If you’re planning to open a coffee shop, the first thing you must do is create a coffee shop business plan.
Why? You might ask.
A good coffee shop business plan is an essential tool for would-be café owners.
It can help you get your business off the ground and serve as a roadmap for your new F&B business adventure. It will help you create your strategy for success and act as a guide you can refer to as you build your coffee shop business.
Before we get started, you might be interested to check out our Ready-made Coffee Shop Business Plan Template with pre-written text and automatic financials which you can easily customize and adapt to your own project, no financial expertise required.
What is a coffee shop business plan?
A good coffee shop business plan is one that explains your business idea and strategy to your potential investors. It answers questions such as how much money it will cost to open a café and how much money you will make. The plan must include information regarding your pricing structure, target market, and competitors.
As you can see, a coffee shop business plan is a crucial business document. Therefore, put some time and effort in creating one. That being said, writing a café business plan is easier than many might think—and we’ll show you how to get it right.
How long your coffee shop business plan should be?
There’s no one-size-fits-all answer to this question. The length of a business plan depends on the scope and size of the business.
A business plan can be just a few pages long or it can go up to hundreds of pages. There’s no prescribed length as such.
That said, for a small business such as a coffee shop, the best strategy would be to keep the plan simple and succinct, particularly if are submitting it to investors or bankers. So, aim for 30 pages, give or take.
To give the plan a better visual appeal, consider adding designs, photos, charts, and graphs.
How many sections should a café business plan have?
For a basic coffee shop business plan, seven main sections, plus a title page, should suffice.
First let’s look at what kind of information the title page must have, and then we’ll check out each individual business plan section.
The title page should begin with the legal name of your business and have other relevant business information. If you have a website in place and/or already scouted a potential location, include those also. Put the business logo (if you have one) at the top of the title page.
Also, add a table of contents, listing the name of each section and the page number where it can be found.
Section 1 – Executive Summary
You should start your business plan with an executive summary, but write it last.
A good executive summary provides investors with a short, precise, and optimistic overview of your coffee shop business plan and aptly captures the reader’s attention.
So how long an executive summary should be?
Most experts agree it shouldn’t be more than one or two pages long. Also, it should include brief summaries of other sections of your business plan.
Here’s a sample.
Business Name: SM Café
SM Café will be the go-to destination for all coffee lovers in the area. We’ll serve high-margin gourmet coffee beverages like cappuccinos, lattes, and espressos. We also plan to sell snacks and pastries to take away, as well as to eat in. Our shop will have a seating capacity of 30 customers.
Although there are two other cafes in the area, there is a significant demand for more coffee shops—particularly ones that serve high-quality products. In addition to gourmet coffee products and snacks, we’ll be offering light-lunch menu to set us apart from our competitors, both of which only serve regular coffee products.
Since we are to be located on a busy street, within walking distance from the city center, we expect a lot of customers from passerby.
We plan to capture the upper end of the coffee market by offering non-machine, gourmet coffee products at reasonable rates.
We expect sales revenue to jump from $100,000 in the first year to $150,000 by year three. We expect the net profit to grow from $20,000 to $50,000 by the third year.
We require $100,000 to cover lease costs, equipment, furniture, and renovations. The owners—Josiane Leniz and Jose Samalago—have $25,000 in cash and the rest is planned to be raised from private investors.
Section 2 – Company Overview
This section must provide readers with answers to these questions?
Who are the owner(s)?
What’s the company structure?
What are the other details about the company?
What’s the company’s mission statement?
What are the startup costs?
SM café will be jointly owned by Josiane Leniz and Jose Samalago, both of whom will also run the coffee shop. Our plan is to hire one full-time employee and three part-time employees to help us out weekends and busy hours.
We require $100,000 to cover lease costs, equipment, furniture, and renovations.
Section 3 – Market and Customer Analysis
There are two parts to this section. In the first section, include information regarding:
General trends and statistics pertaining to the coffee industry
The local market trends
Your direct competitors (that is, other coffee shops in the neighbourhood)
Other businesses with whom you’ll compete (like fast-food joints, bars, or restaurants)
Your competitive advantages
In the second section, provide answers to these questions:
Who’re your target customers?
Why they’ll choose your café over others?
If you have done a custom market research, mention the key takeaways here in an easy-to-understand language.
Sample Market Analysis
Research predicts the US coffee industry will grow at a rate of 17% on year-on-year basis between 2020 and 2025. With the average person drinking two cups of coffee daily, it is the most-popular beverage in the country. We strongly believe that these market and consumer trends make launching a coffee shop a smart business decision.
