Aviano Coffee Shop Business Strategy - Term Paper Example

AVIANO COFFEE SHOP I. EXECUTIVE SUMMARY Aviano Coffee Shop wishes to position itself as the preferred concept coffee shop among Doha’s young men and women who are looking for affiliation in food shops they usually hangout at. As such, it will utilize every opportunity available to be able to penetrate the target market and gain revenues to continue its operations. To meet its corporate objectives, Aviano Coffee Shop shall maximize the capital investments and ensure a positive cash flow through meeting targets and creating a workable profit and loss chart to monitor the transactions. Budget is tight for the first year and as such, management shall be more than careful in its decision making for the business. Employees shall carefully be chosen and the owner shall make sure that each personnel are oriented towards achieving its corporate goal which is to start gaining profit by the end of the first year. Competition would be very stiff with the presence of various coffee shops that have already established their presence in various parts of Qatar. Aviano Coffee is also confident in being able to make gains through its Internet channel. Its Marketing efforts shall be intensified to ensure that the corporate message is brought across the target market. To cap this off, Aviano Coffee Shop wants to achieve two things with the business: to share excellent coffee experience through its quality products and to gain profits to ensure presence in the market for a long period of time. II. BUSINESS DESCRIPTION Coffee remains to be one of the most preferred beverages anywhere in the world. In the US, it is estimated that 50% of the total population or approximately 150 Million Americans drink coffee in any form, be it espresso, cappuccino, latte or cold coffee. Moreover, among these coffee aficionados, the average consumption is 3.1 cups per day (Coffee Business Statistics Report 2010). As such, it is expected that more and more Coffee shops open and thrive serving the tastes of these coffee lovers. Despite the presence of numerous Coffee shops in the country, there is yet room for more entrepreneurs who want to serve the needs of the Coffee lovers. While some may opt to go traditional, others diversify to create concept shops that do not only serve ordinary coffee, but also the fast growing industry of specialty coffee. It is with these premises that the author proposes to bring into local franchise the Denver, Colorado based brand Aviano Coffee. Aviano Coffee is popularly known in Denver, with its market reach extending to other cities in Colorado. Its product line highlights Latte Art, where baristas manually extract espresso. The key to competition is the manner by which specialty coffee drink is done, focusing on aesthetics of the coffee products and the ambience within the coffee shop, which focuses on the 18th and 19th century. Management wants to bring its clients into the specialty coffee experience capturing olden moments through appropriate interior design and shop structure. The thrust is to bring into the shop people who intend to have a good coffee experience (Aviano Coffee 2011). Bringing the concept store in Doha, Qatar will prove to be a challenging but exciting experience for the owners. Promoting the business within a unique culture, there will be little tweaks into the concept to ensure that the target market will feel most welcome when entering the concept store. This business plan discusses the strategies by which the concept is introduced to the target market in Qatar, and hopefully to other areas in the region. III. INDUSTRY AND MARKET ANALYSIS The year 2011 came in with the news that cost of coffee has risen, giving reason for coffee retailers to reconsider their pricing strategies. But the market remains to be friendly with the fact that coffee consumption in the Middle East has doubled since 2005, reaching 7,156.4 tons in 2010 (Rising prices jolt Coffee Industry 2011). The continuous increase in demand somehow proves that despite the changing global economy, coffee remains to be in demand, being a primary need among its niche market. Moreover, coffee is more than just a beverage. It is an avenue for social interaction with the growing number of coffee shops in the region and in the rest of the world. Moreover, coffee is known to have health benefits. Not only an anti-oxidant, coffee and aids in achieving better mental performance (Positively Coffee 2010) The arrival of coffee franchises in the country proves yet another sign that the industry is not only thriving, but at its peak. The growing number of coffee retailers proves that the industry is well developed and still highly competitive. Whilst retailers face competition in other coffee shops, small food stores in convenient spots such as gasoline stations, quick service and fast food restaurants, most franchisers like to invest just a little more to leverage on a well known brand to entice the target market (Coffee Franchise Industry Research – Business Report I 2011). The cost to franchise an established brand may add up to the operational and capital expenditures, but bringing in a brand that is already known in another part of the world will give the business an edge over local competitors and be able to compete with international brands alike. Aviano Coffee Qatar’s primary target market is the coffee lovers, 18 to 40 years old, who are either at the last years in the university or are already embarking on a career. This group needs coffee and complementary food as both for nurturing and as a tool for social activities. The older students may need