BUSINESS PLAN
Project work done by
Shubham Jain (RA1652002010019)
S.Vinodini (RA1652002010017)
Under the guidance of
Prof. Gurunath
MASTER OF MANAGEMENT STUDIES
Branch: BANKING AND FINANCIAL SERVICES
APRIL 2017
FACULTY OF MANAGEMENT
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SRM UNIVERSITY | TIMES PRO
Chennai 603 203
iNDEX
S.NO PARTICULARS
1 EXECUTIVE SUMMARY
2 COMPANY DESCRIPTION
3 PRODUCTS AND SERVICES
4 MARKET ANALYSIS
5 MARKET STRATEGY AND
IMPLEMENTATION
6 ORGANIZATION AND MANAGEMENT
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1.0 Executive Summary
The Arabica capulus will be a one of a kind coffee house / caf located in
Madhya Pradesh ,Indore The 1,500 square foot cafe will be located in the
newly constructed Vijay Nagar located on the northeast corner . The
anchor tenant, the grocery store, has already taken occupancy and the
excellent location brings more than 10,000 shoppers weekly.
The Arabica capulus, aptly named for the aromatic brown liquid that will
fill the cup, fills the void of original cafes in the market area, stands out
from its corporate peers with their fast food concepts and fast services. The
Arabica capulus is the alternative to fast food/commercial/coffee shops and
offers a much calmer, civilized gourmet coffee experience. There are no
televisions in the cafe, the background music is subtle and work from local
artists will hang on the walls.
The caf is well appointed with overstuffed leather chairs and sofas in a
library like setting. The cafe is reminiscent of times gone by yet is
cutting edge technologically with WIFI and state of the art espresso
machines.
The Arabica capulus measures its financial success in terms of increased
market share and in earnings. The keys to success will be the ability to
offer quality gourmet coffees, take advantage of its small size, and reliance
on an outstanding barista staff. In order to achieve these goals, the cafe will
offer some the areas finest gourmet beans from local distributors. Because
of its small size, the cafe can enjoy larger margins in the form of lower
overhead. The cafe will hand select baristas and offer salaries comparable
to the chains. In turn the baristas will be trained to cross-sell, and sell the
higher margin products.
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1.1 Business Objectives
The primary objectives of the business plan for Arabica capulus are
below:
To increase revenues RS.56,000 or 5% in Year 2 and by RS,96000
or 10% by Year 3
Achieve a profit margin of 6.2% in Year 2 and 7.90% by Year 3
Be the Caf of Choice in the Vijay Nagar area and
recipient of the Best Coffeehouse Award
1.2 Mission Statement
The Arabica capulus is committed to its products and employees
which they believe is the recipe for market success.
1.3 Guiding Principles
The Arabica capulus is committed to values such as excellence,
passion, quality, integrity and leadership which allow them to
navigate challenges and provide for future opportunities. These core
beliefs start with their commitment to their products and their
employees.
The Arabica capulus rewards excellence and cherishes loyalty.
The cafe will work with its employees to build strong businesses
and a secure future.
Keys to Success
The Arabica capulus stands out from the competition. Below are
their Keys to Success:
Great Products providing exemplary products at
market prices will make customers want to return
again and again
Hire Quality Baristas Pay employees rates similar to the
larger chains with opportunities for long term careers and
opportunities for advancement with long term plans to open a
second facility
Convert Customers to Connoisseurs - Only 40% of the
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nations coffee drinkers consume premium ground and whole
bean coffee this will aid in continued growth
2.1 Company Description
The Arabica capulus will be a coffee house / cafe located in the Vijay
Nagar, Indore. Located in the Vijay Nagar area, the cosy cafe will be
located in the newly completed crowded area. The cafe will serve
gourmet coffees, espresso and drip coffee, lattes, and smoothies. The
simple pastry offerings may vary with seasonality but the primary line
will be muffins, breads, cookies, scones, and rolls. All pastries will be
supplied daily by a local bakery.
The cafe will be owned and operated by Shubham Jain & Vinodini, a
veteran restaunteur with several years experience running and
managing chain restaurants. The cafe will be open for business
Monday
Thursday 10-10pm, Fridays and Saturdays 9-11pm and closed on
Sundays.
2.1 Ownership
The Arabica capulus will be owned 100% by Shubham Jain. Mr.
