The Coffee Warehouse is a new business specializing in distributing high-quality coffee, specialty beverages, and beverage-related supplies to coffee houses and espresso stands in the Spokane and Northern Idaho market. The owners, Steve and Jennifer Smith, bring office management, exceptional customer service, and over 20 years of distribution and sales management experience. To support our venture, we are currently seeking additional equity capital and looking to secure a bank line for inventory and receivables financing. We already have commitments from independent retailers in the area to carry our products. Our goal is to distribute our products within 30-60 days once financial arrangements are finalized.
Sales projections for The Coffee Warehouse start at approximately $2,229,000 in the first year, increasing to $2,558,000 in Year 2 and $2,936,000 in Year 3. Our expected net profit for the first year is approximately $283,000, which is projected to increase to $406,000 by the end of the third year.
What sets us apart is our combination of management experience, sales and distribution expertise, remarkable products, and exceptional customer service. We pride ourselves in being the only full service distribution company catering specifically to the coffee and specialty beverage industry in the Spokane/Northern Idaho market. Moreover, we have an exclusive contract to distribute a groundbreaking product, giving us immediate access to a majority of potential customers.
1.1 Objectives:
– Open and operate a successful coffee and new age beverage distributorship in the Spokane/Northern Idaho market, employing three to five employees in the first year.
– Obtain a minimum of 100 regular customers in the Spokane/North Idaho market in the first year of operation.
– Achieve first year sales of $2,000,000.
– Maintain an average gross margin of 25 percent.
– Produce a net profit of at least $400,000 by the end of the third year of operation.
1.2 Mission:
The Coffee Warehouse aims to become a recognized distributor of specialty beverages and beverage-related supplies and services to coffee houses and espresso stands throughout Spokane and Northern Idaho. We plan to develop strong relationships with key customers to be viewed as indispensable partners, rather than just another supplier. We will closely work with each customer to recommend unique product assortment, appropriate stocking levels, pricing and display assortments, as well as promotional ideas and material to increase sales. Additionally, we will collaborate with the manufacturers we represent to deliver innovative and exciting products to our customers. Our focus is not only on selling products but also on providing exceptional service.
1.3 Keys to Success:
– Innovative quality products.
– Individualized customer service.
– Full service distribution company in the Spokane/Northern Idaho market.
– Integrated programs to help customers increase sales.
– Exclusive distribution rights to groundbreaking products.
– Combined experience of the principal owners in upper office management, customer service, and distribution and sales management.
The Coffee Warehouse, Inc. is a new S-corporation business located in Spokane, Washington. It will be established based on the details of the following plan.
2.1 Company Location & Facilities:
The Coffee Warehouse will be located in the Spokane Valley within the Spokane Industrial Business Park, a prime location to service both the Spokane and Northern Idaho market. The facilities will include approximately 5,000 square feet of warehouse space, with an additional 1,400 square feet built out for office/retail space. Lease terms are currently being negotiated, with a planned lease signing by July 31.
2.2 Company Ownership:
The Coffee Warehouse is a privately held S-Corporation owned entirely by its co-founders, Steve and Jennifer Smith.
UBI Number: XXX-XXX-XXX (removed to protect confidentiality)
2.3 Start-up Summary:
Start-up expenses for the Coffee Warehouse total $16,450, including legal, marketing, lease deposit, and computer systems. Start-up assets include $9,800 in initial cash requirements, $18,750 in short-term assets (office furniture, refrigeration equipment), and $75,000 in starting inventory. These start-up costs will be financed through investments and small-business loans. The details of the start-up summary are included in the table below.
