Costa Coffee Business Plan

This project is a detailed business plan for Costa Coffee, focusing on the launch of a new vegan food product line. It analyzes the target market, competitive landscape, and economic factors influencing the decision. The plan includes a detailed SWOT analysis, pricing strategies, and operational plan, along with financial projections and a break-even analysis.

Business plan.

Table of Contents
ELEMENT 2....................................................................................................................................3
Business plan...............................................................................................................................3
Porter five force strategy.............................................................................................................5
REFERENCES..............................................................................................................................11

ELEMENT 2
A business plan of a company is written description of its future, a paper or document
that tells what company plans to do and how it plans to do it. Other than this it includes executive
summary, company's vision and mission, goals, key selling points and its products and services.
Business plan
Business detail
Summary :- Costa Coffee is a coffee shop which is a British multinational company
situated in UK. The firm was launched in 1971 by the Costa family as a wholesale operation
supplying roasted coffee to caters and specialises in Italian coffee shops. Its products includes;
hot drinks, savoury snacks, cakes and pastries. It has been found that the Whitebread owner of
Costa plans to grow their business by adding Vegan food range to their store. Health conscious
people are demanding for health food and this Vegan food that is preferred to be a healthier diet
for UK people. The company claims such product innovation underpins its like for growth as
well as establishing a new range of vegan food items will made enhancements to its food
offerings.
Mission of Costa is to provide good quality Vegan food products to customers who are highly
health conscious and satisfy them.
Customer needs :- customers nowadays are very health conscious and prefer to have
healthy diet. This because they think that eating healthy plays an important role in maintaining a
healthy weight. Therefore, vegan food products are concern with healthy items such as
Product outline :- vegan food products are considerably meant for those who are really
health conscious. It includes; herb, such as beans, peas and lentils.
Economic review
Current and future economic conditions :- economic factors like food and labour cost inflation
are likely to continue to affect the Costa Coffee shop in the foreseeable future. As it has been
observed that most of the restaurant consumers are price conscious as well and they are not only
concentrated on consumer cost. But it is a good point for Costa to serve Vegan food, as
consumers are willing to pay more for a meal that is significantly of good quality for health
benefits. Also, the provision of patient protection and affordable health care act could require
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restaurants add health coverage for their employees as well. In addition, cost of food is just one
of the expenditure that needs to be manage by Costa but the rise in cost of major ingredients
made act as a challenge for the company (Liu, Zhai and Chen, 2018).
Macro environment :- success of any industry highly depends upon accurate PESTLE
analysis and it often relies on factors beyond anyone's control. For Costa these issues are
particularly problematic as the chain of production extends around several countries. Firths
comes the political factors which may affect the Costa that includes government attitudes and
trade relationships. The company needs to look at trade connections between its own country i.e.
UK and from which it sends to source raw material from.
Economic factors of the country includes the spending power in a particular area. This
means the more the spending power, the more would be the demand and therefore the sales of
vegan food products in that area.
Sociological forces that may influence Costa Coffee's consumption of coffee as caffeine
is considered to be bad for health as it leads to irregular heart beats etc. Hence, for this the
company has planned to launch new food items of vegan.
Legal factors includes various laws which can affect the Costa shop and the very first law
which may influence the company is import and export of raw material (Scarborough, 2016).
Market & Industry analysis
Target market :- The targeted customers of Costa over here are those who are very much
conscious about protecting the environment. Therefore, Vegan people represented the targeted
group of this plan by Costa. Basically customers are being targeted through market segmentation
method involves; geographic, demographic, behavioural, lifestyle segmentations. For Costa's
new range of vegan food products the company will target customers on the basis of
demographics, and psycho-graphic (lifestyle) segmentation. This will include lower income
households, younger people as well as adults with age of 30 to 45. Also, demographic division of
people consider factors like gender, age, income, housing, etc. Further, psycho-graphic factors
include customers division through their behaviours, values, interest etc. (Bai, Wang and Guihua,
2017)
Marketing mix :- this strategy includes 4P's of marketing that Costa will use for its new
product line. This includes first product; which means the product that will be offered by
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company must include all those things that will satisfy customers. Then comes price; that means
price of vegan food products should be such that it is affordable to all income groups. Third P
stands for place, which means that Costa should place its new products at such location where
customers can easily find it. Next is Promotion of that new product line which means Costa will
promote its items through various promotional tools such as internet, TV, print media etc.
