Coffeehouse Business Plan

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Dark Roast Java

Execution

Marketing & Sales

Marketing Plan

Other coffeehouses rely almost entirely on word-of-mouth marketing to generate business. We will engage in an ongoing aggressive marketing program that will help us establish profitability quickly and set the stage for continual growth.

Our strategy will be to position Dark Roast Java as the "Lexus" of coffeehouses, offering a high quality product and superb service in a superior environment.

Most coffeehouse chains do little or no marketing and advertising. For example, Starbucks’ philosophy is that their ubiquity in the marketplace is all they need to sustain and grow their customer base. They spend less than 1% of gross revenues on advertising, and when they do spend, it is usually to introduce a new product.

The retail coffee industry is a sales-oriented business with historically very little experience in marketing and advertising. This is likely why little is done. As yet, the major players have not been taken over by sophisticated companies like Pepsico, where marketing is viewed as essential to gaining market share. 

We will be using advertising and social media marketing to gain awareness, build customer traffic and establish a strong brand image. We intend to create immediate customer awareness and not wait for word-of-mouth. We are also building customer traffic immediately with an aggressive Facebook and Twitter marketing campaign 

Sales Plan

Our sales strategy includes:

Staff salaries that are 10% above the industry average in order to attract the best people

Hiring for attitude so that we always have a friendly, enthusiastic staff to make customers feel welcome and appreciated; constant staff training to assure the best quality possible

State-of-the-art sales/inventory system to (A) reduce customer waiting time, and (B) create efficient product ordering

Create a mobile kiosk to take Dark Roast Java into the community at special events, farmer’s markets, art shows, etc.

Sell coffee, gift baskets and glass artwork on our website

Establish coffee service at local businesses

Sell gift cards, frequency cards, pre-paid cards, and offer discounts to key groups

Create an ongoing sampling program

Conduct a consistent, aggressive marketing program

Be an active member of the community; be visible at charitable functions

Solicit customer feedback to constantly improve and streamline our operation
Key Strategy: an advanced and expandable point-of-sales system

After carefully tracking the performance of the Pleasantville store through an expandable and highly detailed point-of-sale system, we will use this as a "blueprint" for expansion. For example, daily sales are tracked and analyzed by item, time period and cost of goods. Labor requirements are matched to projected in-store sales based upon past performance for maximum efficiency. Even after paying higher than average wages we expect to allocate no more than 25% to labor costs.

Sales are linked to inventory to both streamline the efficiency of ordering and reduce "shrinkage" by instantly alerting us to unusual shortages compared with revenues.

Scheduling can be done online and easily revised to accommodate changes—all while projecting weekly, monthly, quarterly or annual labor costs. Schedules can be sent via email to staff members.

Cost of goods can be monitored for increased efficiency too. As we continually research methods of delivering a high quality but cost-efficient product, and by making small incremental improvements in the costs of items we expect to increase overall COG by a minimum of 5% during the first year of operation.

As expansion occurs, the POS system can be adapted to each individual location and allow the central office to monitor the stores remotely as well as the overall combined operation. Close monitoring will allow us to achieve a high level of communication between stores as well as spot problems immediately and take corrective action.

Operations

Locations & Facilities

The location of the first Dark Roast Java in Pleasantville is a prototype of future sites. Our second site on busy Shoreline Road in Mount Hill will feature our flagship store. It will be located just off the Oak Patch Road and Highway 66 exit, across from the Mount Hill Inn and The Junction Restaurant. It is by far the best location in Mount Hill—one of America’s most affluent cities.

We will build Dark Roast Java coffeehouses in the best locations possible, as this is the key element in a successful operation.

Site selection criteria include:

  • High traffic location
  • Small or mid-size affluent market
  • Year-round tourist activity
  • Nearby (within 5 miles) student population
  • Outside dining

Other sites that meet these criteria include Newburg, Springfield, Bayview, Shorewood, Orchard Valley, Beachey Head, and Capital City.

Exceptions will be made for some sites if they are deemed to be potentially very profitable.

Sites in other states might include Utah, New Mexico, Oregon, Washington, Montana, Idaho, Colorado, etc. Plans are to locate Dark Roast Java coffeehouses in the Western states for efficiency of supply and management.

