How to Write a Successful Coffee Shop Business Plan

It is no secret that Indians love a cup of freshly brewed tea or coffee any time of the day! In fact, most Indians cannot start their day without a hot cup of tea/coffee! So, with the recent surge in the eating out culture, thanks to western influence, the café business has seen a massive growth in the past decade or so. Amongst the many eating out joints, youngsters specifically gravitate towards cafes as a place for hanging out with friends over some delicious drinks and pocket friendly snacks, some quiet ‘me time’or quality work time. It would be apt to say that cafes have become the go to place for today’s young generation.

From a business point of view, according to recent surveys, the coffee shop business in India is expected to grow at a CAGR of over 11% by 2021. Hence, considering the current boom, opening a coffee shop can prove to be a viable business venture, if done right!

Like with every business, before commencing operations, you need to have a systematic business plan in place to start with.

Let us draw out a step by step business strategy:

Step 1: Decide the type of business:

You will first need to zero in on the kind of café business you want to start:

1. Purchase a franchise of an existing brand
2. Buying out an already existing venture and making amendments to it
3. Starting a café from scratch

Step 2: Find location:

after finalising the type of business, you will need to lock in an apt location for your café. The location can potentially be the deciding factor between success and failure. So, you will need to consider the following factors while doing your research on a place and its demographics:

1. Visibility – ensure the location is in a busy market/shopping area and experiences high footfall throughout the day.
2. Accessibility – along with being visible, the location should also be easily accessible to the public, like an area with ample parking space.
3. Target customers – you will also need to decide which demography are you looking to target and accordingly choose a location that is apt for them.
4. Affordability – you will need to consider the rent as well before finalising the location. Check the lease fluctuation patterns of the past few years.

Step 3: Hire employees:

Hiring a skilled set of people is half the battle won! It is of prime importance to employee the right people for the right position as this ensures excellent customer service, which helps foster customer loyalty. You will need to hire:

1. Head chefs and assistant chefs
2. Baristas
3. Manager
4. Accountant/cashier
5. Servers
6. Cleaners

Step 4: Equipment & technology:

in today’s times, you can seldom function without efficient technology. So, you will need to invest in a good coffee shop POS system that offers fast billing, stock and inventory management, real-time reporting as well as integrates customised offers like meal combos etc.

Along with technology, investing in fine quality equipment like coffee machines, ovens and ranges, microwave, refrigerator, freezer, mixer etc is equally important.

Step 5: Designing:

one aspect of the café business that cannot be denied is that in the beginning, arguably, the only way to attract customers to your coffee shop is through its outlook before the other aspects like food quality and customer service step in. So, it is a must to invest in fancy, yet comfortable furniture, attractive crockery and other aspects of the café’s interior design.

Step 6: Marketing:

with new cafes opening almost every other day, especially in urban areas, the café business is currently experiencing cut throat competition. Therefore, the only way to make a mark in this business right away is an aggressive marketing strategy! From digital marketing platforms like building an attractive website and advertising across various social media platforms to physical marketing tricks like circulating pamphlets, print media advertising and offering unbeatable launch discounts, you will need to make sure you fire from all cylinders as far as marketing is concerned.

Step 7: Financing:

the most vital step in your business strategy will be obtaining the required funds for investment from external sources. Food business being one of the most common entrepreneurial ventures undertaken in India, it is relatively easy to acquire funds for the same. You may need financial aid for various short term and long term business requirements like:

1. Purchase of property
2. Building or renovation of the café
3. Purchase of equipment’s, furniture, and fixtures
4. Working capital needs

Some of the sources for borrowing funds for your coffee shops would be banks, secured loans, SBA loans, credit loans, equipment financing or NBFCs, that includes digital NBFCs like Lendingkart that have been steadily picking pace in recent times due to the many benefits they offer like:

1. Quick turnaround and disbursal time
2. Fast loan processing
3. Low rate of interest
4. Zero hidden charges
5. Free from bureaucratic red tape
6. Effective digital interface ensures minimum human interference, thus speeding up the whole process.
7. Use of analytical technology and tools that evaluate a huge database from multiple data sources to assess the creditworthiness of businesses fast and accurately.
8. Straightforward application process

