Coffee Shop Business Plan

Running head: COFFEE SHOP BUSINESS PLAN
Coffee Shop Business Plan
Name of the Student
Name of the University
Author’s Note

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Table of Contents
1.0 Business Plane Pitch..............................................................................................2
1.1 Written Pitch........................................................................................................2
1.2 Visual Pitch.........................................................................................................2
1.3 Backer Rewards..................................................................................................2
2.0 Business Opportunity.............................................................................................3
2.1 Customer need and target market......................................................................3
2.2 Social impact.......................................................................................................4
2.3 Relevant megatrends..........................................................................................4
2.4 Similar successful campaign..............................................................................5
2.5 Opportunity testing plan......................................................................................5
3.0 Sales and Marketing strategy.................................................................................5
3.1 Fundamentals.....................................................................................................5
3.2 Social media and free publicity...........................................................................6
3.3 Measurement and information............................................................................7
4.0 Operational strategy...............................................................................................7
4.1 Operational structure..........................................................................................7
4.2 Outsourcing and motivation................................................................................7
4.3 Operational risks.................................................................................................8
5.0 Financial plans........................................................................................................9
5.1 P&L and Balance Sheet......................................................................................9
5.2 Capital requirements and funding plan.............................................................10
5.3 Valuation and justification.................................................................................10
References.................................................................................................................11

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1.0 Business Plane Pitch
1.1 Written Pitch
The name of the coffee shop will be “Café Paradise” and it will be located in
the Sydney Opera House area of Australia. The unique feature of the coffee shop
will differentiate it from the crowded sea of café shops and franchises. The smaller
and comfortable size of the coffee shop in the presence of superior coffee and
quality foods served by the professionals make Paradise Café different from the
other coffee shops. This coffee shop will cater to the needs of its customers that is
having a cup of coffee at a calm and peaceful place that will be special form them.
There will be no television in this coffee shop, but there will be subtle background
music and the walls will be full of the works of the local artists. Moreover, a small
library will be attached with Café Paradise full of books for all types of customers so
that they can enjoy reading a good book while having a cup of fine coffee.
1.2 Visual Pitch
The aim of this coffee ship will be to provide something new to its customers
on daily basis. For example, a new types of coffee or a new food item will be served
to the customers; the background music will be changed on everyday basis; new art
works will be added on the walls; and new types of books will be added to the library
for providing the customers with new experience on daily basis.
1.3 Backer Rewards
There is a need for compelling awards for a successful reward crowd funding.
Before the initiation of fundraise, it is essential for the management of Café Paradise

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to think though the audience that the company is hoping to attract. Followings are
the four types of rewards that will be offered to the backers:
1. Pre-orders will be considered as the reward for the backers. Backers want to
be the first to receive a new product that will be offered by the company. Café
Paradise will provide them additional discount to have the products of them
(Love and Hirschheim 2017).
2. Backers will be provided the opportunity to exchange funding for a service
that will be performed once the company is off the ground.
3. The backers will be provided with t-shirts, mugs, hats and others for not more
than $20.
4. The backers will be provided with incentives based on the initial sales of the
café. These are effective reward programs for the backers (Kuppuswamy and
Bayus 2018).
2.0 Business Opportunity
2.1 Customer need and target market
When considering the needs of the customers, it needs to be mentioned that
the customers of coffee shops always search for something special and this is the
reason they are enthusiastic paying so much for a cup of coffee. Big coffee shop
chains have large customer base and these customers would be fascinated in
discovering a local coffee shop in the form of Café Paradise which is offering unique
products and services. Therefore, the management of Café Paradise will be required
to capitalize on this needs of the coffee shop customer for designing their products
and services.
Four top segments will be targeted by Café Paradise that represents a large
portion of the overall population of the Sydney Opera House area. They are as
follows:
 Students from the colleagues and universities are the first target segment of
Café Paradise. Since this segment of customers are reliant on the money
provided by the parents and others, they do not belong from higher income
group. Therefore, this segment will be largely attracted by the affordable price
range of products along with the free services of the café.