coffee as an aid for their studying needs, or a place to stay while they prepare for their homework and studies. With their limited time and budget, they will also look a place that offers reasonably prices and with good service. The young professionals market will also be a target market, as they need to socialize and find comfortable places to meet up with friends. They may also need a place where they could hang out, check on their laptops or just chill. Aviano Coffee aims to cater to their needs by ensuring a good cozy atmosphere conducive for small talk, quiet reading or for relaxation. The interiors will be reminiscent of the 18th and early 19th century, with a particular corner devoted to the local culture, where memorabilia and photos of the 18th century Middle East will be displayed. Moreover, healthy options shall be introduced and are perfect for this group of people who are also conscious of the food they take. They will express preference for healthy drinks and food without sacrificing their cravings for a good cup of coffee. IV. COMPETITIVE ANALYSIS Among the food shops located in the shopping malls in Qatar are coffee shops, locally owned and international franchises alike. International franchise such as Starbucks, Caribou, Illy, Coffee Planet, among others are vividly present in the areas where foot traffic is high. It is not a surprise that coffee is such a hit among the Qatar people. It has been said that coffee was first discovered in the Middle East, giving rise to the famous café Arabica and Turkish coffee. Fast forward to present day, coffee remains to be the top beverage being offered in offices and establishments when you are in the city for business. For these people, offering coffee is a sign on hospitality. Also, being invited for coffee is usually likened to going to a bar in the western culture. (Arabic Coffee and Traditions in Dubai, Abu Dhabi and the UAE 2011).Coffee shops are major converging points for business meetings or for groups or individuals winding down from work or just hanging out. It is also somehow part of their culture, as much as it is part of other cultures in the whole world. V. MARKETING STRATEGY 1. PLACE Aviano Coffee will pilot its first shop at the Business District, in Doha, Qatar. 2. PRODUCTS/ SERVICES Product Lines shall be classified into three categories: a. Specialties – include espresso shots and concept coffee beverages handcrafted and intrinsically designed. These are house blends that will also be considered the banner products of the store. b. Coffee and other beverages – include traditional blends of coffee and teas that appeal to those who are not-so-adventurous in their choice of beverages. These may either be served hot or cold. c. Food and pastries – Cakes, bread and pastries will be offered as well. These products will complement the beverages being offered. There will also be sandwiches and salads as part of its “healthy options’ food products. There will be occasional events, acoustic gatherings and sponsored story telling sessions for local artists. There will also be a to-go section which accepts online and phone orders for pickup. Eventually, delivery services shall also be offered. The Aviano Coffee Shop service quality will also be highlighted. While essentially, this is a self-service store, service crews will be trained to provide only excellent sales and after service to the clients. 3. POSITIONING Aviano Coffee is basically for a niche market of coffee lovers who want a whole new experience. Much like its mother store in Denver, its interiors will be designed in such a way that it will bring its customers back in time. Interior decoration and furniture planning will be focused on because on top of the gourmet/ concept coffee to be served, management wants to give attention to the whole coffee experience itself. However, although the product line is basically for this niche market, the shop also offers other products to traditional coffee drinkers so as not to alienate the rest of the target market. Secondarily, Aviano Coffee welcomes all coffee lovers from all walks of life, guaranteeing a unique Aviano experience 4. PRICING Right pricing is crucial for the business to be able to start having loyal patrons. But it will not sacrifice product and service quality by engaging in a price war. The strategy is basically to offer meal combinations that offer discounted prices for a combination of drink and pastry/ cake slice. With this, it will not only cross-sell but also offer value-for-money packages that would surely attract the target market. Roughly about 35% of the company’s monthly operational budget shall be allocated to Advertising and Promotional strategies alone. This includes expenses to be incurred in utilizing mainstream media particularly print advertising; other alternative media; and design and production of merchandising and promotional materials. Mainstream-wise, Aviano Coffee shall utilize print advertising particularly through tie-ups with different magazines. Although this would not be the company’s primary vehicle in promoting its products, it would just aim to maximize its relationship with these magazines whose websites Aviano Coffee shall be utilizing in its online campaigns. Internet Marketing has become popular because Internet access is becoming more widely available and used. Well over one-third of consumers who have Internet access at home report to using the Internet to make purchases (Benefits of an Online Approach 2010). Since Aviano Coffee’s target market are studying and working groups who, most likely have internet access either at the office or at home, it chooses to