Opening a coffee shop is an intricate process that requires a lot of planning. The best way to do so is to form an official business proposal. Below is an example of a general coffee shop proposal to serve as a guide to anyone looking to create one.

  1. Executive Summary

Mug’s coffee shop is dedicated to becoming the one-stop-shop for all local coffee addicts. It will serve as a place for comfort and relaxation for anyone looking to slowly escape from the daily struggles of life.

As the need and popularity for gourmet coffee and other similar products continue to grow, Mugs coffee shop will continue to draw in local customers to continue to build a returning customer base.

Mugs coffee shop will ensure that its customers have the most relaxing and overall best experience while they sip coffee, consume delectable pastries, and enjoy the comfortable furniture and free internet access.

Mug’s coffee shop will operate in a 1,500 square foot building in the downtown business district of Rochester, Minnesota. This building has been secured through a 4-year lease with negotiations to take place after 3 years if the lease is to be extended beyond the fourth year.

The owners have successfully put forward $172,000, with an extra $25,000 being put forward by local investors and the rest of the funds are to be secured through First National Bank’s commercial loan program.

Mugs is expecting a sales revenue of about $297,000 in its first year, with revenue expected to increase to $408,000 by its fourth year of operation.

Under the assumption that Mugs coffee shop will maintain a gross profit margin of 68% and a low expense cost, it will see a growth in net profits rise from about $77,000 to $100,000 in that same period.

1.1 Targets

Mugs identified target objectives during its first year of operation are to:

      • Maintain its goal of a 68% target operation
      • Produce a profit by its second month of operation
      • Be identified as a rising star in the restaurant world in Minnesota restaurant guide

1.2 Keys to Success

The keys to success for Mugs will be:

      • Customer retention
      • Effective target marketing
      • Efficient and quality service
      • A significant and complete understanding of all offered products

1.3 Mission Statement

Mugs aims to create a unique and relaxing experience for all of its customers while simultaneously providing an array of different products ranging from coffee, espresso, pastries, and an arrangement of other products.

Mugs will do everything in its power to create an environment for all of its customers that allows the stress of their daily struggles to melt away through the combination of kind customer service, a welcoming atmosphere, and a commitment to high-quality products.

The profits that Mugs enjoys will be used to keep employee satisfaction and morale high while also providing returns to its shareholders. It will also spend a portion of its profits on local charitable causes around the community.

  1. Product Overview

Mugs coffee shop will pride itself on offering not only the best coffee but also the best pastries in the local area. All of our ingredients will be of the highest quality to ensure peak flavor and quality standards.

The products offered will include different forms of prepared coffee such as lattes, cappuccinos, and espressos, as well as tea and other refreshments.

Mugs will also offer gourmet bakery products such as muffins, donuts, cakes, and cookies.

All of which will be used to help draw the customer in and to increase profits and overall customer experience.

 

2.1 Products Description

Mugs will be focusing on the needs of all customers with a build your own drink style of service. We will be offering a large number of toppings and other items to include in the products to create the customer’s desired taste.

These toppings and other items will include things such as milk (skim and soy), caramel, whipped cream, a variety of coffee creamers, vanilla extract, cinnamon, and other similar products.

All coffee will be made black with a basic coffee machine and the barista will then follow the desired orders of the customer as to what they want in their drink. There will also be drink ideas on the menu to help customers who are not experienced in the coffee world.

 

  1. Market Analysis Summary

Recent market analysis has shown that the United States is on the path to maintaining a 4.2% growth rate in the field of coffee consumption.

The most recent data shows that citizens of the Midwest region of the United States consumed on average, 2.08 cups per day.

With its long and harsh winters, the citizens of Minnesota are known to be fond of a warm cup of coffee when they can get their hands on one. Mugs will do everything in its power to assure that the citizens of Minnesota choose us for their daily coffee needs.

 

3.1 Market Segmentation

Mugs will focus most of its marketing activity on the millennial generation, who, studies show, spend the most on coffee and coffee products outside of the home.

As a result, we will need to focus a significant amount of resources to try and draw college students from nearby campuses to Mugs to greatly increase our customer base,

 

3.2 Target Market Segment Strategy 

As a direct result of the millennial generation being considered the greatest spenders on coffee products outside of the home, Mugs will be focusing much of its market advertising on the local millennial generation.

This will include a large number of internet-based advertisements, including ads being placed on Facebook, Instagram, Youtube, and other social media sites to draw in those seeing them.

