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This sample business plan has been made available to users of Business Plan Pro®, business planning software published by Palo Alto Software. Names, locations and numbers may have been changed, and substantial portions of the original plan text may have been omitted to preserve confidentiality and proprietary information. You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, resell, publish, distribute or even copy this plan as it exists here. Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at marketing@paloalto.com. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526.

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Table of Contents

1.0 Executive Summary....................................................................................................................................1 1.1 Mission....................................................................................................................................................2 1.2 Objectives................................................................................................................................................2 1.3 Keys to Success.......................................................................................................................................2 Chart: Highlights.......................................................................................................................................3 2.0 Company Summary.....................................................................................................................................4 2.1 Company Ownership..............................................................................................................................4 2.2 Start-up Summary...................................................................................................................................5 Table: Start-up...........................................................................................................................................5 Chart: Start-up...........................................................................................................................................7 Table: Start-up Funding............................................................................................................................7 3.0 Products.......................................................................................................................................................8 3.1 Vendors...................................................................................................................................................8 3.2 The Dark Roast Java Menu.....................................................................................................................8 3.2.2 Teas................................................................................................................................................10 3.2.3 Juices..............................................................................................................................................11 3.2.4 Italian Sodas...................................................................................................................................11 3.2.5 Other Drinks...................................................................................................................................12 3.2.6 Snacks and Pastries........................................................................................................................12 3.2.7 Deli Items.......................................................................................................................................12 4.0 Market Analysis Summary.......................................................................................................................13 4.1 Market Segmentation............................................................................................................................13 Table: Market Analysis...........................................................................................................................14 Chart: Market Analysis (Pie)..................................................................................................................15 4.2 Target Market Segment Strategy..........................................................................................................15 4.3 Industry Analysis..................................................................................................................................16 4.3.1 Competitive Comparison...............................................................................................................18 4.3.2 Competition and Buying Patterns..................................................................................................20 5.0 Strategy and Implementation Summary...................................................................................................22 5.1 Competitive Edge..................................................................................................................................22 5.2 Marketing Strategy................................................................................................................................22 5.2.1 Launch Marketing..........................................................................................................................22 5.3 Sales Strategy........................................................................................................................................28 5.3.1 Sales Forecast.................................................................................................................................30 Chart: Sales Monthly..........................................................................................................................30 Chart: Sales by Year...........................................................................................................................31 Table: Sales Forecast..........................................................................................................................31 5.4 Milestones.............................................................................................................................................31 Table: Milestones....................................................................................................................................32 6.0 Web Plan Summary...................................................................................................................................32 6.1 Website Marketing Strategy.................................................................................................................33 6.2 Development Requirements..................................................................................................................34 7.0 Management Summary.............................................................................................................................34 7.1 Personnel Plan.......................................................................................................................................35 Page 1

Table of Contents

Table: Personnel......................................................................................................................................35 8.0 Financial Plan............................................................................................................................................35 8.1 Important Assumptions.........................................................................................................................36 Table: General Assumptions...................................................................................................................36 .....................................................................................................................................................................36 8.2 Break-even Analysis.............................................................................................................................37 Chart: Break-even Analysis....................................................................................................................37 Table: Break-even Analysis....................................................................................................................37 .....................................................................................................................................................................37 8.3 Projected Profit and Loss......................................................................................................................38 Chart: Profit Monthly..............................................................................................................................38 Chart: Profit Yearly.................................................................................................................................39 Chart: Gross Margin Monthly................................................................................................................39 Chart: Gross Margin Yearly...................................................................................................................40 .....................................................................................................................................................................41 8.4 Projected Cash Flow.............................................................................................................................42 Chart: Cash..............................................................................................................................................42 Table: Cash Flow....................................................................................................................................42 .....................................................................................................................................................................43 8.5 Projected Balance Sheet........................................................................................................................44 Table: Balance Sheet...............................................................................................................................44 .....................................................................................................................................................................44 8.6 Business Ratios.....................................................................................................................................45 Table: Ratios...........................................................................................................................................45 Table: Sales Forecast.........................................................................................................................................1 ...........................................................................................................................................................................1 Table: Personnel................................................................................................................................................2 ...........................................................................................................................................................................2 Table: General Assumptions.............................................................................................................................3 ...........................................................................................................................................................................3 Table: Profit and Loss.......................................................................................................................................4 ...........................................................................................................................................................................5 Table: Cash Flow..............................................................................................................................................6 ...........................................................................................................................................................................7 Table: Balance Sheet.........................................................................................................................................8 Page 2

Diedrich's and other major chains serve average quality drinks in establishments that have the same generic design appearance. Even after paying higher than average wages. Founders Ned Powers-Sebastiane. founder of Dark Roast Java. our highprofile location in Pleasantville provides a mixed customer base that will maintain high levels of business in every season. mocha latte or vanilla ice blended drink. Starbucks and The Coffee Bean are often referred to as "fast food" coffeehouses due to their "cookie cutter" design. no coffeehouse chains have failed during this time. The Coffee Bean. Pleasantville Chamber of Commerce. A niche exists that has yet to be filled for a high-volume. Specialty Coffee Association of America. within the past 20 years the coffeehouse has become a familiar feature of American life.000 in year one. daily sales are tracked and analyzed by item. Now that Americans' coffee preferences have broadened and matured. quality-driven coffeehouse with a warm. An advanced and expandable point-of-sale system After carefully tracking the performance of the Pleasantville store through an expandable and highly detailed point-of-sale system.000+ in the first fiscal year.000+ in year three. Page 1 . Dark Roast Java meets this need and fills this niche. we will use this as a "blueprint" for expansion. People who would not have dreamed of spending more than 50 cents for a cup of coffee a few years ago now gladly pay $3 to $5 for their cappuccino. He is the founder of Powers-Sebastiane Advertising & Public Relations and Pan National Motor Tours. Peet's. inviting atmosphere. Co-owner Curt Yamaguchi has an intuitive understanding of the real estate market. rising to more than $1. Indeed. This Business Plan only provides data on the Pleasantville coffeehouse. The specialty-coffee business is growing at a healthy pace. Sources: US Census Bureau.000. upscale. at all times of the day. there has not been a single year. in which specialty coffee sales have not grown. has a long career as an entrepreneur and marketing executive. with revenues of $600. we expect to allocate no more than 25% to labor costs.000 by year three. We offer high-quality products in an upscale environment. many are asking for more from their coffeehouse. During the past 20 years.0 Executive Summary The concept Thanks primarily to Starbucks. Financials The company anticipates rapid acceptance of the Dark Roast Java concept in Pleasantville. Net profit is projected to be approximately $99. Starbucks. In many years the increase has been in double digits. time period and cost of goods. growing to an estimated $265. not the least of which is his ability to procure highly desirable locations for future stores. As a highly successful real estate broker and investor he brings several key capabilities to the Dark Roast Java team. For example. In addition. millions of Americans stop for an espresso-based coffee drink. Labor requirements are matched to projected in-store sales based upon past performance for maximum efficiency. every day of the week.Dark Roast Java 1. despite war and recession. Every day. although the list of casualties in other industries is quite long. Furthermore.

