Sicheng 2015 Q4 MG 704 Coffee Bar Business Plan

Running Header: ROASTED BEAN COFFEE BAR BUSINESS PLAN 1

Roasted Bean Coffee Bar Business Plan

Sicheng Xue

Rader School of Business

Milwaukee School of Engineering

Author Note

Sicheng Xue, Rader School of Business, Milwaukee School of Engineering.

Prepared for course MG 704, Innovation Entrepreneurship, Professor Gene Wright, and

submitted on August 14, 2015.

Correspondence regarding this article should be directed to Sicheng Xue, 1108 N.

Milwaukee Street, Milwaukee, WI, 53202. E-mail: [email protected]

Wright, Gene, 09/03/15,

Nice job on using the MSOE Format

ROASTED BEAN COFFEE BAR BUSINESS PLAN

Table of Contents

Lists of figures.................................................................................................................3

Lists of tables...................................................................................................................4

Executive Summary.........................................................................................................5

Products...........................................................................................................................6Product Description.....................................................................................................7Sales Literature............................................................................................................7

Business Mission and Location.......................................................................................7Keys to Success...........................................................................................................7Objectives....................................................................................................................8Team Qualifications.....................................................................................................8Coffee Bar Location.....................................................................................................9

Market Analysis.............................................................................................................10Market Needs.............................................................................................................11Market Trends............................................................................................................11

Industry Analysis...........................................................................................................11S.W.O.T Analysis......................................................................................................12Competition...............................................................................................................13

Financial Plan................................................................................................................14

Operational Strategies....................................................................................................17Competitive Advantage.............................................................................................18

Growth Plan...................................................................................................................18

Market Launch Milestones............................................................................................19

Contingency Plan...........................................................................................................19

References......................................................................................................................20

2


Good. This makes navigating the plan easy.


Lists of figures

Figure1. Coffee Consumption Market Analysis............................................................10

Figure 2. First Six Months Sales Forecast.....................................................................14

Figure 3. Star-up Expenses and Assets Assumptions....................................................16

3


Nice to have. And "required"


Lists of tables

Table 1. Coffee Consumption Per Capita Worldwide...................................................12

Table 2. Personnel Plan.................................................................................................15

Table 3. Projected Profit and Loss.................................................................................16

4


Ditto on Nice to have and required.


Executive Summary

Roasted Bean Coffee Bar will provide its customers the best tasting coffee drinks and

pastries in downtown Milwaukee. The bar will be dedicated to create a place where

customers can socialize with friends in a cozy, comfortable, and relaxing environment

and enjoy the best-brewed coffee simultaneously. Our responsibility is to help people

release daily stress and pressure by friendly service, high quality of coffee beverages,

and convenient location. Roasted Bean Coffee Bar will be located on Milwaukee St.,

Downtown Milwaukee in a space of 1,500 square feet. Milwaukee has high demand of

high-quality coffee drinks, especially in downtown area, where is the financial and

educational central part of Milwaukee. Therefore, college students, businessmen,

white-collars, and officers would be the target and primary customers. Roasted Bean

Coffee Bar will create a relaxing environment and offer the best testing coffee in order

to maintain a loyal customer base. Moreover, we will create a website six months after

launching this business. The website will provide information regarding Roasted Bean

Coffee Bar and the offered coffee drinks and foods to prospective and current

customers.

5


Careful about making a promise you cannot keep . You will provide an environment for them to relieve...


Best tasting is sooooo relative, you need to be prepared why you are the "best"


Perfect placement! Good length


Products

Roasted Bean Coffee Bar will provide its customers the best tasting coffee

drinks in downtown Milwaukee. We will use high-quality ingredients and our staff

work by strict guidelines. The layout, menu listings, and roast facilities of our coffee

bar will focus on maximizing the sales of espresso drinks, brewed coffee, teas, and

refreshing beverages. Roasted Bean coffee bar will be using customs from a 45-year-

old Italian master coffee roaster. We first will select and cup the coffee, and then blend

various beans before roasting. We believe the key success of making a wonderful bag

of roasted beans is blending of various coffee beans. Moreover, we will serve some

Chinese flavor pastries and Dim Sum. Roasted Bean Coffee Bar will offer a wide range

of coffees including:

French Roast

Columbian Dark

Italian Roast

Decaf

Kenya

Sumatra

Espresso and Decaf Espresso

African Roast

Turkish Coffee

Drip Coffee

Cold Brew

Product Description

Roasted Bean Coffee Bar will serve different kinds of coffees, especially

espresso-based coffee drinks such as mochas, cappuccinos, and lattes. Each type of

6


Good section. "different coffee" (I am sure there is a great marketing word... Testing the coffee shot.


