Business Plan for The Bean Palace Cafe

This business plan outlines the future course for The Bean Palace Cafe, a new business venture in the cafe industry. It includes a situation analysis, marketing plan, infrastructure and technology assessment, laws and regulations, and financial discussion.

Business Plan
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Executive Summary
A business plan is like a map of the efforts undertaken by a business firm. The following study
tries to create a business plan for a new business venture undertaken in the café industry namely
‘The Bean Palace.
At the onset the study focuses on the business concept and the objectives of the new business.
Subsequently, the study does a situation analysis for the firm and enumerates on the strengths,
weaknesses, opportunities and threats that is facing. Further a marketing assessment is
undertaken where growth and capacity of the industry are discusses. This brings to light that the
new business venture is feasible. In continuation a marketing plan is made for the new firm
where in its segmentation, targeting and positioning strategies are outlines. Further, a
promotional plan is also created for the study.
In continuation an assessment is done of the infrastructure and technology requirements of the
business. The study also assessed the human resource needs and the laws affecting the business.
Lastly budget allocation and the financial discussion of the new launch was done and revenue
and cost dynamics were discussed.
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Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
The Business Concept......................................................................................................................4
The Business Objectives..................................................................................................................4
The situation analysis......................................................................................................................4
Discussion of the Market assessment and Marketing Plan..............................................................6
The Marketing Plan- Creation of Brand and Segmentation, Targeting and Positioning.................7
Marketing Plan and Promotional Strategy.......................................................................................8
Discussion of the Infrastructural and Technical Assessment of the business.................................8
Laws and Regulations Required for the Business-..........................................................................9
Sustainability, moral and Ethical issues..........................................................................................9
Discussion of Human Resource Needs............................................................................................9
Financing of the business...............................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
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Introduction
Business plan is a formal document which outlines the future course for any business venture
(Butler, 2012). It outlines the goals, objectives, vision, purpose and aims of an organisation
(Hiduke, 2013). It also outlines the reasons for these goals and objectives and the methods and
strategies of achieving these goals. For a new business venture, business planning helps to assess
the environment and the business situation (de Pablo, 2013). Additionally, it helps in assessment
of market feasibility, financial feasibility and technical analysis. It also helps a new business firm
in assessing the resources which are required to set up the business.
The following business plan tries to help set up a new firm in the café industry through an
analysis of market, finance, resources and human resource needs
The Business Concept
The name of the new Café has been kept as ‘The Bean Palace’ and its location has been decided
to be Melbourne city. The business will start with a single café restaurant offering coffee in
various flavours and snacks like sandwiches, cakes and cookies. The business would like to
create an image of a friendly café which can be frequented with family and friends to celebrate
or to have an enjoyable outing. The café would be opened in a location where there is a large
residential colony and a college in the vicinity. These would help generate customer base for the
café.
The Business Objectives
 To provide high quality coffee to customers at lower prices
 To create a café which is friendly and family oriented
 To expand in next three years and open another café and to make The Bean Palace into a
café chain with at least 5 to 7 Café’s within next 7 years.
The situation analysis
A situation analysis helps any new business firm to assess its own strengths and weaknesses and
the opportunities and threats posed by the industry and the market (Aaker & McLoughlin, 2010).
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This analysis also helps a firm to assess its strengths which can be used to counter the threats and
use the opportunities to full advantage (Rigby, 2011). A small business venture of a café and
restaurant can be a profitable business if proper planning is done to launch it. Following is a
situation analysis for a new café in Melbourne.
Situation Analysis for The Bean Palace
Strengths
 High quality product with use of best
coffee beans and snack ingredients
 Good infrastructure with picturesque
surroundings
 Airy and fresh ambiance where
students and professionals can sit and
relax and even work along with having
coffee.
 Well trained staff to make and serve the
coffee and other ingredients.
 Approachable location. Near to
important college and residential
colony.
Weaknesses
 Heavy investment into setting up a
premise and paying a skilled staff
 Heavy marketing cost needs to be
incurred to attain customer attention.
 Less experience with running a new
business
 Lower prices initially may lead to less
revenue.
Opportunities
 There is demand for café and restaurant
in the area as people look for nearby
place for relaxation and discussions.
 Not many small cafes offer free WIFI
so that is a huge market opportunity
 Not many small cafes have good food
items inclusive in the product offering
 Very few cafes go with high quality
coffee beans in their ingredients
Threats
 Large amount of competition from big
and small café firms in Melbourne
 Some very big firms in the business-
like Starbucks with immense market
and financial power
 People do not consider coffee as
healthy so that can affect potential
customer attraction for the café.
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 Most high-profile café have exuberant
prices which makes customer look for a
place where product quality is good and
prices are moderate
Made by Author (2018) Adapted from (IBissWorld, 2018) and (Prepair for Australia, 2018)
Discussion of the Market assessment and Marketing Plan
Market feasibility analysis helps in undertaking market research to determine potentiality of a
new business venture. (Rigby, 2011). Following is a feasibility analysis for the new café business
Size and Growth rate of the market- Due to a hectic lifestyle people want to have a nearby place
where they can relax with a cup of coffee and enjoy with friends (IBisWorld, 2015). Hospitality
industry as a whole is growing rapidly because of people’s need for recreation (Bankwest, 2018).
