Starbucks Franchise Business Plan for Murray Hill Area

This business plan outlines the objectives, success factors, mission, start-up expenses, location, products, and competitors of Starbucks franchise in Murray Hill area. It also includes a financial plan for the franchise.

Running head: BUSINESS ADMINISTRATION
Business Administration
Name of the Student:
Name of the University:
Author Note:

1
BUSINESS ADMINISTRATION
Executive Summary:
Starbucks Corporation has become a one-stop destination for the coffee lovers. It
provides an inviting atmosphere away from daily stress. It is also a place comfortable enough for
meeting friends or reading a book over a superb cup of coffee that is richly brewed and expertly
roasted. Starbucks franchise in Murray Hill area plans to capitalize on its proximity of Manhattan
Academy for Arts and Languages Campus and post graduate residents from other campuses for
building a group of repetitive customers. Starbucks will offer the customers with the one of the
best quality coffee in complemented with snacks and pastries. The franchise will be responsible
for operating 2,200 square feet coffee store located within the walking distance of various
university campuses in and around Murray Hill. Owners secured the location with the help of
five-year lease agreement with further option for extension. The startup funds provided was
$130,000 out of the total $255,000 with the rest of the capital to be obtained as commercial loans
from Bank of America. The sales revenue of the franchise expected to grow from $484,000 in
the financial year of 2018 to $ 807,000 in a matter of three years. Besides, Starbucks will try
hard in maintaining a profit margin of 75 percent along with operating expenses thereby having a
net profit growth ranging from $90,000 to $115,000.

2
BUSINESS ADMINISTRATION
1.1 Objectives
Starbucks objectives for its first year operations include (starbucks.com, 2018):
1. Ensure cultural development, high performance, accountability and innovation in
addition to becoming a customer’s paradise.
2. Earn substantial revenue from the operations of the first month
3. Maintaining a profit margin of 75 percent
1.2 Factors Determining Success
1. Visually attractive store designs for faster and efficient operation.
2. Providing employee training for covering best techniques of coffee preparation
3. Suitable marketing strategies for building a stronger customer base for maximizing
sale of higher margin products.
Year 1 Year 2 Year 3
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
Sales
Gross Margin
Profit

3
BUSINESS ADMINISTRATION
Figure 1: Representation of Starbucks Sales, Gross Profit and Net Profit in Three-Year Time
Source: (starbucks.com, 2018)
1.3 Mission
Starbucks Corporation believes in the mission of inspiring and nurturing human spirit
thereby creating a culture of warmth and belongingness (starbucks.com, 2018).
2.1 Company Overview
The franchise of Starbucks is about to be opened in Murray Hills as a 2200 square feet
coffee house will sell coffee, tea, snacks pastries and other beverages. Howard Schultz is not
only the founder and the chief executive officer but is also one of the largest shareholders
holding up to thirty three million shares (starbucks.com, 2018).
2.2 Start –up Expenses
The start up expenses includes:
 Legal expenses for obtaining permits and licenses totaling up to $1100
 Promotional expenses in marketing amounts to $3600
 Insurance coverage for worker compensation, property casualty and general liability has a
total premium of $2300
 Rent expenses and remodeling of the premises amounted up to $ 14,000
 Owners and employers salaries of around $ 22, 900 for initial two months and cash
reserves for operation included $14, 400 per month.

4
BUSINESS ADMINISTRATION
 Inventory for the start up amounted to $17, 027 which can be divided as follows:
i. Five decaffeinated brands and twelve regular brands amounted to $ 6500
ii. Baked goods, salads, sandwiches, beverages, tea and coffee filters amounted to $7,400
iii. Retail supplies including coffee bags, napkins and coffee bags amounted to $ 1740
 Equipment cost amounted to $59, 170 that can be divided as follows :
i. Cost of Coffee Maker is $ 900
ii. Cost of Espresso machine is $6000
iii. Cost of Coffee grinder is $700
iv. Equipments of the food service including toasters, microwave, dishwasher, blender
and refrigerator is $19000
v. Cost of storage hardware including utensil rack, food case and bins amounted to $
3720
vi. Equipments of the counter area including sink, counter top and the ice machine
amounted to $10,500
vii. Cost of the servicing equipments including glasses, plates and flatware amounted to
$3,000
viii. Cost of office equipments including the furniture, phone, printer/fax, PC and file
cabinets amounted to $ 4,600

5
BUSINESS ADMINISTRATION
The franchise receive funding from two resources, the first represents the investment of
the owners and second represents the bank loans.
2.3 Location and Facilities
Starbucks Corporation is located on the first floor of a commercial property in Murray
Hills that is home to young professionals and college graduates. The location would help the
franchise in building a strong customer base.
3.1 Description of Products
Starbucks Corporation served hot and cold coffees, micro grounded instant coffee
commonly known as caffe latte and expresso (starbucks.com, 2018). They also offered fresh
juices, frappuccino beverages and snacks including crackers and chips. It also offered packaged
food items, cold and hot sandwiches.
4. Competitors
The direct competitors of Starbucks included:
Direct Competitors included:
 McDonals McCafe
 Costa Coffee
 Café Coffee Day
 Dunkin Donuts
Indirect Competitors included:
 McDonalds

6
BUSINESS ADMINISTRATION
 Independent Fast Food Chain and Bakeries
5. Financial Plan
The franchise of Starbucks will capitalize on the stronger demand for gourmet coffee of
higher quality. The sufficient start up funds and successful management of growing and
establishing loyal customer base will enhance the net worth of the franchise in a matter of two
years.

7
BUSINESS ADMINISTRATION
References:
starbucks.com (2018). [online] Available at: https://www.starbucks.com/about-us/company-
information [Accessed 12 Sep. 2018].
starbucks.com (2018). [online] Available at: https://www.starbucks.com/about-us/company-
information/mission-statement [Accessed 12 Sep. 2018]
starbucks.com (2018). [online] Available at: https://www.starbucks.com/about-us/company-
information/starbucks-company-profile [Accessed 12 Sep. 2018].
starbucks.in (2018). [online] Available at: https://www.starbucks.com/ [Accessed 12 Sep. 2018].