Ahhh, now we are getting to a point of differentiation. "Italian Master Coffee Roaster. and Chinese pastries and Dim Sum. NOW THIS is DIFFERENT!


"best"


espresso-based drinks will be companied with soy or pure milk. As we know, espresso

drinks are based on a “shot” of espresso. Our bar will prepare the “shot” in an espresso

machine by using heated water to give coffee a high pressure. We also add some extra

ingredients into the “shot”, such as caramel or cocoa. We will make the coffee with

great dedication since we know a minor deviation would affect the coffee flavor. For

example, we will specifically test the amount coffee in the “shot”, the temperature of

water and milk, and the quality of coffee beans.

Sales Literature

As we open our bar, we will send free postcards with Roasted Bean coffee bar

endorsement to increase our bar’s patrons.

Business Mission and Location

Roasted Bean Coffee Bar will be dedicated to create a place where our

customers can socialize with friends in a cozy and relaxing environment and enjoy our

the best brewed coffee simultaneously. Our responsibility is to help people release

daily stress and pressure by our friendly service, high quality of coffee, and convenient

location. Moreover, Roasted Bean Coffee Bar will invest our profits to increase the

employee satisfaction and provide steady return to shareholders at the mean time.

Keys to Success

Roasted Bean Coffee Bar has identified some keys which would be helpful to

achieve goals.

Develop the best and finest product

Exceed consumer expectations

The decoration of our bar will be visually attractive and the layout should be

designed for effective and efficient operations.

7


Check


Check


Cool idea. Be sure the costs are figured in. Postage.


To be strict of financial controls

Marketing business strategies should be focused on maximize the sales of high

margin products.

Objectives

The objectives of Roasted Bean Coffee Bar are created to build customer

service excellence, maintain brand awareness, and increase sales simultaneously. We

aim to become the “Best Brewed Coffee Bar in the area”. The following strategies will

be utilized to achieve our goals.

Create a high-quality menu of various coffee brands

Anticipate the needs of customers in order to offer the best service

Leverage the traditional brew coffee roasting methodologies in order to produce

the best products and to expand market penetration

Team Qualifications

The founders’ roles and qualifications at Roasted Bean Coffee Bar are:

Eric Lin- Manager

24 years in the small business ownership

Managed a Starbucks shop for 15 years

EM-Engineering Management-Milwaukee School of Engineering

Adam Wang-Sales and Marketing

BM-Business Management-UWM

15-year experiences of running coffee shops

Experience of expanding markets and sales

8


Check AND good stuff. This is part of the HOW


These words are very "academic" and better NOT to have them in the plan. Rather, be sure to talk about What and HOW you are going to build customer service excellence, maintain brand awareness etc. The "Strategies" you mention are much better .. be specific in the plan.


Coffee Bar Location

Roasted Bean Coffee Bar will be located on Milwaukee St., Downtown

Milwaukee. We already leased the vacant 1,500 square feet store which was previously

occupied by a massage store.

The first floor plan will have a 150 square feet office and a 1,450 square feet

coffee bar, which will include a kitchen, two bathrooms, and 14 tables. The following

description is the planed distribution of the space in the coffee bar.

300 square feet (20% of the total) for the production area

200 square feet (13.3% of the total) for the customer area

950 square feet (63.3% of the total) for the seating area

Our bar is located in Milwaukee St., where is only 15 minutes walking from

Milwaukee School of Engineering University. The place is also very close to Grand

Avenue Mall, City Hall of Milwaukee, Chase Bank, BMO Harris Bradley Center, and

several fitness centers. Therefore, college students, businessmen, white-collars, and

officers would be the primary customers. This commercial area provides us sufficient

water and electricity and will require us to remodel the bar, seating area, kitchen, and

storage area.

The decoration of Roasted Bean Coffee Bar is very unique. The clean and open

interior of our bar will be designed with modern wooden decoration, which will create

a natural and cozy environment for customers to chill, relax, and enjoy our coffee

drinks. We also make outside electric signs to attract the attention of the customer

traffic. Through the clean windows, pedestrians could see customers enjoying snacks

and beverages.

9


Do you know that MSOE students will LIKE this as well as the "White collars"?


Market Analysis

American coffee consumption has steadily grown these years, especially

gourmet coffee consumption. Milwaukee, as the biggest city in Wisconsin, always has

high demand of high-quality coffee drinks, especially in downtown area, where is the

financial and educational central part of Milwaukee. Roasted Bean Coffee Bar will

create a relaxing environment and offer the best testing coffee in order to maintain a

loyal customer base.