000+ the first fiscal year. 1. year-round tourist activity.000+ the second fiscal year and $1 million the third fiscal year Achieve a 15% net profit margin within the first year and 30% by FY3 Achieve a total net profit of $150. We will support the farmers who grow our coffee by using Fair Trade. a dynamic student population and a concentration of local businesses A market that exposes Dark Roast Java to high-profile "trend-setters" and "key influencers" Ongoing. upscale interior design Prime site selection with an upscale affluent population. We also want to make our contribution to the welfare of the local community by supporting charitable and civic activities. Dark Roast Java also awards its business to as many local suppliers as possible. Sustainable Production and Organic products whenever possible.000+ by FY3 Be an active and vocal member of the community. by providing a higher quality experience than any competitor. keeping the business in the community or.2 Objectives • • • • • Make Dark Roast Java the number one destination for coffee in Pleasantville Sales of $600. aggressive marketing Highly trained and friendly staff • • • Page 2 . heavy pedestrian traffic by the site. As a result.000+ in FY1 and $200. at the least. downtown business workers. and students.3 Keys to Success The keys to our success will be: • • • A superior-tasting product backed by a unique quality store A relaxing. $750. and provide continual re-investment through participation in community activities such as the Chamber of Commerce and financial contributions to local charities and youth organizations Create a solid concept in the industry and track performance in order to begin expanding to other markets within six months • 1.1 Mission Our goal is to be the coffeehouse of choice for the local Pleasantville community. tourists who visit the city.Dark Roast Java 1. in the state. we intend to create coffeehouses that quickly achieve profitability and sustain an attractive rate of return (20% or more annually) for our investors.

000 $200.000 $900. pastry.000 $0 Year 1 Year 2 Year 3 Sales Gross Margin Net Profit Page 3 .000 $700.000 $400.Dark Roast Java • • Multiple revenue streams including gift items.000 $800.000 $600. water and soft drinks A dynamic website with online sales capability Chart: Highlights Highlights $1.000 $500.000 $300.100. gift baskets and coffee gift/frequency cards in addition to coffee.000 $100. chocolates. juice.000.000 $1. tea.

It features stained glass decorations. Other Dark Roast Java coffeehouses will eventually be located in select affluent markets that support the business model (e. Springfield. And then Lexus. juice. the finest tea drinks. Dark Roast Java offers a superior coffee product. Our design style is different from all other coffeehouses.0 Company Summary Dark Roast Java launches with its first coffeehouse located in downtown Pleasantville. • The Dark Roast Java Concept At one time Cadillac was the acknowledged quality automobile in America. significant traffic by the store. relax or work. Expansion: Assuming this store is successful. Ghirardelli cocoa. The only coffeehouse that comes close to being as upscale as our concept in the Pacific Northwest is Torrefazione.g.Dark Roast Java 2. delicious pastries. Mount Hill. Then came Mercedes-Benz. art glasswork. cocoa. Victor Lubitsch. They know how to prepare an excellent espresso-based drink and brew tasty coffee. Dark Roast Java will be the first "Lexus" of the coffeehouse chain industry. Page 4 . Orchard Valley. Curt Yamaguchi and other outside investors. • • Variety: No other coffeehouse in the area will provide the range of coffee drinks. tea. 2. with revenues and profits to match. Newburg. The first Dark Roast Java is located in Pleasantville. it will be the first of a chain of Dark Roast Java coffeehouses located in markets that have similar demographic profiles. smoothies and other products that Dark Roast Java does. fresh juices. It is registered as a state LLC Corporation. gourmet chocolates and gift items. Bayview. upscale environment at which to socialize. Dark Roast Java will offer residents and visitors a totally new style of coffeehouse . with its high style Italian decor (they were recently part of a $72 million dollar buy-out by Starbucks). Location: Dark Roast Java will be located in the prime section of downtown Pleasantville in the heart of the shopping and entertainment district. an upscale "Cote d'Azur" look. The Dark Roast Java staff members who prepare the coffee (baristas) are highly trained and experienced. Capital City). Dark Roast Java locations are designed for high volume year round. Mediterranean Riviera style furnishings and outdoor dining. year-round tourist activity and a sizeable student population. with its superb product and service approach. with ownership shared by Ned Powers-Sebastiane. Beachey Head.1 Company Ownership Dark Roast Java is a privately held corporation. offering a higher quality product and better quality service in an exceptional environment.one offering a uniquely flavorful coffee drink and a comfortable. We use the highest quality equipment and ingredients to deliver a noticeably superior product.

Long term assets: $62.000 Short-term assets: $15.000 $5.500 $12.000 $10. Furnishings Persian Carpet Lighting Fixtures Table: Start-up $12. Chairs. Lighting Electrical.000 and $25. Starbucks spends approximately $380. architectural plan Demolition/Construction Electrical.500 Page 5 .000 $2.500 $1.000 $25.000 to build out since many of the costs incurred here will not have to be repeated later.Dark Roast Java 2. For example.000 Start-up Requirements Start-up Expenses CONSTRUCTION Site design. below.000 $12. include $77.000 $10.000 $1.000 Undercounter Refrigerators Service/Prep Counter Ice Machine Large Refrigerator Milk Coolers (3) Cash register (2) Point of Sale System Espresso Machine Fetco Coffee Brewer Counters/Condiment bar/shelving $5.000 on average to build-out a new store location. Other Flooring/installation Bathroom Construction Plumbing Fireplace Construction Painting $0 $10.000 Tables. Our costs are an estimated $225.000 $4.000 $5.2 Start-up Summary Start-up expenses are in line with those of other coffeehouse chains.000 $11.000 $3.000 $14.000 $2.000 $12. The Start-up requirements.000 $2.000 of short and long-term assets.000 for opening inventory and operating capital.000 $1. Future stores should cost no more than $175.

500 $1.000 $1.000 $147.000) Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements $6.200 $2.500 $14.500 $250.000 $1. menu boards Outside Signage Frequency Cards.000 $800 $6.000 $700 $1.000 $103. Brochures Inserted Row OFFICE Office equipment Computer.000 $1. printer Telephones/Fax/DSL Stationery etc.000 $4.000 $3.Dark Roast Java City permits/licenses/fees Inserted Row LEGAL Accounting Legal Insurance Inserted Row MARKETING Opening marketing/advertising Graphic design for signage.000 $15.500 $0 $0 $2.500 $25. Gift item displays (3) Inserted Row APPLIANCES. prep counters Menu board construction Cups/Lids (50.000 $2.000 $62.500 $2.000 $1. ETC Preparation equipment Dishwasher Blenders (3) Microwave Panini maker Storage racks Music system Food display case Storage room shelving Bulk bean grinder Sinks (2).500 $0 $0 $600 $2.000 $2.000 $500 $1.000 $500 $700 $1. scanner.500 Page 6 .500 $0 $0 $1.500 $0 $0 $3.

