Table of contents
- Summary of the Report
- Summary of the Business
- Ownership of the Business
- Summary of the Start-Up
- Locations and Facilities of the Company
- Summary of Market Research
- Summary of the Strategy and Execution
- Summary of Leadership
- Plan your finances
Summary of the Report
Java Culture coffee shop has resolved to become a daily requirement for neighboring espresso junkies, a place to fantasize about while you attempt to escape the rigors of everyday life, and simply a cozy place to meet friends or read a book, all in one. Java Culture will take use of its closeness to the University of Oregon campus to establish a core group of repeat consumers in response to the rising demand for great gourmet coffee and excellent service. Java Culture will provide its clients with the best-organized espresso in the area, which will be accompanied by pastries, as well as complimentary literature to read during their stay.
Within walking distance of the University of Oregon campus, the agency will operate a 2,300 square foot espresso bar. This site has been secured by the owners via a three-year lease with the option to extend. In addition, they have contributed $140,000 of the needed $170,000 in start-up funding. The rest of the money will come from Bank of America industrial loans.
The company expects to increase sales revenue from $584,000 in FY2001 to $706,000 in year three. Java Culture’s online profits will grow from $100,000 to $125,000 during the same time period as it strives to maintain a 65 percent gross profit margin and appropriate operating expenditures.
- For the first year of operations, Java Culture has set the following goals:
- With the help of the local restaurant directory, it became the “Best New Coffee Bar in the Area.”
- Profits are generated during the first month of operations.
- Maintain a gross margin of 65 percent.
The following are the keys to success:
- Customers will like the store layout, which is both aesthetically appealing and intended for quick and efficient operations.
- Employee training is required to ensure that the best espresso preparation procedures are used
- Marketing methods seek to cultivate a loyal client base while also boosting revenue from high-margin items like espresso drinks.
Java Culture will make every effort to create a unique space where customers can interact in a comfortable and relaxed atmosphere while enjoying the best-brewed espresso or espresso and pastries in town. We shall be in the business of assisting our clients in releasing their daily tensions by providing peace of mind via a fantastic atmosphere, an accessible location, courteous patron service, and consistently high-quality items. Java Culture will reinvest its profits to improve employee satisfaction while providing a consistent return to its stockholders.
Summary of the Business
In its 2,300 square foot premium coffee shop near the University of Oregon campus, Java Culture, an Oregon limited liability business, provides coffee, other drinks, and snacks. Arthur Garfield and James Polk, who together hold over 70% of Java Culture, are the company’s major investors. The firm is estimated to have incurred a $27,680 start-up loss.
Ownership of the Business
In the kingdom of Oregon, Java Culture is incorporated as a Limited Liability Corporation. Arthur Garfield controls 51% of the business. In Java Culture, LLC, his cousin James Polk, as well as Megan Flanigan and Todd Barkley, have minority holdings.
Summary of the Start-Up
- The following items are included in the start-up costs:
- A total of $1,300 was spent on legal fees for acquiring licenses and permits, as well as accounting services.
- For the grand launch of Java Culture, marketing merchandise expenditures of $3,500 were incurred, as well as flyer printing costs of $3,580 (2,000 flyers at $0.04 per copy).
- $3,000 in consultant fees were paid to ABC Espresso Services for assistance in setting up the espresso bar.
- A total premium of $2,400 covers insurance (general liability, workers’ compensation, and property casualty).
- Pre-paid hiring charges totaling $4,400 for one month at $1.76 per square foot.
- Redesigning of the premises in the amount of $10,000.
- Stationery ($500) and telephone and utility deposits ($2,500) are among the other start-up costs.
- The following items are included in the $142,320 start-up property requirement:
- Operating capital of $67,123, which includes $23,900 in employee and owner pay for the first two months and $14,400 in cash reserves for the first three months (about $14,400 each month)
- $16,027 in start-up inventory, which includes:
- Beans of coffee (12 regular brands and 5 decaffeinated brands) $6,000 –
- Filters for coffee, baked goods, salads, sandwiches, tea, and other liquids, among other things. – $7,000.00
- Resources for retailers (napkins, espresso bags, cleaning, etc.) $1,840 –
- $287 for office supplies
- Equipment for the $59,170 total quantity:
- $6,000 for a desktop with espresso.
