Coffee Shop sample essay
One Stop Cafe is taking advantage of the coffee shop rage that has been sweeping the country. Along with taking advantage of this trend, the cafe is also planning for the future. The Cafe is also marketing itself as a full service restaurant to maintain stability, in case the coffee trend begins to fizzle. One Stop Cafe is a theme coffee shop. It is provides customers with high quality and diversified coffee and food. The Cafe will serve breakfast and lunch to the customer. It is specialise in homemade from scratch recipes. The Cafe will offer a daily breakfast menu such as nasi lemak, boiled eggs, deli sandwiches and toast along with fresh ground coffee, espresso and other specialty coffee drinks.
The Cafe lunch menu also will feature porridge, noodles and other drinks like juices, teas, and a variety of other specialty drinks. The area comprising a five mile radius around One Stop Cafe is heavily populated with young, upwardly, mobile persons with expendable income. A special environment and unique experience are offered to our customers such as free books and magazines, free Wi-Fi are available to customers with the airy, colourful decor, older brick, architecturally interesting facade and wishes to be the neighbourhood gathering place. A strength which this business will possess is the ability to change with the times. Rather than limiting the future opportunities by having a small area, One Stop Cafe will have adequate space for kitchen designed for flexibility. One Stop Cafe is seeking start up funding in the amount of RM30,000 to purchase furniture, fixtures and equipment, inventory and working capital. The Cafe is new business, a two member with Che Bakar and Intan as the owner. Overall management will be the responsibility of the owner. A major emphasis of One Stop Cafe will be to hire economically disadvantaged or at risk persons and provide them with job training.
1.1 Objective of The Business
One Stop Cafe’s for the first year of operations are become the best and popular ones in the area by local resident and Kelantan people, turn in profit on the first year of operation and also can maintain a 60% gross margin.
One Stop Cafe mission is to provide the highest quality food and beverage especially the coffee market for a reasonable price and homemade products. Our cafe wants to be in the business of helping the customers to relieve their daily stresses activity by providing piece of mind through great ambience, convenient location and the best customer service. The Cafe also has a mission and plan to provide job opportunities for community especially to local people.
1.3 Purpose of The Business Plan
The purpose of our business plan is:
a) Discover the latest market trends and uncover sources of future market growth for the Coffee industry in Malaysia.
b) To study the market condition, trend and competition, and conclude if the business will have a good prospect to prosper, or otherwise.
c) As a guideline for day to day management to run the business activities.
d) Detailed segmentation of local products
e) Five year forecasts of market trends and market growth
f) To understand competitive threats with our detailed market analysis, and plan the company strategy with our expert qualitative analysis and growth projections.
g) To convince venture capitalists, inventors and bankers in order to raise capital and obtain support the venture.
h) To ensure the business able to produce the product that business had planned.
i) To analyses the viability of the project before actual investment is committed.
j) To provides direction and guidance for all entrepreneurs.
k) To ensure that the attention to both the broad operational and financial objectives of the details, such as budgeting and market planning.
1.4 Background of the Business
: One Stop Cafe Sdn. Bhd.
: Lot 2603-B, Kg Dusun Pinang
Jln Pasir Mas-Salor
15100 Kota Bharu
Kelantan Darul Naim.
Form of the business
Date of business commencement
1 January 2014
Date of registration
1 March 2014
Business account type
Bank account number
The Malaysia coffee culture has adopted from arrivals of branded retails outlet such as Coffee Bean and Starbucks in the local market around 1997 and 1998. Local coffee culture grows and its begin by commercialising kopitiams and branding of local coffee shops to upgrading services by not only selling product but embracing technology as part of the marketing plans to attract younger generations. Coffee lovers in Malaysia have shown steady growth with the creation of the high demand for coffee in the present and in the future.
2.1 Target Market
The target market is segmented according to population, age and income as preferences. One Stop Cafe target market of customer is the people working in offices and college students that used the highway, teenagers and local residents. The surrounding neighbourhood of One Stop Cafe is a very active neighbourhood association with many activities. The neighbourhood consists many of office workers whom work in the nearby office building and around Kota Bharu. A younger group also consist of many singles and college students who attend a college several miles away from the cafe.
