Full Cup Coffee Shop Business Strategies - Example

COFFEE SHOP BUSINESS PLAN Name: Tutor: Subject: Date: Table of Contents Executive Summary 2 Business Philosophy/Mission Statement 3 Product/Service Description 3 Self-Analysis 4 Marketing Research 4 Competition 5 Market Segmentation 6 Organization and Personnel Plan 7 Ownership Choices 8 Personnel Plan 8 Hiring Strategy 9 Marketing Plan 9 Proposed Pricing Policy 10 Promotional Plan 10 Company Location 10 Distribution Pattern 11 Financial Plan 11 Projected Income Statement 11 References 13 Executive Summary Full Cup coffee shop offers services on hot and cold beverages such as brewed coffee, blended drinks like tea and soft drinks. The services of this coffee shop are efficient and convenient, and it allows the customers to order what they want. That is coffee, blended drinks, soft drink, etc. Full Cup coffee shop uses a new technology to offer high-quality services. In addition to the hot and cold drinks sold in the shop, it also offers wide range of snacks that include: cookies, biscuits, small cakes and hot dogs. The plans of the shop are to offer other drinks like hot chocolate, frozen drinks and other beverages that are not in the shop. Full Cup coffee shop approaches the market by targeting captive and commuter customers. This is achieved by use of mobile facilities which penetrates the market to the most reachable locations. The mobile facilities save the consumer’s time that he/she could have used to move to a nearby café or fast food shop. Due to good services and high-quality products, more customers are attracted, and this is one of the marketing strategies of the shop. The financial structure of the Full Cup is well organized. The startup capital is small because of the small size of the business. All the expenses and facilities are well financed. The future financial plan of the shop is to invest greatly on employees since the nature of the business is labor intensive, and this will also be a competitive advantage of the business. The business is also planning to give 10% of its income to charitable organizations. Business Philosophy/Mission Statement The mission of Full Cup covers three main areas: community mission is to provide the support through the consumer engagement, the economic mission is to make a proper economic decision as it operate and develops at a profit and product mission provide the consumers with high-quality beverages at a convenient time. Product/Service Description Full Cup coffee shop is a retail business that offers cold and hot beverages such as brewed coffee, blended tea, and soft drinks. It also offers freshly baked snacks to its consumers. The products are of high quality, and the services are efficient and time-saving since there are mobile facilities located at the consumers’ locations. These features are beneficial to the consumers because they will not waste time. The employees are also friendly and professional thus the consumers are served in the most satisfactory manner. The prices of the products are convenient because the average cost per product is less than 2 dollars. For example, the cost of a coffee cup is 1 dollar. During the start-up, the business targets about 100 people per day and the estimated earnings per day are $500 which amounts to $15000 per month after deduction of the expenditure costs. Self-Analysis The success of this business relies on some key areas. One is the strategic location of the business inaccessible areas with high visibility and high traffic areas. The other key is to build a strong status through advertising and promoting the community through charitable works. This will help to attract more customers and also maintain them. The other area that promotes the success of the business is the use of best products such as quality coffee made from grade one beans, a good flavor that is consistent and use of premium serving tools. The employees who are articulate, professionals and friendly contribute to the success of the business. Use of technology in the business is necessary for keeping records, marketing research and even communication with consumers and suppliers. Computer skills are an added advantage to the business. Marketing Research Adelaide population according to 2011 census was approximately 1.2M without the visitors. The majority of the population is men, and it is composed of working age with more than 27% being 55 years of age. There are a good number of visitors due to the geographic location of the city. During summer, the number of visitors goes up because overseas visitors come to the coastal town especially those from the UK. The city is surrounded by several parkland, and these are appropriate for the business because the most of the people relax in them thus drive-thru can be taken there. Full Cup uses survey method to collect relevant data on the marketing related to coffee business. The personnel moves from one target place to another researching. The following are some of the questions that Full Cup personnel used during the survey. Demographic questions What is your age? Where do you live? Where do you work? Buying pattern and benefit questions What are your favorite drinks? Have you ever purchased a cup of coffee? How often do you purchase any beverage? What distance do you covert purchase? What motivates you to purchase these products? The answers they get from these questions are then analyzed, and a conclusion is drawn. This helps a lot in decision making of the business firm. Competition Full Cup coffee shop is facing stiff competition from coffee shops, restaurants, fast food, cafes coffee companies. These challenges are classified into direct competitors