Dark Roast Java Chart: Start-up Start-up $240.500 $0 $1.000 $60.000 $150.500 Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital $0 $0 $0 $0 $0 Planned Investment Investors Other Additional Investment Requirement Total Planned Investment $250.000 $120.500 $147.000 $103.000 $1.000 $0 Expenses Assets Investment Loans Table: Start-up Funding Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets $102.000 $30.000 $210.000 $90.500 $250.000 $500 $0 $250.500 $103.000 $180.500 Page 7 .

juice. juice and cocoa—with several choices within each group. soft drinks. We are the only coffeehouse to have a wide range of gourmet hot cocoa. our prices are in line with the leading national chains. WI.2 The Dark Roast Java Menu The Dark Roast Java menu sets us apart from other coffeehouses. • We offer six groups of drinks—coffee.000) $103. OR Pastries are provided by local Pleasantville companies such as D'Angelo's Bakery. Pleasantville Biscotti and Pleasantville Cheesecake.500 3. WA 3. Page 8 . In some cases. and Thomas Kemper Soda. Seattle. We carry the highest quality fresh juices.500 Total Capital and Liabilities Total Funding $103. This enables us to provide more variety than our competitors while keeping the preparation of the drinks easy to execute. Tea is primarily supplied by Harney & Sons Tea. an average price has been calculated and applied to all similar drinks in order to keep the menu from confusing the customer. Our water vendor is Crystal Geyser. Arnold. We are taking advantage of the immense popularity of flavored drinks and Chai tea by offering a product mix that includes items the other coffeehouses don't carry as well as more familiar drinks. Despite being an upscale coffeehouse. Helena. CA Gift items are from various vendors • Soft drinks are provided by Sprecher's Brewery.0 Products Dark Roast Java sells high-quality specialty coffee beverages. smoothies.1 Vendors Coffee roasting is provided by Grizzly Mountain Coffee Company. tea. water. Corpus Cristi. tea. Dark Roast Java offers several smoothie drinks and Italian sodas. Pleasantville.500 $250. Chocolates and cocoa are from Ghirardelli Chocolate Company.Dark Roast Java Loss at Start-up (Start-up Expenses) Total Capital ($147. giving us a competitive edge. 3. Los Angeles and Black Forest Chocolates. chocolates and gift items. Milwaukee. San Francisco. pastries. Connecticut. St. Bellagio. Eugene. Italian sodas. TX (fresh orange juice and lemonade) and Genesis Juice. • • • • Prices have been determined after a thorough analysis of all food costs for every item in each drink. CA Juices are provided by Longhorn Orchards.

and Molokai Swiss water process DeCaf. Amaretto and vanilla syrups topped with whipped cream and almonds.60 Regular $1.50 $2.85 Large ESPRESSO Name Espresso Description A double shot of straight espresso. topped with a small amount of velvety milk foam.Dark Roast Java 3. A straight shot of espresso topped with a spoonful of rich milk $1. Topped with whipped cream and cinnamon dusting.00 Large Caffe Americano Espresso combined with hot water.75 $3. Warm milk.85 Cappuccino Caffe Latte Caffe Mocha Espresso Macchiato Espresso Con Panna Espresso Latte Breve Espresso "Red Eye" Espresso with a smooth topping of milk foam. A Caffe Latte combined with Ghirardelli chocolate. a gourmet brewed coffee. Banana. Regular $1. Small Large $2.75 $3.75 $3.50 $3.2. macadamia nut and vanilla syrups.1 Coffee and Espresso Drinks COFFEE Coffees of the day: Dark Roast Java Blend. Warm milk.75 Our famous latte made even more creamy with half and half. $1.50 $2. Coffee. $1.75 Double $2.50 $3.25 $3.25 $3.75 $2.75 Page 9 .75 foam. topped with whipped cream and chocolate shavings. $2.50 Espresso combined with our gourmet coffee of the day to get $2. Riviera Roast. $1. COFFEE DRINKS Name The Banana Nut Java The Cafe Milano Description Coffee. A straight shot of espresso topped with a generous dollop of whipped cream.50 $2.00 your day going. Espresso combined with steamed milk.75 $2.75 $2.

Espresso. $2.50 $4. Half and half. Whipped cream topping.25 $4. Raspberry and chocolate syrups. Topped with whipped cream. Vanilla and orange syrups.00 $3. $1.50 Small. just like you remember as a kid. A 50's favorite. Rich natural vanilla flavor.25 Vanilla Cappuccino Cappuccino made with vanilla flavored milk foam. white chocolate flavoring and steamed milk topped $3.00 with velvety foam and white chocolate shavings. Espresso.2.00 $3. Espresso. Chai. Hot cocoa with white chocolate and whipped cream. Page 10 . Name Vanilla Latte White Chocolate Latte The 50/50 Latte The Raspberry Mocha Latte Chai Latte Description A Caffe Latte with vanilla essence added.00 Large HOT TEA $1.75 Name French Vanilla Cocoa White Chocolate Cocoa Holiday Spice Cocoa Peppermint Cocoa Ovaltine Description Hot cocoa with vanilla and whipped cream. SMOOTHIES All smoothies are $3. Chocolate Truffle Cocoa Rich dark hot cocoa with whipped cream topping. steamed milk and whipped cream topping.50 $3.Dark Roast Java FLAVORED ESPRESSO DRINKS All flavored drinks feature quality Monin and Ghirardelli syrups.00 HOT COCOA DRINKS All hot cocoa drinks are $2. Topped with whipped cream. Rich hot cocoa and holiday spices. Regular Large $2.25 $4. Very chocolatey! An all-time favorite.2 Teas ICED TEAS Classic American Iced Tea.25 $4.50 $4.75 Medium.25 $3.75 Name The Espresso Chocolate Malt The Double Dutch Chocolate Smoothie The Mocha Smoothie The Vanilla Smoothie 50/50 Smoothie (Orange and Vanilla) 3. Steamed milk and whipped cream.50 Regular • • Earl Grey English Breakfast Description A chocolate malt for grownups. Coffee. Rich chocolate and refreshing peppermint. Ovaltine Chocolate Malt and milk. $3. $1.

3 Juices Name Fresh squeezed orange juice Old-fashioned Lemonade Genesis Juice Martinelli's Apple Juice (regular and sparkling) Crystal Geyser Juice Squeeze Description Exclusively from Longhorn Orchards.75 $2.00 $2.50 $2.2.50 $1. Regular Large $1. Corpus Cristi. Mango and Guava.00 Small $2. Blended or on the rocks.4 Italian Sodas ICED ITALIAN SODAS Sparkling spring water. Medium $1.50 Medium $3.75 $2. A San Francisco favorite.50. $2.00 Large $2. Protein Boost.50 $2.25 Large • • • • • • • • • Orange Soda Strawberry Soda Lemon Soda Cherry Soda Raspberry Soda Cream Soda (made with half & half) Peach Soda Kiwi Soda Melon Page 11 .Dark Roast Java • • • • • • • • Peppermint Herb Apricot Earl Grey Lavender Darjeeling Formosa Oolong Golden Flowers Herbal Herbal Lemon Tropical Green CHAI TEAS (hot or ice blended) Chai Original (regular or decaf): Vanilla Chai: 3.00 Regular $3. TX Made fresh daily from Pleasant County lemons.2. Green Machine. flavoring and ice.00 Large 3.95 $2.