One Stop Cafe will focus its marketing activities on the consumer who use the Pasir Mas-Pasir Hor Highway. This highway connects user to the district of Rantau Panjang, Tanah Merah, Pasir Mas, Pengkalan Chepa and Kota Bharu town. The target market of customer is the people working in offices and college students that used the highway, teenagers and local residents. The market research shows that these are the customer groups are most likely to buy the coffee products. Since the coffee consumption is universal across different income categories and mostly depends on the office workers who are employed by the government or private sector will provide access to the targeted customer group. The table below highlight the total market potential context in number of customers that drinks coffee in One Stop Cafe.
ONE STOP CAFE MARKET ANALYSIS
Table 1.0: Total Market Potential Customer of One Stop Cafe
The cafe is very accessible along a very busy traffic. One Stop Cafe chooses the Pasir Mas-Pasir Hor Highway as a location because it has a big potential to grow up our business successfully within two or three years more. The Cafe is located in the middle of the Kota Bharu city besides near our target market. This location and the surrounding area will be developed as Bandar Baru Tunjong within two years from now. Besides that, Kota Bharu is also considered as a busy city and the people are commonly to have high income and they are believed, have a great purchasing power. While the cafe do not have a drive-thru service, it is still convenient to park by the side of the building, customer run in for coffee and go back out. This however will give advantage to us as it hopefully can create demands on our products. Furthermore, we have been making a survey and it is believed that there are not very much competitors in Kelantan especially in running coffee shop business.
2.1.3 Pricing Analysis
In terms of the breakfast crowd, One Stop Cafe are more likely to sell the morning cup of coffee and offer a place where the customer can have coffee and a choice of several morning menu but coffee being is the primary purchase. The goal of this pricing strategy is to attract more customers interested in premium coffee and is willing to pay a more premium price. It is because the cafe has to compete with other coffee shop business for the morning market. Our cafe has offer lunch menu in moderately priced. A lunch meal at the other fast food restaurant will run approximately RM10. One Stop Cafe niche is a nice lunch special typically a noodles dish or variety of sandwich and will run at RM5 to RM8. The lunch will be homemade and more balanced nutritionally than fast food menu, yet affordable for the person who eats lunch out often. Our cafe will use paper goods material such as plate and silverware to keep the cost down. Younger consumers are often willing to spend more on fancy coffee blends and signature drinks, the health conscious would be willing to pay extra and older consumers may have thriftier spending habits with plains black coffee.
2.2 Demand Patterns and Trends
The coffee outlet market in Malaysia seems very promising as the overall consumer spending in the increasing in the country. Rising per capita income, increased literacy and rapid urbanisation have caused rapid growth and change in demand pattern. The availability of more disposable income is driving consumers to experience high end products. The players in the industry or coffee businessman need to be more innovative in order to gain a big share of the ever growing coffee consumption market in Malaysia and especially in Kelantan. Coffee recorded the strongest value sales within hot drinks in Malaysia over the review period. As verified by trade sources, coffee has extended its segmentation to not only adults, but also the 17-21 age groups. With coffee being established in the everyday diet of most Malaysian consumers, new products coupled with the convenience of instant coffee contributed to the growth of the coffee sales in 2013. Coffee sales are expected to grow at CAGR of 8% in constant value terms over the forecast period. One key underlying factor behind coffee sales’ growing momentum is the increasing demand for convenience-orientated products. Fast-paced lifestyles among the urban working population will result in increased demand for coffee.
Coffee sales are creating great opportunity and producing plenty of competition. The coffee shop industry is seemingly attractive because of low costs of entry and exit. However, it is also admits many competitors putting the market in near perfect competition deterring from significant profits. To compete, coffee shops must be readily available to their customers and able to provide coffee variations that stand up to their abundant competition. Marketers must design or create some new strategies or planning that best matches the company resource to consumers and customers. To be a succeed in coffee business, the marketers must arrange strategies that are different and efficient in order to beat the other business, in terms of winning the heart of the customers. This business however, is quite common and become more popular in Malaysia.