Competitor analysis
In marketing and strategic management, competitor analysis is an evaluation of strengths
and weaknesses of present and future competitors. This analysis will provide the company both
an offensive & defensive technique to identify its own opportunities and threats (Burns and eds.,
2016). This analysis will help Costa to:
 understand the nature and scope for its production
 determine the important strengths
 know who are the competitors are
 know who are the consumers and what benefits they expect
Competitive analysis is termed as a field of strategic investigation that specialises in the
gathering and analysis of information regarding competitor's organisations. Therefore, it is
essential for Costa to know what its rivals are doing and what form of threat they present to
company's financial well-being.
Steps involved in this analysis are:
 First Costa will identify its top 5 key competitors
 Then it will analyse and compare competitor content such as; videos, websites, blog
post, etc.
 Look their social media integration.
 Look for areas for improvement.
Porter five force strategy
In Costa Coffee, following analysis can be included that ascertained competitive
assessment: Threat of new entrants (high): In the market, there are several new businesses
continuously take place so that it create impact on Costa. New entrants in food,
beverages, etc. reducing costs and provide new value proposition to the customers.
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 Competitive rivalry (Moderate): In the market, there is low competitive rivalry because
very services of the enterprise must be consider in appropriate manner. Unique position
also successfully develop Bargaining power of customer (High): In the country, buyers demand continuously
increasing so that bargaining power of them is too much high. Smaller and more
powerful customer base in the chosen business holding with limited power. Bargaining power of suppliers (Low): Suppliers bargaining power in UK is low because
there are several suppliers exists those provide raw material to the organisation. As a
result, it can be stated that profitability of Costa is continuously develops in market.
 Threat of substitute (High): In the market, there are several substitutes available so that
it create impact on Costa. As a result, they need to set some unique features and
innovative ideas for business development.
Market pricing and strategy
Price is the value that is set to a product or service & is a result of complex set of
calculations, investigation and risk taking capability. It has been determined that, a pricing
strategy of a company takes into consideration segments, capability to spend, market conditions,
competitor actions, input cost and trade margins. There are various types of pricing strategies
such as;
 Premium pricing :- this high price strategy is used as a defining criteria and such strategy
work in segments and industries where there is strong competitive advantage exists for
the company.
 Penetration pricing :- under this, company set price artificially low to obtain market share
quickly and this is done when a new product is introduced. Therefore, it is clearly
understood that price will be increase when production period is over and share
objectives are achieved.
 Economy pricing :- in this strategy the price of publicity and merchandising of a
commodity is kept low. Margins are water thin, overhead cost is also very minimum.
However, at the time of recession economy pricing sees more sales.
 Skimming strategy :- high price is set by marketers for a commodity till that time when
competitors allow, after which prices gets drop. Behind this pricing strategy the
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company's idea is to cover maximum money before the item or segment attracts more
rivals (Chambers and Humble, 2017).
Through these well defined pricing strategies, the best for Costa company to set for its Vegan
food products will be penetration pricing. This is because the firm wants to acquire as much
number of customers as it can to make it worth their while. So, the company can also offer
special discounts.
Operational plan
The company's operational plan states that how the organisation will structure the firm
and how it will carry out everything. This is because without an execution plan, the rest of the
entire plan is useless and meaningless. Similar to marketing plan, Costa's operational plan is also
necessary to the success of the business and new product launch. Further, are the key elements
that are need to be addressed by Costa Coffee shop to complete its business plan (Kasim and
Dzakiria, 2016).
 Location :- in this head, company includes the address or location of an area where it will
be placing its new product. For example, if an organisation have retail location, then
describe the surrounding area. As disclosed by Costa, it will place its new product in all
of its stores to attract as many customers as it can.
 Inventory and production process :- in this step organisation explains about how it will
manage its inventory and it is also considered essential. This is because it will allow
Costa to manage its inventory properly as too much of inventory is waste of money, that
could be utilised elsewhere in the business. Therefore, having proper management of
stock is very important. Further, describe what company the company will produce and
how much it will produce. Here Costa will also define its Vegan food products
production process. Further, the supplier of the vegan food products will be Clearspring
who are UK's dedicated Oriental and Macrobiotic good producers. They provide quality
soya sauces, tofu, miso, noodles and more. Another supplier would be Food Heaven who
provide vegan and gluten free desserts, cheesecakes, tiramisu and so on.
SWOT analysis
Strengths Weaknesses
 Convenient and wide range of products.
