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People says wait for the right time to start a new business and this line effectively applies to the Joy Coffee and Beans Cafe which is attempting to start a coffee cafe with new idea and concept i.e. recreational facilities like reading, painting, drawing etc. The company is coming with this idea as there is no firm in the market which is providing such type of cafe to the consumers but substantial growth can be seen by following this concept. In the plan, it has been list out that the company will offer most demanded products like Espresso Coffee, Cappuccino, La Costa Cold Coffee with ice cream, Latte, Hot Chocolate, Mocha, Cheese Sandwich, Vegetable Sandwich and Chicken Sandwich to the consumers which will bring more excitement and satisfaction among the consumers with respect to the firm. In order to check the feasibility of this decision industry analysis was done in which it was found that the industry is growing significantly as the revenues of existing business firms are enhancing in large numbers each years.
Opening of a coffee shop is not a new thing as there are already many well established coffee firms like Starbucks, Barista, Coasta Coffee, Caffee Nero, Amt Coffee etc. in the market. However, the concept or idea with Joy Coffee and Beans Cafe is attempting to come in the market is completely different with the existing big coffee firms and this makes it to be counted as an entrepreneurship firm (Gilligan and Wilson, 2012). The motto or new idea with which Joy Coffee and Beans Cafe is trying to come are recreational activities like paintings, reading, drawing and music to the people who have strong desire to learn something different or unique things like arts and paintings with people.
The main products which will be offered in the Joy Coffee and Beans Cafe will be Expresso Coffee, La Costa Cold Coffee with different Ice cream flavours according to the customer's requirement, Cappuccino, Latte, Mocha, Cheese Sandwich, Vegetable Sandwich, Chicken Sandwich with lettuce. The main products which are decided to be offered in the shop are selected on the basis of doing of market research (Handford, 2015).
The particular products and services which are selected to be offered in the coffee shop will help customers to spend their best relaxing or recreational time with taking sips of coffee and sandwiches. It is anticipated that people will love to visit Joy Coffee and Beans Cafe every week or weekends to spend good time with their friends and to experience recreational activities which is difficult to do in the present engaged life or schedule (Westwood, 2013).
The idea and concept with which the company is coming into the industry will add significant value to customers as the company will provide recreational facilities to consumer along with most demanded products of the market. It is mostly seen that people wants to do different but they don't get time and proper place to explore themselves (Mcdonal, 2007).
Coffee Shops is the industry which has been recording significant growth in the UK as well as in other countries. According to the market research reports of Allegra World Coffee Portal, Coffee Shop industry made a total revenue of 7.2 billions in the year 2014 which recorded a growth of 11.9% from the previous year (Thomas, 2014). In the report, it was further added that the UK coffee market is estimated at 18,832 outlets in which the branded coffee chain segment has attained £2.9bn turnover across 5,781 outlets in UK. The branded UK coffee chain segments achieved growth in sales by 11.9% whereas other non-branded outlets had made growth of 4.9% in which 271 stores were added in the year 2014 (Coffee loving Britain, 2013). In addition to that the report also laid down the fact that Coffee Shop business is proving to be the most prolific for UK economy.
From the market research report of Allegra World Coffee Portal, it is found that Costa Coffee has the largest number (1821) of outlets in UK as compared to the competitors firm like Starbucks Coffee Company (824) and Caffè Nero (590). The report indicated that branded Coffee Shop outlets companies has a combined share of 56% in the market. The significant growth in Coffee Shop segment stimulating firms to expand their number of outlets (Statistics and facts on the coffeehouse industry, 2015). In the report, it was acknowledged that the estimated total coffee shop market in UK is of 16,501 outlets and will grow exponentially in the coming years. The report laid down the fact that the industry attained the growth of 6.4% from the previous year and attained the total sales revenue of ￡6.2 billion (Euromonitor International, 2014).
The potential customer market is segmented by adopting demographic and psychographic characteristics of consumers. In other words, the targeted customers for Joy Coffee and Beans Cafe will be upper middle class customers who wants to spend their quality time in Coffee Cafe where they can also do recreational activities (Barringer and Ireland, 2012).
The potential consumers of the firm will be targeted by using concentrated marketing strategy. Here, people will be communicated through pamphlets, social media and newspapers and referral marketing strategy.
The USP of Cafe will be the best coffee experience along with recreational facilities like Painting, Music, Reading, Sketching. The USP or positioning of the firm will be developed with the tag line “Brisking coffee with lively experience”. With this tag line, the concept of innovative coffee service with recreational activities will be developed in the minds of potential consumers.