00 $1. Orange Cream.75 $1. vanilla and mandarin orange syrups. Soup Quiche Price $6. $2.25 Description Sparkling spring water.Dark Roast Java • Apple SPECIALTY ITALIAN SODAS All $1.00 $1. Bagels Brownies Blueberry Muffins Croissants Black Forest chocolate-covered espresso beans Best Ever Bakery Fancy Cookies 3. Price $1.00 3. Root beer.7 Deli Items Item Sandwiches: Turkey.5 Other Drinks Name Geyser Peak Natural Spring Water Soft drinks from Sprecher's. Ham and Salami. ice.75 Regular.2. hot from the oven. Fresh scones. Sprite.6 Snacks and Pastries Item Pleasantville Cheesecake. $2. cherry and vanilla syrups.00 $2. Ginger Ale. made just for us by Pleasantville Cheesecake Company.50 Price $2.75 $3.00 $2. Stewart's and Thomas Kemper. Our version of an egg cream. half and half.00 $2.50 $2.2.00 $4.2.75 Page 12 . Vanilla $1.50 $4. Roast Beef.50 Large Name The Dreamsicle Soda Cherry Vanilla Soda The Chocolate Soda 3.00 $2. Crystal Geyser Tejava Tea RockStar Energy Drink Orangina Citrus Drink Description From Northern California mountain springs. ice.50 Cream and Key Lime.

by appealing to several market segments. For example. adjacent to fine dining and shopping. local business and pass-through traffic on US 66) provide a consistent foundation all year long. 1.0 Market Analysis Summary Dark Roast Java launches with an exciting new coffeehouse concept in a receptive and steadily growing market segment—the specialty coffee retail business. Dark Roast Java Coffee has all the ingredients necessary for immediate success. 2. It's clear that America's love for good coffee continues during good times and bad. The benefit of this mix of customers is that it helps maintain consistent business throughout the year. the student population is not as strong during the summer as it is from September through June of each year. negative balance sheets and even bankruptcy. coffee chains continue to show strong growth. 5. Pleasantville: The Perfect Launch Market By launching Dark Roast Java in the Pleasantville market we maximize our potential for success due to several factors: • • • • • • • The highly affluent local population Year-round tourist activity Ever-changing upscale student population Excellent auto and pedestrian traffic by our location Low media costs High number of local special events Prime site location Dark Roast Java is located at what is arguably one of the best locations for a coffeehouse in Pleasantville—in the heart of the tourist and business district. For example. 4. while tourism is strong all year long in Pleasantville. They must also market Page 13 . Dark Roast Java does not become overly dependent on any single consumer group. Despite economic downturns in recent years the specialty coffee business has been a bright spot. Also. Conversely. several local coffeehouses with primarily student customers do poorly during the non-school months. 4. While literally hundreds of businesses in many categories are facing poor sales. it peaks during the summer months.Dark Roast Java 4. next to the historic Egyptian Theatre and just steps from the busiest intersection in town. Affluent local residents Tourists Local business people Students Travelers passing through These groups are all potentially strong customer segments. 3. The other customer segments (local residents.1 Market Segmentation Dark Roast Java's customer base in Pleasantville is comprised of five target groups.

State University. Tourists.804 20.22% 75. Most will pass by the Dark Roast Java location. and one block from the number one shopping destination in Pleasantville. Pleasantville High School is less than a mile from Dark Roast Java. Key influencers.22% Page 14 . shopping.212 20.606 280. US 66 is also a heavily traveled commuter route to Shorewood and Beachey Head to the south.479 Year 2 Year 3 Year 4 Year 5 CAGR 2.153 41.324 81.250 22. Many of these travelers will stop for a meal. artists. According to Dept of Transportation. 'A' Street and Frist Avenue are the two most heavily traveled streets in Pleasantville.00% 1. Pleasantville Chamber of Commerce. Within five miles of Dark Roast Java are 200.00% 5.000 40. Tourist come to "America's Riviera" for the beaches.00% 3. including many prestigious private schools and academies.00% 5.200 263. more than 35 million auto trips will pass through the city. Table: Market Analysis Market Analysis Year 1 Potential Customers Local residents Tourists Travelers on US 66 Students Local businesses Total Growth 2% 5% 5% 1% 1% 3.763 23. • Affluent locals. Students.000 40.402 271.100 78.311 41.181 121.000 76.000 of the most affluent people in America.590 115.500 105. Pleasantville is home to a major branch of the State University as well as dozens of other schools. Dark Roast Java will avoid these peaks and valleys in business with a mix of customers.624 20.000 255.812 289.050 40.551 24.000 100.000 20.536 79. Lucre Galerie. Homes in adjacent Niceburg sell for $1 million to $50 million. chic. • • • • Sources: Department of Transforation. to refuel and have a cup of coffee.030 110.00% 1. Dark Roast Java is located on the corner of 'A' Street and First Avenue in the heart of the prime downtown business district. Travelers on US 66. Descarte (I Spend. trendsetters. One of the state's two major north/south routes passes through Pleasantville.000 20. Therefore I Am) department store.000 tourists visit Pleasantville every year.000. writers and celebrities have homes in Pleasantville.Dark Roast Java themselves anew each year to the incoming students.000 21. dining and nearby vineyards. It's across from the exclusive. Local business people.400 20. More than 5.

90% of all tourists visiting Pleasantville will pass by the Dark Roast Java location. Local Residents. Pleasantville has excellent year-round tourist activity. It is a short 5 minute drive to Dark Roast Java for most of our potential local customers. involvement in the Chamber of Commerce. While hotels are virtually sold out during the summer months. Excellent public parking is available within 100 yards. both private and government. our strategy is to maintain a constantly high customer count by leveraging our appeal to five groups of potential customers. With a troubled economy and fears of terrorism. are within two blocks of Dark Roast Java. support of local charitable organizations and sponsorship of events and youth sports teams. art shows) scheduled throughout the year. within three miles. Approximately 200. tourism all year is exceptionally strong. We will reach out to them through local marketing. is one block Page 15 .Dark Roast Java Chart: Market Analysis (Pie) Market Analysis (Pie) Local residents Tourists Travelers on US 66 Students Local businesses 4. About 5 million people will visit the area during the next year. Local customers form the loyal core of our business. weekend or day-trip visitors from the greater Ontopolis area and an unusually large number of special events (e. according to the Chamber of Commerce. film festivals. Lucre Galerie.2 Target Market Segment Strategy Overall. We will target these potential customers with ads in local tourism guides. the prime shopping center of Pleasantville. easy and safe short trip to Pleasantville for recreation.000 people live within five miles of our Dark Roast Java location. And. concerts. Many local businesses. Local businesses. The most affluent of these live even closer. This is due in large part to the temperate climate.g. more people are opting for the relatively inexpensive. Tourists.

students need an affordable place to hang out with their friends Travelers on US 66. The area has more than 30. including nearby City College and State University. Because much of the employee parking is out of the immediate area with shuttle service to downtown. We also offer coffee service to local restaurants. To reach students we offer special student discount cards. Coffee service brings in additional revenue and promotes Dark Roast Java among employees at these businesses. a number that is increasing every year. Students. Source: Dept of Transportation. most people stay near their place of employment during breakfast.000 students in several schools. The county courthouse is two blocks away. US 66 is one of two major freeways in the state and the one favored by travelers who want to take a bit more time and make a few stops during their trip. We also conduct PR activities in media outside the local market to expose the Dark Roast Java name to a wider state and national audience. have few places they can go to meet their friends. We will also reach business customers through Chamber of Commerce activities and by personally visiting the shops and businesses to distribute discount coupons and menus. Students. Dark Roast Java is in the heart of the shopping and dining area. Page 16 . Starbucks sold only whole bean coffee. US Census Bureau. Students represent an excellent customer segment for several reasons: • • • • Students bring an energy and youth to the coffeehouse By attracting students we generate excellent word-of-mouth Students represent a large base of potential part-time employees Often under the drinking age. A significant number of these local business people find Dark Roast Java an inviting and convenient destination. pass out free coffee coupons at student events and offer entertainment on weekends.3 Industry Analysis The specialty retail coffee business as we know it today began in 1982 after Howard Schultz purchased the Starbucks name and began the expansion of the modern Starbucks chain.Dark Roast Java away. Pleasantville Chamber of Commerce. The Dept of Transportation estimates that there will be 35 million auto trips through Pleasantville this year. Coffeehouses have proven to be very popular with students—even high school students—as an "in" place to go that's also affordable. most of whom are under the drinking age. night spots and businesses. lunch and for after-work relaxing. offering a 20% discount on all coffee and tea drinks when AAA members show their membership card. 4. It's also a major commuter route to the cities to the south in Sunshine County. Our primary method of reaching this target customer group will be our participation as a AAA member. Prior to his transformation of the business.

