CoffeeTerra Business Plan

CoffeeTerra Business Plan

 

Executive Summary

CoffeeTerra coffee house is determined to become a daily necessity for local coffee addicts, a place to dream of as you try to escape the daily stresses of life and just a comfortable place to meet your friends, to work in a calm atmosphere or to read a book, all in one. With the growing demand for high-quality gourmet coffee and great service, CoffeeTerra will capitalize on its proximity to the range of universities (Timiryazev str – Abay str) to build a core group of repeat customers. CoffeeTerra will offer its customers the best prepared coffee in the area that will be complimented with pastries, business lunches, light food , as well as free books, wi-fi (with free using of computers) that its patrons can use to enjoy their visit.

The company will operate a 700 square meters coffee house within a walking distance from the all universities (KazNTU, KazNU, KazAT&S, KazAT&C, University of D. A. Konayev) schools (#105, 51, 35, Keleshek, Prestige) and different organizations in this area. The owners have secured this location through a three-year lease with an option for extending. The owners have also provided $80,000 of the required $130,000 start-up funds. The remaining capital will be obtained through KazCommercBank commercial loans.

 

1.1 Objectives

CoffeeTerra's objectives for the first year of operations are:

• Become selected as the "Best New Coffee House in the area" by the local restaurant guide.
• Turn in profits from the first month of operations.

1.2 Keys to Success

The keys to success will be:

• Store design that will be both visually attractive to customers, and designed for fast and efficient operations.
• Employee training to insure the best coffee preparation techniques.
• Marketing strategies aimed to build a solid base of loyal customers, as well as maximizing the sales of high margin products, such as espresso drinks.

1.3 Mission

CoffeeTerra will make its best effort to create a unique place where customers can communicate with each other in a comfortable and relaxing environment while enjoying the best brewed coffee or espresso, light food, lunches and pastries in town. We will be in the business of helping our customers to relieve their daily stresses by providing piece of mind through great ambience, convenient location, friendly customer service, and products of consistently high quality.

Company Summary

CoffeeTerra, an Almaty limited liability company, sells coffee, other beverages, food and snacks in its 700 square meters premium coffee house located near Sport Complex Dostyk.  CoffeeTerra's major investors are ___________ and ___________ who cumulatively own over 100% of the company.

 

2.1 Company Ownership

CoffeeTerra is registered as a Limited Liability Corporation in the Almaty City. _________________ and _____________________, both own 50% of the company.

 

2.2 Start-up Summary

The start-up expenses include:

• Legal expenses for obtaining licenses and permits as well as the accounting services totaling $100.
• Marketing promotion expenses for the grand opening of CoffeeTerra in the amount of $3,500 and as well as flyer printing (1,000 flyers at $0.67 per copy) for the total amount of $3,670.
• Consultants fees of $2,000 paid to “Temirlan & Partners” LLC for the help with setting up the coffee house.
• Insurance (general liability, workers' compensation and property casualty) coverage at a total premium of $3,000.
• Pre-paid rent expenses for one month at $ 15 per square meter in the total amount of $10,500.
• Other start-up expenses including stationery ($300) and phone, internet connection and utility deposits ($500).

The required start-up assets of $114,897 include:

• Operating capital in the total amount of $40,270, which includes employees and owner's salaries of $20,000 for the first two months and cash reserves for the first three months of operation (approximately $6,756 per month).
• Start-up inventory of $6,800, which includes:
• Coffee beans (12 regular brands and five decaffeinated brands) - $3,000
• Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. - $3,000
• Retail supplies (napkins, coffee bags, cleaning, etc.) - $500
• Office supplies - $300
• Equipment for the total amount of $62,360:
• Espresso machine - $3,000
• Coffee maker - $1000
• Coffee grinder - $400
• Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) - $8,000
• Storage hardware (bins, utensil rack, shelves, food case) - $2,780
• Counter area equipment (counter top, sink, ice machine, etc.) - $7,500
• Serving area equipment (plates, glasses, flatware) - $3,400
• Store equipment (cash register, security, ventilation, signage) - $10,750
• Office equipment (PC, fax/printer, phone, furniture, file cabinets) - $25,000
• Other miscellaneous expenses - $530

Funding for the company comes from two major sources--owners' investments and bank loans. Two major owners, _____________ and _______________, have contributed $80,000 and $40,000 respectively. The remaining $50,000 needed to cover the start-up expenses and assets came from the bank loan--a three-year loan in the amount of $50,000 (7,400,000 KZT), this loan will be secured through the KazCommercBank (15,9% per year if we will pay within 36 months). Thus, total start-up loss is assumed in the amount of $20,570. 
 
