Innovation and Entrepreneurship: Café Business Plan Project

This project presents a comprehensive business plan for a café, 'Café Magic,' situated in Singapore's Merlion Park area. The plan outlines a unique selling proposition emphasizing a cozy atmosphere, quality products, and competitive pricing to differentiate itself from larger café chains. The analysis includes a detailed market and industry overview of Singapore's growing coffee shop sector, customer segmentation (students, professionals, tourists, etc.), competitive analysis of key players, a marketing plan covering product offerings, pricing strategies, and promotional activities, a financial plan detailing funding sources and capital allocation, and an execution plan. The plan focuses on values like passion, excellence, and integrity to ensure the café's success. The café aims to provide quality coffee, cakes, sandwiches, and a combo meal, targeting various customer segments. The marketing plan employs penetration pricing, social media, website, and email marketing to attract and retain customers. Financial strategies involve personal investment and bank loans. The plan also emphasizes the importance of operational efficiency and customer satisfaction for long-term sustainability.

Running head: INNOVATION AND ENTREPRENEURSHIP
Innovation and Entrepreneurship
(Café Business Plan)
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Executive Summary...................................................................................................................2
Market/Industry Analysis...........................................................................................................4
Customer Analysis.....................................................................................................................5
Competitive Analysis.................................................................................................................6
Marketing Plan...........................................................................................................................7
Financial Plan.............................................................................................................................9
Execution Plan.........................................................................................................................11
References................................................................................................................................13

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Executive Summary
Café Magic will be a unique and different cafe that will be located in the Merlion Park area of
Singapore. The unique selling proposition (USP) of Café Magic is that it is different from the
crowded sea of café chains and franchises. What makes Café Magic unique from its
competitors is its smaller and cosy size combined with quality coffee and foods served by
professional baristas. Café Magic will satisfy the market need of the customers to have a cup
of coffee at a special place that will be calm and peaceful. Café Magic will be operating in
the coffee shop sector of the food and beverage industry of Singapore that is one of the fastest
growing industry of the country. The main growth driver of this industry is the changing
preference of the people of Singapore for coffee and a calmer places to have coffee. It is
expected that this industry will register healthy growth in the coming years which is a
positive aspect for Café Magic. Since this particular industry is full of cafes, Café Magic will
have to face tough competition from some of other cafes in the country which are Café Magic
are Coffee Break, Enchanted Café, Rise & Grind Coffee Co., PS. Café and Common Man
Coffee Roasters. All these competitors have certain strengths and weaknesses. What makes
Café Magic different from these competitors is the quality of coffee and foods in affordable
price in a cosy place.
Café Magic will target five segment of customers based on their preference for coffee; these
segments are students, boomburbs, enterprising professionals, wealthy empty nesters and
tourists. These target customer segments form a large part of the population of Singapore and
they have considerable preference for quality coffee. In case of marketing, the products of
Café Magic will be coffee, cakes, sandwich and a combo meal. The café will position itself as
the perfect place for the coffee lovers. Penetration pricing strategy will be adopted by Café
Magic along with discount and coupon offers with the aim to attract and retain customers.
The promotional and advertisement mediums that Café Magic will adopt are social media,

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newspaper, website and personal e-mails. All the products will be sold in cash as no credit
will be allowed. Café Magic will raise the required capital from two source that are personal
fund injection of the owner and taking loan from the bank. This funds will primarily be used
for the purpose of purchasing the required fixed assets for the business and the rest will be
used as operating capital. In order to ensure the success of the business, Café Magic will be
required to ensure the continuation of its daily operations. The guiding principle of Café
Magic is that the café has a strong commitment towards values like passion, excellence,
leadership and integrity that will provide the café with future opportunities.