Outside Dining

The coffeehouse/cafe experience is indelibly linked to its European origins, where al fresco dining is a way of life. Americans have embraced sidewalk dining. It is one of the fastest growing additions to the American dining scene.

Sidewalk dining also provides an excellent way for prospective customers to see and "check out" the coffeehouse for the first time.

Sampling

We will engage in several sampling activities to introduce potential customers (and current customers) to Dark Roast Java’s range of drink options.

  • Samples will be distributed at the coffeehouse
  • Samples will be given to passers-by on the street
  • Discount coupons will be distributed on the street, via direct mail and at special events
  • Complementary coffee will be served at charitable and civic events
  • Free coffee service will be provided to the Chamber of Commerce, a radio station, the newspaper and at select government offices (e.g. the Planning and Zoning Department)

Portable Kiosk

Within 6 to 8 months we will create a portable Dark Roast Java kiosk to sell and market our products at special events and community activities. Pleasantville has more than 130 such events every year. It will be an excellent way to publicize Dark Roast Java coffee.

The kiosk will be highly visible and fun. It will also potentially be very profitable, although it’s hard to determine how profitable with any accuracy until the local response is measured. We believe it could generate $75,000 – $100,000 annual revenue.

Pre-paid, re-loadable, frequency and discount cards

We will promote our program of gift cards and customer frequency cards to drive business and stimulate cash flow. Industry records indicate that 25% – 40% of all gift card amounts go unused. Also, gift cards have proven to be a popular holiday item accounting for more than 5% of total sales during December.

Pre-paid and re-loadable cards have also proven to be very popular with the major chain coffeehouses, again accounting for a significant percentage of sales. These cards promote customer loyalty as well.

Frequency cards rewarding the repeat customer with a free drink after a specified number of visits are popular and proven methods to forge customer loyalty.

Discount cards are used to build goodwill among specific groups such as the Chamber of Commerce members and college students.

By tying in with our computerized sales and inventory system we will be able to track usage and allocate the expense to marketing.

The Future

The number of Dark Roast Java locations could easily reach 20 – 25 within five years. While the financials in this Business Plan only address the Pleasantville location, we can extrapolate from the store’s performance (which will be carefully monitored and tracked) to get a general idea of the chain’s projected profitability.

With ten coffeehouses the gross revenues, when fully realized, would be more than $10 million using the third year performance figures. Even factoring in the cost of additional staff and other resources, a 10-store chain would likely generate a minimum of $1 million in profits annually, while building significant valuation. A 25-store chain would easily top $2.5 million in annual profits.

Dark Roast Java’s start-up, implementation and operation in Pleasantville will be the "blueprint" for future efficient expansion. Our new Mount Hill location will incorporate the knowledge we gain with our first store as well as new creative ideas, and become our "flagship" operation.

Sources:  SRDS, Interep Radio, Scarborough Market Data Survey.

Technology

Equipment & Tools

Milestones & Metrics

Milestones Table

Milestone Due Date
Structure Company Type
May 23, 2020
Select and order furnishings
June 06, 2020
Health Dept
June 06, 2020
Site Plans
June 20, 2020
Join Spec coffee roasters
June 27, 2020
Create employee manual
July 04, 2020
Select business insurance
July 11, 2020
Alliance with water company
July 18, 2020
Join chamber of commerce
July 25, 2020
Select cash register
Aug 08, 2020
Business license
Aug 15, 2020
Choose paint palette
Aug 29, 2020
Select and order flooring
Aug 31, 2020
Gift Items suppliers order
Sept 05, 2020
Select pastry supplier
Sept 12, 2020
Select equipment supplier
Sept 26, 2020
Select confection supplier
Oct 06, 2020
Select Juice suppliers
Oct 10, 2020
Create training program
Oct 17, 2020
Select music
Oct 31, 2020
Hire manager, baristas
Nov 07, 2020
Install wireless
Nov 14, 2020
Pre-Opening Parties
Dec 19, 2020
Grand opening
Jan 03, 2021

Key Metrics

Our Key metrics are: 

  • # of customers who purchase caffeinated drinks in a day
  • # of customers who purchase caffeinated drinks in a month 
  • # of customers who tweet or retweet our tweets 
  • # of Facebook page views 
  • # of website shares 
  • # of customers purchasing pastries or non alcoholic drinks 
  • product cogs vs price 
  • month to month inventory 
  • # of coffee bean bags sold 
  •  

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