Summary of the loan charges at Lendingkart:

Eligibility Criteria:

1. The business should not come under the blacklist of SBA finance
2. Café location should not fall under negative location zone
3. NGOs, trusts and charitable institutions are not eligible for business loans

Documents required:

1. Business registration proof in the form of any one of the below:
   • Trade License
   • TIN
   • VAT Registration
   • Gumastadhara
   • Business Registration Certificate
   • GST Filing
2. Aadhar card
3. PAN card
4. Bank statements of last 12 months
5. Company PAN card copy
6. Copy of Partnership deed, if applicable

Application Procedure:

At Lendingkart, we have a hassle free three step application process:

1. Submit your application by filling up the application form with accurate personal, professional and required loan details on our official website.
2. Upload all the required documents for verification purpose.
3. After due verification, your loan will be sanctioned and disbursed to your bank account in three working days.

Executive Summary

The modern coffee industry’s rapid growth has transformed coffee shops from mere providers of beverages into quintessential lifestyle destinations. The vision for this venture is to establish more than just a place to get a quality drink. Positioned in a strategic urban location, the coffee shop can be geared towards maximising accessibility and capturing significant foot traffic. Financially, estimates show a promising trajectory, with expectations to break even within the first year and achieve profitability by the second if done correctly. 

Read on to discover more on how to start a cafe business.

Business Description

A coffee shop is where people buy and drink coffee, tea, and sometimes eat snacks like pastries. It’s not just about the drinks but also the comfortable setting where friends meet to chat or where some come to work or read. Each coffee shop has its own special look and feel. Some even focus on selling coffee that’s good for the environment or directly from farmers. Decorations, music, and how the place is set up make each coffee shop different from the next.

Management Profile

In coffee shops, what brews behind the counter is just as critical as what’s brewing in the pot. The management team are the key players that make the magic happen:

• Founder’s Story: Introduce the leaders. What’s their connection to coffee, and why did they start this business?
• Roles & Responsibilities: Who does what? Highlight the expertise each brings to the table.
• Leadership Philosophy: Emphasise the team’s commitment to excellent customer service and a positive work culture.
• Training & Development: Describe plans for keeping the team updated with skills, from coffee brewing to customer handling.
• Team Growth Strategy: How will you expand your team as business grows? Address strategies for attracting and retaining talent.
• Advisors & Partnerships: Mention any key connections, like bean suppliers or industry experts, who offer guidance.
• Success Stories: Share your team’s notable achievements or experiences in the coffee world.

Information about the Coffee Industry and Your Competition

If you are wondering how to start cafe business in India? Here is some information. Coffee is super popular. A lot of people drink it every day, not just in one country but all over the world. Some people like plain coffee, some like it with flavours and others like cold versions like iced coffee or frappuccinos. Coffee shops make a lot of money, and that’s why there are so many of them around.

Who Sells Coffee?

• There are big names that almost everyone knows who do coffee business in India.
• But there are also smaller coffee shops in towns and cities, often run by local people. Some folks prefer these because they feel more special and unique.
• Plus, nowadays, you can even get coffee from places that aren’t coffee shops, like fast-food restaurants and gas stations.

How Do Coffee Shops Compete?

• Big brands use their famous names and special deals to get customers.
• Small coffee shops might offer unique flavours, cosy settings, or events like music nights to stand out.
• Price, taste, and how fast you get your coffee can also make a big difference in where people choose to go.

Cash Flow Statement

Simply put, the Cash Flow Statement is a record that shows how money moves in and out of your coffee shop over a period of time. Think of it as tracking the journey: from the moment you spend on buying beans to when you receive cash from a customer buying their morning latte. It is also an important part of your coffee shop business plan.

Why is it Important for a Coffee Shop?