who sell the same product as Full Cup. One of these kinds of a competitor is a coffee company (Di Bella), which sells coffee, tea and other beverages and the owner delivers them to the consumer. Indirect competitor refers to businesses that do not sell the same products but compete for consumers. It includes fast foods, cafes, and restaurants. Apart from the two types of competitors, there is another form of competition that Full Cup faces. This is imitators who follow what the business is offering. To compete with such competitors; Full Cup should aim at producing high-quality products, use of mobile cafes, good consumer services and drive-through services. This is a competitive advantage to the business. Market Segmentation Full Cup coffee shop targets both captive and commuter customers. Captive customers refer to those who are confined in a certain environment such as corporate offices, high schools, campuses, meetings, festivals and other places where movement is restricted. Commuter customer, on the other hand, refers to someone who is not restricted, for example, a person who is traveling to the job, driving or shopping. Full Cup reaches their customers by using different delivery systems. For the captive consumers, a mobile café is convenient for them while the commuter consumers, mobile coffee drives are effective. From the research, there are more than 4 million reliable consumers, both commuters, and captive in Adelaide Australia. The mobile cafes that are meant for captive consumers are located in more than 500 places in different environments such as school, special events, organizations, corporate offices, and colleges. Each of the locations is estimated to have a population of about 1000 people, thus making a total of 0.5 million consumers. Commuters include visitors and vacationers also make a population of about 0.5 million potential consumers. The marketing segment strategy of Full Cup coffee shop business is to locate the business in places with high traffic jams and high visibility so that it can attract potential customers who can be regular. This strategy is effective because the business is carried out in Adelaide city of commerce and government institutions and there are several campuses that are established. The Full Cup Coffee Shop reaches its customers by taking the products and services to the customers where they are for example in learning institutions such as schools, colleges, and corporate institutions. In Australia, coffee market is trending towards new and unique coffee brands. More coffee companies have developed quality brands of coffee. An example of such company is “Di Bell Coffee” which was developed in 2008 by Philip Di Bella and this company was named the fastest-growing company. It focuses on brands that are quality, tea and wide range of brands. For the Full Cup, new dispensers have been identified which produces best and sweet coffee and other beverages such as tea. These drinks had different flavors such as vanilla and strawberry and offered to the customers at suitable prices as low as $2. The target market (commuter and captive consumer) is growing quickly. Most of the population in Adelaide stays in the surrounding estates, and the consumers move in and out of the city everyday as they carry out their daily activities. From the estimated population of 1million potential consumers, more than 50% are beverages consumers, particularly coffee. The market needs of the consumers are as a result of the introduction of an automobile which makes the society highly mobile thus introduction of the mobile coffee shop is necessary. Organization and Personnel Plan The business will begin with some small headcount personnel, but it will increase with time. The business consists of three main categories of personnel; administrators, marketers, and production personnel. Administrative involves general management of the business including the equipment, operations, payrolls, etc. production sector deals with customer services and beverage production. Sales and marketing promotes and organizes community programs. Ownership Choices The Full Cup Coffee shop will start as a single person corporation where the owner manages all the roles carried out in the business. In future, Full Cup intends to sell it shares to other members such as friends and other investors who are interested in the business to make it over 50 Membership Corporation. The cost per membership unit is estimated to be rough $3000 with a minimum of 10 members for every certificate. Personnel Plan The start of the Full Cup Coffee shop requires a small number of personnel because it will be in the early stages of development. It will start with one drive-through and one mobile café. Each of the units will need two customer service employees, one equipment technician, and an administrator. During the second year of progress, there a number of personnel is anticipated to grow as the business expands. The number of units is expected to double and also the number of personnel will increase by 100%. The payroll will also increase proportionally. As the time goes by, Full Cup business will also grow and the number of units will also increase especially the drive-through equipment because they are a bit cheap compared to mobile cafes. As the business grows, more personnel with special skills are added. For example, a financial manager who will manage all the financial matters, a marketing director to carry out marketing analysis and an accountant to prepare balance sheets and profit and loss statement. The other staff includes: clerks, secretaries, and sales representative. Hiring Strategy Full Cup will hire qualified