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Almost everyone loves coffee. It has been said that some 330 million cup of coffee are consumed everyday in the US. This is a lot of coffee. What makes it more attractive to enter into the coffee business is the low starting cost in comparison with other businesses. Most people use around 200,000 dollars opening up a coffee shop. In the scheme of things, this money is not that much considering what is involved in opening a business. The second thing that makes coffee business very appealing is that even though it is food service, and has the highest gnawing away rate than any other business, it has a higher profit margin than say in a restaurant and this is an advantage (Godsmark, Brown, & Arduser, 2004).
According to Abrams & Kleiner (2003), coffee is also a very sexy business and everyone always wants to be associated with a certain coffee shop that frequently visit and always tell their friends about. You would not find people exited like this about when talking about other retail establishments that they may patronize. Coffee bars are so personal because they are really the third place for many of us. They are relaxing places that people can even carry their laptops to and finish off their office work or even meet friends at.
At some point in the history of America, Cadillac was acknowledged as the quality automobile, it was then followed by Mercedes-Benz and then after wards the Lexus came in with superb quality product and great service approach. The Hard luck coffee shop will be the fist Lexus of the coffee shop business. It will offer high quality services in great environment.
The greatest determination of this coffee shop will be to become daily necessity for the many coffee addicts around and make everyone rush to this place as he tries to forget the stresses of the life. It will also be a comfortable place for people to meet their friends or even just relax as they read a book. All this will come in one package. The demand for coffee is growing and therefore great service is a major priority. We shall provide our customers with the best prepared coffee in the area that will complement with tartlets and books for free that clients can read to enjoy the visit (McKeever, 2008).
The shop will operate under 800 square foot and will be located in the town centre. We shall acquire the 200,000 required capital from the Bank of America by taking a loan. The major objective for the shop in the first year is to become the best new coffee seller in the region and turn in profits from the first month of operations (Godsmark, Brown, & Arduser, 2004). The target gross margin is 65%. This will be made possible by storing designs that will be not only visually attractive to the customers but will be designed for operations that are fast and efficient. Employees will also be trained to ensure that the best coffee preparation techniques are used so as to attract and retain customers. In addition we shall employ marketing strategies that are aimed to build a solid base for customers' loyalty and maximize the sell of products with high margins like espresso drinks.
Our mission will be to make best efforts to create a unique place where our customers will be able to socialize in a relaxing and comfortable environment as they enjoy the best brewed coffee or espresso in town. We shall engage in the business of helping our customers overcome the stresses of everyday by providing a piece of mind through customer services that are friendly, great ambiance, location that is convenient and high quality products throughout our time in business. The profits will be invested to increasing the satisfaction of employees while providing stable return to the shareholders (Puckett & Green, 2004).
The shop will provide the best tasting coffee beverages to its customers. This will be achieved through the use of high quality ingredients and following the preparation procedure to the latter. According to McKeever (2008), the menu listings, the store layout and the marketing activities will be focused on ensuring that more sales of higher margin espresso drinks is achieved. Apart from the espresso drinks other drinks like brewed coffee and tea together with some refreshing beverages will be sold in the shop to take care of other customers who might want to take anything different from coffee. Sandwiches and small salads will also be offered to go along with the coffee desire. We shall also be selling coffee beans to take care of those clients who prefer to prepare their coffee at home.
Espresso based coffee drinks such as cappuccino and macho will be the basis of our menu and each drink will be offered with soy, skimmed or whole milk. Every of these products will be based on an espresso shot which is prepared by an espresso machine. Heated water is forced through ground coffee at high pressure. Such shots will be mixed together with additives like steamed milk, caramel or cocoa in order to prepare the espresso-based beverages. For this kind of drinks proper preparation techniques are of great importance and should be perfectly followed. According to Berry (2008), if you even deviate just a little from the required amount of coffee in the shot, using the wrong size of coffee particles or the wrong milk temperature, this will negatively affect the quality of the drink prepared.
To introduce the company to the customers and make it well known, two one thousand five hundred flyers will be distributed in the immediate neighborhood, the malls and around and even in some selected offices around two weeks before the official opening of the shop. Subsequently, free postcards will be printed with the shops endorsement to make it more visible and known among the clients (McKeever, 2008).