Shubham a graduate of SRM University has a postgraduate
degree in business administration.
2.2 Legal Form
The Arabica capulus will be formed as an S-Corporation wholly
owned by Mr. Shubham.
2.3 Start-Up Summary
The Arabica capulus will have seating for 40 patrons. The rent is
RS. 5,000 a month, with a four-five-year lease available. The site
consists of 1500 square feet of leased space consisting of a dining
room, a coffee bar, two restrooms, and a storage room in back. To
be used as a restaurant, this storefront needs to be plumbed and
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wired appropriately. Painting, new floors, and countertops are also
needed. A custom coffee bar needs to be built. With materials
bought on sale and volunteer labour, the cost to renovate will be
Rs, 50000. The coffeehouse equipment will consist of two
commercial espresso machines, air pots and urns, a commercial
blender, commercial brewer, top loading coffee bins, barista
syrups, cold drink dispenser, frothing equipment, a commercial
refrigerator, microwave and stainless steel prep bar. The cost for
the equipment is Rs, 15000. The furniture will consist of leather
couches, and chairs (purchased at auction), coffee tables,
bookcases, and window treatment. The artwork will come from
local artists and will be sold on a consignment basis. The books
were secured via donations. Total cost to furnish is Rs30, 000.
Other start-up expenses will be dishes, furniture, rent deposit, and
marketing.
2.4 Location and Facilities
The new coffeehouse is located in the highly desirable Vijay Nagar,
Indore area at the northeaster in the Pailka Plaza. The property is
located in an excellent location. The property is 95% leased with Price
Chopper as the Anchor Tenant. Other tenants include: Jawed Habib
Saloon, Archies (Gift gallery), and Reliance Fresh brings more than
50,000 shoppers per week to the centre. The location is comprised of a
population of 9,420 within a one mile radius, 61,102 within 2 mile
radius and 149,550 within a 5 mile radius with a median household
income of Rs.120, 856.
3.0 Products/Services
3.1 Products/Services Descriptions
The Arabica capuluss primary offering is gourmet roasted coffees
with such varieties such as mocha, carmelicious, white mocha,
candy bar latte, and brewed coffee. Complementing the coffee will
be a smoothie line including wild berry, strawberry, peach, mango
and lemonade. Rounding out the simple menu line will be pastries
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obtained with an outside supplier, freshly made and delivered
daily. The pastry offerings may vary with seasonality but the
primary line will muffins, breads, cookies, scones, and rolls.
3.2 Competitive Comparison
The research methodology is based on unique coffee shops/cafes
in the greater metro area and omits larger chains or franchises.
The findings reveal eight unique competitors.
3.3 Product/Service Sourcing
The Arabica capulus has negotiated supplier agreements with
several local food-service wholesalers and coffee wholesalers in
the Vijay Nagar area that have a reputation for quality and
reliability:
Prakash Coffee Roasters
Perfect Bakery
HMG ltd.
Devs Bakery
In the event that one of the aforementioned specialty suppliers
cannot meet their needs, the following national suppliers can both
provide all of the food-service products that they require.
3.4 Future Products/Services
Young families which comprise the fourth largest market share in
Indore are often overlooked in the coffee market. Coffeehouses
traditionally have not been considered kid friendly. To overcome
this hurdle, the Arabica capulus has long term plans (5 years) to
open a 2nd coffee shop: A combination indoor play area / coffee
bar. This concept allows parents and caregivers an opportunity to
meet and relax with other adults while the children can enjoy the
indoor playground amenities.
Additional future services will include in-store sales for home
purchase as well as an online store.
The website will have an option to purchase prepaid gift card
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program Prepaid gift cards not only provide immediate cash, but
also reduce credit card transaction charges and draw new
customers to the business.
4.0 Market Analysis
Vijay Nagar, Palasiya is an award-winning place to live and work and is
considered the leading business community.
Vijay Nagar, Indore is at the core of one of the most dynamic local markets
in the Indore Madhya Pradesh. The city maintains an excellent arterial
street network and plans to construct additional lane-miles as the area
grows. One airports serve the region Devi Ahilya Bai Holkar Airport (IDR)
is just 15 Km from Vijay nagar.
In Vijay Nagar and its surrounding area supplies some of the most highly
educated workers in the Indore, with 78% of Vijay Nagar adults over age
25 holding at least a high school diploma.
