Business Overview
The proposed business idea for coffee machines is that special zones with coffee machines organized according to the DIY type will be placed in places with a large flow of people. After payment, a person chooses a drink on the screen, substitutes a glass, and then can use several services: take the syrup, sugar, cinnamon, a straw, a lid, or a stirring stick for free. The advantage of these devices is that such machines are distinguished by better preparation of the drink, unlike vending machines, where soluble powders are used, not grains, and also in the diversification of available drink bonuses, as in specialized coffee shops.
Initially, the market where the business will be deployed is enclosed in the local territory of one city. Test points will be placed in parks, supermarkets, educational institutions for students, and business centers with many offices. The direct competition will consist of coffee shops and vending machines: in the first case, a competitive advantage is achieved through price and time, and in the second, quality. The business model will be implemented as a franchise: anyone can buy a ready-made package of services and consultations to locate a similar point and its service options. The project’s mission is to make quality coffee accessible to everyone; the vision is to create a recognizable and beloved brand of DIY coffee outlets.
Market Analysis
Starbucks, Dunkin Donuts, Dunn Bros Coffee, and Caribou stand out among coffee shop competitors. To varying degrees, the advantages of these networks lie in the atmosphere of the establishment and related products: pastries, cookies, and other coffee snacks. The outlets of the proposed business will be comparable in terms of the quality of the coffee drinks themselves, while the snacks will remain the prerogative of competitors, including vending machines. The availability of coffee is an integral part of almost every American’s workday, with recent statistics suggesting they drink more than 3 cups daily (Gunter, 2023). Therefore, one person drinks at least one cup while at school or work during the day.
It is proposed that DeVry University, Whole Foods Market, Publix Supermarket, and Glenlake Park be used as the first test locations for evaluation. These places have a high capacity in Decatur, which many people pass daily. It is because, in the state of Georgia, a significant share of roasted coffee over instant coffee tends to increase shortly; this business idea is relevant (Statista, 2023).
Taking the able-bodied population of the city of Decatur, which is approximately 12-16 thousand people, it can be assumed that about 3-4 thousand of them visit these places per month and buy coffee at least 10-20 times a month. Considering that the average price for a cup of coffee in Georgia is $2.30, and coffee shops like Starbucks offer prices from $2.75, in this model, the price is taken strictly at the average cost of a cup in all three scenarios (Sherman, 2021). Calculations for three different scenarios are presented in Table 1.
Table 1 – Expected Market Value: DIY-Coffee Points
The total addressable market, which the company plans to capture, falls mainly on the share of vending rather than coffee houses. Their ratio fluctuates at the level of 80:20 in favor of coffee shops, so the startup will aim for the mark of 10% in the ratio of 7.5:2.5 in favor of capturing the vending market (Statista, 2023). Therefore, TAM will be equal to 129.375*0.1=12937.5$.
Recommendation
This business idea is quite promising and has vast growth potential if appropriately implemented. Although the TAM is relatively low, the drink is in demand, and a similar business model has yet to be implemented in this respect. Therefore, it is better to continue to develop this idea, however, with specific systems for monitoring financial indicators, the ratio of expenses and incomes, and timely servicing of outlets.
References
Gunter, M. (2023). 22 Coffee Consumption Statistics and Facts in 2023: Fascinating Data. Coffee Affection. Web.
Sherman, E. (2021). New study found the most, and least, expensive states to buy a cup of coffee in. Matador Network. Web.
Statista. (2023). Coffee – Georgia. Web.