Based on the fact that the primary customers are college students, businessmen,

white-collars, and officers, the chart below gives an approximate market potential of

gourmet coffee drinkers.

Figure1. Coffee Consumption Market Analysis

Students and FacultyOfficersAdolescentsOther

10


Nice picture. Assuming a good analysis. WHAT is the SOURCE of the data? This will ADD to credibility.


Lots of generalities.


Market Needs

Roasted Bean Coffee Bar is designed and organized to try to facilitate new

friendships. Roasted Bean Coffee Bar will create the following benefits in order to

satisfy our consumers.

Competitive pricing: based on the around competition, the price of all products

will be competitively priced.

Selection: we will be dedicated to select high-quality coffee beans and other

ingredients in order to make gourmet drinks and food.

Customer service: we will offer great customer services since we believe

customers are always right.

Accessibility: customers will get minimal waits and long business hours.

Market Trends

The coffee market today is more complicated due to customers. The bar today

is more complex in several different ways.

Quality conversation: customers prefer intellectual conversations to normal bar

talk.

Access to meeting people: customers are willing to meet friends rather than

being alone.

Product quality: customers like high quality ingredients and various options.

Industry Analysis

Coffee is the second-largest merchandise traded behind oil, with an

international market of $56 billion. Except North America, people like instant coffee

which is made at home.

11


Any time you have DATA you MUST have a source cited!!! (However, it is most likely true)


Good that you know this.


Create friendships among target clientele Is Competitive pricing important?


According to Gonzalez Soto (2003), coffee was the United States’ favorite

beverage until 1984. The increased consumption of soda drinks has led to a sharp

decrease in the production of tea, milk, and coffee. The 30’s group age that is related to

purchasing coffee in the U.S. The table below gives a description of consuming coffee

per person worldwide.

Table 1. Coffee Consumption Per Capita Worldwide

S.W.O.T Analysis

The following S.W.O.T. analysis identifies strengths and weakness and

describes the opportunities and threats of Roasted Bean Coffee Bar.

Strengths

12


A SWOT analysis is relative to something or someone. WHO/What are these points compared to?


VERY GOOD Source citation. We should not need to ASSUME the previous paragraph and following table are from the source cited. It must be stated.


Excellent and highly trained staff

Great facility (a 45-year-old Italian master coffee roaster)

Nice location (commercial area, downtown Milwaukee)

Weaknesses

The Roasted Bean Coffee Bar is brand new; therefore, it needs time for

customers to take in.

Our supply chain may not as mature as international coffee stores, such as

Starbucks.

Opportunities

A growing market with a huge proportion of the target market still does not

know Roasted Bean Coffee Bar.

The bar has an ability to lower costs through efficiency gains.

The great location, which is the central part of education and finance in

Milwaukee, gives an opportunity to expand business.

Threats

Competition from international chained coffee stores

Competition form some single meeting activities

Competition

Located on the commercial area in downtown Milwaukee, our coffee bar will

face several different types of competition. There are lots of decent coffee shops and

bars in downtown including Starbucks, Valentine Coffee Roasters, Rochambo Coffee

& Tea House, Anodyne Coffee Roasting Co., and Colectivo Lakefront. Starbucks will

definitely be one of the primary competitors due to its established marketing, strong

international status, and great financial position. The other coffee shops are also strong

competitors around downtown area. However, Roasted Bean Coffee Bar will position

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You need this section, and the material is GOOD. Here is where a "map" to SWOT is very effective.


itself as a unique coffee bar serving high-quality coffee drinks and pastries in a cozy

and relaxing environment.

Moreover, some activities or meeting events may influence our business. For

example, there are lots of summer music festivals in Milwaukee starting from the end

of May to the end of August every year. People are passionate about meeting friends

and drinking beers outside rather than sitting in the coffee bars.

Financial Plan

Roasted Bean Coffee Bar will aim to make gourmet coffee drinks. With

successful management and the aim of building a loyal customer base, we forecast the

sales of the first six months, and make the assumption of doubling the profits on the

next two years.

We have assumed the food costs with 20% of coffee drinks and 50% of retail

pastries and coffee beans. The chart below illustrates the forecast sales of the first six

months.

Figure 2. First Six Months Sales Forecast

Month 1

Month 2

Month 3

Month 4

Month5 Month 6

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Pastries, Dim Sum, etc.Coffee beansCoffee drinks/beverages

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Good financials. We assume they are correct. Looks like you have a great start on the numbers. I like that you named some of your assumptions. I would like to see the assumptions on your sales.


We also have made the personnel plan of Roasted Bean Coffee Bar. The chart

below gives a description of the amount of workers and total payroll in the first three

years.