Competitive Landscape
Consumer taste and personal income drive demand. The profitability
of individual companies depends on the ability to secure prime
locations, drive store traffic, and deliver high-quality products. Large
companies have advantages in purchasing, finance, and marketing.
Small companies can compete effectively by offering specialized
products, serving a local market, or providing superior customer
service. Specialty eateries, which include coffee shops, are labour-
intensive: average annual revenue per worker is about Rs 90,000.
Coffee shops compete with businesses such as convenience stores,
gas stations, quick service and fast food restaurants, gourmet food
shops.
Products, Operations, Technology
Major products include beverages and food. Beverages include
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brewed coffee and tea; espresso drinks (cappuccinos, cafe lattes); cold
blended beverages; bottled water; soft drinks; and juices. Food
includes pastries, bakery items, desserts, sandwiches, and candy.
Many coffee shops sell whole or ground coffee beans for home
consumption. Some coffee shops sell coffee or espresso-making
equipment, grinders, mugs, and other accessories. (First Research)
The Arabica capulus is targeting three primary groups residing in
their direct marketing area. These individuals prefer unique venues
and avoid the big chains and franchises. They prefer their local
neighbourhood and will support local businesses if the business
warrants.
5.0 Marketing Strategy and Implementation
The Arabica capulus will provide:
A quiet and relaxing environment
An opportunity to visit with friends
An opportunity to catch up on ones email
An opportunity to read a chapter of a book
Knowledgeable cafs baristas offering assistance in coffee
purchase
Providing customers with outstanding service.
5.1 SWOT Analysis
The SWOT analysis examines the cafs strengths and weaknesses
that need to be addressed. Further, this section examines the
opportunities presented to Caf as well as potential threats.
5.1.1 Strengths
Based on its smaller size, the fact that it is not a
franchise, the Arabica capulus is a unique coffee shop
concept unlike any other in the Overland Park market.
The owner has first-hand experience, in
operating and starting new restaurants,
Handpicked baristas will bring professionalism and
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enthusiasm to the Shop.
5.1.2 Weaknesses
Franchises are the easiest way and often the safest
conduit to start a caf; the caf will not have the backing
of one of these established entities.
The Arabica capulus has a minimal budget and is
competing against larger and more established
coffeehouses for market share.
5.1.3 Opportunities
The Overland Park demographics support the need for a
unique coffee shop.
Additional opportunities to target the active and recently
retired target market and 45 years+ age group.
A small slice of a much bigger pie is the goal. Only 40
percent of the nations coffee drinkers are consuming
premium ground and whole bean coffee. Encouraging
coffee drinkers to become coffee connoisseurs is the key
to continued growth.
The local coffeehouse/caf market is 54 million
5.1.4 Threats
The Morning Glory Coffee shop is currently for sale;
should another independent purchase this caf, it
could pose significant threat to market share.
5.2 Unique Selling Proposition (USP)
The Arabica capulus truly stands out from a crowded sea of coffee
chains and franchises. What sets them apart from the competition is
primarily its smaller cozier size combined with premium coffees
served by knowledgeable baristas providing so much energy and
enthusiasm for the products they sell.
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5.3 Marketing Strategy and Positioning
The Arabica capulus utilizes a focus strategy on its market. By
specifically targeting three primary segments they can cater
specifically to their needs.
Senior Market (age 45+)
The Arabica capulus will target this market simply by its well
selected location. Although this demographic group could readily
drive downtown, they prefer a local caf to unwind and relax and
historically become some of the most loyal patrons.
Newly Hired Employees
The caf will attract regular customers (weekly or more) - particularly
the newly employed (first job) by providing free WIFI services and
providing interesting games in the customer area.
Young Families
The third targeted markets, younger families, often find that
coffeehouse is not kid friendly. The company has long term plans to
create a combination coffee shop / play area so that parents and
caregivers will have a place to meet with other adults while the
children can enjoy the bounce houses, slides and indoor playground
equipment.
5.5.1 Positioning Statement
The Arabica capulus is a gourmet coffee lovers gem. It is truly
one of a kind coffee house offering outstanding gourmet coffees
and blends, served by enthusiastic and knowledgeable baristas,
in a warm, relaxed environment. It is the place to go to visit with
friends or cozy up in a quiet corner with a good book either from
the library or from one of the patrons personal E-Books.