The hospitality industry growth rate was at 7.1% in 2015. The Government is also giving
incentives to hospitality industry by giving incentives to small and medium enterprise
(Bankwest, 2018). The café industry growth was around 5.1 % in 2014-15 and is expected to
grow on similar lines (IBissWorld, 2018). 75% of population of Australia like to drink coffee
and do not want to go to trouble of making it at home. Additionally, coffee culture in Australia is
such that people like to go to small local cafes rather than the large coffee brands. (IBisWorld,
2015). Therefore, good product along with high demand can give competitive advantage to the
business along with being lucrative for the investors.
Market Capacity and fulfilment of customer demand and creation of value
Australians love coffee and it is a $ 4.3 Billion industry (IBisWorld, 2015). There are many large
firms in the coffee business like Starbucks, however demand for coffee is ever rising.
Additionally, it has been found in research that people prefer smaller local cafes to the big
international chains (IBissWorld, 2018). This is because of exuberant prices of these big firms.
Independent cafes and coffee shops are preferred. No big coffee chain has more than 5% market
share (IBissWorld, 2018) This shows the hold of smaller cafes in the marker is high.
Additionally, the market has not reached full capacity as the demand for coffee is growing at a
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very good rate and customers demand for hospitality is rising. (Evens, 2015) Therefore, market
capacity is good for the firm to establish a new business.
Customer location and expected customers – Customers are expected to come from areas of
vicinity like the college students and the families from the nearby residential areas. The customer
base should be enough initially to be profitable
External Factors affecting market growth- Major external factors which can affect market
growth are government regulations pertaining to customer health and safety, employment
regulation, ingredient quality and safety and waste disposal norms (Evens, 2015). High
competition with big and small firms is also a major external factor. Therefore, The Bean Palace
will have to undertake marketing activities to succeed in the market. Marketing techniques like
sales promotion, public relations and customer relationship management would be useful.
Barriers to Entry- Industry specific barters like Start-up cost of setting a new infrastructure is
one of the major barriers to entry in this industry (Hiduke, 2013). Additionally, heavy
dependence on suppliers is another major barrier. Therefore, the new café will have to focus on
acquiring infrastructure, equipment and staff.
The Marketing Plan- Creation of Brand and Segmentation, Targeting and Positioning
The Brand Name- Brand is any name symbol or logo with which a firm or its products get
identified or recalled by the customer (Brown, 2016). The café venture has chosen the name ‘The
Bean Palace ‘for its café. A steaming coffee mug with coffee beans spilled around will be the
logo. The brand will try to position itself as a high-quality low-priced café where one can feel
relaxed
The target market- Target market is the market which has been identified by the company to sell
its products (Ferrel, 2012). Target market for ‘The Bean Palace’ would consists of students,
professionals and families in the age group of 20-50 within the middle-income range.
Positioning- Positioning is the image of the product or the service that a firm wants to create in
the mind of the customers (Ferrel, 2012). Positioning is the perceived value of the brand. The
new café needs to focus on its strengths like its product quality and its ambiance while creating
the brand image. Focus on service quality and atmospherics of service delivery will help in
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creating a positive brand image. Therefore, The Bean Palace will have a quality focused image
This will increase competitive advantage as high quality will appeal to customers.
The market segment- The firm will use demographic segmentation strategy and will segment the
market based on income size, age and family size. Prices will be kept low for middle income
groups and students (Ferrel, 2012). The market can also be segmented based on lifestyle and
where special offers on coffee can be given to students and young professionals. Demographic
and lifestyle segmentation will help the firm in catering to the needs of the customers. Mostly
students need a place near to college where they can sit and relax. Additionally, families and
friends also need a place where they can drink a cup of coffee and relax. The Been Palace can
address this need by providing airy and fresh ambiance with quality product.
Marketing Plan and Promotional Strategy
As there is lot of competition in the market the firm needs to create awareness through marketing
strategy (Ferrel, 2012). As the budget of the start up is low it can use print advertising with Ads
in newspaper. It can also use pamphlets in newspapers to increase awareness about the new café.
Additionally, marketing techniques like billboards and hoardings can be used to spread
awareness (Belch, 2011).Sales promotion techniques of giving free offers or discounts on larger
orders can also increase initial sales. Through these measures the new firm can increase footfalls
into the café and create customer value by making them aware of a good product.
Discussion of the Infrastructural and Technical Assessment of the business
Like any other hospitality and food services business, café business is also heavily dependent on
infrastructure and technique or recipe of making the products (Evens, 2015)
Technology Development- The Been Palace needs to fix ingredients value and quality of each
coffee cup and other snacks that are available for sale. Quality control in ingredients and recopies
will help the firm in catering high quality coffee to the customers (Evens, 2015). Good
production techniques can get more customers leading to value for both customers and investors.
