Coffee Kiosk Business Plan

The Daily Perc

Executive Summary

Opportunity

Problem

There are many different kinds of coffees and caffeinated specialty drinks that go along with the snacks that we serve. Some people like dark bold coffee, some people like sweet weak coffee. Some prefer green tea. People have traveled the globe and experienced lots of different cuisines so it’s easy to figure out what they like and what they don’t. We offer something for everyone.

Solution

The Daily Perc offers its patrons the finest hot and cold beverages, specializing in specialty coffees, blended teas, and other custom drinks. In addition, TDP will offer soft drinks, fresh-baked pastries, and other confections. Seasonally, TDP will add beverages such as hot apple cider, hot chocolate, frozen coffees, and more.

Market

The United States is a very mobile society. With the introduction of the automobile, we became a nation that thrived on the further freedom of going where we wanted when we wanted. It has only gotten worse. There are over 250 million men, women, and children in America, half of whom are too old, too young, or too poor to drive an automobile. Yet, there are more licensed vehicles in the country than people. And that mobility has created a unique need in our society.

Our market is made up of consumers who have busy schedules, a desire for quality, and disposable income. As much as they would like the opportunity to sit in an upscale coffee house and sip a uniquely blended coffee beverage and read the morning paper, they don’t have the time. However, they still have the desire for the uniquely blended beverage as they hurry through their busy lives.

Competition

There are four general competitors in The Daily Perc’s drive-thru market. They are the national specialty beverage chains, such as Starbucks and Panera, local coffee houses–or cafes–with an established clientele and a quality product, fast food restaurants, and convenience stores. There is a dramatic distinction among the patrons of each of these outlets.

Patrons to a Starbucks, or to one of the local cafes, are looking for the “experience” of the coffee house. They want the ability to “design” their coffee, smell the fresh pastry, listen to the soothing Italian music, and read the local paper or visit with an acquaintance. It is a relaxing, slow paced environment.

Patrons of the fast food restaurants or the convenience stores are just the opposite. They have no time for idle chatter and are willing to overpay for whatever beverage the machine can spit out, as long as it’s quick. They pay for their gas and they are back on the road to work. Although they have the desire and good taste to know good from bad, time is more valuable to them.

Competitors to the Mobile Cafes on campuses would include fast food restaurants–assuming they are close enough to the consumer that they can get there and back in the minimal allotted time, vending machines, and company or school cafeterias. The consumers in this environment are looking for a quick, convenient, fairly priced, quality refreshment that will allow them to purchase the product and return to work, class, or other activity.

Competitors to the Mobile Cafes at events such as festivals and fairs would include all the other vendors who are licensed to sell refreshments. Attendees to such events expect to pay a premium price for a quality product.

Why Us?

The Daily Perc offers its patrons the finest hot and cold beverages, specializing in specialty coffees, blended teas, and other custom drinks. In addition, TDP will offer soft drinks, fresh-baked pastries, and other confections. Seasonally, TDP will add beverages such as hot apple cider, hot chocolate, frozen coffees, and more.

Expectations

Forecast

The Daily Perc’s financial picture is quite promising. Since TDP is operating a cash business, the initial cost is significantly less than many start-ups these days. The process is labor intensive and TDP recognizes that a higher level of talent is required. The financial investment in its employees will be one of the greatest differentiators between it and TDP’s competition. For the purpose of this pro-forma plan, the facilities and equipment are financed. These items are capital expenditures and will be available for financing. There will be a minimum of inventory on hand so as to keep the product fresh and to take advantage of price drops, when and if they should occur.

The Daily Perc anticipates the initial combination of investments and long-term financing to carry it without the need for any additional equity or debt investment, beyond the purchase of equipment or facilities. This will mean growing a bit more slowly than might be otherwise possible, but it will be a solid, financially sound growth based on customer request and product demand.

Financial Highlights by Year

Financing Needed

Planned Investment

Partner 1 $20,000

Partner 2 $20,000

Partner 3 $20,000

Partner 4 $20,000

Partner 5 $20,000

Partner 6 $20,000

Partner 7 $20,200

Partner 8 $20,250

Partner 9 $20,250

Partner 10 $21,250

Totaling $221,950

Opportunity

Problem & Solution

Problem Worth Solving

 

There are many different kinds of coffees and caffeinated specialty drinks that go along with the snacks that we serve. Some people like dark bold coffee, some people like sweet weak coffee. Some prefer green tea. People have traveled the globe and experienced lots of different cuisine so its easy to figure out what they like and what they don’t. We offer something for everyone. 