Mugs will also focus heavily on keeping in touch with its customers by creating an online presence through sites such as Facebook, Instagram, and Snapchat, as well as maintaining a blog about coffee and coffee products.

Mugs will also advertise healthier options for its products to help draw in millennials who as a generation are more concerned about living a healthy lifestyle compared to other generations.

 

4.3 Industry Analysis

Over the last decade in the United States, coffee consumption has shown a steady 2.5% growth rate. This rate is only expected to continue its path and will likely reach a higher growth rate sometime over the next few years.

The Midwest of the United States is enjoying much of this success, as the variable climate of Rochester Minnesota, which is what most of the midwest experiences, is ideal for coffee sales.

This is a result of the Midwest’s long and harsh winters which drive people inside looking for a warm environment and a warm beverage which is essentially what a coffee shop is designed to be.

The Midwest also experiences fairly hot and humid summers, which is when coffee shops switch many of their resources to making iced drinks, perfect for anyone looking to cool down while still enjoying the benefits of coffee products.

4.4 Competition

 

The city of Rochester is a fairly competitive area when it comes to coffee sales and consumption offering over two dozen separate coffee shops in the city which holds a population of about 116,000 people.

The main competitors will be Starbucks and Panera Bread, as both are chain companies with massive resources and fantastic brand name recognition.

However, recent studies have shown that a great percentage of the population is beginning to prefer smaller shops, especially when they are shopping locally.

To make a name in the already established market, Mugs will have a grand opening sale offering discounts on our products to help bring on the local population. We will then offer several coupons that will help maximize customer retention.

  1. Management Summary

The majority of Mugs is owned by Mr. Rockefeller who has a bachelor’s degree in business management from XYX University. He has years of experience overseeing projects similar to this one and will be in charge of conducting management training.

A professional experienced manager will be hired to oversee all bar operations and will be paid a salary of $32,500 yearly. The manager will also be in charge of hiring two full-time baristas to help bar operations, each being paid $12 per hour.

The manager will be in charge of hiring any additional staff as well, the salaries of which will be discussed with ownership.

Management will be responsible for all bar operations, employee management, inventory operations, ordering supplies, and working with ownership to create a marketing strategy.

  1. Financial Plan

Mugs plans to capitalize on the need for a relaxing environment and an escape from the harsh Minnesota winter and warm Minnesota summer.

The owners have provided the company with sufficient funds to serve as start-up capital, and management will aim to provide a returning customer base to keep cash flow consistent.

The is that within 18 months, Mugs will see its profits double. Mugs will also aim to maintain a 68% measure of gross margin during that same period.

6.1 Projected Cash Flow

Over the first three years of operations, Mugs is anticipating its net profit to increase from $220,000 in the first year to approximately $315,000 in the third year.

This will be done through customer retention, effective marketing schemes, and overall effective management.

6.2 Break-Even Analysis

Mugs are expected to see an average monthly cost of about $12,500. That, combined with its average margin of about 68%, Mugs will require about $17,000 monthly to break even in terms of equaling all of its expenses.

Based on current projections, Mugs should have no issues reaching this goal one opening.

6.3 Costs and Expenses

 Mugs will experience about $12,500 in monthly expenses.

These expenses will consist of employee salaries, product costs, building rent, utility, and equipment costs, as well as marketing costs.

These costs and expenses will be altered annually to keep up with changes happening to the business.

Frequently Asked Questions

How often should a business plan be updated?

A business plan should be updated based on the needs of your company. As a result, your plan may only need to be updated once every couple of years.
However, it is recommended that your plan be revised at least once annually. This will allow the goals of your company as well as the other information in the business plan to be as accurate as possible.
Your updates should include things such as any changes in costs you may have sustained, your current profit margins, any new employees, and other possible changes that may have occurred

Why is a business plan important?

A business plan is important because it essentially will serve as the outline of your businesses.
It will hold all the necessary information you may need to ensure that your business will succeed.
Without it, you will essentially be relying on dumb luck to ensure that your business succeeds, and in case you didn’t know, luck isn’t the most reliable thing.
Instead, by having a business plan, you ensure that you and everyone else around you know exactly how your business plans to function, where all the money will come from, and any other information that may be crucial to the success of your business.

To learn more about how much coffee shops make, click here.

To learn more on how to start your own coffee shop checkout my startup documents here

Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.