- $900 for a coffee maker
- $200 for a coffee grinder
- Equipment for food service providers (microwave, toasters, dishwasher, refrigerator, blender, etc.) – $18,000 Hardware for storage (bins, utensil rack, shelves, food case) $3,720 –
- Equipment to be placed on the counter (counter top, sink, ice machine, etc.) – $9,500
Serving tools in the area (plates, glasses, flatware) – $3,000
Tools for the store (cash register, security, ventilation, signage) – $13,750
Office supplies (computer, fax/printer, phone, furniture, filing cabinets) –
Other incidental charges: $3,600 – $500
The two most essential sources of funding for a corporation are owner investments and financial institution loans. Arthur Garfield and James Polk, two influential proprietors, have given $70,000 and $30,00, respectively. A total of $40,000 has been invested by all traders, bringing the total investment to $140,000. The last $30,000 needed to cover start-up costs and assets came from two bank loans: a $10,000 one-year loan and a $20,000 long-term (five-year) loan. Both of the loans were obtained via Bank of America. As a result, a total start-up loss of $27,680 is projected.
The startup assumptions are summarized in the chart and desk below.
The startup assumptions are summarized in the chart and table below.
Locations and Facilities of the Company
The Java Culture coffee shop will be located on the ground level of a commercial building on West 13th Avenue and Patterson Street in Eugene, Oregon. The group has signed a one-year lease for the empty 2,500 square feet space that was previously occupied by a hair shop. The leasing deal contains a three-year option for renewal at a set rate, which Java Culture will exercise based on the financial strength of the firm.
A 200-square-foot rear office and a 2,300-square-foot espresso bar will be included in the ground plan, which will contain a dining area with 15 tables, a kitchen, a storage area, and two restrooms. The space in the espresso bar will be divided roughly as follows: 1,260 rectangular feet (or 55 percent of the total) for the sitting area, 600 rectangle feet (or 26 percent) for the production area, and 440 rectangular feet (19 percent) for the customer carrier area.
This property is situated in an industrial region near the University of Oregon campus, on the corner of a major road that connects wealthy South Eugene with the bustling downtown business sector. The espresso bar, kitchen, and storage space will only need a modest alteration in the commercially zoned premises, which already have the necessary water and electrical energy connections. The open and clean inside layout of the coffee bar, along with modern wooden décor, will reflect the high quality of the supplied drinks and snacks and will be consistent with the establishment’s stance as an eclectic space where people can relax and enjoy their cup of coffee. Clear window displays, which will let passers-by observe customers enjoying their drinks, as well as backyard electric-powered signs, will be used to attract patron site visitors’ attention.
Java Culture will provide the best espresso drinks in the neighborhood to its customers. This will be done by using powerful drugs and adhering to stringent practice requirements. The store layout, menu listings, and marketing efforts will all be geared at increasing sales of higher-margin espresso beverages. The espresso bar will also provide brewed espresso and teas, as well as various refreshing beverages, in addition to espresso drinks. Pastries, mini salads, and sandwiches will also be available at Java Culture. Java Culture will also be selling espresso beans to connoisseur customers who like to make their own espresso at home.
Customers will be able to augment their menu options with complimentary books and periodicals available within the espresso bar.
Description of the product
The Java Culture espresso bar’s menu will focus on espresso-based espresso beverages such as lattes, mochas, and cappuccinos. Whole, skimmed, or soy milk will be available in each of the espresso-based cocktails. Each of these espresso beverages is made from a single shot of espresso, which is made by pushing heated water through ground coffee under high pressure in an espresso machine. To make espresso-based drinks, these espresso shots are combined with steamed milk and/or additional ingredients such as chocolate, caramel, and so on. For such cocktails, proper preparation procedures are crucial. A little variation in the amount of espresso in the shot, the measurement of espresso particles, the temperature of the milk, and other factors may have a negative impact on the best of the organized drink.
Literature for Sales
Within two weeks of the launch of Java Culture, 2,000 flyers will be distributed in the surrounding neighborhood, on the University campus, at the stores, and in the selected office buildings. Following that, complimentary postcards endorsing Java Culture will be produced to increase the company’s exposure among customers.
