Coffee Shop Business Plan

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Opportunity

Problem

Not only do people living near the University of Oregon want coffee, tea, pastries or snacks, they also need a place to relax, have a group discussion or just sit and read. It is now available near the University of Oregon campus. However, it is too crowded and does not provide the right combination of factors.

Solution

Java Culture coffee bar 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 or to read a book, all in one.

Market

Java Culture will target university students and faculty, as well as people working in coffee bars near their offices. According to our market research, these are the most likely customer groups to buy gourmet coffee products. Since gourmet coffee consumption is universal across different income categories and mostly depends on the level of higher education, proximity to the University of Oregon campus will provide access to the targeted customer audience.

Competition

Java Culture’s direct competitors will be other coffee bars located near the University of Oregon campus. These include Starbucks, Cafe Roma and The UO Bookstore.

Why Us?

Good coffee, pastries, additional tea options, very welcoming atmosphere.

Expectations

Forecast

As shown below, we plan to grow as derived from our sales forecast. We aim to maintain an industry-standard 60% gross profit margin and reasonable operating expenses, and to produce reasonable profits in the second and third year.

Financial Highlights by Year

You will need financing

The owners will invest $140,000 and take out a bank loan for $30,000 to cover the start-up expenses and assets needed plus deficient spending in the early months.

$27,000 is the start-up cost.

• Legal costs for obtaining licenses, permits, and accounting services total $1,300
• Marketing promotion expenses for Java Culture’s grand open were $3,500. Flyer printing (2,040 copies at $0.04 each) was also included in the total of $3,580.
• ABC Espresso Services paid $3,000 to consultants for their assistance with setting up the coffee shop.
• The total premium for insurance (general liability, workers&#8217’s compensation and property accident) is $2,400
• Pre-paid rent expenses for one month at $1.76 per square feet in the total amount of $4,400.
• Renovation of the premises in the amount $10,000
• Other expenses include stationery (500 USD) and phone/utility deposits (2500 USD).

These expenses will be incurred before launch, so they take their place in our financial projections as negative retained earnings of $27,680 at the end of the month before we begin. The balance sheet shows this number.

The necessary start-up assets, which are $143,000

• Cash in the bank totaling $67,000. This includes enough cash to pay employees and owners salaries of $23,900 in the first two months, and cash reserves for three months (approximately $14,400 per month).
• Initial inventory of $16,000 which includes:
  • Coffee beans (12 regular brands, five decaffeinated ones) #8211 $6,000
  • Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. – $7,900
  • Retail supplies (napkins, coffee bags, cleaning, etc.) – $1,840
  • Supplies for office &#8211: $287
• Equipment for the total amount of $60,000:
  • Espresso machine – $6,000
  • Coffee maker &#8211, $900
  • Coffee grinder #8211 $200
  • Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) – $18,000
  • Storage hardware (bins. utensil rack. shelves. food case.) #8211 $3,720
  • Counter area equipment (counter top, sink, ice machine, etc.) – $9,500
  • Servier area equipment (plates and glasses, flatware, etc.) – 8211; $3,000
  • Store equipment (cash registers and security systems, signage, ventilation, etc.) #8211; $13,750
  • Office equipment (PC, fax/printer, phone, furniture, file cabinets) – $3,600
  • Other miscellaneous expenses – $500

Funding for the company comes from two major sources–owners’ investments and bank loans. Arthur Garfield & James Polk have contributed $70,000 & $30,00, respectively. All other investors have contributed $40,000, which brings the total investments to $140,000. The two bank loans of $30,000 each were used to pay the remaining start-up expenses and assets. A $10,000 loan for one year and a $20,000.00 loan for five years provided the rest. Both loans were secured with the Bank of America. Thus, total start-up loss is assumed in the amount of $27,000.

These amounts appear in the balance sheet one month prior to opening. Paid in Capital is what the $140,000 investment looks like. The $27,000 expenses show up as negative retained earnings. Assets and liabilities are both there. Financial standards dictate that this happens.

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