personnel who are competent and skilled. One of the strategies that the firm will use to attract qualified personnel is a promotion. The managing directors can promote the employees by giving them incentives and promoting them from one level to another. This will attract job seekers because every person wants where they are promoted. There another way to attract more qualified employees is by creating a friendly working environment where the employees are treated with respect, and their views are taken into account. Salary increment will also attract skilled personnel. The salary should be increased with time such that after a certain period, a person does not earn the same amount he or she began with. The salary should also be given according to the level of qualification. For example, financial managers are paid higher than customer service providers, this will motivate them. Marketing Plan Product plan Full Cup specializes in beverages and snacks production. The beverages include: coffee, blended tea and soft drinks while the snacks are cookies, hot-dogs and biscuits. In future, the company will produce sweet flavored beverages and other variety of drinks like chocolate that will attract more customers. Customer service providers will be trained on how to produce coffee or any other drink according to the consumer’s requirements. Before they start offering services, they undergo the training on brewing, blending and how to serve. Online marketing of the products such as mugs and T-shirts is the plan that Full Cup need to execute. Proposed Pricing Policy The pricing policy of Full Cup is faced with competition from other companies. The pricing policy involves the development of sales strategies used by consumer service providers. For example, when a customer buys a specific number of coffee cups, he or she is given a free snack. This will attract more customers to the shop. Another way to attract high customers discounts on the products. The prices of the items could be reduced by a certain percentage, and the manager should specify the period in which the discounts last. This will generate profit for the company at the same time it will increase the prestige. The profit will be generated because the sales will be high. Promotional Plan The sales and marketing personnel in Full Cup are responsible for promoting the products offered in the company. They use the word of mouth to convince customers. The products should also be of high quality to attract and keep the consumers. The non-personal strategy involves engagement in public relation services which requires the company to budget for it. The aim of this is to increase the publicity of the business firm. An example of PR service is fundraising. Advertising is another promotional strategy of Full Cup. This could be through national televisions, radios and even online platforms such as websites, facebook and twitter. Company Location The Full Cup Coffee Shop is located the central business district of Adelaide city. The drives-thru and mobile cafes are placed outside institutions such as schools, colleges, campuses and corporate office. During events like festivals in the city, the products are taken to the consumers. However, the business is planning to move to the outskirts of the city and place their mobile shops where the consumers are more. Visibility areas with high traffic and security are highly recommendable for this business. Distribution Pattern Full Cup distributes its products in the drive-thru and mobile facilities that are well decorated to attract the customers. The facilities are decorated using different cultures such as Australian traditional coffee, modern coffee mugs and eye-pleasing pictures of other products available in the shop. The business should acquire licenses from appropriate authority for it to operate without interruption. Financial Plan The start-up capital of Full Cup is less because it is a cash business. The business is labor intensive, and, therefore, there is a need for investing in employees who are talented. Full Cup keeps its products as fresh as possible through keeping small inventory that does not exceed two weeks. The business depends on investments from the partners, and it does not borrow any money. The financial assumptions of Full Cup state that its products have no negative effects on human health. It also assumes that the company will not stop despite the slow economic growth. Key financial indicators are gross margins, inventory turnover, sales, and expenses. Full Cup intends to maintain its gross margin above 30% but not above 50% because of payrolls. The anticipated growth in sales is about 100% p.a. Projected Income Statement Below is the project income statement of Full Cup coffee shop for three years. YEAR 1 YEAR 2 YEAR 3 Assets Current assets Cash $25000 $50,000 $100,000 inventory $30,000 $90,000 $200,000 Total current assets $55,000 $140,000 $300,000 Long term assets Long term assets $300,000 $675,000 $1,230,000 Accumulated depreciation $42,370 $125,000 $175,000 Total long term assets $257630 $550,000 $1,055,000 TOTAL ASSETS $312,630 $690,000 $1,355,000 Liabilities and capital Current liabilities Accounts payable $43,000 $111,200 $ 230,870 Current borrowing $ 225,000 $0 $0 Other liabilities $0 $0 $0 Subtotal liabilities $268,000 $111,200 $230,000 Long term liabilities $215,000 $1, 110,000 $1,500,000 TOTAL LIABILITIES $483,000 $1,221,200 $1,730,000 Paid-in capital $220,000 $220,000 $220,000 Retained earnings $189,550 $78,445 $16,000 earnings $15000 $72,000 $500,000 TOTAL CAPITAL $15,540 $69555 $296,000 Net worth $15,540 $69,555 $296,000 References A. 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