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Executive Summary
Our new coffee shop will be situated in Melbourne. The business will target only female clients. The hotel will concentrate on gaining the allegiance of customers by providing them with an unparalleled experience of coffee beverage services. The cafe will offer many crafted dishes to fulfill our clients’ banquet, lunch, and supper desires. Our menu will comprise of omelets, benedicts, toasted bread, and toasties.
Introduction of Coffee Shop Business Plan
The article below focuses on a coffee shop’s business plan. The café will be registered as a sole proprietorship. It will be wholly owned and operated by one entrepreneur. The cafe will be established in the city of Melbourne.
Market feasibility
What is the size of the market?
In Melbourne and its neighboring cities, coffee shop industry is estimated to generate revenue worth $4.78 billion annually (David 2015). The business is large and varied. Over the last few years, the number of coffee shops and cafes has increased.
What is the growth rate of the industry?
The industry’s revenues are expected to increase by 7.3% annually for the next two years (Hunter 2015). The increase has been boosted by growing incomes and the citizens’ unceasing love for quality coffee.
Is the market at full capacity?
We are predominantly interested in a coffee café because currently there are a few businesses that offer these services. Therefore, our venture aims to fill this market gap by delivering exceptional beverage services.
Where are our customers getting the product now?
The leading coffee cafes in Melbourne include Auction Rooms, Three Bags Full, Hardware Sociate, Di Bella Roasting Warehouse, Market Lane, Proud Mary, and Sensory Lab (Purnama 2013). All these cafes offer services to both male and female clients. We expect to face competition from these shops and other medium food kiosks spread across the city of Melbourne. The other competitors are restaurants and food stalls that offer beverage services.
Where are the customers?
We will target female clients who work or study in regions around Melbourne. The city currently has a population of 4.35 million people (Johnny 2015). Half of these residents are women. In the future, the population is expected to increase to surpass that of Sydney. The main reason for positioning itself in this segment is that the business has the opportunity of incorporating new features to the existing services to cater for the changing demands and needs of our targeted customers. We will offer our services to females. Through this, we will differentiate our services from our competitors.
To gain a competitive advantage over our competitors, we will differentiate our products and services (Agnihotri 2015). One major way of fulfilling the above is through value addition. We will focus on improving our beverages’ package to enhance their aesthetic appeal. All drinks and snacks will be packed and served in impressive food packages designed to surpass our customers’ expectations.
We will only offer services to female clients to differentiate ourselves from our rivals. In Melbourne, a few coffee shops focus on particular communities such as religious, age, sex, or political minorities. If our café focuses on specializing in satisfying only women’s community, we will attract many clients and enhance our market share. The market segment presents an opportunity for the business.
How many would purchase from you?
With increased government expenditure, vibrant tourism, transport, and trade in the region, our business will be favorable and convenient to many women. An increase in government expenditure implies that there is more money in circulation, and more people can afford to enjoy the food services at our business center (Kwek 2015). We expect to serve up to 300 clients in a day.
What external factors come to bear? Government, Industry Dynamics
An important external factor that will affect our business is government regulations. We will have to satisfy all the standards required by the local governments.
How long will this opportunity last in the market?
Our projections indicate that during our earlier years of operation, we will experience less competition because we will only focus on female clients. However, competition is expected to increase in the future because we have a window period of two years. Over time, several players will enter the market eating into our company’s customers. Because of this, our company will experience enormous pressure from the new entrants. Such risks put pressure on our business’ future success. The above imply that we must always differentiate our products and services from those offered by our competitors. If we fail to do so, our rivals will fill the gap and gain an advantage over the company.
What keeps new competition from entering this market?
A threat faced by new entrants has been the inability to adapt to the ever changing service features and standards required by the clients. Another threat that prevents new competitors in the industry is competition from established rivals.
In the first months of our operation, we plan to focus on understanding the thoughts, desires, and behaviors of our clients. Through this, we will be able to come up with the appropriate targeting and positioning techniques in future. Equally, the chance will enable the business to identify efficient and reliable marketing channels to be utilized in the future.
Technical Feasibility
Options for developing the technology
Our café will be registered as a sole proprietorship. The shop will be wholly owned and operated by five entrepreneurs. The cafe will be established in the city of Melbourne. The coffee shop will serve clients throughout the week as indicated below:
Options for producing the product or service
Our products and services will be generated in house. Equally, we will utilize the same approach in our sales and distribution. As such, we expect our clients to visit our establishment. There will be no outside catering services. With increased turnover for startup cafes, the owners are expected to offer their skills and labor to fill in where required until the business starts to generate profits.