Start-up
Requirements
Start-up Expenses
Legal Business Formation – $220
Business Plan – $90
Warehouse Lease Deposit – $2,800
Insurance (first month) – $500
Utilities (first month) – $350
Research & Development – $1,200
Marketing – $1,200
Advertising – $250
Personnel – $2,060
Business/Office Supplies – $1,550
Computer Systems – $3,080
Phone System – $650
Communication Lines – $300
Trade Show/Grand Opening – $2,200
Total Start-up Expenses – $16,450
Start-up Assets
Cash Required – $9,800
Start-up Inventory – $75,000
Other Current Assets – $18,750
Long-term Assets – $0
Total Assets – $103,550
Total Requirements – $120,000
Start-up Funding
Start-up Expenses to Fund – $16,450
Start-up Assets to Fund – $103,550
Total Funding Required – $120,000
Assets
Non-cash Assets from Start-up – $93,750
Cash Requirements from Start-up – $9,800
Additional Cash Raised – $0
Cash Balance on Starting Date – $9,800
Total Assets – $103,550
Liabilities and Capital
Liabilities
Current Borrowing – $95,000
Long-term Liabilities – $0
Accounts Payable (Outstanding Bills) – $0
Other Current Liabilities (interest-free) – $0
Total Liabilities – $95,000
Capital
Planned Investment
Investor 1 – $25,000
Other – $0
Additional Investment Requirement – $0
Total Planned Investment – $25,000
Loss at Start-up (Start-up Expenses) – ($16,450)
Total Capital – $8,550
Total Capital and Liabilities – $103,550
Total Funding – $120,000
Products
The Coffee Warehouse will provide a first-class delivery service of quality hot and cold beverage related supplies, including whole bean or ground coffee, flavor syrups, jet teas, fruit smoothies, bubble teas, concentrated milk, fresh baked goods, and assorted paper supplies. Our services will include invaluable trade resources, effective promotional programs, custom-designed marketing material, informative monthly newsletters, training and product demonstrations, as well as information on the latest market trends in the coffee/specialty beverage industry.
Product & Service Description
PRODUCT DESCRIPTION
The Coffee Warehouse will carry a variety of quality products that will enable us to provide full-service delivery to espresso stands and coffee houses. Our philosophy in selecting products is to choose lines that bring consistent quality, competitive prices, and product satisfaction to our customers. We have personally researched and sampled each of the following products to ensure guaranteed quality:
– Lowery’s Gourmet Whole Bean and Wired Willey’s White Coffee
– Assorted Gourmet Syrups & Coffee Toppings
– Chocolate, White Chocolate and Caramel Syrups/Sauces
– Oregon Chai Concentrate
– Jet Cafe and Jet Tea Fruit n’ Tea Freeze
– Cappuccina line of product
– Big Train line of product
– Red Bull Energy Drinks
– Good Cow Concentrated Milk with Custom Dispensing Equipment
– Fresh Baked Goods
– Assortment of White, Pre-printed Paper, and Clear Beverage Cups Systems – as well as other paper supplies
At this time, these products are only available to customers through wholesale vendors. The Coffee Warehouse will make these same products available through our high-quality, full-service delivery at a competitive price.
SERVICE DESCRIPTION
In addition to our full-service delivery, we offer important service elements:
– Ideas to help our customers increase sales through menu development, creative promotions, co-op advertising, and more.
– Custom designed marketing material such as banners, posters, punch cards, and reader boards.
– Monthly newsletter featuring the latest coffee trends, industry news, recipes, and events.
– Samples of new product releases with eye-catching point-of-sale materials.
– Routine equipment maintenance and training.
Competitive Edge
KEY COMPETITIVE STRENGTHS
No other wholesaler offers full-service delivery with the variety of products we feature. We focus exclusively on high-quality distribution and customer service. The Coffee Warehouse has exclusive distribution rights to Good Cow’s concentrated milk/dispensing system, which is not available from any other suppliers in our market.
KEY COMPETITIVE WEAKNESSES
Our primary weakness is that we are a new business competing against established suppliers. However, by offering superior supplies, new products, and focusing on high-quality service and delivery, we can quickly establish accounts and build strong relationships.
Sales Literature
Sales literature includes brochures, fliers, newsletters, and print advertisements. We have quality design and printing equipment to publish professional pieces at a low cost.