One Stop Cafe main competitors are quick-service restaurants and specialty coffee shops. There are an abundant amount of competitors in the specialty coffee beverage industry. This Cafe believes that its customers choose among retailers primarily on the basis of product service, service, price, and convenience. One Stop Cafe is also faced with well-established competitors in the local markets with increased competition in the Kelantan ready-to-drink coffee beverage market. The intensity of rivalry increases as business tries to improve their position in the industry. In order to gain new customer, The One Stop Cafe may reduce price, introduce new products or substitutes and also increase marketing efforts. The types of food choices, pricing and cafe ambience create the diversity among competitors. Customers may choose among competitors based on preference. One Stop Cafe pricing is considered to be average than other cafes. The ambience among the competitors varies from a fast-food chain where the objective is to get fast service while the coffee shop ambience is slow-paced and relaxed.
One Stop Cafe has to compete directly against specialty coffees sold through supermarkets, specialty retailers and a growing number of specialty coffee stores. The Cafe face significant competition from established wholesale and mail order suppliers with some of the competitor have greater financial and marketing resources. It is also faces intense competition from both restaurants and other specialty retailers for prime retail locations. While there are many competitors in the specialty eateries industry, McDonalds in Wakaf Che Yeh and The Deli Kopitiam in Pasir Mas are the main players in the industry especially in terms of location neighbourhood. New entrants as One Stop Cafe can increase the fight for market share, lowering prices and the profitability of an industry. Some existing competitors can retaliate against new entrants to deter them from entering the industry in the first place. There are two major competitors on the cafe business. This business also has some competitors with local coffee shops or similar business in Kelantan. Among our competitor are:
Average Price per unit (RM)
18 – 45 middle class
The Deli Kopitiam
18 – 45 middle class
Table 1.1: The Competitors of One Stop Cafe
2.4 List of Suppliers
The right deal to choose suppliers is not just getting what the business want at the cheapest possible price. It is involved the right choice and have to considered other factors such as delivery times, payment terms or the quality of the goods. One Stop Cafe has view suppliers as a key stakeholder in our business and finding reliable suppliers is important for business success. Supplier management is an on-going process within a business. It also seeks to reduce risk in the purchasing process and maximise value from the supply chain. The following is a list of the identified suppliers that will be involved in the cafe business: No.
RoastCoffee2u Sdn Bhd
Suite A-08-06, Plaza Mont Kiara, 50480 Kuala Lumpur.
LMC Star Sdn Bhd
1120-A, Damansara Intan 1, Jln SS20/27 Petaling Jaya, Selangor. Coffee Product
Florida Bakery Sdn. Bhd.
W2/ 151-e, Jalan Dato’ Hamid, 17000 Pasir Mas, Kelantan.
Jalan Kebun Sultan, 15350 Kota Bharu, Kelantan.
BERNAS Peringat Factory
Melor, 16400 Kota Bharu, Kelantan.
TESCO Kota Bharu
Lot 1828, Seksyen 17, Bandar Kota Bharu, 15050 Kota Bharu, Kelantan. Butter, noodles and dry raw materials
Table 1.2: List of One Stop Cafe Suppliers
One Stop Cafe will capitalise on the strong demand for high quality gourmet coffee. The owner has provided the business with sufficient start-up capital. The Cafe can be managed with successful management aimed at establishing and growing a loyal customer.