According to Abrams & Kleiner (2003), the major expense in coffee business will be of course the build-out and the cabinetry. Another major expense will be the equipments because this business requires very sophisticated equipments that have to be kept in the best condition. Other tools that will be required include refrigerators and the coffee cups. We shall also need painting, new floors and countertops. We shall customize the walk-in cooler to give our customers a real price for their money. Other expenses that will be required for start up will include furniture, rent deposit, food inventory and marketing. All of these expenses will however be depended o the menu since each product requires certain tools. The kind of products will also define the the layout and the design. The shop will be named Hard luck coffee shop and will be a sole proprietorship owned by me. I will also mange the shop and will be the only one responsible for employee and financial management.
We shall begin with the employment of ten workers who will work in shifts and then increase the number slowly as the customer base also increases. The employees will be chosen on merit so that we get the best staff for the demanding coffee business. This business will serve various customer groups such as business workers and owners. Since most people work early in the morning while others work throughout the night and depart from their jobs in the morning, the shop will be opened at 7.00 am. This group of clients includes managers, tradesmen, labourers, professionals and even retail clerks. This will be our client base because many of them will be repeat customers. The service provided for this group of clients will be fast and accurate to ensure customer satisfaction (Godsmark, Brown & Arduser, 2004).
Consumption of coffee in the US has shown a steady growth with the strongest growth being in gourmet coffee. The economic downturn in the passed years up to today has not deterred the specialty coffee business from broadening. Some business are literally facing negative balance sheets, poor sales and even bankruptcy, the coffee shops have continued to show positive progress. This is a clear indication that Americans love coffee whether in good times or bad times (McKeever, 2008). The most demanding coffee drinkers are those from the Pacific Northwest. These customers favor coffee drinks that are well brewed and also demand great service. The business will strive to build loyalty in its customers by providing coffee with great taste in an environment that is relaxing since the shop will be well ventilated and spacious enough. The consumption of coffee is universal across different income categories and in many cases depended on the education level or professional level and therefore the location of this shop in the town will provide access to all these different groups of people. Customers also vary in age. Apart from the working class, our research also showed that many students will prefer coffee shops to be the appropriate place where they can meet their friends and also read without necessarily paying for cover charges. This will also be our unique possibility for us to build a loyal client base with the students (McKeever, 2008).
The recent growth in Coffee business in the US has been brought about because of the general trend among the customers. The desire for small indulgencies and for unique things will provide a good selling opportunity for the shop. Our major priority will be to ensure that the customers leave the shop with a satisfied look. According to Berry (2008), this will be a marketing strategy since the client can always come back or even bring in more of his friends.
Industry analysis has shown that coffee consumption has grown by 2.5 % over the last decade. The total coffee sales in 1994 were around $7.5 billion. This shows how flourishing the coffee industry is in the US. The local climate which consists of long rainy season is very appealing to consumption of beverages that are hot like coffee and not alcoholic beverages. On the other hand during summer time people will drive in to have iced drinks which will also be available. Apart from this, it's clear that coffee has become some kind of lifestyle for the people especially in the Pacific Northwest. According to McKeever (2008), it is clear that coffee drinkers like well prepared beverages that they consume in a relaxing environment.
The main reason why customers return to a specific coffee shop is because of great tasting coffee, pleasant atmosphere and quick service. Although consumption of coffee is said to be uniform in all cultures, we believe that great service of coffee in a good and appealing service will help us have a strong base of clients that are loyal (Puckett & Green, 2004).
Hard luck coffee shop's customers comprise of five groups. This includes tourists, local business people, students, and travelers passing through. Approximately 300,000 people work around our shop location. There is excellent parking space available within 120 yards and this is an added advantage to us because they can always park and enter the coffee shop. These local customers form the core of our customer base. According to Godsmark, Brown, & Arduser (2004), the best way we can reach them is through local marketing and supporting local charitable organizations. We shall also sponsor local youth events and sports to capture the attention of these residents.
This area also has more than 30,000 students who attend neighboring colleges, and universities. Most of them are under the drinking age and therefore have few places where they can meet up with their friends. This leaves only coffee houses and may be other food and beverage shops as the remaining options. These coffee shops have also become popular with high school students because they are affordable. Special student discounts rates will be offered to attract many of them and even offer weekend entertainment events. These students represent a large population and therefore if we are able to attract most of them, we shall be better of than our competitors. They also bring energy into the business because they are interactive (Berry 2008).
According to Puckett & Green (2004), the United States also receives a huge number of travelers and the number is estimated to be around 35 thousand every year. This number is also increasing every year. We shall reach this customer group by offering AAA membership card and whenever a customer shows this card he or she will be given a 20% discount on every coffee drink.