Summary of Market Research
Coffee consumption in the United States has been steadily increasing, with gourmet coffee seeing the most rise. Coffee drinkers in the Pacific Northwest are notorious for being obnoxious. They expect excellent service and well-brewed gourmet coffee drinks. Eugene, OR, has always been a fantastic location for espresso shops due to its liberal and welcoming population and lengthy rainy winter. Java Culture’s espresso bar, located near the busy University of Oregon campus, will try to establish a loyal customer base by providing a great-tasting espresso in a fun setting.
Segmenting Your Market
Java Culture will target university students and instructors, those who work in offices near the espresso bar, and sophisticated youngsters with its advertising efforts. According to our data, these are the firms most likely to buy premium coffee. Because gourmet coffee consumption is widespread across all socioeconomic groups and is mostly dependent on higher education levels, proximity to the University of Oregon campus will provide access to the desired client base.
The graph and table below depict the total market of gourmet coffee consumers in Eugene, OR (in terms of a number of customers).
Market Segmentation Objectives
People who desire a daily cup of great-tasting espresso in a calm environment will be catered to at Java Culture. The age of our customers varies, but since we are located near a university campus, the majority of our clientele will be university students and teachers. According to our research, they are discriminating against customers who want higher-quality coffee. Furthermore, many university students see espresso cafes as a convenient reading or gathering spot where they may study or connect with friends without having to pay a cover fee. This will provide us with a once-in-a-lifetime chance to grow our consumer base.
Needs of the Market
The present surge in connoisseur coffee is unquestionably fueled by the general trend toward extraordinary amongst American consumers. Furthermore, elements such as a need for minor indulgences, as well as a desire for something more original and unusual, provide a suitable advertising opportunity for coffee shops.
Analyzing the Market
Over the last decade, coffee consumption in the United States has increased at a constant 2.5 percent annual rate. Gourmet coffee accounted for 33% (or $2.5 billion) of total espresso sales in 1994. In the Pacific Northwest of the United States, retail espresso is booming. The environment in the area, which has a long rainy season, is ideal for drinking hot non-alcoholic drinks. At the same time, hot, dry summers compel people to seek out iced beverages at cafés. Furthermore, in the Pacific Northwest, coffee has become a way of life. Its espresso connoisseurs are an exclusive group.
Patterns of Purchase and Competition
Eugene has 45 established snack & non-alcoholic beverage bars (NAICS 722213) with total sales of $14.2 million in 1997, according to the Oregon Food Provider Statistics (NAICS 72). The majority of Eugene’s limited- and full-service restaurants, for example, provide espresso drinks to their patrons. Other coffee shops located near the University of Oregon campus will be Java Culture’s immediate competitors. Starbucks, Cafe Roma, The University of Oregon Bookstore, and other coffee-serving establishments are among them. Because of its powerful economic significance and well-connected marketing and operational strategies, Starbucks will simply be one of the most significant rivals. Regardless of Starbuck’s market dominance, many consumers prefer smaller, independent businesses that provide a welcoming atmosphere and high-quality coffee at a moderate cost. Cafe Roma is a prime example of this kind of rivalry. Starbucks has a 35 percent market share in the area, Cafe Roma has a 25% market share, The UO Bookstore has a 10% market share, and the remaining market share is split among other businesses. Java Culture will market itself as a one-of-a-kind espresso bar that not only serves the best-tasting coffee and pastries, but also provides a homey, comfortable, and relaxing atmosphere that is lacking in many established corporations. We will cater to the bodies and brains of our clients, allowing us to increase our market share in this competitive sector.
The most significant reason for customers to return to a unique coffee shop is the exceptional taste of the coffee, the prompt service, and the wonderful ambiance. Despite the fact that, as previously stated, coffee consumption is consistent across all profit groups, Java Culture will price its products competitively. We are certain that selling coffee in a beautiful package at a high-end location would help us build a solid customer base.
Summary of the Strategy and Execution
The marketing strategy for Java Culture will be focused on attracting new consumers, retaining existing customers, and encouraging customers to spend more and return more often. Establishing a loyal customer base is critical since such a customer base will not only earn the majority of revenue but will also provide positive recommendations.
Advantage over your competitors
Java Culture will establish itself as a one-of-a-kind coffee shop where customers may not only enjoy a cup of well-made espresso but also spend time in a relaxing atmosphere. Comfortable couches and chairs, subdued lighting, and a piece of soothing background music will help customers rest and unwind from their daily pressures, setting Java Culture apart from its rivals.