As the graph below showing Year 2000 per capita coffee consumption illustrates. lead to high profit margins in the coffeehouse industry. there is still much room for growth. as yet. where quality and service are paramount.000 espresso bars and coffeehouses. It still retains much of its original flavor. and low overhead. By 2002 the percentage had grown to 62%. However. Year after year. It's easy to see there is significant room for growth in consumption. the specialty coffeehouse segment is growing steadily at a healthy pace every year. drank specialty coffee. Twenty-five years ago. Starbucks' success has encouraged others to enter this potentially lucrative business. Obviously. America's coffee-drinking habits are changing. Cafe Trieste in San Francisco is typical. Coffee drinkers spend an average of $164.S. In the past five years the number of "gourmet" coffee drinkers has increased from 7 million to 27 million. almost nobody consumed espresso or espresso-based drinks in the United States. the growth continues at sizeable rates." 77% of coffee drinkers consume coffee daily. It's easy to see why coffee is second only to oil as the largest commodity in the world. While overall coffee sales have not grown significantly in recent years. coffeehouses have been primarily independent businesses. If Starbucks' image becomes one of a "fast food" purveyor of coffee. Page 17 . no coffee chain has differentiated itself significantly from the others.71 on coffee annually.000 coffeehouses in the U. more nimble competitor like Dark Roast Java. and drink an average 3. It was once a gathering place for "Beats" and "Hippies. the United States is not presently one of the stronger markets for coffee drinking.S. Now they account. once known for quality and customer service.1 cups daily." Poetry readings were held weekly. In 2001 53% of all adults in the U. Starbucks. Their size (6. compared with Italy. for more than half of all specialty coffee consumed. which has 200. The Specialty Coffee Retailers Association believes the market has not approached maturity and. relatively modest investment capital requirements. even as recently as the 1970's.Dark Roast Java Coffeehouses in America have existed since the 1600's. The coffeehouse chains of America are leading this growth. Many of these independent coffeehouses continue to enjoy a loyal following.300 stores worldwide) is the reason why Starbucks is now often called the "McDonald's" of coffee chains. has recently come under attack by customers and business commentators for becoming too big. typically with an eclectic Bohemian style. it leaves the market open for a smaller. Today there are more than 13. There are 108 million coffee drinkers in the United States. and the coffeehouse concept is more than 400 years old. according to the National Coffee Association's report "2000 Coffee Drinking Trends. The low food cost of coffee drinks. In the United States.

Gloria Jean's (291 stores. Leaders in the specialty coffee chain category in the United States include: Starbucks (6.S. 90% of stores are franchises. Coffee Bean & Tea Leaf (210 stores). New management seems to leading a turnaround. Same store sales increased by 10% in 2002.5%. Started the specialty coffee chain phenomena in America in 1982.Mike Ferguson.S. 99% are company owned. Owned by AFC. Another Seattle-born company." -.000 locations such as grocery stores and office buildings. which also owns Popeye's Chicken. Revenues exceeded $6 billion in 2002. 4. Now in 30 countries. (founded 1963). Seattle's Best is also distributed at 7. The only coffeehouse chain that has not experienced excellent growth every year.com cites poor management as as the reason. Oldest privately held specialty coffee retailer in the U. Page 18 .300 stores). The third largest company-owned chain.Dark Roast Java Coffee drinking per capita by country. Gross profit last year was 49. Peet's (58 stores) One of the few successful IPO's in 2001. business. Only 19 stores are company owned. Caribou Coffee (260 stores).). 58% of revenues come from sales of whole coffee beans. Long Beach. Seattle's Best (150 stores). Average store gross revenue is $805. Cinnabon and Torrefazione Italia Coffee (21 stores). Founded in 1992 in Minneapolis.000. Tully's (103 stores).3. Church's. Second largest all company-owned chain.1 Competitive Comparison "Until everybody can walk to a coffeehouse and get a properly prepared espresso drink. we're not even approaching market saturation. Marketing & Communications Director Specialty Coffee Association. 2002. 195 in U.

First coffeehouse in 1982. has only mediocre stores in the Pleasantville area (eight locations). Many people think it's the best.com. Dun & Bradstreet. Mostly in the Oklahoma area. 12 are franchises and two are company owned. Sources: Business. the main thoroughfare in town. It's a Grind (86 stores). there is still much room for growth—especially in niche market segments. small and lacks outside seating. Many are kiosks. All but three are franchises. Yahoo Business. Begun in Hawaii. Most locations are franchises. Starbucks Corporation.150 customers daily) is at an excellent location on 'A' Street. the leading coffeehouse chain. Specialty coffee chains in Canada: Blenz (27 stores). Mostly concentrated in the New Jersey/New York area.S. Dunkin' Donuts More than 800 outlets serving a surprisingly good coffee. but the store is unattractive. 386 outlets total and 370 wholesale accounts. Its highest volume store (1. This New Orleans-area chain owns four of their stores. Fast-growing chain that began in Long Beach. Page 19 . Bad Ass Coffee Company (29 stores). this company has grown rapidly by offering a Hawaiian-grown coffee and a milder. California seven years ago. Its stores average more than $500. Second Cup (401 stores) Tim Horton's (2. A unit of the Massachusetts-based Chock Full O'Nuts organization. National Coffee Association. Although they serve an excellent product they have operated "below the radar.Dark Roast Java Diedrich Coffee Company Originally founded in 1916 when the owners inherited a coffee plantation. Starbucks. according to The Specialty Coffee Association of America. Although the specialty coffee industry is successful and expanding rapidly.100 stores/150 in U. Local Competition Surprisingly. Owns the Gloria Jean and Coffee People chain. This store is very close to being a Dunkin' Donuts style operation where baked goods are the primary products. Headquartered in Southern California.). Hoover's Business Data. Company reported $12 million in revenue in 2002. All but three are franchises. mellower brew." Bucks County Coffee A Mid-Atlantic chain of 40 stores founded in 1982. Quikava (68 locations). Market maturity is not expected to be reached until at least 2019. 2002. Concentrated in Southern California and Las Vegas.000 gross revenue. Specialty Coffee Association. A division of Manhattan Bagel. New World Coffee (33 stores). Java Dave's (14 stores). PJ's Coffee & Tea (22 stores). Has a very good reputation.