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Market/Industry Analysis
Café Magic will be a cafe located in the Merlion Park area of Singapore. It needs to
be mentioned that the Café Magic will have its business operation in the coffee shop or café
sector of the food and beverage industry of Singapore. The coffee shop industry in Singapore
is a major industry and this industry has been able in generating a revenue of US$1,681
million in the year 2019 and it is expected that this industry will grow at a rate of 4.1% from
2019 to 2023. At present, the market volume of this industry is worth US$1,394 million in
the year 2019 (statista.com 2019). It needs to be mentioned that there has been increase in the
market value of the café industry of Singapore from the year 2013 to 2019. At present, the
presence of a trend of growth in the café industry can be seen and the main reason is the
increase in taste sophistication among the young customers; at the same time, there has been
major increase in the café culture in this country (euromonitor.com 2019). It is expected that
more cafes will be appearing in Singapore in the current years. All these situations will be
favourable for Café Magic.
The presence of many cafes can be seen in Singapore due to the potentiality and
growth of this industry and this also makes the café industry of the country more competitive.
In this context, it needs to be mentioned that Café Magic is a small and innovative coffee
shop and thus, cafes of this size and characteristics will be its main competitors. The main
competitors of Café Magic are Coffee Break, Enchanted Café, Rise & Grind Coffee Co., PS.
Café and Common Man Coffee Roasters. However, the products and services of Café Magic
will be different from these cafes. There will be four types of foods in Café Magic unlike the
other cafes with a huge menu, but the target will be to provide quality foods to the customers.
In addition, Café Magic will provide some additional services like free internet, different
taste of books for reading and a cosy place to have a chat. These will differentiate Café Magic
from its competitors.

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Customer Analysis
There are five segments of customers that are the main targets of Café Magic because
these segments are representing a large portion of the population of Singapore. They are
discussed below:
Students – This segment is consists of students from schools and colleges. This segment of
customers does not have higher income as most of them are dependent on pocket money from
parents or relatives. The affordable products and free services of Café Magic will largely
attract this customer segment (McDonald 2015).
Boomburbs – This segment consists of younger families having a busy and upscale lifestyle.
Median age of this segment is 35 and these families operate based on two sources of incomes.
These types of customers lead a residential lifestyle.
Enterprising Professionals – This target customer segment includes young, highly educated
and working professionals. They are single or recently married with a median age of 32.
Youth, mobility and growing power can be reflected from the lifestyle of this customer
group. They have heavy reliance on phones, computers and internet in order to stay
connected (Dibb and Simkin 2013).
Wealthy Empty Nesters – This customer segment includes well educated and experience
residents of Singapore who are enjoying the transition from child nurturing to retirement.
Median age of this segment is 45 and they have a high income. They are financially as well
as physically active (Gupta and Pirsch 2014).
Tourists – The area where Café Magic will be situated is a popular location for the tourists
and therefore, tourists will be another target segment of the café.
It needs to be mentioned that the customers of café look for something special and
unique and thus, they are enthusiastic to pay high amount for a cup of coffee. The same is

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also applicable for the people from the above segments. In addition, many customers of the
large coffee chains who are pleased with their daily coffee would be fascinated to spot a local
café that is unique and different. These needs would be critical success factors of Café Magic
(Haider et al. 2019).
Competitive Analysis
It is mentioned above that Café Magic has six major competitors and their details are
discussed below:
Coffee Break
7 Maxwell Road, Singapore, Singapore
This competitor of Café Magic is a family owned business and the main strength of it can be
seen in preserving the older coffee culture since they provide classic Singapore coffee. High
price of products is the main disadvantage.
Enchanted Café
88 Rangoon Road, Singapore, Singapore
The main strength of this competitor is its fantasy delight ambiance and eternal charm. The
coffee and drinks are of great taste. The only weakness is that it is highly expensive.
Rise & Grind Coffee Co.
1 Jalan Anak Bukit, Singapore, Singapore
This is a great place for relaxing and enjoying whatever one is drinking and this is the main
advantage. The weakness is low quality of coffee and foods.
PS. Café
28b Harding Road, Singapore 249549