Sourcing
We purchase products directly from manufacturers and master distributors, eliminating the middleman. This allows us to operate on a 25-30% profit margin and provide competitive prices. We also plan to share product shipments with distributors in Portland and Tri-Cities to reduce costs.
Technology
To streamline distribution methods, we will use the latest technology, including Thinque MSP handhelds and software for our drivers/sales representatives. This will reduce expenses, increase efficiency, and provide real-time information to management.
Future Products and Services
Within the first year, we plan to open a retail/wholesale store and showroom. We will offer quarterly product and training demonstrations, as well as semi-annual trade shows for customers to sample products, learn about new trends, review marketing material, and network with other business owners.
Market Analysis Summary
Coffee is the second largest commodity market, and the specialty beverage industry is growing rapidly. This offers excellent opportunities for new companies like The Coffee Warehouse in the Spokane and Northern Idaho market.
Market Segmentation
The gourmet coffee and specialty beverage industry is divided into several segments. We will target consumers who enjoy these products at various locations, including restaurants, coffee houses, drive-thru espresso stands, and retail establishments. In the market surrounding Spokane, there are currently 250 drive-thru espresso stands, 18 coffee/tea houses, 52 independent inner-retail espresso stands, and approximately 10 stands in other locations, excluding restaurants, bars, and cafes.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Potential Customers
Drive-thru Espresso 4% 250 259 268 277 287 3.51%
Inner-Retail Espresso 4% 52 54 56 58 60 3.64%
Coffee/Tea Houses 5% 18 19 20 21 22 5.14%
Other (sports venues, universities, etc) 5% 10 11 12 13 14 8.78%
Total 3.79% 330 343 356 369 383 3.79%
4.2 Target Market Segment Strategy
While the market is sizeable, this industry continues to grow. New espresso stands open their doors on a monthly basis in our market, and it’s not uncommon to see numerous espresso stands within a one or two mile radius. The article below, published by a national coffee retail magazine, discusses our market’s unique drive-thru espresso industry. The sales potential in this market is unlimited.
The Coffee Warehouse plans to target drive-thru espresso stands and inner-retail espresso stands within our designated market. This segment is most in need of the services we plan to offer – quality products at competitive prices, first class service, and strong sales support. These small owner-operated businesses are often neglected by larger suppliers and are forced to service themselves. They could greatly benefit from marketing services, sales support, and full service product delivery. Within the first six months of operation, The Coffee Warehouse plans to expand our target into formal coffee houses and cafes. As business grows and stabilizes, we will evaluate the needs of potential customers in the restaurant and bar industry.
4.3 Market Growth
The coffee industry has experienced significant growth in recent years, especially in the gourmet/specialty coffee sector in the United States.
The new age beverage industry is also growing rapidly. The chai tea category alone has historically seen sales growth of 50%, with projected annual growth rates of 40%. Energy drinks, including brands like Red Bull, as well as trends like Jet Tea, have experienced a 50-fold increase in the past three years.
Bubble Tea has rapidly emerged as a growing market in Asia, and it is now gaining popularity in the United States. Sales have been booming in trend-setting cities like San Francisco and Seattle, and the popularity of the “Tapioca Pearl” trend is expected to spread throughout America.
The coffee and specialty beverage industry is fragmented, with numerous manufacturers, brokers, suppliers, and retailers. Unlike the beer/soda industry, which is dominated by large companies like Anheuser Busch, Pepsi, and Coca Cola, the coffee and specialty beverage industry lacks major national chains with market control. However, in an open and rapidly growing industry, The Coffee Warehouse has the opportunity to meet the customer’s need for quality products, exceptional service, and a reliable partner for success.
4.5 Industry Participants
With the gourmet coffee market and the recent popularity of Jet Teas and other specialty beverages, the industry consists of many small players, each focusing on a few specific items or brands. As the markets evolve, we expect the industry to consolidate, with larger distributors representing a wider range of products in each market. Currently, our segment of the industry lacks major national chains with market control, and there are only a few products offered exclusively in one market. However, The Coffee Warehouse is working with manufacturers to change this, aiming to offer a more diverse product portfolio and secure exclusive rights to many of our products.
