Over the last fifteen years or so, the country has seen a major shift in how we prefer our coffee. Gone are the days where we flocked to the gas station for a cup of morning joe, adding as much sugar as possible to mask the terrible quality. Today, we increasingly appreciate high-quality and even artisanal coffee choices. Coffee shops have become a comfortable environment for work and socialization. While coffee shops are popping up everywhere, launching one can be expensive. The first step to getting your shop off the ground is to write a fantastic coffee shop business plan so you can raise the funding you need.
Many entrepreneurs and business plan writers approach a coffee shop business plan the same way they approach any other business plan. However, coffee shops operate differently than other businesses, even other food businesses. In the following post, we will explain these differences and teach you everything you need to know to write the most effective plan for your coffee shop venture.
Download our winning coffee shop business plan template here!
Important Coffee Shop Business Plan Considerations
Coffee shops operate uniquely when compared to other types of venues. On one hand, they are a provider of awesome coffee and snack products. On the other hand, they often operate as lounges, social hangouts, or even remote working environments. Here are three important questions you should address when writing your coffee shop business plan.
How Can You Maximize Customer Spend?
Obviously, your cafe will serve coffee. However, single cups of coffee will only get your business so far. The most successful coffee shops are those that are able to maximize the amount of customer spend by providing a wide variety of products.
Whether its espresso products like cappuccinos and iced coffee or food items like bagels and muffins, investors want to know how you will diversify your offering. Once you have decided what products you will offer, use research to estimate what portion of consumers will buy additional products. Represent these projections with a financial model to substantially strengthen your coffee shop business plan.
What Is Your Competitive Advantage?
There are over 20,000 coffee shops and cafes currently operating in America. These shops are each vying for their share of the $10 billion per year industry. In any market where a single coffee shop exists, several usually exist. Competition in this industry is heavy, and those who don’t manage to stand out often fail.
Investors want to know what makes you different. If three coffee shops existed within the same neighborhood, what makes people want to stop at yours?
Identify the competitors that serve your market within the same region. Perform a competitive analysis to recognize their strengths and weaknesses. Then, complete a SWOT analysis process to identify potential opportunities and threats.
With so many coffee shops seeking funding, you’ll need a clear advantage to impress investors. Whether it’s a higher-quality product, a better atmosphere, or a niche offering, make sure that your unique selling proposition is clearly defined.
What Is The Long-Term Plan?
Unfortunately, a single coffee shop is limited to how much profit it can earn. Even at maximum capacity, your shop will only serve so many customers in a single day. In the early stages, maybe they can add more equipment and more staff to serve an increase – but eventually, they will max out their capacity.
Investors want to see the big picture. Once your coffee shop has proven successful, what’s next? Duplicate its success by opening another shop on the other side of the city? Franchise the idea out to entrepreneurs in other cities? Expand it into a full-on co-sharing office space? The opportunities are endless.
In your coffee shop business plan, consider how you will expand, and possibly even how you will exit.
Critical Elements of a Coffee Shop Business Plan
In general, a coffee plan will follow the same business plan format as any other brick and mortar business. However, since coffee houses and coffee bars operate differently than some other food businesses, cafe business plans must be written with a different approach. In the following sections, we will explain the layout we use when developing a coffee and pastry shop business plan.
Executive Summary
The executive summary is arguably the most important section of the coffee shop plan. This section is presented as the first section of the plan, but it is often written last.
Your executive summary is essentially a vastly condensed version of the plan. It provides the highlights of each section that can be found throughout your coffee shop’s business plan.
The goal of the executive summary is to convince readers to continue reading the remainder of the document. Business plans can be extremely long – sometimes up to 40 pages or more. People often will not read further than the executive summary unless it was strong enough to capture their attention and build their curiosity.
Company Details
When you write your coffee business plan, start with a company description. In this section, you’ll want to describe your coffee house concept and introduce the reader to your idea.
Talk about the milestones you’ve reached so far. Have you located a building for your coffee shop? Have you secured supply from a supplier of rare artesian beans? If you’ve reached any milestones, list them here in the company details section.
Furthermore, explain which products and services your coffee bar will carry. You don’t have to describe every single product, but at least give readers some insight into the different categories of coffee products that you sell. Always remember, products aren’t the only thing that your coffee shop provides – the experience, the ambiance, and a sense of community may be other highly attractive elements of your cafe business plan.
Industry Research
Sure, there are many successful coffee shops out there – but many of them have failed as well. Not every location is prime for a new cafe. A high-priced cafe on a college campus may seem like a great idea until you find out that the students can’t afford your products. Market research is critical to proving the potential of your coffee shop concept to investors or funders.
Start by determining exactly who your customer is. Sure, you will serve a variety of different people – but which customer group will you target? Students? Employees on their way to work? Maybe remote workers who use the coffee shop like an office?
Once you know who you are targeting, research to find out how many of these customers live within your serviceable area. Of the number of people who fit your specific customer type, how many can you attract to your coffee shop on a daily basis?
Marketing Strategy
A huge sign outside of your coffee shop won’t be enough to draw in customers. While word-of-mouth is a great way to get customers in the door, you will still need a great marketing strategy to persuade customers to visit.
Consider which methods you will use to introduce your coffee shop – whether it’s social media, posting in local newspapers, building relationships with other local businesses, or another strategy. Keep in mind, however, that coffee shops depend on loyalty and repeat business. It may be a good idea to add some type of loyalty program to your coffee shop marketing strategy.
Competitive Analysis
Cafes are more popular than ever. In general, if there’s anywhere in the United States that a coffee shop has the potential to succeed – one probably already exists. In order to win, you will need a clear competitive advantage that completely separates you from the other coffee shops within the region. Use a competitive table to display your competitors and showcase your competitive advantages.
Operational Strategy
Running any business is tough, but operating a coffee shop comes with a variety of challenges. Your small coffee shop business plan needs to contain a well-thought strategy for operating the business on a day-to-day basis.
A coffee shop business plan operational strategy should describe how you will deal with supply & inventory, staffing & hiring, quality control, customer service, and more.
Furthermore, it should explain how you will source your products – everything from coffee beans to the toilet paper in the bathroom. Think of every task that must be in place to successfully operate your coffee shop for a single day – and make sure that there is a plan in place to address each of these tasks.
Management
Running a coffee shop isn’t for everyone. Doing so successfully takes experience, leadership skills, and knowledge of food & drink management. Investors will pay close attention to your coffee shop management plan.
Provide bios of all owners and managers who will be involved in the operation of the business. What are their specific skills and how do those skills lead to the success of your coffee shop? Do they have past experiences that will be beneficial to the launch of your business?
Financial Model
When reading your plan, investors are looking to find out one thing – how much money can they make? To find this information, they will turn to your coffee shop business plan financials section.
Take all of your research, testing, and planning, and develop financial projections for 3-5 years into the future. Make it clear how much money is needed to get started, what you’re offering in return for their investment, and how much ROI an investor can expect to earn.
A coffee shop business plan financial model should include all standard statements such as Profit & Loss, Cash Flow, Balance Sheet, Cap Tables, Loan Amortization Schedules (if applicable), and more.
Writing Your Investor-Ready Business Plan
Ready to create the perfect coffee shop business plan? We’d love to help. At ThinkLions, we have written dozens of plans for food-based startups from food trucks to coffee subscription services and beyond. Our business plan consultants know exactly what it takes to write a winning plan that investors pay attention to. Contact us today to speak with an expert startup consultant about your coffee shop venture today!