Options for sales and distribution
To reach our customers, we will utilize some approaches. Advertising will be our primary marketing strategy. We will create a series of television, the internet, and technology advertisement platforms. Through this, we will subcontract these functionalities to other firms. The firms will comprise of individuals knowledgeable in product information as well as customer service. Through social media, we will encourage more potential clients to access our services. The social media will also enable us to interact with potential customers to understand their expectations
Resources required for development
With respect to our limited inexperience in the industry, we will collaborate with reputable and competent suppliers. The vendors will offer sensibly priced products. The merchandise will be delivered according to an approved time timetable. The cost of establishing the shop is $363,000. The majority of the expenses will be used in purchasing the raw materials including furniture fixtures. Raw materials to be used at the café will be sourced from experienced suppliers. They include kitchenware, food processors, utensils, dishwasher, clothing, and stainless steel tables.
The laws and regulation relating to the business
Before opening our enterprise, we will obtain accreditation from relevant business licensing regulators in Melbourne. Similarly, we will get a permit that will illustrate that our company will work towards environment conservation.
Any moral or ethical issues that you are uncomfortable with
Our research identified that ethical issues of workers being mistreated by their supervisors are prevalent in the hospitality industry. The business will formulate and implement appropriate ethical cultures to prevent such incidences. The code of ethics should articulate the accepted standards. Similarly, ethical culture will be enhanced by all levels of supervision.
Technological changes are changing or emerging that may affect the business
During our research, we noted that a significant threat faced by coffee shops and other beverage outlets is speedy technological transformations. Many clients enjoy cafes with the latest technological facilities such as Wifi access. The threat puts pressure on the company’s future success. Every year, we will be required to adopt new technologies to be ahead of our rivals. If we fail to do so, our competitors will fill the gap and gain an advantage over our company.
Financial feasibility
Projected revenues from sales of our products and services
The table below illustrates the expected sales volume in units sold and in dollars sold. Our approximate selling price per unit is $ 11.37. The expected revenues are indicated below.
Financial dynamics and opportunities
Indicated below are the cost structures illustrated based on unit basis:
- Price per unit minus is $11.37
- Variable costs are estimated to be $4.51 per meal
- Gross margin per unit minus is 44.90
- Fixed costs per unit are 48.0
- Net margin per unit is 8.0%
Indicated below is the income statement used in the calculations:
Is the project worthwhile financially?
Indicated below are assumptions utilized in our financial plan
- Meal Price ranges from $8.00 – $15.00
- Average lunch price is 8.79
- Average dinner price is13.74
- The restaurant is located in the Melbourne City
Gross margin 45% and net profit are 8.0%. The figures indicate that the venture is economically viable. Below is a 1-year monthly cash flow statement:
How much investment is required and how they will be used
Financial risk
Total fixed costs linked with the coffee shop are $669,186. They represent yearly expenses. The variable cost is $ 4.51 for each meal. The breakeven revenue will be $1,108,970. It equals to 97,535 meals. We would not get better returns elsewhere, so we better invest in the shop. I will have to give up my mortgage to finance the project. The return of investment is $1, 229,334 after three years. The above illustrations are indicated in the table below:
Sources of funds
The money needed will be sourced as shown in the table below. There are higher chances that we are going to get all the money required for the project. We will have to sacrifice money needed for other investments to attain our objectives.
Human resource feasibility
What technical and management experience is required?
The business will hire 20 employees. They will comprise of two managers and subordinate staff. The managers will be needed to have more than three years of experience in a similar environment.
The technical team should have at least one year of experience. Together, the management team will select every applicant. We have implemented an up-to-date interview procedure. The process will staff the coffee café with highly experienced persons for every position. Every candidate will be evaluated and ranked based on a pre-defined set of values intended for each vacancy. Hiring efforts will focus on recommendations.
Who are the owners and what are their roles?
The restaurant’s management team will comprise of the owner, the manager, and technical expert. The owner has a restaurant career. He has served for over 20 years in the foodservice industry. He will be the general manager of the business. The manager will oversee smooth operation of the facility.
As such, the hotel manager will manage the overall undertakings like hiring and making financial arrangements. The manager will report to the owner of the shop. A technical expert will direct every functional group. As such, the technical expert will ensure that all installations in the shop are up and working. The supervisor reports to the general manager.
What is the ownership structure?
The organizational fabric of the shop will represent a corporate divisional order. The divisional order will be predominant service sections of the cafe. They include housekeeping segment, food and beverage section, concierge block, and front desk management. For instance, the prominent sectors of the enterprise will be separated into semi-autonomous bodies. The smaller sections will be apportioned to a particular field of service.
Every semi-autonomous will have a group head. As such, the group leader will be selected as the managing officer of that particular segment. At the top of the hierarchy will be the hotel manager. The present-day economic conditions in the beverage industry are characterized by increased competition.
In this regard, the coffee shop will adopt the above organizational structure to save on the cost of operation. The organizational structure has many advantages. Through this structure, every section functions effectively for the reason that they are centered on certain precise task. By doing so, the shop will be able to enhance the output of every section.
What are the labor requirements?
Attracting, inspiring, and retaining a skilled workforce is significant and often challenging for today’s businesses (Hazelton 2014). Appropriate staffing measures will aid our coffee shop intensify the satisfaction of its workers, reduce recruiting costs and increase the hotel’s productivity.