primarily utilize internet marketing to promote its products. Aviano Coffee shall utilize a website that contains pertinent details regarding the company’s profile and products. The menu, as well as events and marketing campaigns shall be featured in this website. Customers will also have the option to pick up their orders by calling the store to-go hotline. Eventually, delivery will also be introduced. Advertising in the listings on the Internet can provide a website with a number of viewers. As such, Aviano Coffee shall do Search Engine Optimization (SEO) by subscribing to the most popular search engines such as Google and Yahoo, among others. The company shall subscribe to advertising services such as Google AdWords, in which the company’s website would appear immediately following key word searches from Internet browsers. This would prove to be cost-effective since Search Engines charge a company only whenever a person actually accesses its website. Further, this would guarantee that the advertising effort would reach the targeted market because one can limit its ad to appear only to people searching in a particular city, state or region. VI. OPERATIONAL ISSUES Aviano Coffee will need to rent a space for its store operations. To achieve its desired look, the store will also have to be renovated and with the help of an Interior Designer, will be arranged to achieve a minimalist look integrated with wooden fixtures and furniture. Other assets for acquisition include baking and bar equipment, kitchen equipment, and dining equipment. Advertising expenses include design and production of merchandising materials; tie up fees, projected sponsorship and talent fee costs. VII. HUMAN RESOUCE REQUIREMENT Aviano Coffee operates under sole proprietorship, and the owner will serve as its Chief Executive Officer overseeing operations and support teams. He will employ the services of one Finance Officer to directly assist him with the Finances of the store, and one Marketing Officer who will manage the advertising campaigns and needs of the store. There will be one store manager who is in charge of daily store operations, one barista who will manage the coffee blends, one chef/ baker who will plan and cook the pastries. There will be a total of two full time staffs and eight part time staffs to provide assistance backroom (kitchen) and dine in areas. There will be a chief Barista who is in charge of creating the signature taste in all its product lines. The Chef/ Baker, on the other hand, are in charge of preparing the food and pastries. He will have a daily regular menu that he will adhere to. He is also in charge of developing the menu to eventually diversify and offer more snacks that would complement the coffee products. Together with the Barista, he is in charge of Product development, and would be given support in terms of research and training. Two full time staff will act as senior personnel rendering service to the customers. They will be deployed on a different shift schedule. Together with the part time staff, they will be the front liners who will conduct sales, take orders and deliver the food to the tables. They will also be trained to ensure that they perform the right services to the customers. VIII. FINANCIAL PROJECTIONS Store Space Rental (Inclusive of first six months rental) $ 12,000 Store Renovation $ 80,000 Store Equipment and Furniture $ 80,000 Advertising and Promotions $ 30,000 Permits and Licenses $ 5,000 Initial Stocks Purchase (Raw Materials) $ 20,000 Other Expenses $ 23,000 TOTAL $ 250,000 PROFIT AND LOSS ANALYSIS   Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Projected Gross Income Coffee 5,000 5,000 8,000 8,000 10,000 10,000 Confectionaries 3,000 3,000 5,000 5,000 8,000 8,000 Total Projected Gross Income $ 8,000 $ 8,000 $ 13,000 $ 13,000 $ 18,000 $ 18,000 Projected Expenses Equipment and Materials             Store Construction and Architecture 80,000           Store Equipment and Furniture 75,000           Registration and Rental Costs             Business Registration Costs 5,000           Store Space Rental 12,000           Manpower Costs 7,000 7,000 7,000 7,000 7,000 7,000 Ads and Promo Costs 10,000     10,000     Others 1,000 1,000 1,000 1,000 1,000 1,000 Total Project Costs $ 190,000 $ - $ - $ 20,000 $ - $ - Coffee 10,000     10,000     Confectionaries 10,000     10,000     Total Projected Expenses $ 210,000 $ - $ - $ 40,000 $ - $ - Net Income $ (202,000) $ 8,000 $ 13,000 $ (27,000) $ 18,000 $ 18,000 Works Cited “Arabic Coffee and Traditions in Dubai, Abu Dhabi and the UAE.’ Grapeshisa. April 24, 2011. http://www.grapeshisha.com/culture/drinking- coffee.html “Aviano Coffee” April 24, 2011. http://avianocoffee.blogspot.com/ “Benefits of an Online Marketing Approach 2011”. April 25, 2011. http://www.nextsbd.com/imarketing/benefits-of-online-marketing.php “Brazil: Increase in Coffee Exports Lowers Price.” Third World Network. April 11, 2010. http://www.twnside.org.sg/title/coffee-cn.htm “Coffee Business Statistics Report”. E-Imports. April 7, 2010. http://www.e-importz.com/Support/specialty_coffee.htm “Coffee Franchise Industry Research – Business Report” Franchise Direct. April 24, 2011. http://www.franchisedirect.com/coffeefranchises/ coffeefranchiseindustryresearchbusinessreporti/74/220 “Coffee Throughout the Day”. Positively Coffee. April 11, 2010. http://www.positivelycoffee.org/%2ftopic_performance_statement.aspx “Rising prices jolt Coffee Industry”. The National. April 24, 2011. http://www.thenational.ae/business/retail/rising-prices-jolt-coffee-industry Stella’s Gourmet Coffee and Such. April 10, 2010. http://www.stellascoffee.com/ Read More