Café industry functions in the service industry. Therefore, it suffers from homogeny and
inseparability aspect of services (Bateson, 2010). In such a case quality of service delivery is
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very important to create differentiation (Bateson, 2010). Therefore, café ambiance and catering
staff is of great importance. Ambiance should be relaxing and staff should be qualified.
Therefore, it is important to invest in an infrastructure which can provide relaxing ambiance to
customers along with areas where they can sit and work and chit chat.
Options for product development- The Bean Palace intends to sell high quality coffee in
different varieties like café latte, expresso and others. It also intends to sell various eatables like
cakes, cookies and sandwiches along with the coffee.
Laws and Regulations Required for the Business-
All regulations applicable to hospitality and food services industry are also applicable to the
Bean Palace cafe (Evens, 2015). Competition and consumer Act 2010 binds the firm to to
protection of consumer health and holds that no ingredients should be used which are harmful to
human health (Government of Australia, 2018). The firm also has to abide by the food standard
code. Additionally, workforce health and safety norms have to be followed (Government of
Australia, 2018). Working hours, pay, and safety regulations for the workforce needs to be
abided to. Any kind discrimination towards any gender, race or ethinicity is prohibited under
Australian Laws (Government of Australia, 2018). Additionally, the firm needs to use safe waste
disposal methods under environment protection legislation.
Sustainability, moral and Ethical issues- The firm should be ethical in its conduct and always
provide safe and healthy products to its customers. Additionally, the firm should try to be ethical
in terms of waste disposal (Hiduke, 2013). This will help the firm in being sustainable. Also,
staff should be respected and trained to be efficient and effective. (Butler, 2012).
Discussion of Human Resource Needs
Like any other service industry café business is extremely dependent on work force because it is
the workforce which creates and serves the product (Niehaus, 2010).Therefore, experienced,
skilled and motivated staff is required (Butler, 2012)..
Technical and Management Experience Requirements- A café needs proper management to
handle customers and day to day functioning (Niehaus, 2010). Therefore, a manager with a
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proper management qualification should be hired. This manager will oversee daily activities and
report to the owners. Additional management staff will be hired to handle marketing and human
resources of the café.
Ownership status- The Bean Palace will be a partnership firm jointly owned by Mr Smith and
Mr Jones. The infrastructure of the café also belongs to the partnership firm,
Manpower Requirements- A proper recruitment policy will be formulated with job specification
and description for each staff member. (Cooper, 2011). Jobs will be advertised in local
newspapers and job portals. Fixed salary plus incentives for better performance will be paid to
employees based on their knowledge, skillsets and experience. Performance linked bonuses will
be given to those who show better efficiency and performance (Cooper, 2011). This will help in
motivating and retaining the staff. Jobs will include Café manager, Receptionist, Hostess, waiter,
cleaner and delivery boy.
Financing of the business
Financial strength is the backbone of any business venture (Butler, 2012). To become successful
in the café industry, ‘The Bean Palace’ needs to look into its financial strengths. Additionally, it
needs to pinpoint its costs and allocate budget and project its revenue expectations for the next
few years.
Start-up Budget- Total budget allocated for the business amounts to $350.000 which will be
raised through venture capital. Infrastructure premises for the café is already available with the
owners. $ 50,000 has been allocated for its upgradation, interiors, décor and furnishing.
Revenue- Prices will be kept low initially so that more customers can be attracted and market
can be penetrated (Butler, 2012). The price of coffee can be kept at $1 a cup as opposed to $3.5
of the larger cafes. Additionally, the price of food items should also be kept low. The firm should
at least try to sell 100 cups per day along with food items worth 100$ per day. This would earn
the firm 400$ worth of revenue per day. Which amounts to annual projected revenue of $146000.
The firm should aim to increase revenue by 1% in the next year
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Financial Dynamics- $10000 would be initially sent on marketing. $20000 would be spent on
equipment purchase and another $ 35000 would be spent on staff acquisition, salaries and
training in the coming year.
Investments- The start-up would be financed through venture capital and bank loans. The firm
hopes to break even in three years.
Therefore, with the help of this business plan the new café venture can aim to create value for
both the investor and the customer. It can also generate completive advantage by offering higher
quality at lower price.
Conclusion
New business ventures can greatly enhance their capabilities by making a business plan. A
business plan can give proper orientation in formulating various strategies. A good business plan
can help a new business in identifying its key strengths and also help it in forming strategies
which can add value for the customers and the investors and give the firm competitive
advantage.
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References
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Belch, G., 2011. Advertising and Promotion: An Integrated Marketing Communications
Perspective. Chicago: McGraw-Hill .
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de Pablo, O., 2013. International Business Strategy and Entrepreneurship: An Information
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[Accessed 28 Sep 2018].
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IBissWorld, 2018. IBisWorld. [Online]
Available at: https://www.ibisworld.com.au/industry-trends/market-research-reports/
accommodation-food-services/cafes-coffee-shops.html
[Accessed 28 Sep 2018Sep].
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Springer Science & Business Media.
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[Accessed 28 Sep 2018].
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