In this regard, the business has put in place appropriate sourcing policies that attract a diverse variety of high-performing candidates. We have also implemented a transparent hiring procedure, which guarantees objective selection using pertinent criteria. Through this, the company will attract competitive and competent candidates. Our orientation processes guarantee that new employees are informed about the business’ values, objectives, key policies, and measures.
The shop will offer a positive working environment for its staff. Through this, the business will be able to attract and retain qualified workers. A positive work environment enables the employees to undertake their roles without challenges. Thus, the productivity of the cafe will increase.
Similarly, the business should identify, compensate, and support the right behavior to attract and retain a competent workforce. Through this, the worker’s morale will be boosted. By involving and engaging the employees, the shop will be able to motivate its workforce. As such, individuals are more dedicated and involved if they are allowed to add their thoughts and proposals towards the improvement of the business.
Equally, the firm will adopt fun in the workplace to motivate the employees. The initiative will enable the employees develop a positive staff culture, boost their morale and motivation, and enhance employer and employee relationship. Likewise, the approach will improve teamwork, increase employee satisfaction, help attract and retain the best people, and improve customer satisfaction. The initiative will also enhance creativity and problem solving, resolve conflict and difficult issues, and augment productivity and performance.
Likewise, the hotel manager will come up with policies that encourage relationship among the employees. Through building relationship among the employees, the managers will enable the employees to understand and appreciate each other’s social, religious, or racial background (Stafford 2013). They will be achieved by offering the employees with regular seminars, workshops, and other social events. Through this, they will get to know one another better enhancing mutual respect.
The managers acknowledge that recruitment and hiring of new employees contribute to the increase in operating costs. Therefore, the business has adopted a competitive reward scheme to reduce the employee turnover. Because the firm is aiming to be among the top coffee shop in Melbourne, its reward system is expected to be competitive.
As such, the reward scheme will indicate the individuals to be awarded and the reason behind the rewards. The practice will enhance individual performance and firm’s outcomes. The reward system will balance with the organization’s culture.
To enhance and maintain quality, the cafe’s executives will implement performance measurement strategies (Carlson 2013). The shop will adopt quality and time performance measures. Quality performance test will assess the value of the services rendered by the employees. Equally, time performance will determine the period it takes the employees to perform their services.
The hotel will undertake the above assessment regularly to enhance the efficiency of the performance measures. Changes in performance measures and requirements related to increasing the competency-base of workers to meet global requirements will also be monitored. Therefore, the cafe will implement a culture of accountability.
Similarly, they will focus on results. When goals and visions are brought into line with organizational accountability, the administration can hold employees answerable for their tasks. Equally, performance measures will encourage workers to accomplish the lounge’s goals, missions, and objectives.
What is the company’s growth strategy?
The shop’s organizational culture will change as the business grows. The appropriate succession planning measure will be instituted to recognize and develop internal staff with the possibility to fill future vacancy positions in the cafe (Catherine 2014). The process is the most efficient and appropriate way of filling organization’s vacancies.
Through this approach, the shop will reduce its recruitment costs and orientation training expenses and time. The approach will offer employees with abilities to advance their career through regular training. As a result, employees will progressively develop and advance their careers. Through career advancement, workers’ morale will be enhanced enabling them to dispense their knowledge and capabilities effectively. By improving on the workforce’s morale, the business will increase its productivity leading to an increase in returns.
Conclusion for Coffee Shop Business Plan
In conclusion, it should be noted that the cost of establishing the shop is $363,000. The majority of the expenses will be used in purchasing the raw materials including furniture fixtures. The business will target only female clients. As such, the coffee bar will offer many crafted dishes.
Appendixes
Start-up Expenditures and Expenses Worksheet
SWOT analysis
References
Agnihotri, A. 2015, ‘Extending boundaries of Blue Ocean Strategy’, Journal of Strategic Marketing, vol. 32, no. 8, pp.1-10.
Carlson, K. 2013, ‘Designing Business Training for Fun and Results’, Performance Improvement, vol. 52, no. 9, pp. 45-46.
Catherine, F. 2014, ‘Sustainable cultures: Engaging employees in creating more sustainable workplaces and work styles’, Facilities, vol. 32, no. 8, pp. 438-454.
David, B. 2015, Coffee culture in Australia. Web.
Hazelton, S. 2014, ‘Positive emotions boost employee engagement: Making work funbrings individual and organizational success’, Human Resource Management International Digest, vol. 22, no. 1, pp. 34-37.
Hunter, B. 2015, Melbourne CBD, Melbourne. Web.
Johnny Y. 2015, Start a new business/Café Business. Web.
Kwek, G. 2015, Australia makes its mark on global coffee culture. Web.
Purnama, M. 2013, Melbourn Top 10 Cafes. Web.
Stafford, K. 2013, ‘Does Fun Pay? The Impact of Workplace Fun on Employee Turnover and Performance’, Cornell Hospitality Quarterly, vol. 54, no. 4, pp. 370-382.