How to write a Coffee Shop Business Plan
The Coffee Shop industry is a growing trend for several reasons. First, coffee shops are a great place for students and office colleagues to meet in a casual setting. This usually helps work productivity for a company or studying productivity for students.
The second reason coffee shops are so darn popular is our society's love/addiction to coffee and all its wonderful caffeine-based motivational factors. Finally, coffee shops also offer complementary products like pastries, breakfast sandwiches, and even salads at some locations, which people truly appreciate the convenience factor associated with the act. Regardless, no matter which reason, or reasons, for the popularity of coffee shops, this industry is anticipated to continually grow in the long term. Because of this, new entrants, as well as established coffee shop competitors, continually seek out coffee shop business plan writers or coffee shop business plan templates to help with organizing their thoughts and ideas as well as for coffee shop financial projections. From this need, our coffee shop business plan writer and financial projection professional have come up with some tips and tricks that may be beneficial for writing this type of business plan (11/21).
Executive Summary for a Coffee Shop Business Plan.
In the executive summary section of the Coffee Shop business plan, make sure to first discuss what type of business your organization will be. Most coffee shops, especially those owned by small business owners, are limited liability corporations. These business structures help protect business owners from liabilities ranging from debt to lawsuits.
The next segment in the executive summary for the coffee shop should talk about the actual coffee shop itself. Some coffee shops like to go with modern decor and a wide array of coffee selections. This is evident in different Barney coffee shops around the country. As for Starbucks, they like to focus on a limited menu but high-quality coffee beans. And then we have Dunkin’ Donuts, their niche decor is salt of the earth plain and simple decor that appeals to the working professional. No matter what your menu item selection is or decor choices, make sure to first start with identifying a target market and then aligning the selections with the market selected.
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Company Information for a Coffee Shop Business Plan.
The company information section of a Coffee Shop business plan should start by explaining the problem that the company will solve for the client. For a coffee shop, a problem that may be solved could be convenience. People tend to prefer purchasing a hot cup of coffee on their way to work instead of preparing one at home.
Also, in the company information section of a coffee shop business plan, our business plan writer strongly suggests answering the questions who, what, where, why, and how. Those who section should discuss the name of the company, business structure, and reasoning for the need for the business. As for what, coffee shop owners should explain the different menu items that will be available in the coffee shop. Then why is the problem that the company is solving? Every business that has ever been started to solve the problem. Even a coffee shop. Make sure to address what the problem is that the coffee shop is solving, as noted above. How are your business operations? Will you have a walk-up counter? Drive-through? Make sure to discuss how your business will operate in significant enough detail where the business owner will understand how your coffee shop will serve the customers but not so much information that the reader can start their own coffee shop thanks to your hard work.
Product Description for a Coffee Shop Business Plan.
Coffee Shop businesses may generate revenues from selling coffee, pastries, and even merchandise. As a coffee shop business owner, for this section, make sure to discuss, in detail, what products and services your organization will offer. Our business plan writer has found that startup coffee shops have the best opportunities for success when they offer limited menu items, which focus on coffees, pastries, and other complementary products. As a coffee shop expands and grows, then adding more menu items like sandwiches and salads or even beer and wine may be advisable, based on feedback from customers. Also, when the business becomes popular, merchandising, like offering T-shirts and hats and coffee mugs, is another great way to not only generate revenues but build brand recognition and community. In your business plan for the coffee shop, make sure to not only discuss your current coffee product descriptions but also generally outline your future complementary offerings as well.
Competitive Advantages for a Coffee Shop Business Plan.
The Coffee Shop industry has been growing substantially over the last several years thanks to income growth for the US population and our society's craving for caffeine injections on a daily or multi-daily basis. Because of the growth of the coffee shop industry, coffee shop business plans should outline the competitive advantages that a business will embrace to gain market share in the coffee sales industry. For example, a popular competitive advantage for coffee shops is the speed of service. As we all know, getting a cup of coffee sometimes takes 30 to 40 minutes during peak breakfast hours. If a coffee shop can turn around its customers in less time, it will inevitably gain market share in the industry. With this said, make sure to put a lot of thought into your competitive advantages for the coffee shop business plan.
Location Description for a Coffee Shop Business Plan
The location of a new Coffee Shop facility is critical for the success of the business. For the interior of the business, most coffee shops have a minimum of approximately 1500 ft.². About three-quarters of the square footage is designated for the front-of-house operations and dining area. In the dining area, there are approximately anywhere from 6 to 15 tables as well as barstools for patrons to enjoy. As for the back of the house, coffee shops, the dishes washed, coffee products stored, and ovens for bakery items. Keep in mind, that the more products or services offered, the larger the area for back-of-house operations needs to be.