Our Solution

The Daily Perc is a specialty beverage retailer. TDP uses a system that is new to the beverage and food service industry to provide hot and cold beverages in a convenient and time-efficient way. TDP provides its customers the ability to drive up and order from a trained Barista their choice of a custom blended espresso drink, freshly brewed coffee, or other beverage. TDP is offering a high quality option to the fast-food, gas station, and institutional coffee.

Target Market

Market Size & Segments

The Daily Perc will focus on two markets:

The Daily Commuter – someone traveling to or from work, out shopping, delivering goods or services, or just out for a drive.
The Captive Consumer – someone who is in a restricted environment that does not allow convenient departure and return while searching for refreshments, or where refreshments stands are an integral part of the environment.
4.1 Market Segmentation

The Daily Perc will focus on two different market segments: Commuters and Captive Consumers. To access both of these markets, TDP has two different delivery systems. For the commuters, TDP has the Drive-thru coffee house. For the captive consumer, TDP has the Mobile Cafe.

Commuters are defined as any one or more individuals in a motorized vehicle traveling from point "A" to point "B." The Daily Perc’s greatest concentration will be on commuters heading to or from work, or those out on their lunch break.

Captive Consumers would include those who are tethered to a campus environment, or in a restricted entry environment that does not allow free movement to and from. Examples would include high school and college campuses, where there is limited time between classes and corporate campuses where the same time constraints are involved, but regarding meetings and project deadlines, and special events–such as carnivals, fairs or festivals–where there is an admission price to enter the gate, but exiting would mean another admission fee, or where refreshments are an integral part of the festivities.

The following chart and table reflect the potential numbers of venues available for the Mobile Cafes and what growth could be expected in those markets over the next five years. For a conservative estimate of the number of Captive Consumers this represents, multiply the total number of venues in the year by 1,000. As an example, in the first year, The Daily Perc is showing that there is a total of 2,582 venues at which we might position a Mobile Cafe. That would equate to a Captive Consumer potential of 2,582,000.

Similarly, there are well over 2,500,000 commuters in the metropolitan area, as well as visitors, vacationers, and others. It can also be assumed that these commuters do not make only one purchase in a day, but in many cases, two and even three beverage purchases.

The chart reflects college and high school campuses, special events, hospital campuses, and various charitable organizations. A segment that is not reflected in the chart (since it would skew the chart so greatly) is the number of corporate campuses in the metropolitan area. There are over 1,700 corporate facilities that house more than 500 employees, giving us an additional 1,700,000 prospective customers, or a total of 2,582 locations at which we could place a Mobile Cafe.

Competition

Current Alternatives

When measuring head-to-head, direct competitors, we have found that there are none in the metropolitan area. The Daily Perc will be the first double-sided, drive-thru coffee house in the metropolitan area. However, there is still significant competition from traditional coffee houses and other retailers.

National Chains:
Starbucks, the national leader, had revenues in fiscal year 2000 of $2.2 billion. That is an increase of 32% over fiscal year. Starbucks plans to increase revenues to over $6.6 billion from 10,000 retail outlets over the next 5 years 

Panera had revenues of $151 million from corporate owned stores and $350 million from franchised locations last year. This fiscal year revenue was an increase in 28.9% on a per store basis.

The Daily Perc believes it has a significant competitive advantage over these chains because of the following benefits:

• Drive-thru Service
• More Substantial Customer Service
• Community Benefit
• Mobile Cafes
• Selection
• Higher Product Quality

Local Cafes:
The toughest competitor for The Daily Perc is the established locally owned cafe. TDP knows the quality and pride that the local cafe has in the product purchase by their customers. Any local cafe has a customer base that is dedicated and highly educated. The quality of beverages served at an established cafe will surpass any of the regional or national chains.