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 Young families with a busy and fashionable lifestyle is the second customer
segment targeted by Café Paradise. These types of families have more than
one source of income as most of them are working couple. In their busy
lifestyle, they will be attracted to the calmer ambiance of Café Paradise for
spending some quality time.
 Enterprising professional that includes working and highly educated young
customers are the next target segment of Café Paradise. They can be defined
by youth, mobility and growth.
 Well-educated and experienced residents are the last segment targeted by
the coffee shop. Most of them are enjoying their retirements; and they have
good financial condition. This customer segment will be interested in spending
some in a calmer place while reading books.
2.2 Social impact
The first cultivation of coffee can be seen in Arabia at the time of 15th and 16th
century. At that time in the Middle East, public coffee houses gained major popularity
when people could listen to music, play chess, watch performers and discuss
different types of new over a cup of coffee. The same trend could be seen in Europe
when coffee first appeared in there. From that time onward, coffee houses or cafes
are considered as a social gathering point and they encourages different types of
cultures (Tucker 2017). In the present time, cafes continue to be the places where
people come to talk, read, write, listen to music and entertain. These are considered
as the places for light hearted and unplanned conversations with the individuals in
the community that influence each other. In this manner, coffee shops play a role in
creating social networks and therefore, encouraging social and community values.
Coffee shops are considered as the great places for meetings and one can find
many creative things in the coffee shops. At the same time, it is considered as great
place for to work in absolute relaxation (Carroll et al. 2018). Therefore, it can be seen
that the coffee shops create major positive impact on the society.
2.3 Relevant megatrends
Australia has a vibrant coffee culture that has supported the growth of coffee
shops all over the country. Even if drinking coffee in the coffee shops is considered
as optional, many Australian consumer consider drinking coffee from the cafes as an
affordable luxury and this trend has been allowing the coffee shop industry to be

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resilient despite fluctuation in the household income. This trend has also provided a
steady revenue base to the industry. At the same time, trend shows that the
customer of coffee shops like unique products in the presence of additional
experience like music, activities and others. The coffee shops are largely used for
hosting local events such as entertainment, book club and others. They prefer
amazing services from the trained and experienced baristas and staffs. The
management of Café Paradise needs to take into consideration these trends
(ibisworld.com.au 2020).
2.4 Similar successful campaign
There are many small businesses in Australia that have been funded at least
partly via crowdsourcing; and one of them is the Paramount Coffee Project in
Sydney. The main unique selling proposition of this café can be seen in their
innovative approach to coffee. New beans and new rosters from the world are
introduced by this café for every four to six weeks in order to keep things fresh and
exciting. Most importantly, part of the required capital for establishing this café was
raised from crowdsourcing. This particular coffee shop has been running
successfully from its inception.
2.5 Opportunity testing plan
Through considering the above-discussed trends in the Australian coffee shop
industry, it can be said that Café Paradise has a major opportunity to satisfy the
needs of the consumers by its products and services. Café Paradise will be able in
making money from selling coffee and other food products to the customers while
providing additional facilities such as music, books and others. Coffee and other food
products of Café Paradise will be sold from the store of Café Paradise directly to the
customers. All these aspects will provide the business with the opportunity to sustain
in the coffee shop industry (Brinckmann, Grichnik and Kapsa 2010).
3.0 Sales and Marketing strategy
3.1 Fundamentals
Product – Café Paradise will offer four types of products that are coffee, cakes,
sandwich and breakfast combo meal. Varieties of coffee will include mocha,
carmelicious, white mocha, candy bar latte and brewed coffee. The breakfast meal

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combo will include coffee of choice and sandwich. Accessing library and internet will
be free of cost (Todorova 2015).
Price – Since Café Paradise is a new entity entering into the coffee shop industry,
the required pricing strategy will be penetration strategy. Under this strategy, Café
Paradise will make available the products in lower price as compared to the main
competitors and the aim of this is to attract the customers. During the first week of
opening, all the customers will be provided with a flat 20% discount on all products.
Place – Café Paradise will sell all of its products from its only store in the Sydney
Opera House area of Australia. Customers will have to visit this store for having
coffee and other foods. In case of other foods, customers will be provided with the
facility to buy food home (Serrat 2017).
Promotion Strategy – A simple web site will be developed by Café Paradise for
providing basic information on business, menu and links to their presence in the
social media channels. Moreover, local newspaper will be used for promoting the
business. Lastly, radio advertising will be used by Café Paradise for promoting their
business during the first six months of operation and during busy holiday shopping
season (Rosenbaum et al. 2017).
Sales Force – Café Paradise will appoint two highly trained experienced baristas for
preparing coffee and two staffs will be there for making sandwiches and cakes.
There will be two waiters for serving the food and one staff for cleaning the floor.
Moreover, one staff will be responsible for receiving the payments from the
customers and he/she will be in the cash counter (Pomering 2017).
3.2 Social media and free publicity
The sales and marketing strategy of Café Paradise associated with online
advertising will involve in the regular advisertisment in the popular social media sites
such as Facebook and Instangram. The main aim of adopting this online
advertisement strategy is that it is significantly cost effective as compared to the
traditional print media advertising. At the same time, this will allow Café Paradise to
reach prospects in a highly targeted way (Dwivedi, Kapoor and Chen 2015).
In order to gain free publicity, Café Paradise will be involved in setting up a
facebook page of the café along with a Twitter account at free of cost. This is