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The main strength is that this café provides lunch and dinner along with coffee, but high cost
of price can be considered as the main weakness of this café.
Common Man Coffee Roasters
22 Martin Road, #01-00, Singapore
The main strength of this café can be seen in quality coffee and foods which are the main
attraction. However, high price of the products needs to be considered as the main weakness
of this café.
On the basis of the analysis of the strengths and weaknesses of Café Magic’s
competitors, it can be said that the competitive advantage of Café Magic is that it will provide
quality coffee and foods in the most affordable price (Proctor 2014). Since many of the
competitors have quality issue and some of them have price issues, good quality in affordable
price will be the main competitive advantage of Café Magic. At the same time, the customers
will have free access to the internet and book store of Café Magic which will work as added
advantage for the café. These are the main competitive advantage of Café Magic (Fan, Lau
and Zhao 2015).
Marketing Plan
Products and Services – There are four types of products that will be offered by Café
Magic; they are coffee, cakes, sandwich and a combo meal for breakfast. There will be four
varieties of coffees which are cappuccino, espresso, flat white and long black. The mean
combo will consists of coffee and sandwich which will be served as breakfast. In addition,
there will be free internet access and access to Café Magic’s own library for the customers at
free of cost (Kotler et al. 2018).

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Brand Positioning – Café Magic is going to position itself as a nest for the coffee lovers. It
is correctly one a kind of café offering outstanding coffee and foods served by knowledgeable
and passionate baristas in relaxed and cosy ambiance. Café Magic will be positioned as a
place to visit with friends and relatives or sit to a peaceful corner with a good book from the
library (Maarit Jalkala and Keränen 2014).
Pricing Strategy – Based on the nature and positioning of Café Magic, penetration pricing
strategy will be adopted by the café where it will enter the market with low price with the aim
to draw the attention of the customers. There will be an opening promotion where customers
will be provided with discount on the first three days of opening of the café. In addition,
coupons as well as discounts will be utilized with the aim to attract and retain customers
(Davcik and Sharma 2015).
Promotion – In the promotional and advertisement strategy, four major promotional
mediums will be adopted by Café Magic. First is online advertising where Café Magic will
advertises regularly on popular social media platforms like Facebook, Instagram and others.
Second is Web Site where Café Magic will develop its own simple website where the basic
information of the business like menu, location and others can be accessed. The third is
Newspaper advisement where Café Magic will use the local newspapers of Singapore to
promote and advertise its business. Fourth is campaigning through e-mails where personal
mails will be sent to the people from the selected segments in order to make them aware of
the business of Café Magic (Gangwar, Kumar and Rao 2013).
Distribution Plan – The products of Café Magic that are coffee, sandwich and cake will be
produced by the café itself. The required ingredients for making these products like coffee
beans, breads, flour, sugar, creams and others will be purchased from the suppliers as per the

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requirements of the business. The products will be distributed from the own shop of Café
Magic (Batzer 2019).
Financial Plan
Inflation 2.00%
Growth in sales price 4.00%
Growth in quantity 6.00%
As per the above tables, the selling price, cost price and number of quantities that will
be sold are determined. For the purpose of generation of revenue, three key assumptions have
been considered. As per assumption, inflation rate is 2%, growth in sales price is 4% and
growth in quantity is 6%. It implies that the sales price of the products of Café Magic will be
increased at 4% rate for 10 years, the will be increase in the quality sold of the products at 6%
over the coming 10 years and cost price of the products will be increased at 2% rate for 10
years (Kuzmenko and Kyrkach 2014).
Particulars Amount (S$)
Sources of Funds:
Owner's Capital 50000
Loan from Bank@6% 100000
Total Sources of Fund 150000
Use of Funds:
Purchase of Fixed Assets 110000

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Operating Capital 40000
Total Use of Funds 150000
As per the above table, a total of S$150000 will be required to start the business of
Café Magic. This required fund will come from two sources; S$50000 will be injected by the
proprietor of the café as owner’s equity; and the rest S$100000 will be raised from bank loan
(Sá, Towbin and Wieladek 2014). This fund will be used for purchasing the fixed assets that
are equipment, furniture and fixture and as operating capital. The equipment consists of
commercial espresso machines, air pots, commercial blender, commercial refrigerator,
stainless steel prep bars, microwave, top loading coffee beans, frothing equipment, sandwich
maker and commercial oven.
Followings are the summary of the financial projection of Café Magic that includes
the projection of revenue, expenses and profit for 3 years, 5 years and 10 years.
Pro-Forma Income Statement