 Reputed for value for money, quality and
 As it is the biggest company in coffee
industry in UK, the company has
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comfort.
 Growth at global level.
 Ability to alter according to the demand
of the market.
 Excellent brand name and visibility.
 Quality of customer service.
 Better financial status & fewer issues
associated to deficits.
weak control over industry with its
extra advantage of IT in the firm.
 Deficiency in flexibility when
compared to competitors.
 Vulnerable loss to staff.
 It has been found that company's
operation is restricted in the global
are.
 At the time of new product
development cash inflow is
unreliable.
Opportunities Threats
 Possible opportunity in Europe and China
by merging, taking over % strategic
coalition.
 Broad opportunity in the emerging
countries like India and Brazil.
 Company's expansion would provide
diversification of Costa from its large
super centres to local sites (Ward, 2016).
 It is tough for competitors to adopt new
technology likewise Costa.
 Present strategy of expansion assist in
expanding in the global level quickly.
 The target for competition is Costa as
it is termed as the number one in
coffee industry both locally and
globally.
 Exposed to political challenges in the
business market globally.
 Manufacturing cost is being
decreased presently in this sector by
outsourcing to low cost regions that
would decrease the cost price of the
items.
 Its competitors are, Starbucks, cafe
coffee day.
Financial requirements
A business plan is conceptual until the company start filling in numericals and terms in it.
Hence, the financial section of a business plan for forecast is necessary as it will be required by
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company if it has any hope of wining over investors or obtaining a bank loan. The main aim of
financial section in a business plan is two-fold. This means it will be needed by Costa if it opts
for investment from venture capitalist. The following things are being covered in a financial
plan:
 Start with sales prediction:- here company set up a spreadsheet projecting its sales over
the course of three years. Create different sections for different lines of sales and columns
for each month for the 1st year.
 Create an expense budget :- the company here requires understanding how much it's
going to cost it to actually make the sales the organisation have forecast (Barton, 2016).
 Develop a cash flow statement :- this cash flow statement will display physical dollars
moving in and out of the business.
Start-up expenses Cost
Legal $600
Stationary $300
Brochures $150
Consultant $0
Insurance $0
Rent $0
Research and development $0
Equipments $600
$1650
Start-up assets Cost
Cash required $25,000
Other current assets $0
Long term assets $24,000
$49,000
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Fixed and running costs of the business
In order to run business operations of Costa, it is essential to concentrate on fixed and
running cost of the business. In this regard, effectiveness can be develop successfully to cover all
aspects of management (Fulker, Timur, Dew and Butler, 2016).
Profitability and Break even point
Break even point consider when sales is equal to expenses. In this consideration, it can be
stated that profitability can be successfully develop to attain overall goals and targets.
Break even point (in units) = Fixed cost/ (Price - variables)
For example,
Fixed cost of company is = 35000
Price = 20000
Variable = 10000
BEP = 35000/ (20000-10000)
= 35000/ 10000
= 3.5 units.
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REFERENCES
Bai, Y., Wang, M. and Guihua, X. U., 2017. Macro-environment analysis and management
countermeasures of nursing development in China based on PEST model. Chinese Journal
of Hospital Administration. 33(10). pp.784-786.
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
Chambers, I. and Humble, J., 2017. Plan for the planet: a business plan for a sustainable
world.Routledge.
Weisstein, F. L., Kukar-Kinney, M. and Monroe, K.B., 2016. Determinants of consumers'
response to pay-what-you-want pricing strategy on the Internet. Journal of Business
Research. 69(10). pp.4313-4320.
Kasim, A. and Dzakiria, H., 2016. Exploring the effects of macro-environment on the
predisposition to adopt strategic orientation among small medium size hotel
entrepreneurs. International Journal of Economics and Financial Issues. 6(7S). pp.67-71.
Liu, J., Zhai, X. and Chen, L., 2018. Optimal pricing strategy under trade-in program in the
presence of strategic consumers. Omega.
Scarborough, N. M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Fulker, D., Timur, A., Dew, K. and Butler, J., 2016. A Case Study of the Grey Oaks Community
and Club: Creation of a High-Performance Culture Through the Innovative Use of a Data-
Driven Business Plan. International Journal of Hospitality & Tourism Administration.
17(1). pp.72-99.
Barton, A., 2016. The Munch: An Integrated Business Plan.
Ward, J., 2016. Keeping the family business healthy: How to plan for continuing growth,
profitability, and family leadership. Springer.
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