Sample Competitor Analysis
At present there are two coffee shops in the area where our venture—SM café—will open. However, our research shows there is space for new entrants.
Both existing coffee shops serve non-gourmet coffee. Our main advantage is that we’ll be the only player in this area to offer high-margin, high-quality coffee products and snacks. This will help us stand out from the crowd and build a loyal customer base.
It is also a good idea to draw a table listing the strengths and weaknesses of each existing competitor.
Sample Customer Analysis
Business people make up a sizeable portion of our expected customer base: The location of our café will generate high footfall, particularly before and after working hours, as well as during lunch hours. Since there is a business hub a few meters away, the area has many professionals who would like gourmet coffee and high-quality snacks. The local business hub houses approximately 3,000 professionals all of which are potential prospects.
Section 4 – Sales and Marketing Plan
This section is divided into two parts. First up is the sales strategy, which should include your sales forecasts, as well as how you have calculated it. Mention the names of the products and your pricing strategy as well.
In the marketing plan section, discuss your strategies for attracting customers, your budget, and your expected ROI (Return On Investment). In case your marketing plan is a complex one, only mention the key points in the business plan. You can have the detailed marketing plan on a different document.
Sample Sales Plan
SM café will open from 7.00 a.m. to 7.00 p.m. all days of the week. Our busiest hours are likely to be before and after business hours, as well as during the lunch hours between noon and 1.30 p.m.
We have a seating for 30 people. Our non-machine coffee products will be priced from $20 upward. We’ll sell pastries (at $5-$8 each) and light meals ($15-$24) as well. Since meals will be packed, customers can either take them away or eat them inside the shop.
Our daily revenue is expected to be $1,000.
Draw a table including your various marketing channels, their annual budget allocation and the rationale behind each selected channel.
For example, you can say: We will allocate 12,000 USD per year to run two radio campaigns, one in April and one in September. The purpose is to create awareness and attract people to try our seasonal coffee offers.
Section 5 – Operating Plan
In this section, provide answers to questions such as how you are going to run your café and explaining your initial costs, opening times, sourcing and production processes. Also, show the investors how you plan to build efficient procedures to ensure smooth running of the coffee shop.
This section can also help you iron out potential issues. For instance, if you expect to serve 125 people during lunch hours, will you be able to do that with only one full-time employee and three part-time employees? Or would you be much better off adding one more member to your team?
Also mention any certificate or license that you need to open the café, in addition to how you plan to train your employees, both full-time and part-time.
Sample Operational Plan
Our café will be open from 7.00 a.m. to 7.00 p.m. During normal hours, both owners and one full-time employee will take care of everything. During busy hours, we’ll add three part-time employees to our team.
We plan to purchase coffee wholesale at $80 per 10-pound package. At any time, the shop will have one week’s stock of coffee. For grinding the coffee beans, we’ll purchase a high-quality commercial grinder.
Pastries and other food menu items will be bought on a daily basis from a local supplier, who’ll deliver the goods half-an-hour before the shop opens, that is, latest by 6.30 a.m. This, in turn, will ensure commuters can easily and quickly grab a breakfast on-the-go.
We’ll ensure our coffee shop meets the guidelines set by the local food agency, and each of our employees, full-time or part-time, will undergo training before they join us on the floor.
Section 6 – Management Team
This section should answer the following questions:
Who owns the café?
Who will manage it?
What qualifications or relevant experience the owners have?
In case of multiple owners, how will you split the profits?
In case the owners won’t be managing the shop, share information about the person who will be in charge of the day-to-day operations.
The owners will run the shop. Each of the owners has over a decade experience in the food service, including management experience. We’ll hire one full-time employee to start with, who will be paid $20,000 per annum.
We plan to hire three part-time employees, each of whom will be paid at the rate of $11 per hour.
Section 7 – Financial Plan
This is the final section of your business plan. Describe here how your coffee shop will make money. Include the following information in your financial plan:
Operating and overhead costs
Expected revenue and profit
Capital needed and use of funds
Make sure to explain when you will reach break-even and analyze your gross and net profit margins.
Standard pro-forma financials are usually done for 3 years and some take it further to cover 5 years.
Before you open a coffee shop, sit down and prepare a detailed business plan. As this guide shows, writing a business plan is not as difficult as many think.
Make sure you cover each of the sections mentioned in this article. Wherever possible, use charts, pictures, and graphs to simplify things for readers.
Last but not the least, avoid technical jargons, as they are likely to put off readers instead of adding any value to your business plan.
A coffee business plan is a vital document that will help you draw a detailed roadmap for a successful launch and execution. It is also a key document for potential investors and other stakeholders.