3.1 Start-up Capital
One Stop Cafe has a strategic location. At this location that place rent about RM13 per square meter. The Cafe is about 150 square meters and the total rent about one month is RM2,000. The Cafe wants to provide a comfortable environment. The flooring in the coffee shop would be dark wood floor. The atmosphere in the coffee shop should be romantic and warm, and the dark wood is a good choice to express the mood. The light in our coffee shop sent out gentle beam. In our wall we will put some painting on it. It is also provide the light music to let our costumers relax themselves. Coffee fragrance revolves around you to let our costumers stay here. In order to build a tranquillity and cosy environment to make guests feel at home, so the cafe spends RM160 per square meter about remodelling fee. The furniture is also important for our coffee shop. Good furniture can upgrade our coffee shop’s pattern. Sofas, tables, chairs and bar counter are provided in the coffee shop. The Cafe will buy the modern furniture and also the furniture will coordinate with our whole coffee shop mood. The total prices about the furniture about RM1000. Equipment fee is almost RM28000. Equipment includes two coffee machines, two coffee-mills, air conditionings, stereo, cash registers and water treatment.
3.2 Total Capital
Working capital is the amount of cash needed to operate the business until the income is greater than expenses.
Inventory / Material
Furniture and Fixture
Deposits or other upfront fees
Other upfront fees
Cost of Land & Building
Total Project Cost
Total Loan Amount
Table 1.3: Total Capital and Estimated Money Needs of One Stop Cafe
3.3 Products and Marginal Revenues
a) Beverage Products
Cost of Goods Sold
b) Food Products
Cost of Goods Sold
c) Financial Assumption
To determine our cafe monthly sales projections, the fact that is used approximately 460 residents living in the neighbourhood and 600 business majors. This is taking into account that there used for office workers coming into the contact with the coffee shop will be 900. Out of these 900 office workers it is estimated that 40% will make a purchase of an average of RM4.75. Consumer discounts were calculated by assuming that through our promotions half of our customers would have one ringgit off their purchase. As the year goes on, fewer promotions would be available, decreasing this value. Costs of goods sold were calculated using a forty percent mark up.
3.4Return on Investment
One Stop Cafe business must have a good planning in term of financial aspects to compete and survive in the current market and for future. The Cafe are invests in buy its machine, new vendor, a new process and a new employee the business always expects a return on investment.
PRO FORMA INCOME PROJECTION OF ONE STOP CAFE
A financial plan should include the projections of the financial statements. A financial analysis also should include some financial analysis in order to determine the viability of the proposed business or project. Cafe owner typically expected five year of financials, recognising that the farther out one goes, the less accurate the forecasts are. The rationale behind five years is that the first two years show the business surviving and the last three years show the upside growth potential. The reason of income statement should be month to month during the first year to show how much cash is needed until the business can become self-sustaining. This is Exhibit 1.0: First Year Income Statement
PART B: YEAR 2 UNTIL YEAR 5
3.5A Worst-Case Scenario
From the analysis that has been before, One Stop Cafe has experience losses in second year but can maintain and survive in the next year. It is occurred because the cafe is a new business and not sufficiently known in the surrounding area. Month-to-month analysis above shows cash flow decreasing and provides an early warning system to owners should seek the next round of financing. Years three through five only used as to communicates our cafe vision for growth and a textured understanding of the forces that the cafe believe will drive the future of the business. The balance sheet can be annual bases since it is reporting a snapshot on the last day of a particular period, but it also inform the owner of the magnitude of the resources that expect to marshal to fulfil the business vision.
4. ECONOMIC ANALYSIS
The coffee industry and the coffee shop business have boomed in recent years especially with regards to specialty coffees. The market for specialty coffees has grown as consumers become more educated about espresso-based drinks and how they are made. According to a National Coffee Association Annual Drinking Trends Survey, specialty coffee consumption has risen from 9 percent in 2011 to 15 percent in year 2012. Every day, more than half of adult population drinks coffee is about 108.9 million people.
Job creation is a generally good aspect of any type of business. With the economy stagnating and the unemployment rate hovering around 10%, the Kelantan state could definitely use some more jobs. More employment would mean that people would have more money to save, spend and invest.
Malaysia is an upper-middle income economy with a gross national income of USD 8,770 per capita in 2011. It is a highly open economy.
Short term interest rates are pretty much set by the bank. With the rise of the credit card, short term rates influence shopping habits, which means that people thinking about to starting a retail business. Long term interest rates rise and fall in corporate and government bond markets. Long term rates have a major impact on how easy it is for consumers to afford anything that they want because these items are usually financed with long-term loans. Long-term rates also affect consumer demand for expensive items.
