Coffeehouse Business Plan
Every day, millions of Americans stop for an espresso-based coffee drink. People who would not have dreamed of spending more than 50 cents for a cup of coffee a few years ago now gladly pay $3 to $5 for their cappuccino, mocha latte, or vanilla ice blended drink.
The specialty-coffee business is growing at a healthy pace. During the past 20 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.
Solution
A niche exists that has yet to be filled for a high-volume, upscale, quality-driven coffeehouse with a warm, inviting atmosphere. Dark Roast Java meets this need and fills this niche. We offer high-quality products in an upscale environment. Furthermore, our high-profile location in Pleasantville 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.
Market
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.
Pleasantville: The Perfect Launch Market
By launching Dark Roast Java in the Pleasantville market, 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, and prime site location. Dark Roast Java is located at what is arguably one of the best locations for a coffeehouse in Pleasantville – in the heart of the tourist and business district, adjacent to fine dining and shopping, next to the historic Egyptian Theatre, and just steps from the busiest intersection in town. Dark Roast Java Coffee has all the ingredients necessary for immediate success.
Competition
The specialty retail coffee business as we know it today began in 1982 after Howard Schultz purchased the Starbucks name and began the expansion of the modern Starbucks chain. Prior to his transformation of the business, Starbucks sold only whole bean coffee.
Coffeehouses in America have existed since the 1600’s, 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.
Why Us?
Our goal is to be the coffeehouse of choice for the local Pleasantville community, downtown business workers, tourists who visit the city, and students, by providing a higher quality experience than any competitor. 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.
Dark Roast Java also awards its business to as many local suppliers as possible, keeping the business in the community or, at the least, in the state.
Expectations
Forecast:
The company anticipates rapid acceptance of the Dark Roast Java concept in Pleasantville, with revenues of $750,000+ in the first fiscal year, rising to more than $1,000,000+ in year three. We will be able to start giving investors dividends by year 4.
Financial Highlights by Year
Financing Needed:
We will get investors to put in $250,000 to get us up and running.
Opportunity
Problem & Solution
Thanks primarily to Starbucks, within the past 20 years, the coffeehouse has become a familiar feature of American life. Every day, millions of Americans stop for an espresso-based coffee drink. People who would not have dreamed of spending more than 50 cents for a cup of coffee a few years ago now gladly pay $3 to $5 for their cappuccino, mocha latte, or vanilla ice blended drink.
The specialty-coffee business is growing at a healthy pace. During the past 20 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.
Starbucks, The Coffee Bean, Peet’s, Diedrich’s, and other major chains serve average quality drinks in establishments that have the same generic design appearance. Starbucks and The Coffee Bean are often referred to as "fast food" coffeehouses due to their "cookie-cutter" design. Now that Americans’ coffee preferences have broadened and matured, many are asking for more from their coffeehouse.
Our Solution
Dark Roast Java launches with its first coffeehouse located in downtown Pleasantville. Dark Roast Java 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 range of coffee drinks, tea, cocoa, juice, smoothies, and other products that Dark Roast Java does.
Location: Dark Roast Java will be located in the prime section of downtown Pleasantville in the heart of the shopping and entertainment district. Dark Roast Java 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 Dark Roast Java coffeehouses located in markets that have similar demographic profiles, significant traffic by the store, year-round tourist activity, and a sizable student population.
Market Size & Segments
Dark Roast Java’s customer base in Pleasantville is comprised of five target groups: affluent local residents, tourists, local business people, students, and 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. The other customer segments provide a consistent foundation all year long. Also, by appealing to several market segments, Dark Roast Java does not become overly dependent on any single consumer group. Affluent locals, within five miles of Dark Roast Java, have homes in adjacent Niceburg that sell for $1 million to $50 million. Key influencers, trendsetters, artists, writers, and celebrities have homes in Pleasantville.
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 Dark Roast Java location. The most affluent of these live even closer, within three miles. It is a short 5-minute drive to Dark Roast Java 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: Pleasantville 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 Ontopolis area, and an unusually large number of special events (e.g. film festivals, concerts, art shows) scheduled throughout the year.
Exceptions will be made for potentially very profitable sites. Plans are to locate Dark Roast Java coffeehouses in Western states for supply and management efficiency.
The coffeehouse/cafe experience is linked to European origins, where sidewalk dining is popular. Americans have embraced sidewalk dining, one of the fastest growing additions to the American dining scene.
Sidewalk dining also allows prospective customers to see and "check out" the coffeehouse for the first time.
Several sampling activities will be conducted to introduce potential and current customers to Dark Roast Java’s drink options.
– Samples will be distributed at the coffeehouse and 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.
– Free coffee service will be provided to the Chamber of Commerce, a radio station, the newspaper, and select government offices.
Within 6 to 8 months, a portable Dark Roast Java kiosk will be created to sell and market products at special events and community activities in Pleasantville. The kiosk will be highly visible and potentially profitable. Revenue of $75,000 – $100,000 annually is expected.
Gift cards and customer frequency cards will be promoted to drive business and stimulate cash flow. Industry records indicate that 25% – 40% of all gift card amounts go unused. Pre-paid and reloadable cards have also been popular with major chain coffeehouses, promoting customer loyalty. Frequency cards rewarding repeat customers with a free drink are proven methods to foster customer loyalty. Discount cards are used to build goodwill among specific groups. Usage can be tracked and expenses allocated to marketing through the computerized sales and inventory system.
The number of Dark Roast Java locations could easily reach 20 – 25 within five years. The Pleasantville location will serve as a blueprint for future expansion. With ten coffeehouses, projected gross revenues could exceed $10 million in the third year. A 10-store chain would likely generate at least $1 million in annual profits, while a 25-store chain would surpass $2.5 million in profits.
Sources: SRDS, Interep Radio, Scarborough Market Data Survey.
Hello!
I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
My career is built on a foundation of helping individuals and businesses thrive financially in an ever-changing economic landscape. At phonenumber247.com, my aim is to demystify the complex world of finance, providing clear, actionable advice that can help you navigate your financial journey with confidence. Whether it’s personal finance management, investment strategies, or understanding the nuances of market dynamics, I’m here to share insights and tools that can propel you towards your financial goals.
Welcome to my digital space, where every piece of advice is a step closer to financial clarity and success!