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Pro-forma Balance Sheet
Pro-forma Cash Flows Statement
Execution Plan
Execution plan is a key part of any business plan and the same is also applicable for
Café Magic. There are certain part of the execution plan that the management of Café Magic
is required to consider. Café Magic needs to achieve certain operational processes on daily
basis for achieving success. The first process is to ensure the sale of its products to the
customers. In order to do this, Café Magic needs to ensure the in-house production of coffee,
sandwich and cakes so that they can be served to the customers. For the purpose of
production, it is needed to ensure the presence of required equipment and assets within the
café. Most importantly, it is required to appoint the required personnel for ensuring the

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continuation of the business operations. Café Magic needs to recruit one barista, two waiters,
one cook and one cleaner. There will also be a store manager. Adequate amount of inventory
needs to be mentioned which requires an inventory control mechanism. Café Magic needs to
ensure the payment policies. There will be no credit sales as all the sales will be in cash. After
that, in order to ensure the daily business processes, Café Magic will be required to comply
handle all the legal and regulatory matters carefully by complying with all the required legal
laws and regulations in the areas of business license, insurance, various permits, workplace
and environmental regulations, employee associated laws, laws related to protect intellectual
properties and taxation (Serra and Kunc 2015).
Café Magic will consider certain milestones in order to achieve success. The first
milestone of Café Magic will be to achieve a sales growth of 10% after 1st year, 20% after 2nd
year and 30% after 3rd year. The second milestone is to make the customer base double after
the end of 3rd year. The third and final milestone is to open another branch of Café Magic
after the end of 3rd year.

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References
Batzer, E., 2019. Marketing strategies and distribution channels for foreign companies in
Japan. Routledge.
Davcik, N.S. and Sharma, P., 2015. Impact of product differentiation, marketing investments
and brand equity on pricing strategies: A brand level investigation. European Journal of
Marketing, 49(5/6), pp.760-781.
Dibb, S. and Simkin, L., 2013. Market segmentation success: making it happen!. Routledge.
Euromonitor.com. 2019. Coffee in Singapore | Market Research Report | Euromonitor .
[online] Available at: https://www.euromonitor.com/coffee-in-singapore/report [Accessed 29
Nov. 2019].
Fan, S., Lau, R.Y. and Zhao, J.L., 2015. Demystifying big data analytics for business
intelligence through the lens of marketing mix. Big Data Research, 2(1), pp.28-32.
Gangwar, M., Kumar, N. and Rao, R.C., 2013. Consumer stockpiling and competitive
promotional strategies. Marketing Science, 33(1), pp.94-113.
Gupta, S. and Pirsch, J., 2014. Consumer evaluation of target marketing to the bottom of the
pyramid. Journal of International Consumer Marketing, 26(1), pp.58-74.
Haider, A.A., Zafar, A., Khalid, A., Majid, A., Abdullah, M.A. and Sarwar, M.B., 2019.
Marketing Management.
Kotler, P., Keller, K.L., Ang, S.H., Tan, C.T. and Leong, S.M., 2018. Marketing
management: an Asian perspective. Pearson.
Kuzmenko, O. and Kyrkach, S., 2014. The use of regression analysis in the financial planning
of banks, mathematical formalization of the stages of financial planning in

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banks. Mathematical Formalization of the Stages of Financial Planning in Banks (December
13, 2014).
Maarit Jalkala, A. and Keränen, J., 2014. Brand positioning strategies for industrial firms
providing customer solutions. Journal of Business & Industrial Marketing, 29(3), pp.253-
264.
McDonald, M., 2015. Marketing accountability. Wiley Encyclopedia of Management, pp.1-8.
Proctor, T., 2014. Strategic marketing: an introduction. Routledge.
Sá, F., Towbin, P. and Wieladek, T., 2014. Capital inflows, financial structure and housing
booms. Journal of the European Economic Association, 12(2), pp.522-546.
Serra, C.E.M. and Kunc, M., 2015. Benefits realisation management and its influence on
project success and on the execution of business strategies. International Journal of Project
Management, 33(1), pp.53-66.
Statista. 2019. Coffee - Singapore | Statista Market Forecast. [online] Available at:
https://www.statista.com/outlook/30010000/124/coffee/singapore [Accessed 29 Nov. 2019].
Statista. 2019. Singapore: market value of the cafés and bars industry 2017 | Statista.
[online] Available at: https://www.statista.com/statistics/724889/market-value-of-the-cafes-
and-bars-industry-in-singapore/ [Accessed 29 Nov. 2019].