Changes in the way people live their lives affect how they work, what they buy, how they play and where they live.
Many social aspects of coffee can be seen in the modern day lifestyle. Coffee plays a large role in much of history and literature because of the large effects the coffee industry has had on cultures where it is produced or consumed. Coffee in culture or trade is a central theme and prominently referenced in much poetry, fiction and regional history.
5.1 Norms and Traditions
A while ago, the coffee shop is a public place where most of the main social activities happen for Malaysia society and coffee culture started in small villages. Only men were allows hang out in coffee shop due to Malay culture, where women must only stay at home to prevent any unpleasant things happen such as rumours or immoral behaviour. In another situation, Malaysians enjoy coffee or tea when visiting relatives or neighbours when the owner of the house will serve coffee or tea to the guest as appreciation of their visiting to the owner’s house. Until now, the tradition still continues especially in village areas.
5.2 Preferences of Local People
Time and progress does contribute towards social changes. From small coffee shop and kopitiams, retail coffee shops begin to enter local society, together with variety of fast food chain and grow rapidly as requested for these kinds of lifestyle is booming together with economic changes and buying power. This new lifestyle leads o sudden changes in food and beverage industry resulting in branded coffee shop and kopitiams mushrooming and people becoming more demanding for greater services. Thus, Malaysia coffee culture now not only provides small stalls but has also developed to cafe with their own brand name. It also has been inspiration to local coffee businessman to started re-branding their corporate design and interior, provides services and creates new concept and feeling.
6. INSTITUTIONAL ANALYSIS
To open a One Stop Cafe according to city codes and regulations, the business will need to secure a food handling permit by submitting an application, paying a fee, and passing an inspection. Government policy exists to manage entry into an industry with licensing requirements regulations. Opening a coffee shop will require obtaining certain licenses such as business licenses and tax id’s, among other possible licenses. Registration of a new business can be done at Companies Commission of Malaysia (SSM). In this case, One Stop Cafe also must registered and obtain a business license from District Council of Ketereh, Kelantan before operate its business. It is legal by law that every entrepreneur has to follow the rule. There is also a certain body or agency that can assist entrepreneurs to build and grow the business such as Ministry of Entrepreneurship Development and Co-operation (MeCD), MARA and TEKUN Nasional.
The specific services currently offered by the MeCD are a one-stop entrepreneurship information centre, the spearheading of the franchise and vendor development program and the provision of entrepreneurship training, subsidized business premises for qualified entrepreneurs, financial assistance in the form of grants or loans, and an online resource and information centre for entrepreneurs. MARA is helping entrepreneurs in the field of Entrepreneur Development, Business and Industry Development, Business Infrastructure Development and Business Financing. While TEKUN Nasional is an institution that provides business opportunities as well as income generation opportunities, business capital financing and guidance and support services as well as providing a networking platform for entrepreneurs.
7. ENVIRONMENT ANALYSIS
An environmental analysis was looks at the general and nearby conditions and evaluates the ways in which external forces and factors could influence the profitability of the business.
Traffic in the area of the cafe quite busy throughout the day. It is because functions Pasir Mas-Pasir Hor Highway and the main route to the city and other districts of Kelantan. Besides, it is also focus and appeal to customers because of its strategic location.
One Stop Cafe is also easily visible and has good accessibility. This Cafe is located in the main street and has a car park reserved for customers.
The One Stop Cafe will off its customer by using re-usable coffee mugs. The goal of coffee mug is to support environmentally friendly practices, save money on one time use cups and increase awareness of environment hygiene.
The One Stop Cafe is operating air-conditioners, many lights, dishwashers and a lot of cooking equipment and all of which consume energy. Heating water used for cleaning also consumes a lot of energy. The cafe has implementing the strategies that can reduce energy consumption and once can reduce operational costs significantly.
Traditionally, coffee shops use a lot of water for cleaning and dishwashing. Many new dishwashers require significantly less water and new developments in technology, equipment and cleaning processes now offer low-water options. Water is becoming increasingly more expensive and this is expected to continue in the future.