Page 20 . They make a quality cup of coffee and have a loyal following. small outlet opened in 2003 in Lucre Galerie. This busy coffeehouse is very small. The Barnes & Noble coffee cafe is very small. The Borders Books cafe is larger.000 square feet.2 Competition and Buying Patterns Competition is dominated by the presence of Starbucks. located in a residential neighborhood but on a busy street in what was once a gas station. Other major chains are Caribou Coffee. Seattle's Best. adjacent to the same major parking garage as Dark Roast Java and they also draw from book shoppers and drop-ins from 'A' Street. Both Barnes & Noble and Borders Books have integrated cafes that serve espresso drinks into their store plans. It is a big hangout for the "Goth" and "punk" crowd. Despite their poor location. The coffee is roasted on site. This coffeehouse is also very "collegiate" in its decor. Other Starbucks locations in the Pleasantville area are even less memorable. but manages to average more than 250 customers per day. Another independent is Grounds for Action. A counter inside and a couple of tables outside are the only areas for customers to sit down. Another location in Mount Hill is scheduled to open in Summer 2004.3. Coffee Bean also has an excellent location directly across the street from Starbucks on 'A' Street in downtown Pleasantville. and a favored haunt of the law school students. They do much of their business by mail order. New managers are trying to improve the store but without success so far. A second. and the service can often be quite slow. All of these chains are considered "clones" of Starbucks. this is probably the most formidable competitor in town. Peet's Coffee & Tea. A second Coffee Bean opened in 2002 on the northern end of 'A' Street. A second Paradiseo is located in Shorewood. about three miles from downtown. although it does have a sizeable lounge area and some outside seating. and does a good business. Paradiseo is located on State Street in a good location. The Pleasantville Roastery is a bean roaster and coffeehouse with brick walls and a "San Francisco" style. Gloria Jeans and Diedrich Coffee. Other competitors include three independent coffeehouses. They have a second location in Springfield. about 1. Photos of some of these locations are shown in the appendix. Few vary much from what is perceived as a proven formula for success. They serve good coffee but have a limited menu and a very "funky" decor. The quality of their coffee and pastries does not compare with ours. They suffer from a very poor location in a difficult to find (or even see) shopping mall off lower 'C' Street. It is not a particularly attractive store.Dark Roast Java The other high-volume Starbucks is located at the end of a shopping mall in Mount Hill and averages 952 customers daily. with small facilities and mediocre locations. 4. located in the rear of the store. Ambrosia Kaffe is primarily a student hangout located about three blocks off First Avenue in the northern end of the business district. The business has undergone changes in management during recent years. Coffee Bean & Tea Leaf. They are in a good location. Both of these are within two blocks of the Dark Roast Java site. Its business is modest. fast becoming the "McDonalds" of the specialty coffee industry. and not very busy despite serving Starbucks coffee.

Entertainment on weekend nights draws a young group of enthusiastic customers. Conversely. pre-packaged sandwiches. the average customer expenditure has risen.$6 range. Page 21 . they can meet with their friends. Customer guest check averages are rising. Coffeehouses need to produce a quality product to back up the perceived "little luxury" image. Despite major economic recessions. coffeehouses provide a calm. many coffeehouses are packed with patrons. mass bean buying and other efficiency measures. It's not unusual for a well located coffeehouse to exceed a daily average of 900 customers. Coffee drinking is now an all-day activity." America's love for good coffee is stronger than ever and increasing in size faster than any other industry. fast-paced Americans consider a stop at their local coffeehouse a necessary part of their day. One industry observer said.50. in recent years coffee drinking has become an all-day activity. Lifestyle factors converge to make the coffee industry strong at all times. the coffeehouse is an intimate yet inexpensive venue. Dark Roast Java expects that guest checks will average about $4. inviting environment for people to socialize. terrorist attacks and two wars over the past two decades. FACT: Not a single coffeehouse chain has failed during the past 20 years.Dark Roast Java FACT: The coffeehouse business has grown every year since 1982. The surge in interest in coffee drinking among young people assures a diverse. Quality is deteriorating even as the industry is growing. Instead of going to a bar and paying for an alcoholic drink or a restaurant where a meal usually comes with a hefty price tag. Once concentrated in the early morning hours or mid-afternoon. relax or work. snacks. As pastries. juice drinks and gift items are added to the menu. Many popular coffeehouses report averages in the $4 . Coffeehouses provide them with a much-needed place to meet with their friends. Even late at night. sophisticated customer base now and in the future. receptive. most of the largest chains are bowing to the pressures of growth and are cutting corners on quality by introducing fully automatic espresso machines. tea. the specialty coffee industry has grown every year. And when times are bad the coffeehouse industry is great. Older adults also enjoy the fact that for the relatively modest price of a cup of coffee and snack. chocolates. "When times are good the coffeehouse industry is great. The stimulant effect of coffee is an important reason why many hard-working. Young people under the legal drinking age are one of the fastest-growing segments of the coffee drinking market. Currently. relax or catch up on work.

gift items and gift baskets. A wider variety of popular drinks than our competitors. including flavored coffee drinks. It features stained glass decorations. the people we attract and the atmosphere we create. art glasswork.1 Launch Marketing Most coffeehouse chains do little or no marketing and advertising.1 Competitive Edge Our competitive edge. An ambiance superior to all other coffeehouses in the area with upscale "Cote d'Azur" look. tea. Mediterranean Riviera style furnishings and outdoor dining. Starbucks' philosophy is that their ubiquity in the marketplace is all they need to sustain and grow their Page 22 . cocoa. entertainment and cultural district in Pleasantville and adjacent to the historic Egyptian Theatre. Strategic Assumptions: • • • • • People want a better-tasting coffee drink Coffee drinkers want a more inviting coffeehouse environment Coffee drinks are considered an affordable luxury The coffeehouse industry is largely unaffected by the economy and world events Dark Roast Java offers several unique advantages over all other coffeehouses 5. Our current location can arguably be considered the best in the market—in the heart of the downtown shopping. chocolates. Our strategy will be to position Dark Roast Java as the "Lexus" of coffeehouses. cocoa. Our Internet website will include sales of whole coffee beans.Dark Roast Java 5. dining. better tasting coffee product. 5. chai.2 Marketing Strategy Other coffeehouses rely almost entirely on word-of-mouth marketing to generate business. juice and smoothies. The only coffeehouse downtown to provide regular weekend evening entertainment. compared to the other coffeehouses in the greater Pleasantville area includes the following: • • A significantly higher quality.2.0 Strategy and Implementation Summary The Dark Roast Java coffeehouse uses a strategy of total quality—in product and service. For example. We have several drink options for people who don't drink coffee: tea. juice and Italian sodas. tea. the products we sell. • • • • 5. offering a high quality product and superb service in a superior environment. Our promise is in our location. We will engage in an ongoing aggressive marketing program that will help us establish profitability quickly and set the stage for continual growth.