 

Start-up Requirements
Start-up Expenses
Legal	$100
Stationery etc.	$300
Marketing promotion expenses	3000
Brochures	$670
Consultants	$2,000
Insurance	$3,000
Rent	$10,500
Other	$1000
Total Start-up Expenses	$20,570
Start-up Assets
Operating capital	$40,270
Start-up Inventory	$6,800
Other Current Assets	$0
Long-term Assets	$62,360
Total Assets	$109,430
Total Requirements	$130,000

 

Start-up Funding
Start-up Expenses to Fund	$20,570
Start-up Assets to Fund	$109,430
Total Funding Required	$130,000
Assets   Liabilities and Shareholders’ equity   Non-cash Assets from Start-up $69,160 Liabilities   Cash Requirements from Start-up $40,270 Long-term Liabilities $50,000 Additional Cash Raised $0 Total Liabilities $50,000 Cash Balance on Starting Date $40,270 Shareholders’ equity   Total Assets $109,430 Planned Investment       ____________________ $40,000     ____________________ $40,000     Total Planned Investment $80,000     Loss at Start-up (Start-up Expenses) ($20,570)     Total Capital $59,430     Total Capital and Liabilities $109,430 Total Funding $130,000

 

2.3 Company Locations and Facilities

CoffeeTerra coffee house will be located on the ground floor of the commercial building at the corner of Abay 48 A Avenue and Shagabutdinov Street in Almaty. The company has secured a one-year lease of the vacant 700 square meters premises previously occupied by a Bank Center Credit. The lease contract has an option of renewal for three years at a fixed rate that CoffeeTerra will execute depending on the financial strength of its business.

The floor plan will include a 50 square meters back office and a 650 square meters coffee house, which will include a seating area with 20 tables, 4 private rooms, kitchen, storage area and two bathrooms.

This property is located in an area within a walking distance from the range of Universities on the one of the busiest avenues in the city. The commercially zoned premises have the necessary water and electricity hookups and will require remodeling to accommodate the espresso house, kitchen and storage area. The coffee house's open and clean interior design with modern wooden decor will convey the quality of the served beverages and snacks, and will be in-line with the establishment's positioning as an eclectic place where people can relax and enjoy their cup of coffee.

Products

CoffeeTerra will offer its customers the best tasting coffee beverages in the area. This will be achieved by using high-quality ingredients and strictly following preparation guidelines. The store layout, menu listings and marketing activities will be focused on maximizing the sales of higher margin espresso drinks. Along with the espresso drinks, brewed coffee and teas, as well as some refreshment beverages, will be sold in the coffee house. CoffeeTerra will also offer its clients pastries, small salads and sandwiches. The menu offerings will be supplemented by free wi-fi connection, books and magazines that customers can read inside the coffee house.

 

3.1 Product Description

The menu of the CoffeeTerra coffee house will be built around espresso-based coffee drinks such as lattes, mochas, cappuccinos, etc. Each of the espresso-based drinks will be offered with whole, skimmed, or soy milk. Each of these coffee beverages is based on a 'shot' of espresso, which is prepared in the espresso machine by forcing heated water through ground coffee at high pressure. Such espresso shots are combined with steamed milk and/or other additives like cocoa, caramel, etc., to prepare the espresso-based beverages. Proper preparation techniques are of paramount importance for such drinks. A minor deviation from the amount of coffee in the shot, the size of the coffee particles, the temperature of milk, etc., can negatively affect the quality of the prepared drink.

 

3.2 Sales Literature

One thousand flyers will be distributed in the adjacent neighborhood, on the Abay avenue, at the universities, malls and in the selected office buildings within two weeks prior to the opening of CoffeeTerra.

 
Market Analysis Summary

Kazakhstani coffee consumption has shown growth during last years. Coffee drinkers in the Almaty city are among the most demanding ones. Almaty, with its liberal and outgoing populace and changeable climate has traditionally been a great place for coffee establishments. CoffeeTerra will strive to build a loyal customer base by offering a great tasting coffee in a relaxing environment of its coffee house located on the busy Abay avenue.