As for the general location of the Coffee Shop facility, our business plan writer has found that these types of businesses do well in locations near interstates or in strip malls with grocery stores. The interstate location allows coffee shop business owners to exploit travelers through the area. For the strip mall location, these are excellent for commuters going to or heading from work. Also, coffee shop locations should ensure a large parking lot to accommodate ease of entering and exiting the facility and enough area for individuals parking.
Target Market for a Coffee Shop Business Plan.
A common target market for a coffee shop may be office workers, tourists, or students. The target market may change based on geographic variables. For example, if a coffee shop opens near a college, then make sure to consider college students as your target market. In contrast, in downtown areas, a target market for a coffee shop may include office workers or tourists. Finally, when considering the target market for the coffee shop, always keeps in mind that a specific target market does not preclude selling your products and services to other demographics. This just means that you expect to sell more coffee to a particular demographic as compared to others. This perspective helps you choose decor, menu selections, and other amenities to best attract you're demographic chosen as a target market.
In addition, when considering the target market, make sure to also visualize complementary products that may be offered to this target market. An example of this would be if your target market is tourists visiting the area, then maybe consider carrying city or area memorabilia that tourists may purchase while enjoying your coffee and pastries. This revenue channel may be small as compared to your coffee generating opportunities, but the additional revenues will not only enhance the visitor experience but also increase your profit margins as well.
Industry research for a Coffee Shop Business Plan
Based on quick research from our business plan writer, the main industry in which Coffee Shop competitors compete is the coffee shop and snack industry. In the last five years, the coffee shop and snack industry have grown thanks to the overall growth of the US economy significantly. Also, the price of coffees and other pastries has declined over the last several years. This has further bolstered the desire in our culture for this delectable caffeinated delight.
There have been recent changes in the coffee shop industry over the last several years. First, customers have been demanding healthier menu options at coffee shops. This is led large chains and other coffee shop competitors to start selling healthy menu items like salads and even protein shakes. A second industry change recently has been the demand for different types of coffees. These gourmet coffees may be created from beings from Africa to Costa Rica. A final industry change recently has been coffee beans. Coffee beans are commodities. As with most commodities, their prices change based on availability and demand for the products. Also, there are variables such as weather and tariffs that may impact the price of coffee. Because of the different variables involved with the prices of coffee, coffee shops may have fluctuations in net profits. As a result, strategically planning for these changes is necessitated.
Owner and Management Section of a Coffee Shop Business Plan
Owning and managing a Coffee Shop business is quite different from other organizations. This is because owners of coffee shops are usually individual owners as compared to group investors. Also, coffee shop management is challenging because of the high turnover in the industry and specialized training needed for baristas. With this said, our business plan writer strongly recommends that business owners of coffee shops create training programs and cultivate nurturing company cultures for their stores. Training programs will help coffee shop owners deliver top-of-the-line coffee products. As for company culture, this will help coffee shop business owners retain employees, which will inevitably lower training costs.
Funding Request for a Coffee Shop Business Plan
Starting in the Coffee Shop business is actually quite expensive. Business owners need to purchase coffee brewing machines, tables and barstools, ovens, and supplies like coffee beans, pastry dough, and even uniforms. Because of the high start-up costs and product supply costs, funding needs for coffee shops may range from 100,000 to $500,000. From this, make sure to include a detailed description of the funding needs for your coffee shop. Our business plan writer has found that funding requests for coffee shops are best structured in bullet points. For example, the first bullet point may be back of house equipment, which will cost $75,000. Next could be tables and chairs with an associated cost of about $10,000. Follow the structure until all of your budgeted needs are met. In the end, make sure to tally the total amount needed for funding at the bottom.
Financials for a Coffee Shop Business Plan.
Financial projections and financial models for a Coffee Shop business plan should first start with daily revenues and associated product costs. Associated product costs may include coffee beans, pastry dough, office supplies, and cups and bags. Next, the revenues and costs should be extended to 30 days. Once this is done, then the associated fixed cost like coffee shop lease payment, utilities, any loan payments, and other monthly expenses associated with the business. Once these cost her totaled and deducted from revenues, you then have a basic net profit and loss understanding. The final step from here would be to extend this practice from a 30-day timeframe to 12 months and then again to a five-year projection.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author