Dark Roast Java customer base. This is likely why little is done. the major players have not been taken over by sophisticated companies like Pepsico. National awareness will help drive the expansion by generating opportunities created by the media buzz and familiarizing people with our brand name. Launch Marketing Launch marketing will promote awareness. The retail coffee industry is a sales-oriented business with historically very little experience in marketing and advertising. They spend less than 1% of gross revenues on advertising. An element of our differentiation from other coffeehouse chains will be our use of advertising and marketing to gain awareness. Dark Roast Java is Pleasantville's first true gourmet coffeehouse 2. where marketing is viewed as essential to gaining market share. Local Media • • • • • • • The Pleasantville Gazette Pleasantville Magazine The Mount Hill Journal The Pleasantville Weekly Mount Hill Magazine Pleasantville Dining Pleasantville Seasons Page 23 . It will help set the stage for future brand identification. build customer traffic and establish a strong brand image. and when they do spend. Our unique quality products 3. it is usually to introduce a new product. build immediate traffic and establish our brand image via several methods: • • • • • • • • Public relations/publicity Direct mail Local print and broadcast media Design and packaging Community involvement Sampling Superior location Desirable store ambiance Public Relations A strong public relations/publicity program uses as its primary "hook" these three main points: 1. As yet. We intend to create immediate customer awareness and not wait for word-of-mouth. Our distinctive latte "art" The goal of the PR/publicity is to achieve local market awareness and establish the brand on a wider scale to set the stage for future expansion. We are also building customer traffic immediately with an aggressive Launch Marketing Plan. Local market awareness is vital because more than 50% of sales will come from people living within a 5-mile radius of the store.

tea Gift baskets Gift items Furnishings Page 24 . Oprah. Good Morning America) 1. We will eventually sell the following items online: • • • • Whole coffee beans.Dark Roast Java • • • • • • • • • • • ABC-TV (KTBO) KATF radio KEZI radio KWAS radio KSNZ radio KOBR radio KPML radio KKMN radiO KJBU radio KSEC radio KION radio Regional/National Print Media • • • • • • • • • • • BusinessWeek The Ontopolis Business Journal Time Newsweek US News Entrepreneur Wall Street Journal Fortune Forbes Robb Report Newspapers in top 50 US markets National Broadcast Media • • Feature programming (e.g.500 radio stations nationwide Direct Mail • • Ongoing direct mail generated from our website data Visa or MasterCard local direct mail program Website Our website is fully e-commerce functional and could easily become a significant revenue source.

However. art glasswork. One mention on a TV talk program or in a 'lifestyle' magazine can (and has) launched many successful careers and businesses. they are all of the modern Italian or Starbucks look. we will also sell a catalog of glass artwork representative of our store decor. We also offer sales of stained glass and glass artwork by the artisans who produced our decor furnishings. Key individuals will be targeted with gift baskets from Dark Roast Java containing samples of our products to entice them to visit Dark Roast Java and talk about us with their friends. including gift baskets. the wordof-mouth recommendations from these people can drive significant business to us as well as generate favorable publicity. differentiates us from all others. A former actor owns a local vineyard and is a major hotel developer. featuring stained glass decorations. While there are some upscale designs.Dark Roast Java And in a first for any coffeehouse in the world. We will act as the sales agent for a number of participating stained glass. Page 25 . Gift basket business could eventually grow to be substantial. Our Mount Hill location will be in a building owned by a clothing brand multimillionaire. and art glass artisans. The wife of the billionaire owner of Nationwide Communications owns the Pleasantville newspaper. Gift Items We carry a wide variety of quality gift items. Our upscale stylized "Cote d'Azur" Mediterranean Riviera design. Design style The interior design of Dark Roast Java is unlike any other coffeehouse chain. Our involvement in the community will enable us to garner exposure for Dark Roast Java among an important group of local residents. Celebrities in Pleasantville are also actively involved in the community. since it is difficult to project at this time we have not included it in the financial computations. With literally hundreds of celebrities and wealthy business people as local residents. Many celebrities visit Pleasantville or have second homes here. Politicians and entertainers have interests in several restaurants. many supporting several local charities. The website also markets Dark Roast Java with: • • • • • • A monthly newsletter Interesting information about the coffee industry A map to our store Store hours Special events Coffee recipes Most of these functions are already up and running. Trend-setters Pleasantville and the southern part of the state are home to thousands of individuals who can be important to the successful positioning of Dark Roast Java.

Idaho. New Mexico. Our second site on busy Shoreline Road in Mount Hill will feature our flagship store.Dark Roast Java Community Involvement We will make ourselves an integral part of the local and world community. Shorewood. Montana. Site selection criteria include: • • • • • High traffic location Small or mid-size affluent market Year-round tourist activity Nearby (within 5 miles) student population Outside dining Other sites that meet these criteria include Newburg. etc. organic. Plans are to locate Dark Roast Java coffeehouses in the Western states for efficiency of supply and management. Orchard Valley. Sites in other states might include Utah. Bayview. Beachey Head. Colorado. We will build Dark Roast Java coffeehouses in the best locations possible. Exceptions will be made for some sites if they are deemed to be potentially very profitable. sustainable farming Location The location of the first Dark Roast Java in Pleasantville is a prototype of future sites. Some of these community involvement goals include: • • • • • • Take an active role in the Chamber of Commerce Supply complementary product to local charities for fund-raising activities Sponsor local sports teams Create and sponsor a Pleasantville to La Pine cross-mountain foot race following the old Stone Canyon stage route Purchase fair trade coffee whenever possible Support Fair Trade. create opportunities to forge important contacts with key people and live up to our company Mission Statement. across from the Mount Hill Inn and The Junction Restaurant. as this is the key element in a successful operation. Washington. where al fresco dining is a way of life. It is by far the best location in Mount Hill—one of America's most affluent cities. Outside Dining The coffeehouse/cafe experience is indelibly linked to its European origins. Page 26 . Americans have embraced sidewalk dining. It is one of the fastest growing additions to the American dining scene. Oregon. It will be located just off the Oak Patch Road and Highway 66 exit. This will generate goodwill. Sidewalk dining also provides an excellent way for prospective customers to see and "check out" the coffeehouse for the first time. and Capital City. Springfield.

$100. It will be an excellent way to publicize Dark Roast Java coffee.40% of all gift card amounts go unused. The kiosk will be highly visible and fun. It will also potentially be very profitable. frequency and discount cards We will promote our program of gift cards and customer frequency cards to drive business and stimulate cash flow.Dark Roast Java Sampling We will engage in several sampling activities to introduce potential customers (and current customers) to Dark Roast Java's range of drink options. With ten coffeehouses the gross revenues. The Future The number of Dark Roast Java locations could easily reach 20 .000 . Even factoring in the cost of additional staff and other resources. By tying in with our computerized sales and inventory system we will be able to track usage and allocate the expense to marketing. These cards promote customer loyalty as well. We believe it could generate $75. via direct mail and at special events Complementary coffee will be served at charitable and civic events Free coffee service will be provided to the Chamber of Commerce. While the financials in this Business Plan only address the Pleasantville location. • • • • • Samples will be distributed at the coffeehouse Samples will be given to passers-by on the street Discount coupons will be distributed on the street. Discount cards are used to build goodwill among specific groups such as the Chamber of Commerce members and college students. Pre-paid and re-loadable cards have also proven to be very popular with the major chain coffeehouses. the Planning and Zoning Department) Portable Kiosk Within 6 to 8 months we will create a portable Dark Roast Java kiosk to sell and market our products at special events and community activities. Industry records indicate that 25% . a radio station. Pre-paid. Frequency cards rewarding the repeat customer with a free drink after a specified number of visits are popular and proven methods to forge customer loyalty. a 10-store chain would likely generate a minimum of $1 million in profits annually.000 annual revenue. when fully realized. the newspaper and at select government offices (e. would be more than $10 million using the third year performance figures. Pleasantville has more than 130 such events every year. Page 27 . although it's hard to determine how profitable with any accuracy until the local response is measured. Also.25 within five years.g. again accounting for a significant percentage of sales. we can extrapolate from the store's performance (which will be carefully monitored and tracked) to get a general idea of the chain's projected profitability. gift cards have proven to be a popular holiday item accounting for more than 5% of total sales during December. re-loadable.