Table 2. Personnel Plan

Year 1 Year 2 Year 3

Employees $ 39,500 $ 51,000 $ 55,000

Manager $ 34,000 $ 37,000 $ 41,000

Baristas $ 49,000 $ 53,000 $ 58,000

Total People 6 9 9

Total Payroll $ 125,700 $ 142,700 $ 156,000

We also have made the start-up summary. The start-up expenses include:

Legal expenses for obtaining permits and licenses $1,200

Insurance coverage at a total of $ 2,500

Pre-paid lease expenses in the total amount of $ 4,500

Remodeling in the amount of $ 1,100

Stationery, phone, and other utilities in the amount of $ 2,400

The star-up assets include inventory and equipment:

o Inventory

Coffee beans -$ 6,000

Office supplies -$290

Coffee filters, salads, tea, baked products, beverages, etc. -$ 8,000

o Equipment

Coffee maker-$850

Coffee grinder-$150

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Food service equipment (refrigerator, blender, roaster, toasters, etc.)-$ 19,000

Store equipment-$13,800

Storage hardware-$3,800

Serving area equipment-$9,700

Counter area equipment-$3,200

The chart below summarizes the star-up assumptions.

Figure 3. Star-up Expenses and Assets Assumptions

Expenses Assets0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Based on the forecast, personnel plan, and star-up summary, we have made the

financial plan of the first three years. The table below illustrates the projected Profit

and Loss Statement.

Table 3. Projected Profit and Loss

16


Humm, I have not seen a chart with Expenses and Assets on one chart. WHY? Did you do a cash flow?


Operational Strategies

Roasted Bean Coffee Bar operational strategies will focus on building a loyal

customer base, making high-quality foods and gourmet coffee drinks. A loyal customer

base is of a paramount importance because these customers will not only earn profits

but also will offer favorable referrals.

Competitive Advantage

Roasted Bean Coffee Bar will value itself as a unique place where its

consumers can spend time with friends in a cozy, ambient, and comfortable

17


Your competitive advantage, as you have stated it is WEAK. Very general, nothing different. Not based on specific targets or assumptions.


environment and enjoy brewed gourmet coffee beverages and foods. We also will

provide comfortable sofa, quiet relaxing music, great service, and dimmed light in

order to help release daily stress of college students, businessmen, white-collars, and

officers.

Growth Plan

In the financial plan section, we already provided the first three-year business

plan. Moreover, we will create a website six months after launching this business. The

website will provide information regarding Roasted Bean Coffee Bar and the offered

coffee drinks and foods to prospective and current customers. Initially, this website

will be used for informational purposes instead of commerce purposes. When the

business is operated maturely, the owners will reconsider to sell the products through

this website for the e-commerce purposes.

The purpose of this website is to develop awareness for customers and to direct

them select their favorite coffee beverages and foods. We also will create a search

engine such as Google. For example, customers can search “gourmet coffee”, “the best

sell coffee”, or other such key words in order to get information of our products.

As mentioned before, this website will only be used to provide information of

the bar. Roasted Bean Coffee Bar will hire a major of computer science graduate

student with the technical expertise to develop this website.

Market Launch Milestones

Roasted Bean Coffee Bar has planned the following milestones in order to get a

steady business growth.

Trying to adapt to the commercial area location and stabilize the business in the

first six months

18


I like the thoughts on the work you need to do.


Computer Science is NOT the skill set you need here. You need marketing and online + retail sales expertise.


To figure out the top 10 best flavors of coffee drinks among the main customers

in the first six months

Launch and develop the website with search engine in the first year

Trying to double the profits in the fourth year

Contingency Plan

Almost all business plans must provide a contingency plan in order to deal with

some bad things happen. This coffee bar business plan is diversified and will lead the

bar to a bright future. However, in case some emergencies happen, a few contingency

plans should be organized.

Always adjust prices in order to cater to customers and market needs.

Do not alter any ingredients or recipes in case that it will change the flavors of

products.

If the bar are going to bankrupt, owners should sell it to its competitors and

obey their rules.

Sell the expensive equipment (coffee makers, roasters, coffee grinders, etc.) if

necessary and rent them instead.

References

Gonzalez Soto, K. (2003). The socio-economic and cultural discrepancies in the

production and consumption of coffee between Guatemala and North America.

UMI Dissertations Publishing. Retrieved from http://ezproxy.msoe.edu

19


Ouch,,,,, Price as a strategy in your contingency plan is very concerning. Selling out, ouch again.

ROASTED BEAN COFFEE BAR BUSINESS PLAN 20

Documents

Sicheng 2015 Q4 MG 704 Coffee Bar Business Plan