The sales will be handled by baristas from Java Culture. At least two personnel will be serving customers to speed up the purchasing process: one will be preparing the customer’s order, while the other will handle the sales transaction. All sales information recorded on the electronic point-of-sale terminal will be examined for advertising reasons afterward.
Java Culture will employ posters and leaflets to build its client base, as well as buyer recommendations and cross-promotions with other community groups. Simultaneously, customer retention initiatives will be implemented to ensure that customers return to the coffee shop and spend more money.
For espresso beverages, a 25% discount is anticipated, whereas retail beans and pastries are discounted 50%. Because of its proximity to the university campus, sales will be seasonal, with revenues only slightly declining during faculty vacation times.
Our predicted revenue prediction for the next three years is shown in the graph and table below.
Summary of Leadership
Through Arthur Garfield and James Polk, Java Culture is majority-owned. Mr. Garfield graduated from the University of ZYX with a Bachelor of Business Administration. He has been a self-employed business consultant for many years. He used to own the ABC Travel Agency, which he sold four years ago at a profit. Mr. Garfield has a large network of business connections in Oregon, which he will use to aid the success of his new endeavor. Mr. Polk graduated from XYZ State University with a Bachelor’s Degree in Psychology. He has spent the last five years as a supervisor at DEF Ristorante in Portland, OR, a successful Italian restaurant. The restaurant’s revenue has steadily increased under Mr. Polk’s leadership while operating expenditures have remained lower than average.
However, due to their other obligations, the investors will no longer be involved in Java Culture’s daily management choices. A professional supervisor will be hired ($35,000/year) to manage all aspects of the coffee shop’s operations. Coffee preparation will be handled by two full-time baristas ($25,000/year each). To meet the staffing demands, four more part-time workers will be hired. To deal with the increasing sales volume in the second and 0.33 years of operation, an additional part-time employee will be hired.
Team of Directors
To handle the day-to-day activities of Java Culture, a full-time manager will be employed. The applicant (whose name has been changed owing to a current work obligation) has three years of management experience in Oregon’s particular industry. This person’s responsibilities will include managing the personnel, ordering inventory, working with suppliers, devising a marketing and advertising strategy, and other day-to-day management tasks. We are certain that our applicant has the necessary experience for this position. Based on the first year’s operating success, a profit-sharing plan for the supervisor may also be considered.
Team Gaps in Management
Despite the owners’ and managers’ experiences in the field, ABC Espresso Services, the consultants that helped to promote the business concept for Java Culture, will continue to provide advising services to the firm. This company has over two decades of experience in the retail espresso industry and has successfully launched dozens of coffee shops around the United States. Market research, customer satisfaction surveys, and further input into the appraisal of new company prospects will be the primary functions of consultants.
The table below shows the Java Culture coffee shop’s staffing requirements.
Plan your finances
Java Culture will take advantage of the strong demand for outstanding connoisseur coffee. The company’s founders have put up a substantial amount of money to get it off the ground. The company’s net worth will double in two years thanks to successful management focused on establishing and expanding a loyal customer base. Java Culture will have a healthy 65 percent gross margin, which, when combined with reasonable operational expenditures, will provide enough revenue to fund future expansion.
Assumptions in General Table
Cash Flow Forecast
The firm will retain a good cash flow situation, as shown in the chart and table below, allowing for timely debt payment and money available for future expansion.
The Most Important Financial Indicators
Analysis of the Break-Even Point
Java Culture’s break-even sales volume is roughly $31,300 per month, based on typical monthly consistent fees of $20,300 in FY2001 and an average margin of 65 percent. As further shown, the firm is expected to achieve such revenue volume right from the outset.
Profit and Loss Estimates
In FY2001, predicted sales of $584,000 equate to $254.00 per square foot, which is in line with industry standards for this kind of coffee shop. Overall, the company’s net profitability rises from 17.06 percent in FY2001 to 17.63 percent in FY2003 as it established itself in the local market. The expected Profit and Loss Statement for FY2001-2003 is shown in the table below.
Balance Sheet Forecast
The company’s net worth is predicted to grow from about $212,000 at the end of FY2001 to around $443,000 in FY2003. The predicted balance sheets for this time are summarized in the table below.
Ratios in Business
The business ratios of the firm are summarized in the table below. The last column shows the typical business ratios for Specialty Eating Places in the industry (SIC 5812).