shareholders.

Learn how to write a funding proposal here.

2Company Summary
Java Culture, an Oregon limited liability company, sells coffee, other beverages and
snacks in its 2,300 square feet premium coffee bar located near the University of
Oregon campus.

Java Culture’s major investors are Arthur Garfield and James Polk who cumulatively
own over 70% of the company. The start-up loss of the company is assumed in the
amount of R270 680.

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1. Company Ownership

Java Culture is registered as a Limited Liability Corporation in the state of Oregon.

Arthur Garfield owns 51% of the company. His cousin, James Polk, as well as Megan
Flanigan and Todd Barkley hold minority stakes in Java Culture, LLC.

2. Company Locations and Facilities

Java Culture coffee bar will be located on the ground floor of the commercial
building at the corner of West 13th Avenue and Patterson Street in Eugene, OR.
The company has secured a one-year lease of the vacant 2,500 square feet
premises previously occupied by a hair salon. The lease contract has an option of
renewal for three years at a fixed rate that Java Culture will execute depending on
the financial strength of its business.

The floor plan will include a 200 square feet back office and a 2,300 square feet
coffee bar, which will include a seating area with 15 tables, a kitchen, storage area
and two bathrooms.

The space in the coffee bar will be approximately distributed the following way –
1,260 square feet (i.e., 55% of the total) for the seating area, 600 square feet (26%)
for the production area, and the remaining 440 square feet (19%) for the customer
service area.

This property is located in a commercial area within a walking distance from the
University of Oregon campus on the corner of a major thoroughfare connecting
affluent South Eugene neighbourhood with the busy downtown commercial area.

The commercially zoned premises have the necessary water and electricity
hookups and will require only minor re-modeling to accommodate the espresso
bar, kitchen and storage area.

The coffee bar’s open and clean interior design with modern wooden decor will
convey the quality of the served beverages and snacks, and will be in-line with the
establishment’s positioning as an eclectic place where people can relax and enjoy
their cup of coffee.

The clear window displays, through which passerby will be able to see customers
enjoying their beverages, and outside electric signs will be aimed to grab the
attention of the customer traffic.

Related: What you MUST Know About the Choosing the Best Location for Your
Coffee Shop

3Products
Java Culture 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
maximising 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 coffee bar.

Java Culture will also offer its clients pastries, small salads and sandwiches. For the
gourmet clientele that prefers to prepare its coffee at home, Java Culture will also
be selling coffee beans.

The menu offerings will be supplemented by free books and magazines that
customers can read inside the coffee bar.

1. Product Description

The menu of the Java Culture coffee bar 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.

2. Sales Literature

Two thousand flyers will be distributed in the adjacent neighbourhood, on the

University campus, at the malls and in the selected office buildings within two
weeks prior to the opening of Java Culture. Subsequently, free postcards with Java
Culture endorsement will be printed to increase the company visibility among the
patrons.

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4Market Analysis Summary

U.S. coffee consumption has shown steady growth, with gourmet coffee having the
strongest growth. Coffee drinkers in the Pacific Northwest are among the most
demanding ones.

They favour well-brewed gourmet coffee drinks and demand great service. Eugene,
OR, with its liberal and outgoing populace and long rainy winter, has traditionally
been a great place for coffee establishments.

Java Culture will strive to build a loyal customer base by offering a great tasting
coffee in a  relaxing environment of its coffee bar located close to the bustling
University of Oregon campus.

1. Market Segmentation

Java Culture will focus its marketing activities on reaching the University students
and faculty, people working in offices located close to the coffee bar and on
sophisticated teenagers.

Our market research shows that these are the customer groups that are most likely
to buy gourmet coffee products. Since gourmet coffee consumption is universal
across different income categories and mostly depends on the level of higher
education, proximity to the University of Oregon campus will provide access to the
targeted customer audience.

2. Target Market Segment Strategy

Java Culture will cater to people who want to get their daily cup of great-tasting
coffee in a relaxing atmosphere.

Such customers vary in age, although our location close to the University campus
means that most of our clientele will be college students and faculty. Our market
research shows that these are discerning customers that gravitate towards better
tasting coffee.

Furthermore, a lot of college students consider coffee bars to be a convenient

studying or meeting location, where they can read or meet with peers without the
necessity to pay cover charges. For us, this will provide a unique possibility for
building a loyal client base.

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2.1. Market Needs

General trend toward quality among U.S. consumers definitely plays an important
role in the recent growth in gourmet coffee. Additionally, such factors as desire for
small indulgencies, for something more exotic and unique, provide a good selling
opportunity for coffee bars.

3. Industry Analysis

Coffee consumption has shown a steady 2.5% growth rate in the United States over
the last decade. In 1994, total sales of coffee were approximately R75 Billion with
gourmet coffee representing 33% (or R25 Billion) of that. The retail coffee industry
is flourishing in the U.S. Pacific Northwest.

The local climate, with a long rainy season, is very conducive for the consumption of
hot non-alcoholic beverages. At the same time, hot dry summers drive people into
cafes to order iced drinks. Further, coffee has really become a part of the lifestyle in
the Pacific Northwest.

Its discerning coffee drinkers are in favour of well-prepared, strong coffee-based

beverages, which they can consume in a relaxing environment.

3.1 Competition and Buying Patterns

Competition

According to the 1997 Oregon Food service Statistics (NAICS 72), Eugene had 45
established snack & non-alcoholic beverage bars (NAICS 722213) with total sales of
R142 Million. Among other establishments that offer coffee drinks to their
customers are most of Eugene’s limited- and full-service restaurants.

Java Culture’s direct competitors will be other coffee bars located near the
University of Oregon campus. These include Starbucks, Cafe Roma, The UO
Bookstore, and other Food service establishments that offer coffee.

Starbucks will definitely be one of the major competitors because of its strong
financial position and established marketing and operational practices. However,
despite of Starbuck’s entrenched market position, many customers favour smaller,
independent establishments that offer cozy atmosphere and good coffee at
affordable prices.

Cafe Roma is a good example of such competition. We estimate that Starbucks

holds approximately 35% market share in that neighbourhood, Cafe Roma appeals
to 25% of customers, The UO Bookstore caters to another 10%, with the remaining
market share split among other establishments.

Java Culture will position itself as a unique coffee bar that not only offers the best
tasting coffee and pastries but also provides home-like, cozy and comfortable
environment, which established corporate establishments lack. We will cater to
customers’ bodies and minds, which will help us grow our market share in this
competitive market.

Buying Patterns
The major reason for the customers to return to a specific coffee bar is a great
tasting coffee, quick service and pleasant atmosphere. Although, as stated before,
coffee consumption is uniform across different income segments, Java Culture will
price its product offerings competitively. We strongly believe that selling coffee with
a great service in a nice setting will help us build a strong base of loyal clientele.