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because social media is considered as an excellent way of building relationship with
the customers while it encourages word-of-mouth publicity. Gaining publicity through
social media is one of the most popular ways of getting known to a large number of
prospects (Warnick et al. 2018).
3.3 Measurement and information
Café Paradise will use two measures for measuring the success of the overall
marketing strategy. First, growth in sales will be used for measuring the success. In
this process, sales of the present month or year will be compared to the previous
month of year in order to assess growth. Apart from this, increase in the number of
new customers will be used for assessing success of the sales and marketing. This
is because effective sales and marketing strategy helps in increase the number of
customers of the companies and thus, the number of new customers generated will
be used for measuring the success of sales and marketing (Baron, Mueller and
Wolfe 2016).
Apart from the strategy to measure the success of sales and marketing, Café
Paradise will use market research as a technique for gaining the required information
from the market. Under this, the main techniques that will be used by the café are
market surveys, focus groups, observations, field trials and personal interviews. All
these techniques will assist Café Paradise in acquiring the required information on
the market (Song, Wang and Parry 2010).
4.0 Operational strategy
4.1 Operational structure
There are three parts that Café Paradise will be required to consider; they are
legal structure, organisational structure and suppliers need. In case of legal
structure, Café Paradise will be a for-profit business venture in nature with the aim to
convert into a B-Corporation in future. Function organizational structure is selected
for the business of Café Paradise. Under this organizational structure, owner of the
café will be on the top of the structure and the functional departments such as
accounting and human resources will be under the owner. This is a top-down
structure where the decision will flow from top to bottom. In case of suppliers, it
needs to be mentioned that Café Paradise will be required to negotiate supplier
agreement with several local food-service wholesalers and coffee wholesalers for

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ensuring the supply of coffee beans, breads, eggs, vegetables, flour, oil and other
ingredients.
4.2 Outsourcing and motivation
It is earlier discussed that Café Paradise will hire 2 baristas, two staffs for
making sandwich and cakes, 2 waiters, 1 cashier and 1 staff for cleaning. All these
employees and staffs will be hired from the local area through employment
advertisement. It needs to be mentioned that no employee or staff will be outsourced
from outside Australia (Rauch and Hatak 2016). At the same time, Café Paradise will
be required to ensure the employees and staffs are well motivated to discharge their
duties. More specifically, the café will be needed to empower the employees,
motivate them and enhance their skills. For this reason, Café Paradise will be
implementing the strategies like rewards, compensation, performance appraisal,
stock options, health plan, pension plan and internal staffing. All these strategies will
lead to empower as well as motivate the employees and staffs of Café Paradise
(Martin, McNally and Kay 2013).
4.3 Operational risks
The presence of different operational risks can be seen within the business
organizations and the same is also applicable for Café Paradise. The top five
operational risks of Café Paradise are as follows:
1. Fraud risk is a major operational risk in Café Paradise and this risk is the risk
that there will be fraud in the cash and financial statements of the café.
2. Regulation risk is another key operational risk which states that Café Paradise
will not be able in complying with the required rules and regulations.
3. Process failure is another operational risk which means established process
in Café Paradise is not able to operate properly.
4. Quality risk is another crucial operational risk where the café will not be able
in maintaining the required quality of foods and services.
5. Human error is another major operational risk which need to be considered by
the café (Dutta and Folta 2016).
Risk High Medium Low
Fraud risk
Regulation risk

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Process failure
Quality risk
Human error
5.0 Financial plans
5.1 P&L and Balance Sheet

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Preparation of the profit or loss statement and balance sheet helps in planning
the financial aspects of a business and the same aspect is also applicable in case of
Café Paradise. Profit or loss statement of Café Paradise includes the sales revenue
projection of the café for three years. For the preparation of the same, selling price,
cost price and number of units sold are assumed. These assumptions are required
for gaining total sales value and cost of sales. At the same time, a balance sheet has
been prepared for Café Paradise for three years. This balance sheet contains
information on the assets, liabilities and equity of the café for three years basis. Both
these statements are crucial for assessing the financial position and performance of
Café Paradise in the coming three years.
5.2 Capital requirements and funding plan
Every business needs an initial capital for staring the business operations and
the same aspect can also be seen in case of Café Paradise. In order to start the
business, the total required amount of capital of Café Paradise is $180,000 and this
whole amount of capital or fund will be raised through two ways. First way of raising
this fund is the owner’s own investment and the amount is $60,000. The rest of the
required fund will be raised through crowdfunding. More specifically, the café will use
debt security crowdfunding for raising the rest of the fund (Anglin et al. 2018).
5.3 Valuation and justification
Valuation of the new business after the projection period is considered as a
crucial aspect as this helps in assessing the overall financial standing of the
businesses. There are certain techniques to do this valuation such as asset
valuation, capitalized future earnings, earnings multiple and comparable sales. In
case of Café Paradise, earnings multiple is used.
For the purpose of this valuation, it is assumed that the company issues
30000 shares in each of the three years as this is needed to get the value of EPS. It
is also assumed that Café Paradise will be listed in stock exchange in the second

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year. Based on the calculation, it can be seen that the value of the café will decrease
in the third year as compared to the second year.

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