4.1 Market Segmentation

CoffeeTerra will focus its marketing activities on reaching the Universities students and faculty, people working in offices located close to the coffee house and on sophisticated teenagers. Our market research shows that these are the customer groups that are most likely to buy coffee products.

Market Analysis
		Year 1	Year 2	Year 3	Year 4	Year 5
Potential Customers	Growth						CAGR
Students and Faculty	2%	18,000	18,360	18,727	19,102	19,484	2.00%
Teenagers	1%	3,000	3,030	3,060	3,091	3,122	1.00%
Office workers	2%	8,000	8,160	8,323	8,489	8,659	2.00%
Other	0%	5,000	5,000	5,000	5,000	5,000	0.00%
Total	1.63%	34,000	34,550	35,110	35,682	36,265	1.63%

 

 

4.2 Target Market Segment Strategy

CoffeeTerra will cater to people who want to get their daily cup of great-tasting coffee in a relaxing atmosphere. Such customers vary in age, the fact our location close to the Universities means that most of our clientele will be college students and faculty. A lot of college students consider coffee houses to be a convenient studying or meeting location, where they can read or meet with peers without the necessity to pay cover charges. For us, this will provide a unique possibility for building a loyal client base.

4.3 Industry Analysis

The retail coffee industry is flourishing in the Almaty. The local climate, with rainy and snowy seasons, is very conducive for the consumption of hot non-alcoholic beverages. At the same time, hot dry summers drive people into cafes to order iced drinks. Further, coffee has really become a part of the lifestyle in the Almaty. Its discerning coffee drinkers are in favor of well-prepared, strong coffee-based beverages, which they can consume in a relaxing environment.

 

Competition

According to the 2011 Statistical Agency of Kazakhstan, Almaty has 45 established snack & non-alcoholic beverage houses. Among other establishments that offer coffee drinks to their customers are most of Almaty's limited- and full-service restaurants. CoffeeTerra's direct competitors will be other coffee houses located in the City center. These include Madlen and Black & Brown, and other Food service establishments that offer coffee. Black & Brown will definitely be one of the major competitors because it is the most closely situated. However, despite this fact, many customers want to discover something new. We estimate that Black & Brown holds approximately 25% market share in that neighborhood, Madlen appeals to 35% of customers, The Promenade TC caters to another 10%, with the remaining market share split among other establishments. CoffeeTerra will position itself as a unique coffee house that not only offers the best tasting coffee and pastries but also provides home-like, cozy and comfortable environment, which established corporate establishments’ lack. We will cater to customers' bodies and minds, which will help us grow our market share in this competitive market.

 

Buying Patterns

The major reason for the customers to return to a specific coffee house is a great tasting coffee, quick service and pleasant atmosphere. Although, as stated before, coffee consumption is uniform across different income segments, CoffeeTerra will price its product offerings competitively. We strongly believe that selling coffee with a great service in a nice setting will help us build a strong base of loyal clientele.

 

Strategy and Implementation Summary

CoffeeTerra's marketing strategy will be focused at getting new customers, retaining the existing customers, getting customers to spend more and come back more often. Establishing a loyal customer base is of a paramount importance since such customer core will not only generate most of the sales but also will provide favorable referrals.

 

5.1 Competitive Edge

CoffeeTerra will position itself as unique coffee house where its patrons can not only enjoy a cup of perfectly brewed coffee but also spend their time in an ambient environment. Comfortable sofas and chairs, dimmed light and quiet relaxing music will help the customers to relax from the daily stresses and will differentiate CoffeeTerra from incumbent competitors.

 

5.2 Sales Strategy

CoffeeTerra house will handle the sales transactions. To speed up the customer service, at least two employees will be servicing clients--while one employee will be preparing the customer's order, the other one will be taking care of the sales transaction.

In order to build up its client base, CoffeeTerra will use banners and fliers, utilize customer referrals and cross-promotions with other businesses in the community. At the same time, customer retention programs will be used to make sure the customers are coming back and spending more at the coffee house.

 
Management Summary

CoffeeTerra is owned by ________________ and _________________, they both finished _________________________________.