5.3.2 Pricing Strategy
The Arabica capulus primarily utilizes competition based
pricing. The caf does not utilize coupons and discounts (other
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than opening promotion) because they believe that the most
valuable customer demographic of daily coffee consumers is
not influenced by discount programs or coupons.
5.3.3 Promotion and Advertising Strategy
Online Advertising - The Arabica capulus will advertise
regularly on popular social
Media sites, such as Facebook. Compared to traditional print
advertising, this is a cost effective tactic that will allow them to
reach prospects in a highly targeted way (e.g., based on criteria
such as age, gender, geography, etc.).
Web Site - the Arabica capulus will develop a simple Web
site, which will provide basic information about the business,
the menu, and links to their presence on the aforementioned
social media channels.
Radio Advertising - During the first six months of operation,
and during the busy
Holiday shopping season, the business will advertise on local
radio stations.
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5.3.4 Website
The Arabica capulus will have a simple website identifying its
menu items of gourmet coffees, smoothies and pastries, along
with the address, map and hours of operation. The website will
also have a calendar of any upcoming events or sponsorships.
The site will also have links to their social media sites such as
Facebook, Twitter, and Pinterest.
5.3.5 Marketing Programs
The caf will also rely on signage and draw to its location.
Price Chopper brings 10,000 shoppers weekly to its location.
5.4 Sales Strategy
The Arabica capulus will use the following methods to
increase sales revenue (as recommended by Andrew
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Hetzel on Better Coffee, Better Business):
The menu will focus on the most profitable products sold. The
caf will always draw customer attention to the most profitable
products.
As warranted, the caf will raise prices to bolster brand image.
Prices communicate a perceived value of a product; so if set too
low, the customers might assume that the beverages are inferior
compared to the competition.
Monitor flavouring inventory Excess flavouring inventory ties
up capital and valuable back room space for storage. The caf
will utilize 4-6 varieties, including sugar free offerings.
Control waste and theft audit sales and inventory reports to
evaluate ingredient waste due to inefficient preparation,
returned drinks and employee consumption. Retail locations
can easily waste 20% or more of their daily sales these three
key categories, which is a substantial and unnecessary loss.
Monitor and evaluate hours of operation
Run employee sales contests The baristas are the salespeople
and have a great deal of influence over the customer ordering
process. All baristas will have some form of sales and customer
service training to make each transaction active, rather than
passive. Sales contests will emphasize high margin items or cross
selling
5.4.1 Sales Programs
The Arabica capulus will run employee sales contests The baristas
are the salespeople and have a great deal of influence over the
customer ordering process. All baristas will be required to have
sales and customer service training to make each transaction. The
sales contests will emphasize high margin items and cross selling.
5.5 Legal
The Arabica capulus is organized as an S-Corporation formed in the
state of Kansas.
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5.6 Milestones
Listed below are the milestones for the Arabica capulus:
5.7 Exit Strategy
In the event the store would have to close for business all assets
would be sold at auction.
6.0 Organization and Management
6.1 Organizational Structure
The Arabica capulus is formed as an S-Corporation wholly owned
by Owen Jones.
6.2 Management Team
The Arabica capulus will be owned 100% by Owen Jones. Mr
Jones a graduate of Kansas State University has an undergraduate
degree in business administration. During high school he worked
as a waiter in a local hospital coffee shop that purchased its beans
from a local roaster. In addition to being an avid coffee drinker
himself, this job allowed him to learn about the business first
-hand. In college, Jones worked in a campus coffeehouse for four
years, eventually rising to the position of assistant manager.
Following graduation, Jones secured a business development
position for regional restaurant chain, which provided additional
first-hand exposure to the food and beverage industryespecially
the steps involved in establishing new locations.
6.3 Management Team Gaps
The Arabica capulus will rely on its POS (Point of Sale) system
to generate daily accounting and cost activity reports. Mr Jones
will supply these to an outside bookkeeper for preparation of
annual income taxes.
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6.4 Personnel Plan
Initially the caf will hire 1 manager, 5 baristas, and 2 part time
servers. In Year 2, the caf plans to hire 1 additional full time
barista.
7.0 Financial Plan
The financial plan will cover the following:
Required Cost of Start-Up
Profit and Loss
Cash Flow
Balance Sheet
Financial Ratios
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