The products will be sold to the customers directly from the outlet only. In future, expansion of business can be anticipated through franchising system.
Joy Coffee and Beans Cafe will provide discount offers to the customers if they will come in group of 4 and more than 4 people. Discounts would be flat 12% discount on the all the products (Gilligan and Wilson, 2012).
The marketing material which will be used in Joy Coffee and Beans Cafe will be menu card, catalogs, website, customers reviews, log diaries.
The firm will be promoted by using the media channels like newspapers, digital billboard, providing of sponsorship and lifestyle magazines (Thomas, 2014). The selected media channels are used as the firm is attempting to focus on selected customers who fall in upper middle class and has good interest in spending quality time in Coffee Cafe's by doing recreational activities.
Online marketing of the firm will be done by using Google Adwords (SEM), Social Media (Facebook and Twitter), Blogs and Third Party Websites.
The prospective customers will be converted into paying customers by keeping a board and diaries on which testimonials or reviews are written by the past customers who gets utmost satisfaction from the products and services.
A customer loyalty program would be followed in order to retain existing customers and acquiring new customers through their referrals (Mcdonal, 2007). Here, if an existing customer would come with new people then additional 5% discount would be offered.
Owner: The owner will be the top most strategic decision maker of Joy Coffee and Beans Cafe. He will handle all the activities related to marketing planning and implementation (Barringer and Ireland, 2012). By assuming the task of marketing manager, initially the owner of the firm will do regular promotion of the business. The accounts' manager and store manager will report their task and activities to the owner.
Accounts Manager: The account manager will be responsible for recording, classifying, summarizing and analyzing of monetary transaction occurred in the business. He is responsible to record and analyze all monetary transaction.
Store Manager: The store manager will play the key role of administrating overall business activities of the cafe.
Catering Staff: The catering staff of 3 people will work under the supervision of store manager. The catering staff will perform task related to taking of orders from customers and delivering of products accordingly.
The products which will be offered in the Cafe are selected by assessing the customer needs and requirements. A coffee shops business could be considered incomplete if such products are not offered to the consumers (Euromonitor International, 2014). As it is known that Joy Coffee and Beans Cafe is entering into the Coffee Shop market with recreational facilities, so the products like Espresso Coffee, Cappuccino, Latte, Cold Coffee, Sandwiches, Hot Chocolates will have higher sales because people usually loves to drink coffee while doing recreational activities or spending quality time with their loved ones. The products which will be offered in Joy Coffee and Beans Cafe are as follows:
Espresso Coffee: The particular products will be offered in small and medium size.
Cappuccino: Cappuccino is very demanding product in the coffee shop industry.
La Costa Cold Coffee (Excluding ice-cream): This the special product of Joy Coffee and Beans Cafe which will be offered to the customers. It is cold coffee which will be served with ice cream according to the choice of customers.
Latte: It is a strong coffee drink. It will be offered to the consumers who likes to drink strong coffee.
Mocha: It is a coffee which will be made by adding chocolate and hot milk. This will also be made available in three sizes i.e. small, medium and large.
Cheese Sandwich: It will be offered in both types i.e. grilled and in uncooked form of bread. It will be stuffed with tomato slices, cucumber and lettuce and cheese.
Sandwich Vegetable: It will also be a speciality product of Joy Coffee and Beans Cafe.
Chicken Sandwich: A standard size chicken sandwich with required stuff like cheese, and lettuce
Hot Chocolate: Hot chocolate with the best quality will be offered to live up to the expectation of people who have strong likeness of having hot chocolate.
The complete idea of establishing Joy Coffee and Beans Cafe is different and innovative with respect to the existing competitors. There is no branded or non-branded firm which are operating coffee cafe with recreational facilities in London as well as in other place of the world. Apart from that, the taste and shape of products would be different from the competitors firm.
The giant competitors firm like Starbucks, Costa Coffee, Caffe Nero offers products like Cappuccino, Espresso Coffee, Latte, Hot Chocolate and Cold Coffee to the consumers (LavinSky, 2013). These products are very demanding in the industry, thus Joy Coffee and Beans Cafe also decided to offer the particular products in order to reap the benefits from the growing market trend.
The concept and idea with which Joy Coffee and Beans Cafe is coming in the market is totally different from the existing business activities of competitors firms like Starbucks, Caffee Nero. There is no firm who are providing coffee cafe services with recreational activities (Price Watch July, 2014). So, this type of innovative services will bring enthusiasm among consumers and will stimulate them to visit the cafe and spend their good time by doing recreational activities.