4.6 Distribution Patterns
The flow chart below illustrates the distribution patterns in the coffee and specialty beverage industry. The Coffee Warehouse falls into the highlighted level (yellow). Manufacturers are represented by master distributors or brokers, who then supply the product to direct distributors and other wholesale suppliers. Some manufacturers also allow distributors and suppliers to purchase product directly, depending on the quantity. The product is then distributed or sold through cash and carry wholesale stores to retail businesses, as shown below.
The coffee and specialty beverage market has room for new businesses that provide high-quality service and sales support in addition to competitive prices. Customers in this industry prioritize product, price, and service when choosing suppliers. However, many suppliers either lack satisfactory service or have high prices. As a result, some customers resort to purchasing their supplies from wholesale stores that offer no service or support. By positioning ourselves as a provider of in-demand, high-quality products at competitive prices and offering consistent, top-notch customer service, we are confident in attracting and retaining customers.
Our sales and marketing strategy revolves around individual product selection, quality assurance, and high-quality full-service distribution. We will focus our efforts on the espresso supplies market in the Spokane and Northern Idaho area, aiming to quickly establish and maintain a leadership position. As a small, owner-operated company, we will leverage our size to ensure every customer receives excellent service, making them feel valued and important. Our sales representatives and in-house personnel will receive extensive training to ensure customer satisfaction.
Our marketing strategy involves working with customers on a one-to-one basis to meet their supply needs and develop unique marketing programs for each of them. We prioritize customer service and aim to provide customers with what they want, when and how they want it. We believe that exceeding customer expectations is key to building repeat business and positive word-of-mouth advertising. We will establish accounts in a personable manner, emphasizing the high-quality service behind our company name, "The Coffee Warehouse, Inc." Additionally, we will attend conventions and trade shows to stay updated on market trends.
Relationships are crucial in the distribution business, and personal selling will be our primary means of promotion. We will also send news releases to local media and trade magazines to gain exposure. Furthermore, we will produce generic press releases for our customers to use in local publications. We plan to have a monthly newsletter for current and potential customers, which will include industry trends, promotions, recipes, and success stories. Traditional advertising efforts such as Yellow Pages ads and advertising in local publications will complement our promotional activities.
In terms of distribution, we will operate two delivery trucks initially, with a third vehicle for special deliveries as needed. We will strategically route deliveries Monday through Friday, maximizing efficiency and minimizing travel time and fuel costs. As our number of accounts grows, we will evaluate the need for additional delivery trucks to maintain efficiency.
Our sales strategy is based on personal, consistent sales contact, aiming to build strong customer relationships. As a new distributor, we understand the importance of proving our worth to customers and earning their respect and business. Both owners, Steve and Jennifer, will make personal calls on potential customers to introduce our product line, discuss our company, and explain how we can help them succeed in their business. We will start with two full-time delivery/sales representatives who will provide full service and delivery to current customers while also making sales calls for potential new business.
Our personnel plan involves initially relying on Steve and Jennifer, along with one administrative assistant, and two product delivery/sales personnel. As the business grows, we will gradually hire additional employees to meet demands. We will provide training to deliver excellent service and give employees the flexibility to respond creatively to customer requests. We will regularly monitor customer satisfaction through surveys and hold meetings with employees to review results and discuss future plans. Sales and delivery personnel will be carefully selected, and we will provide immediate backup support for exceptional customer service.
In summary, The Coffee Warehouse aims to be a leader in the espresso supplies market by offering high-quality products, competitive prices, and outstanding customer service. We will build strong relationships with customers and prioritize their supply needs. Our sales and marketing efforts will be integrated to project a consistent image of our company and emphasize our high-quality service. We will use personal selling as the main promotion method and explore other advertising and publicity avenues. Our distribution strategy will focus on efficiency and maximizing production. With our dedicated management team and well-trained personnel, we are confident in achieving success in this industry.
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