The competitive edge The Daily Perc has on the local cafes is based on the attributes of:

• Drive-thru Service
• Supply Discounts
• Mobile Cafe
• Consistent Menu
• Community Benefit
• Quality Product

Drive-thru Coffee Houses:
There is not a drive-thru specialty beverage retailer with significant market presence in the central United States. The only company with similar depth to that of The Daily Perc is Quikava, a wholly owned subsidiary of Chock Full ‘o Nuts. However, Quikava has limited its corporate footprint to the East Coast and the Great Lakes Region.

In the drive-thru specialty beverage market, The Daily Perc has a competitive edge over the smaller retailers, and even Quikava, due to:

• Mobile Cafes
• Consistent Menu
• Community Benefit
• Quality Product
• Supply Discounts
• Valued Image
• Greater Product Selection

Fast Food and Convenience Stores:
These are two industries where The Daily Perc will experience a certain level of competition. The national fast food chains and national convenience store chains already serve coffee, soda, and some breakfast foods. The national fast food chains obviously know the benefits and value to customers of drive-thru. TDP knows that within the specialty coffee and tea market, the quality of the products sold will be much greater than what can currently be purchased at fast food and convenience stores. The addition of domestic soda sales for these stores is a large part of revenue. TDP knows the quality of our products, along with the addition of domestic soda and the ease of drive-thru, gives it a competitive edge over fast food and convenience stores.

Other competition:
The Daily Perc knows that once it has entered the market and established a presence, others will try to follow. However, TDP believes that the corporate missions and even the organizational design will be imitated, but never duplicated. TDP will constantly evaluate its products, locations, service, and corporate missions to ensure that it remains a leader in the specialty beverage industry.

Our Advantages

The Daily Perc will penetrate the commuter and captive consumer markets by deploying Drive-thru facilities and Mobile Cafes in the most logical and accessible locations. The Drive-thrus are designed to handle two-sided traffic and dispense customer-designed, specially ordered cups of specialty beverages in less time than required for a visit to the locally owned cafe or one of the national chains.

The Daily Perc has identified its market as busy, mobile people, whose time is already at a premium, but desire a refreshing, high-quality beverage or baked item while commuting to or from work or school.

In addition to providing a quality product and an extensive menu of delicious items, to ensure customer awareness and loyalty, as well as positive public and media support, The Daily Perc could be donating up to 7.5% of revenue from each cup sold in individual Drive-thrus to the charities of the customers’ choice.

Keys to Success

Keys to Success

There are four keys to success in this business, three of which are virtually the same as any food service business. It is our fourth key–the Community Mission–that will give us that extra measure of respect in the public eye.

1. The greatest locations – visibility, high traffic pattern, convenient access.
2. The best products – freshest coffee beans, cleanest equipment, premium serving containers, consistent flavor.
3. The friendliest servers – cheerful, skilled, professional, articulate.
4. The finest reputation – word-of-mouth advertising, promotion of our community mission of charitable giving.

 

Execution

Marketing & Sales

Marketing Plan

Marketing Strategy

First and foremost, The Daily Perc will be placing its Drive-thru facilities in locations of very high visibility and great ease of access. They will be located on high traffic commuter routes and close to shopping facilities in order to catch customers going to or from work, or while they are out for lunch, or on a shopping expedition. The Drive-thrus are unique and eye-catching, which will be a branding feature of its own.

The Daily Perc will be implementing a low-cost advertising/promotion campaign which could involve drive-time radio, but not much more.

The Daily Perc will rely on building relationships with schools, charities, and corporations to provide significant free publicity because of its community support program. By giving charitable contributions to these institutions, they will get the word out to their students/faculty/employees/partners about TDP. Word of mouth has always proven to be the greatest advertising program a company can implement. In addition, the media will be more than willing to promote the charitable aspects of TDP and provide the opportunity for more exposure every time TDP writes a check to another organization.

Promotion Strategy

The long-range goal is to gain enough visibility to leverage the product line into other regions and generate inquiries from potential investors. To do that, The Daily Perc needs:

• Public relations services at $1,000 per month for the next year intended to generate awareness of editors and product information insertions, reviews, etc. It is anticipated that the school fundraising program will generate a fair amount of publicity on its own and will, perhaps, minimize–or even eliminate–the need for a publicist.
• Advertising at $1,000 per month concentrating on drive time radio. The Daily Perc will experiment with different stations, keeping careful track of results. As with the school fundraising program, TDP expects the facilities and signage to be a substantial portion of our advertising. However, in the start-up phase, TDP needs to let people know where to look for the facilities.

