Business Plan for Café Art

BUSINESS PLAN
Executive summary

In the proposed plan, it is decided to open a medium sized coffee shop, “Café Art” in the
Northampton which will target University students and street shoppers between the age category
of 16-30 years. The idea of maintaining proper safety, hygiene and cleanliness to provide
intriguing atmosphere to the guests will be definitely prove as a creative and unique business
idea which will not only bring good return to the entrepreneur but also provide an opportunity to
the public who wants to enjoy really a great taste. Product differentiation and cost leadership are
the two strategies which will enable business to grow. However, over the period, market
expansion through introducing more items in the menu and opening more outlets will facilitate
good growth.

Table of Contents
BUSINESS DETAILS.....................................................................................................................1
Vision...........................................................................................................................................2
Mission.........................................................................................................................................2
Business objectives......................................................................................................................2
Growth strategy............................................................................................................................3
Industry and market analysis........................................................................................................3
Current and projected demand analysis using both primary and secondary research..................5
Internal Analysis: SWOT.............................................................................................................9
Business model: Canvas.............................................................................................................10
Competitive analysis: Porter’s 5 forces.....................................................................................10
Customers and value preposition...............................................................................................13
Unique Selling Preposition (USP)..........................................................................................13
Value preposition...................................................................................................................13
Market strategy..........................................................................................................................13
Management team & company structure...................................................................................15
Structure.................................................................................................................................15
Management...........................................................................................................................15
Resources...................................................................................................................................15
Financing....................................................................................................................................16
Demand projections...................................................................................................................16
Profitability statement................................................................................................................17
Cash flow statement...................................................................................................................18
Calculation of pay-back period..................................................................................................18
Break-even point........................................................................................................................19
Risk and strategic options..........................................................................................................20
REFERENCES..............................................................................................................................21
Appendix: Questionnaire...........................................................................................................23

Survey results.............................................................................................................................24
SWOT analysis..........................................................................................................................26
Porter’s 5 forces.........................................................................................................................27
STP Approach:...........................................................................................................................28
Demand projection.....................................................................................................................28
Profit and loss account...............................................................................................................29
Cash flow statements.................................................................................................................31

BUSINESS DETAILS
The coffee industry in UK is considered as one of the fastest growing market in the
Europe. In 2016, the industry reported total 22,845 outlets in the coffee market which is growing
at 6%. The industry contributed £8.9 billion in the economic growth at a growth of 12% in total
turnover which was earlier reported to £7.2 billion with 18,832 outlets.
(Source: UK Coffee Shop Market, 2015)
According to the Project Café’s report, UK coffee chain sector contributed 6.9% to the
GDP with a projected turnover of £3.7 billion at an impressive growth @ 11.2%. There are
number of well-established coffee houses such as Coasta Coffee (2121 outlets), Caffe Nero (650)
and Starbucks (898) who are leading the industry. The leading coffee houses are delivering
exceptional quality of services to the people with having a good proportion of consumer base
which makes the competition level really tough, especially for the new entrepreneur to build a
position in the industry. In order to set up a new establishment, it is necessary to bring
uniqueness & innovative offerings for the society so that more and more audience can be
attracted.
1

Despite the crowded marketplace & fierce competition, in the booming industry, various
small & medium sized coffee providers i.e. Joe & the Juice, Coffee#1, Taylor St, Baristas and
others who have gained momentum sales ahead of the industry leaders. Therefore, it is decided
to open a medium sized street coffee shop, named “Café Art” in the Northampton with 3 flavors
i.e. Coffee Frappuccino, Caramel and Mocha. The particular place is chosen because in
Northampton is a place where people wants to taste new varieties to satisfy themselves. Besides
this, Northampton University & number of tourist places i.e. Express Lift Tower, Holy,
Sepulchre, All Saint’s Church, Northampton Guildhall, Central Library and others are the
destinations where number of people come and see the beauty. People are giving high preference
to healthy diet therefore; “Café Art” will provide highly hygienic goods at competitive charges to
satisfy the target audiences.
Vision
“To gain a well-known position in the British coffee industry by serving consumers with
the great-quality and hygienic products along with maintaining an intriguing atmosphere”
Mission
“To offer a great place to the customers for enjoying interesting and delicious taste of
coffee, drinks and snacks with friendly environment”
Business objectives
 To establish well presence in the coffee sector by providing a place to the consumer
where they can enjoy great taste
 To deliver tastier, healthier and hygienic products for satisfying consumers desire
 To keep an eclectic, friendly and excellent atmosphere for the people
 To combine with great variety, entertainment, ambiance and superior staff
 To hire experienced chef and staff and empower active participation through training
 To earn at least 10% return per annum on the total annual turnover
 To give full value to ethnicity and integrity for customer satisfaction
2

Growth strategy
In the starting period, it will focus only on the selected coffee flavors and focus on
quality, consumer services, cost leadership and product differentiation to gain a good position in
the market (Wentzensen and Wacholder, 2013). Once it gained a good audience base, “Café Art”
expand their business through opening more branches at other places and introducing coffee in
new flavors also to generate consumer traffic and expand their market size by expanding their
scale base from medium sized coffee house to a large coffee chain
Industry and market analysis
(Source: Eastern, 2016)
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UK Coffee industry shows an impressive growth over a decade due to change in
consumer lifestyle, food taste, high availability of disposable income and others. Above graph
reflects that Europe is a market with 37.43% market share in instant coffee and expected to reach
to 15.40bn USD by the end of year 2020 and projected to grow @6% CAGR during 2016-2020
(Eastern, 2016).
(Source: UK Food Service Market, 2016)
In UK, there is different kind of cultural audiences residing in the country such as
European, American, Arabic, Chinese, Indian and others. In today’s period, more and more
citizens in the nation prefer dinning out to satisfy their need and expectations. As presented in
the graph, it is visualized that from Q1 2013 to Q2 2016, the eating out participation in the
country gone up from 92.2% to 93.1%. Approximately, 90% of the citizens go out to have tasty
eat.
In UK, by 2021, it is projected to grow the number of branded coffee outlets to 9400
which will record the turnover of around £6 bn. All the large chains will continue to bring
innovative strategies to meet intensifying & fierce competition. However, total number of coffee
shops has been projected to exceed beyond 32,000 with turnover of £16 bn by 2025. Around
2/3rd (65%) of the British population visited coffee shops frequently and only 1/5th (19%) Brits
never visit coffee houses out of their home. The immense progress of the industry is majorly
driven by the faster increase in number of high street coffee retailers and habitual drinkers.
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