The resources which would be required to offer the particular products and services are as follows-
Financial Resources: To open the Joy Coffee and Bean Cafe substantial funds would be required for buying of equipments, payment of remuneration to staff, purchasing of furnitures and fixture, books, painting board, interior decoration etc.
Human Resources: In Joy Coffee and Beans Cafe, a staff of 5 people would be required in which 2 would be the managers and 3 would be the catering staff. The account manager and store manager would be appointed on the basis of their year of experience and educational qualification. It is decided that the account manage required to be an MBA finance with 3 years industry experience whereas the store manager must be a graduate in commerce with 2 years experience. In addition, that manager will be hired who are also having knowledge of using CRM, AIS and Microsoft Excel Software.
Technological Resources: The technological resources which will be required in carrying out of the given business would be a computer system with software like Excel, Customer Relationship Management and Accounting Information System software.
Physical Resources: In order to establish the cafe in successful manner following physical resources would be acquired or bought.
The major challenge and issue which could be arise or emerge in Joy Coffee and Beans Cafe would be non-availability of coffee beans in market due to any natural environment condition. The other challenge which could be seen is increase in prices of coffee beans in international market which bring direct negative effect on the profits of the firm as cost would be increased (LavinSky, 2013). The other challenge which could be anticipated is adopting of proper care in order to provide appropriate health and safety to consumers.
The documents which would be required for staring of the cafe are certificate of incorporation, Tin number, contracts like mortgage papers or rent papers if the shop is taken on rent or lease. The other aspect which would be followed is practising of proper health and safety standards in providing of services.
Sales units- In order to estimate the income from the business, sales unit were determined. The sales unit were estimated by taking the assumptions that on average 50 customers would visit the Coffee Shop daily. So, by taking this into account customer footfalls on yearly basis was calculated. Here, 27 working days in a month were anticipated and when this was multiplied with 12 months and 50 customers then the minimum total sales of 16200 units were deduced.
Sales price- The sales price were calculated by taking average of prices of total products which will be offered in Joy Coffee and Beans Cafe. Though, 9 different types of products will be offered to the consumers but as they are classified into different sizes so it was found that the company will have product mix of 18 products. So, average price of 18 products were computed for estimation of sales price per unit.
Depreciation- A depreciation of 10% has been estimated on furniture and coffee making equipment. Thus, the calculation regarding the same is also represented in the income statement.
Selling and Administrative expenses- This is computed by taking into the account of staff salaries and marketing expenditure. Here, the marketing expenditure done on online and offline medium is considered collectively.
Cost of sales- Cost of sales is computed by estimating the total material purchased in the year. The material which will be purchased are chocolates, chocolate syrup, milk, coffee beans, books for reading, bread and etc.
The furniture and equipments which will be purchased at the time of start up, its impact is shown in cash flow statement under the head cash flow from investing activities.
To start-up the business, a total financial requirement of £12000 were estimate. The £12000 financial requirement will be met by acquiring £8000 funds from bank where £4000 will be the owner's capital.
The payment of loan will be made in the year 2016 and 2017. Each year a sum of 4000 will be paid. The interest will be paid each year.
From this report, it can be concluded that the firm can successfully enter into the industry with recreational facility idea as it is new and innovative in the industry. Moreover, people will like the concept and will feel excited to buy the products and services of Joy Coffee and Beans Cafe. The products which are selected to be offered in Joy Coffee and Beans Cafe will help the firm in attracting substantial customer response as in present time people feels very excited and satisfied to eat food or hot chocolate or drink coffee in cafe with their friends and loved ones. The significant advantage which Joy Coffee and Beans Cafe will add in customer satisfaction will be the providing of recreational facilities to the consumers.
According to the reports of Statistica.com, in the year 2002 the Coffee Shop segment had the total revenue of US$16.5 billion US dollars. From the Statistica.com it was found that the Coffee Shop industry was one of the segment which didn't get affected even at the time of recession which hit the US as well as global economy severely in the year 2008. The report of statistica.com estimated that by the year 2016, the revenue of total Coffee Shop segment will reach to $32.46 billion US dollars in United States (Revenue of the coffee and snack shops industry in the United States from 2002 to 2016, 2015). From the secondary information which was being published by Statistica.com on its website, it was found that Starbucks was the largest coffee chain in the 2013 as it was having 19,767 Coffee Shop outlets worldwide in which 11,457 was located in the United States only (Revenue of the coffee and snack shops industry in the United States from 2002 to 2016, 2015). The company Starbucks generated a total revenue of 15 billion US dollars in the year 2013 (Statistics and facts on the coffeehouse industry, 2015).
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