Marketing Programs

Distinctive Logo:
"Papo" is a very happy and conspicuous sun. The sun is one of infinite mental pictures. The sun touches every human being every day. Obviously, TDP wants to touch every customer every day. That is why the use of the sun lends itself to being the corporate identifier. Papo is already an awarding winning logo. Papo won in the New Artist Category of the 2001 Not Just Another Art Director’s Club (NJAADC).

Distinctive Buildings:
TDP is using diner style buildings for its Drive-thru facilities. TDP has worked closely with the manufacturer to make the building distinctive, so that it is easy to recognize, and functional.

The Fund-raising and Catering Trailer:
The Mobile Cafe will be a key marketing tool. The similarities between the Mobile Cafes and the Drive-thru facilities will be unmistakable. The exposure these units will provide cannot be measured in dollars. The Daily Perc will negotiate visits with the Mobile Units at schools, hospitals, corporations and other entities. In the case of schools and certain corporations, a portion of all sales made while on their campus could go to a program of their choice. The organization would promote its presence to their constituency and encourage them to frequent the Drive-thru establishments so that their charitable cause is nurtured. This will give those patrons an opportunity to taste the products and become a regular customer of the Drive-thru facilities. The Mobile Cafes will also be appearing at community events such as fairs, festivals, and other charitable events.

Advertising and Promotion:

We will be using Social Media to help create and promote our brand.  Twitter tweets and retweets will be used to make sure we have a conversation with our customers. It will also be used to let them communicate directly with us. Facebook page views and promotions of our charitable enterprises will be used to get people talking about us and wanting to stop by and try our unique coffee. Everyone appreciates a good cause. 

In the first year, The Daily Perc plans to spend moderately on advertising and promotion, with the program beginning in September, after the opening of the first Drive-thru. This would not be considered a serious advertising budget for any business, but TDP feels the exposure will come from publicity and promotion, so most of the funds will be spent on a good publicist who will get the word out about the charitable contribution program and how it works in conjunction with the website. TDP also believes that word-of-mouth advertising and free beverage coupons will be better ways to drive people to the first and second locations.

In the second year, The Daily Perc is increasing the budget, since it will need to promote several locations, with particular emphasis on announcing these openings and all the other locations. TDP will continue to use publicity as a key component of the marketing program since TDP could be contributing over $70,000 to local schools and charities.

In the third year, The Daily Perc will double its advertising and promotion budget, with the majority of the advertising budget being spent on drive time radio. As in the previous years, TDP will get substantial publicity from the donation of nearly $200,000 to local schools and charities.

Sales Plan

There will be several sales strategies put into place, including posting specials on high-profit items at the drive-up window. The Baristas will also hand out free drink coupons to those who have purchased a certain number of cups or something similar. TDP will also develop window sales techniques such as the Baristas asking if the customer would like a fresh-baked item with their coffee.

Operations

Locations & Facilities

The Daily Perc will open its first drive-thru facility on Manchester Road in the Colonial Square Shopping Center. Twelve more drive-thru facilities will be placed throughout the metropolitan area over the next three years. The drive-thru in the Colonial Square Shopping Center will serve as the commissary for the first mobile unit.

The demographic and physical requirements for a Drive-thru location are:

• Traffic of 40,000+ on the store side.
• Visible from the roadway.
• Easy entry with light if less than 30,000 cars.
• Established retail shops in the area.

Technology

The Daily Perc’s delivery system is based on its technology. TDP is using state-of-the-art, two-sided, Drive-thru facilities to provide convenience and efficiency for its clientele. An architectural exterior diagram of the Drive Thru building can be found on the following page (removed from this sample plan).

The Daily Perc has also designed state-of-the-art Mobile Cafes that will be deployed from time to time on high school and college campuses, corporate campuses, and at special events.

Milestones & Metrics

Milestones Table

Key Metrics

• Sales, Gross margin, profits
• Average sales per day
• Average units per day
• Facebook likes
• Twitter follows
• Average unit prices for main sales lines

Company

Overview

Ownership & Structure

The Daily Perc is a Limited Liability Corporation. All membership shares are currently owned by Bart and Teresa Fisher, with the intent of using a portion of the shares to raise capital.