These groups provide continued clientele to the shop. According to Godsmark, Brown, & Arduser (2004), it is beneficial for the shop to have such a broad customer base because it will maintain consistent working through out the year because they come at different times. For instance when the student population is not in session, the tourists can come in and keep the business running.
The marketing plan of Hard Luck shop will be build around the four P's of marketing. It will have competitive prices for coffee; offer a wide variety of coffee-based beverages and a few snacks and only items of high quality will be sold. It will also be allocated on a great place for fun, entertainment and food. This will be o the building hosting the E-Sception corporate office. Promotion will also be doe in various ways. Our main advantage in competition will be our menu and atmosphere. According to McKeever (2008), there is no other shop around that offers such a great variety of coffee-based beverages at such great prices and cozy environment. The customers will also be offered great services and great products. The other competitive advantage of the shop is its location. It's located next to a busy street with many businesses around.
We have done enough and extensive research regarding the coffee pricing in the area by visiting cafes around and also looked at national statistics on coffee pricing. We have analyzed and planned our menu accordingly. The prices will take into consideration the cost of the materials, 45% of the beverages and 25% for food. These prices are reasonable but do not compromise on the quality of the drinks (Puckett & Green, 2004). We shall sell coffee in three sizes and their prices will range from $2.50 to $5.50 while the flavors will be offered at an additional price of $1.00. Other specialty drinks like Espresso, mocha, and cappuccino will be sold in two quality sizes and will range from $4.00 and $7.00. The Sandwich prices vary depending on what kind of meat will be chosen. We shall make sure we take care of people from both the low class and the upper class so that there is no discrimination. The prices as indicated are very affordable and varied therefore customers will choose the prices that more comfortable to their pockets (Puckett & Green, 2004).
The shop will also be promoted using various ways and this will be facilitated by an allotment of about $19,000 during the first year. We shall print fliers for the nightly specials and distribute them through out the town, putting higher consideration to the before said customer base. Cars will be used to transport these fliers and deliver them to local offices around. In addition we shall also hand out some of the fliers to pedestrians and any other person walking on the streets to try and lure them into visiting the shop. Some will also be posted on notice boards within the towns and the street signs including even the most obvious places like next to cinema halls (Godsmark, Brown, & Arduser, 2004).
The shop will also run weekly print out in the local dailies. These classified will be used to introduce the Hard Luck shop into the market and make public the location and the hours of operation. Many radio spots on the local radio stations will be run to promote the shop. These advertisements will be run during the evening and the morning hours to announce the daily specials so as to capture those going to work in the morning and those from work. We choose this time in order to take advantage of the traffic jam so that those who are driving-by because of this jam can listen to their radios. Local entertainments will be featured by the shop to attract more customers. Music and poetry will be provided to keep the shop lively (Abrams & Kleiner, 2003).
The internet has become one of the most used forms of advertisements. Very many people visit the internet each day. To make good use of this opportunity, we shall establish a website where advertisements will be made. All our beverages will be posted here so that anyone who visits it can get access to all that we sell at a mere click of the mouse. According to Puckett & Green (2004), this will also save on time because we will not have to visit each customer one on one. However follow ups shall be made to those customers that wish to understand more on whatever we are doing. We shall update this website every month to make sure that every new item is advertised. Telephone calls will be used to follow up on this divertisements to ensure that those customers who need clarification on issues are reached. An online kit will be provided for the media and it will include photos that can be download and reproducible logos.
Frequent customers will be offered discount rates to maintain their loyalty. Apart from this, there will be a discount for those who buy in bulk. For instance if you buy ten cups you get one free. Membership cards and frequent customer cards will also be used for the loyal customers. Comment cards will be offered to customers so that they can fill in any questions or comments they might have about the attitude of the employees, service speed and even the overall satisfactions they get from our services and drinks (Berry, 2008).
The strategy by which we shall market the shop will be aimed at getting new customers but still retain the older customers. The customers should also be made to spend more money and still comeback the following day. It is very important to establish a customer base that is loyal since most sales will be generated from such customers and they will also provide referrals that are favorable to the business (Puckett & Green, 2004).
Our main competitors will include those neighboring coffee shops like the Starbuck, and other establishments of food service that are located near by and offer coffee in addition to the mail meals they serve. Among all these our major competitor will be starbuck because of its huge financial stability as compared to ours that is just starting off. This shop has also established strong market position among most people and it will posse a great threat to us in terms of diverting those customers that are used to them and make them ours. Their operating practices are also good and if we have to out do them then we will have t step up the game (Abrams & Kleiner, 2003).