Cash flow statement should be a part of the cafeteria business plan because: 

• See Where Money Goes: You can pinpoint costs, like how much you’re spending on supplies, wages for staff, or rent for the shop’s location.
• Track Sales Revenue: By checking how much money comes in from selling coffee and snacks, you can gauge which products are most popular and profitable.
• Plan for the Future: Knowing your cash flow helps you make decisions. For example, can you afford to introduce a new type of coffee or renovate your shop?

Key Sections in the Statement:

• Operating Activities: This section reveals money earned from daily business tasks, like selling coffee.
• Investing Activities: Here, you’ll see cash spent or received from things like buying new machines or selling old furniture.
• Financing Activities: This covers money matters related to your business’s finances, like loans taken out to start the shop or repayments made to lenders.

Reading the Numbers:

• Positive Cash Flow: More money coming in than going out. It’s a sign that the coffee shop is doing well and a chance to invest in improvements or save for future needs.
• Negative Cash Flow: More money going out than coming in. This might happen if you’ve recently made a big purchase or if sales are slow. It’s a signal to check where expenses can be reduced or sales can be boosted.

Income Statement or P&L

Imagine you have a big jar. Every time someone buys coffee, you put money in. This is your sales or revenue. But running a shop isn’t free. You pay for coffee beans, milk, and the place itself. Each time you spend, you take money out. These are your expenses. At the end, you see what’s left. If there’s a lot, yay! You made a profit. If not, it’s a loss.

So, the Income Statement just shows:

• Money in (sales)
• Money out (expenses)
• What’s left (profit or loss)

It’s important because it tells you if your shop is making money or if you need to make some changes. Keep an eye on it to keep your coffee brewing smoothly!

Balance Sheet

A coffee business plan should have proper financial management as one of its key elements: 

• A balance sheet is like a snapshot of a business’s financial health at a point in time. For a coffee shop, it will show what the shop owns and what it owes.
• On one side, you’ll see ‘Assets.’ These are things the coffee shop owns. This includes cash in the register, supplies (like coffee beans and pastries), equipment (like coffee machines and furniture), and maybe even the building if they own it.
• On the other side, you’ll see ‘Liabilities’ and ‘Owner’s Equity.’ Liabilities are what the coffee shop owes. This might be loans taken to start the business or money owed to suppliers. Owner’s Equity, on the other hand, is the owner’s share of the business. If you subtract liabilities from assets, you get this amount.
• In simple terms, the balance sheet ensures that the coffee shop’s assets equal the sum of its liabilities and owner’s equity. It’s a way to see if the business is on solid financial ground.

How to Write a Coffee Shop Business Plan (Description, Examples, Proposals)

This is how you get started with writing a coffee shop business plan for any cafe business ideas you get: 

Description:

• Overview: Start by describing what your coffee shop is about. Is it a cosy place for readers? Or a bustling spot for busy folks?
• Location & Design: Where’s your shop? How does it look? If it’s near a school, maybe you’ll get lots of students!
• What You Sell: Of course, you’ll have coffee. But what about cookies, sandwiches, or even smoothies?
• Who Are Your Customers: Think about who’ll come to your shop. Busy office people? Or maybe families?

Proposals (if you’re asking for money):

• How Much Money: Clearly say how much money you need.
• What’s It For: Explain why you need the money. Maybe for new chairs or a fancy coffee machine.
• What They Get: If someone gives you money, what do they get? A share in your shop? Or maybe you’ll pay them back with interest.

Example: 

Here is the business plan for coffee shop example that you can use to understand better.

Summary:
Located on Main Street near the city library and tech hub, aims to be the go-to spot for professionals, students, and locals. We offer a mix of traditional and unique coffee drinks, light snacks, and comfortable ambiance, complete with Wi-Fi and a reading book.

Offerings:
Classic espressos, innovative cold brews, pastries, and sandwiches with health-conscious options.

Target:
Students, professionals, and city residents.

Marketing:
Social media engagement, loyalty programs, local business partnerships, and weekly events like book clubs or open mics.

Partnerships:
Seeking collaborations for local ingredient supply and event organisation to enrich community involvement.

A successful coffee shop business plan will have all these elements in it.