Comprehensive Business Plan: Cafe Art Coffee Shop - Northampton

This document presents a comprehensive business plan for “Café Art,” a medium-sized coffee shop in Northampton, UK, targeting university students and shoppers aged 16-30. The plan details the business's vision, mission, and objectives, focusing on providing a hygienic and intriguing atmosphere. It includes an industry and market analysis, highlighting the growing UK coffee market and consumer preferences. Primary survey results are incorporated to analyze market demand, revealing preferences for affordable, high-quality coffee. The plan outlines growth strategies, including product differentiation, cost leadership, and future market expansion. Internal and competitive analyses, including SWOT and Porter’s 5 Forces, are presented, along with a business model canvas. The document also covers the management team, financial projections (demand, profitability, cash flow), payback period calculation, break-even point analysis, and risk assessment. The appendices include survey questionnaires, results, and detailed analyses. This business plan aims to establish a strong presence in the coffee sector by delivering tasty, healthy products and maintaining an excellent atmosphere.

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)
3

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.
4

Statistical data reported that UK becomes a hub of coffee drinkers where approximately 2.3
billion cups of coffee are sold within a year. The statistical data clearly reports that change in
consumer demand, lifestyle, and growth in their income are the reasons behind remarkable
progress of the sector (Van Loo, E.J. and et.al., 2015). Thus, it will be definitely a wonderful
opportunity for the entrepreneur to set up a new coffee shop in the Northampton and gain
phenomenal brand popularity.
Current and projected demand analysis using both primary and secondary research
Primary survey to analyze market demand for proposed business
See Appendix
Daily 2-3 times a
week 1-2 times in
a month Never
0
5
10
15
20
25
30
14
27
9
0
Quality
Affordability
Convenience
Good ambiance
Atmosphere
0
5
10
15
20
25
20
12
8 6 4
High price
16%
Affordable prices
52%
Low prices
32%
Yes
6%
Sometimes
26%
Never
68%
5

Coffee Frapuccino
Caramel
Mocha
Mango & Passion fruit
Espresso
Strawberry
0
2
4
6
8
10
12
14
16 15
10 11
6 5
3
Extremely well
Highly important
Neutral
Little bit important
Not important
0 5 10 15 20 25
22
14
8
6
0
Yes, definitely
52%
Never
18%
Sometimes
30%
Market research results clearly present that maximum number of target audiences (54%)
visit at least 2-3 times in the coffee shop to enjoy a great taste of the desired flavor. It clearly
presents increasing consumer demand in the market about best coffee, breakfast and lunch with a
variety of dishes. Guests need exceptional taste of coffee at an affordable/economical charge
henceforth; both the quality and affordability are the factors which influences their purchase
decisions. It can be evident from the survey results wherein 40% and 24% people stated that they
demand a great taste at competitive prices which they can afford. In the survey, it is being
assessed that 26(52%) surveyed people said that they are willing to pay off affordable prices
considering their affordability. However, few of the participants said that they are ready to pay
high prices due to high income as in the survey; only 8(16%) people said that they can pay high
prices. Most of the audiences said that WOM publicity and quality of services have a
6

considerable impact over their buying decisions (Brinckmann and Kim, 2015). Maximum
number of audiences likes to have Coffee Frappuccino, Caramel and Mocha flavors. Besides
this, 26(52%) people are willing to enjoy new taste of products at coffee shop and they do not
want to compromise with the taste and quality just for discount. Thus, considering the findings, it
is decided to enter into a challenging coffee sector and to gain excellence in the industry by
providing the best taste to the guests.
Secondary market analysis for assessing future landscape of market demand for proposed
business
Leading coffee houses in UK and growth
(Source: UK coffee: market grows and to grow strongly, 2015)
UK becomes a hub of coffee drinks, and all the drinkers are demanding variety of choices
for satisfying their need which increase overall demand. More importantly, artisan coffee is
generating attractive demand to satisfy consumer need of premium quality café. It is a fastest
growing market and estimated to increase the independent coffee venues from 1400 to 2500 by
2020 with a YOY growth of 12% (Allegra, 2017).
7

(Source: UK coffee: market grows and to grow strongly, 2015
Northampton is the midst of professional awakening and cultural advancement.
Attractiveness of the city and rising café culture with growing demand attracts new start ups.
Looking to growing popularity and growth opportunities in the coffee sector, one of the leading
coffee houses of UK, Starbucks also opened a two storey café in the Northampton for business
growth.
Within just 5 year, market rose from GBP 2.4 bn to GBP 3.4 bn in 2016 clearly reveals
rising café culture. More importantly, the demand shows a significant increase among people
aged 16-24 years (Grand Growth: UK Coffee Shop Sales Enjoy a Growth High, 2017). The
demand has been grown among habitual coffee drinkers, increasing retailers and street coffee
shops. Fast food chains and bakeries also came in the sector and competing on three factors that
are price, geographical reach and convenience. In future, it is expected that total number of
coffee shops has been projected to exceed beyond 32,000 with turnover of £16 bn by 2025. The
growth is especially underpinned by widening participation of the customers, aspirational appeal
and embedded café culture into people lifestyle. More importantly, high quality artisan cafes are
fuelling demand and driving larger coffee chains to focus on their interiors, baristas and thriving
innovation (Law, Harvey and Reay, 2013).
8