However despite the entrenched market position of Starbuck, we have many customers who prefer to take their coffee in small and independed shops like ours that provide cozy environment and offer good tasty coffee at reasonable prices that are affordable to them. This is our strongest point against starbuck and we plan to make good use of it. The only problem will be between us and Café Roma which is as small as we are. While starbuck may hold around 35% of the coffee market shares in this neighborhood, the other competitor Cafe Roma manages to hold around 25% of coffee customers. The remaining market share is split among other establishments of which we will be part of. We however hope to attract more customers from our rivals (McKeever, 2008).
Hard lucks culture of business will place it in a unique position as a shop that offers the best coffee together with pastries and also provide an environment that is cozy, homelike and comfortable which other establishments in the area do not have. We will strive to cater not only for the customers' body but also the mind and this will definitely help us to grow our share in the competitive market that we are going in (Berry, 2008).
Apart from these competitors, generally there are more than 32,210 shops that sell coffee in over 150 countries and among this over 20,000 of them are located in the United States alone. Just but to break down on a few, the state of Illinois hosts 3512 coffee shops. The resent trend in the market shows that traditional coffee shops are being replaced with shops that are more customer friendly environment which sometimes even include tools like wi-fi and World Wide Web surfing tools (Abrams & Kleiner, 2003). This shop will be competing with other shops in the food and restaurant services and this industry is growing at a very fast rate. From the records of National Restaurant Association, restaurants produce around 4% of the country's Gross domestic product. In the next ten years, this total is projected to rise more steadily. In the coming eight years it is expected that more than half of family food budget will be spent on prepaid foods.
Comfortable chairs and sofas will be provided to ensure that customers feel at home and always want to spend more time within the shop (Berry, 2008). Quiet relaxing music and deemed light will be set up to help the customers relax better and this will differentiate this shop from any other competitor. For the customer service to be sped up two employees will help in servicing clients and another will help in preparing orders made by customers. Sales transactions will be taken care of by another employee. A computerized point of sale terminal will keep all the sales data logged on it and later analyzed because of purposes of marketing.
Operations and management plan
To ensure proper running of the shop we shall hire a professional manger to oversee operations of the coffee shop. This manager will be employed on full time basis and he will be charged with overseeing the daily operations of the coffee shop. His responsibilities will include managing the whole staff, dealing with suppliers and ordering inventory. I addition he will also be in charge of developing a marketing strategy apart from his usual managerial duties. He will be assisted by two baristas who will be in charged of preparation of coffee (Berry, 2008). The best will be chosen from those who will make application and no favourism will be employed. All employments will be made on merit and experience. After the business has picked up, an extra barista will be employed to cater for the increase in cliental and he will also help to take of the increase in sales volume. Best on the results of the first year, a profit sharing mechanism will be looked at (Berry, 2008).
Even though the manger has reputable experience, we shall employ the consulting services of ABC Espresso services. According to Abrams & Kleiner (2003), these are good consultants who have helped a number of coffee shops and restaurants like Java. It is because of their services that these coffee bars have grown to where they are right now. This consultant firm ahs over twenty years in this business and we believe it is the right choice for the job. Its work can be seen from a number of coffee bars which have been opened in the United States. The services will be majorly employed in market research so that we can know the potential areas where we can exploit in terms of expanding our cliental. Surveys on customer satisfaction will also be carried out with this company to provide additional resource into evaluation of potential new business possibilities.
We shall capitalize on the strong desire for high quality coffee. We have managed to get enough start up capital from the bank loan and we hope to make good use of it. The company has successful management which is dedicated to finding and retaining a loyal customer base and this will see the company's net worth doubling itself within the next two years. We hope to maintain a good gross margin of 65% and if this is combined with reasonable operation expenses, enough cash will be available to provide the needed cash to further the growth of the shop (McKeever, 2008).
According to Godsmark, Brown, & Arduser (2004), the initial start up cost is significantly lower than most of other businesses. We recognize that the business is labor intensive and the right number of qualified staff will be employed. The financial plan also depends on several assumptions and a number of them have been illustrated below. The company will maintain a cash flow process that is healthy enough to ensure that the debts are serviced in time and still retain enough money that will allow the coffee shop to continue running for future development. Further more the company is expected to generate more sales from the onset so that it remains relevant in business through out its time in office.
We also assume that the growth of coffee consumption will continue increasing at a better rate. Records from the coffee specialty association indicate that the coffee market is far from saturation. Its maturity is projected to reach around in the year 2019.