Packaging in all forms, is one of the biggest waste products generated in coffee shops along with detergent polluted water and waste heat. Waste food can also be a significant problem. Any ongoing relationship with commercial waste removal companies will enable the cafe to obtain a record of actual waste generated. Our cafe also assess the quantities and different types of waste that generate, and the disposal methods.
A priority for every cafe is to make sure it is clean and hygienic. To achieve this, the One Stop Cafe workers have often had to use chemicals that have a significant impact on both the environment and staff. In recent years, new options have emerged that provide good results with much-reduced, or even no impacts.
Business plan is valuable in, that it helps One Stop Cafe gain a deeper understanding to the coffee shop business. It is also show the best shape of business opportunity and grow our business. There are some critical factors that may lead to the success of a new business venture. The Cafe business is easy to open a single small cafe that means low entry barriers. It is also includes several aspect such as install the equipment, remodel and get license as needed. However there are high entry barriers for the specialty level or big competition players with strong brand recognition of major players especially McDonalds. Economies of scale realised by big players is means cost disadvantage for new entrants like One Stop Cafe. From the analysis, our cafe experienced a decline in second year sales due to the mistake of negotiating every deal or making every sale like they will never see or need the customer again. In addition, the cafe believes to adopt effective communication systems. Excellent business believes in the importance of informality between management and employees to enhance communication. One Stop Cafe has to keep consistent in making sales and their incomes year by year, and also it’s should be driven by quality. Excellent business strives to make things that work fast and last. Their fundamental goal is to create products and services that add value to the lives of their customers.
The owners have to taking classes with an expert on growing and expand the business in the future. It is also more meaningful to work closely with the mentor or a company that provides business training services. One Stop Cafe owners should have also spent considerable time fostering relationships with suppliers of their business. This strong relationship has led to a promise for the cafe to provide debt financing for the equipment to open new cafes. One of the most difficult tasks that an entrepreneur faces is financing growth. The supplier can help One Stop Cafe keep abreast of the latest on new equipment coffee machines to understand the trade-off between the likely higher price and the savings from lower energy.
In marketing aspects, One Stop Cafe will have a Facebook page that will keep college students and teenager updated on current promotions and events. Facebook “likes”, followers, and reposts will be a great way to measure brand attitude and awareness. One Stop Cafe will also have a Twitter account that allows students to keep up with daily promotions. Measuring the amount of “re-tweets” and followers will be another great way to measure brand attitude and awareness among customers. It is even possible to talk to the competitors by attending the trade shows. The owner has to start attending trade shows. Through these events, it is useful to know new concepts and a potential of competitor in the coffee shop business. As such, the owners can gain deep insight into the competition’s business and strategy. The key is to view the business planning process as one of gathering information that will help the business forward and succeed. Excellent business seek to be innovative in almost every aspects of their business including pricing, human resource policies, distribution, sales promotion, signs and not just in their products and services.
1. Peter J. (2004), Successful Business Planning in 30 Days, Pearson Education South Asia Pte Ltd. 2. Paul, Steven & Collin (2010), Business Plans for Dummies, John Wiley & Sons Ltd. 3. Andrew, Stephen & Jeffry (2011), Business Plans That Work, Mc Graw Hill Companies (2011). 4. Deviga & Karunagaran (2010), Principles of Economics Second Edition, Oxford University Press. 5. Ng, Zhang, Maran and Sandeep (2010), Financial Management, Wiley-black well Publisher.Oxford University Press.
1. http://www.bplans.co.uk/coffee_shop_business_plan/market_analysis_summary_fc.cfm 2. http://www.academia.edu/1088257/Malaysian_Coffee_Culture_a_Research_of_Social_Aspect_Branding_and_Design 3. Coffee culture
4. Preferences in Coffee Shops: Social and Environment Factors architecture.unl.edu/projects/bsfed/…/
5. Coffee Shop Marketing Strategies
6. Business You Can Start
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