The organization will be a relatively flat one since the majority of personnel are involved in production and there will be a relatively low headcount in management. 

Team

Management Team

The Daily Perc is a relatively flat organization. Overhead for management will be kept to a minimum and all senior managers will be "hands-on" workers. There is no intention of having a top-heavy organization that drains profits and complicates decisions.

Management Team

The Daily Perc has selected Mr. Barton Fisher to perform the duties of the chief operating officer. Bart has a highly entrepreneurial spirit and has already started a company from scratch (NetCom Services, Inc.) that ran in the black within three months of inception, and paid off all initial debt within six months. Upon leaving NSI in April 2001, the company had again paid off all debt and was running a profit monthly. Combine his experience, leadership, and desire with three years of research in specialty drinks and drive-thru service, and TDP knows that Bart is the individual who will get the company out of the gate and up to full speed for a long time to come.

Ms. Mary Jamison has been selected to fulfill the position of bookkeeper and office manager. Mary has been the business administrator of Jones International, Inc. for the past four years. Jones is a $4 million company that retails vitamins and other betterment products. Over those four years, Mary has written numerous corporate policies and directed the financial reporting and reconciliation. The Daily Perc considers Mary to be a great addition to the team when she becomes available in November. Until that time, she will be working with Mr. Fisher on a part-time basis to help establish the corporate accounts and policies.

Mr. Tony Guy has been selected to perform the duties of corporate events coordinator on a part time basis. Mr. Guy has over five years in the business-to-business sales realm. Last year he was responsible for over $250,000 in sales of promotional material to corporate and educational clients.

Mr. Chuck McNulty has been selected to fulfill the position of warehouse/trailer manager. Chuck has been working for Nabisco, Inc. as a service representative for over ten years. His experience in account services, merchandising, and inventory control is a welcome addition to The Daily Perc team. Chuck will use his knowledge in conjunction with the rest of the team to establish inventory and warehouse policies. The warehouse manager is responsible for handling the inventory of all products sold by The Daily Perc. Some merchandising experience is a welcome addition. Training in the First In First Out (FIFO) style of inventory control is a requirement. Also, knowledge of ergonomics and health issues would be important. Chuck’s domain will be the headquarters, the trailers, and the drive-thrus–ensuring that minimum and maximum inventories are maintained. Working with the mobile and drive-thru Baristas will be integral to his task as well.

Management Team Gaps

The Daily Perc knows that it is going to require several quality-management team members over the next three years, beginning with a district manager for every four Drive-thrus. This person will oversee the quality of the product, the training of the Baristas, the inventory management, and customer satisfaction. Ideally, as The Daily Perc grows, it will be able to promote from within for this position. This individual will be responsible for the operation of up to four drive-thrus under his/her management. They will be required to visit between locations and possibly even join administrative personnel on training or marketing travel. Clearly, as the need arises, these individuals will ideally be selected from the Mobile Cafe or Drive-Thru team.

By the beginning of the third year, The Daily Perc will hire three key senior managers. They are as follows: a chief financial officer, a chief information officer, and a director of marketing. The role of each of these individuals will be discussed in subsequent sections of this plan.

 

Personnel Table

Financial Plan

Forecast

Key Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

• The Daily Perc assumes a slow-growth economy, without a major recession.
• The Daily Perc assumes of course that there are no unforeseen changes in public health perceptions of its general products.
• The Daily Perc assumes access to equity capital and financing sufficient to maintain its financial plan as shown in the tables.

 

Revenue by Month

Expenses by Month

Net Profit (or Loss) by Year

Financing

Use of Funds

Start-up Expenses

Legal $3,500

Office Equipment $4,950

Land Lease (2 month) $7,200

Vehicle Finance (2 months) $3,700

Website Preliminary Development & Hosting $5,600

Identity/Logos/Stationary$ 4,000

Other $5,000

Total Expenses $33,950

 

 

Sources of Funds

Planned Investment

Partner 1 $20,000

Partner 2 $20,000

Partner 3 $20,000

Partner 4 $20,000

Partner 5 $20,000

Partner 6 $20,000

Partner 7 $20,200

Partner 8 $20,250

Partner 9 $20,250

Partner 10 $21,250

Totaling $221,950

 

Statements

Projected Profit & Loss

Projected Balance Sheet

Projected Cash Flow Statement