art shows. and (B) create efficient product ordering Create a mobile kiosk to take Dark Roast Java into the community at special events. pre-paid cards. Scheduling can be done online and easily revised to accommodate changes—all while projecting weekly. Scarborough Market Data Survey. implementation and operation in Pleasantville will be the "blueprint" for future efficient expansion. Sales are linked to inventory to both streamline the efficiency of ordering and reduce "shrinkage" by instantly alerting us to unusual shortages compared with revenues. and become our "flagship" operation. etc. frequency cards. be visible at charitable functions Solicit customer feedback to constantly improve and streamline our operation Key Strategy: an advanced and expandable point-of-sales system After carefully tracking the performance of the Pleasantville store through an expandable and highly detailed point-of-sale system. A 25-store chain would easily top $2. Labor requirements are matched to projected in-store sales based upon past performance for maximum efficiency. Page 28 . Interep Radio. Dark Roast Java's start-up.Dark Roast Java while building significant valuation. farmer's markets. Sell coffee. time period and cost of goods. Sources: SRDS. Schedules can be sent via email to staff members. and offer discounts to key groups Create an ongoing sampling program Conduct a consistent. Even after paying higher than average wages we expect to allocate no more than 25% to labor costs. constant staff training to assure the best quality possible State-of-the-art sales/inventory system to (A) reduce customer waiting time. quarterly or annual labor costs. daily sales are tracked and analyzed by item. gift baskets and glass artwork on our website Establish coffee service at local businesses Sell gift cards. For example.5 million in annual profits. monthly.3 Sales Strategy Our sales strategy includes: • • • • • • • • • • • Staff salaries that are 10% above the industry average in order to attract the best people Hiring for attitude so that we always have a friendly. enthusiastic staff to make customers feel welcome and appreciated. 5. Our new Mount Hill location will incorporate the knowledge we gain with our first store as well as new creative ideas. aggressive marketing program Be an active member of the community. we will use this as a "blueprint" for expansion.

As we continually research methods of delivering a high quality but cost-efficient product. Page 29 . As expansion occurs. and by making small incremental improvements in the costs of items we expect to increase overall COG by a minimum of 5% during the first year of operation. Close monitoring will allow us to achieve a high level of communication between stores as well as spot problems immediately and take corrective action. the POS system can be adapted to each individual location and allow the central office to monitor the stores remotely as well as the overall combined operation.Dark Roast Java Cost of goods can be monitored for increased efficiency too.

soft drinks.1 Sales Forecast Conservatively.000 $10.000 $40.000-per-day customer count within three years.10. food items Coffee beans Events/mobile kiosk Coffee service to businesses Internet sales Gift items Page 30 . Chart: Sales Monthly Sales Monthly $70. juice Pastries.5%) due to the premium price we will charge for some of our items. we are forecasting an average of 300 customers per day during the first year with an average guest check expenditure for all items of $4.3.Dark Roast Java 5.500 customers per day and an average customer expenditure of $4. However.10.000 $30. water.000 $60. This figure was arrived at by surveying the customer traffic at the nearest competing coffeehouses which have a range of 150 . We have estimated our customer expenditure to be slightly higher (2. Total cost of sales is approximately 25%.000 $0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Coffee drinks Tea.000 $50. We expect growth to occur across all categories at about 10% annually as the business becomes more established and well-known. reaching 400+ customers per day within a year and more than 500+ within three years. These estimates are likely conservative.000 $20. it is possible we could attain a 1.

578 $56.630 $10.000 $900.000.440 $606.315 $55. water.306 $0 $775 $4. water.021 $282.625 $7.054 $55.609 $448.000 $500.500 $6.020.210 $142.241 $1.000 $300.007 $154.828 $26. The milestone schedule indicates our emphasis on planning for implementation.964 $10.000 $200.000 $800.728 $786.4 Milestones The accompanying table lists important program milestones.035 Year 2 Year 3 5. A similar milestone development program will be developed for our Mount Page 31 .293 $0 $768 $3.709 $26.300 $8.280 $0 $760 $3.281 $9. mobile kiosk coffee service to businesses Internet sales Gift items Subtotal Direct Cost of Sales $265.000 $100.100.000 $600.526 $0 $3.351 $1. food items Coffee beans Events.241 $260.004 $10.101 $167.000 $0 Year 1 Year 2 Year 3 Coffee drinks Tea.631 $217.364 $2. juice Pastries. soft drinks.000 $1. food items Coffee beans Events/mobile kiosk Coffee service to businesses Internet sales Gift items Table: Sales Forecast Sales Forecast Year 1 Sales Coffee drinks Tea.Dark Roast Java Chart: Sales by Year Sales by Year $1.126 $2.579 Year 1 $43.197 $344.274 $1.793 $1. water.473 $3.109 $141. food items Coffee beans Events/mobile kiosk Coffee service to businesses Internet sales Gift items Total Sales Direct Cost of Sales Coffee drinks Tea.993 $13. with dates and managers in charge.314 Year 3 $44.105 $0 $3.925 $10.312 $144. juice Pastries. juice Pastries.031 $0 $3.000 $700.266 $26. and budgets for each.109 $200. soft drinks.000 $400. soft drinks.613 Year 2 $44.

Dark Roast Java Hill location to insure its timely execution. P-S/V. L N. L V. P-S N. P-S N. L N.000 $1. L V. P-S N. P-S/V. What the table doesn't show is the commitment behind it. L N. Select and order furnishings Site plans Select construction contractor Join Spec. and we will hold follow-up meetings every month to discuss the variance and course corrections. P-S/V. P-S N. P-S N. L N. P-S/V. P-S N. L N. P-S N. P-S N. P-S N. P-S N. baristas Select business insurance Design. L Department Marketing Marketing Admin Marketing Marketing Marketing Marketing Marketing Admin Admin Admin Admin Marketing Marketing Personnel Admin Admin Admin Admin Admin Admin Marketing Marketing Admin Admin Marketing Admin Admin Admin Personnel Admin Admin Personnel Admin Admin Marketing Admin/Marketing Admin/Marketing 6. P-S/V. P-S/V. Select paint contractor Choose paint palette Select and order flooring Gift items. P-S/V. L N. P-S/V.000 $0 $7. suppliers. P-S/V. L N. P-S N. P-S N. we believe the potential exists for Internet sales to become a substantial percentage of our revenue. P-S N.950 Manager N. P-S N. P-S/V. P-S/V. P-S N. L N. L N. L N. P-S N. Page 32 . P-S/V. Table: Milestones Milestones Milestone Business/Marketing Plan Secure Funding Secure lease Secure name licensing Marketing plan Structure company type Develop investor program Attend Coffee Fest Health Dept. L N. P-S V. L N. P-S/V. L V.000 $1. print stationery Pre-opening parties GRAND OPENING Acheive 700+ daily customers Totals Start Date 2/1/2003 2/1/2003 2/10/2003 2/10/2003 2/10/2003 2/15/2003 2/15/2003 2/27/2003 3/1/2003 5/1/2003 3/1/2003 3/15/2003 3/15/2003 4/1/2003 4/1/2003 4/1/2003 4/1/2003 4/15/2003 4/15/2003 4/15/2003 4/15/2003 4/15/2003 4/15/2003 4/15/2003 4/15/2003 4/15/2003 4/15/2003 4/15/2003 4/30/2003 4/30/2003 5/1/2003 5/1/2003 7/1/2003 7/1/2003 7/15/2003 9/1/2003 9/15/2003 12/12/2003 End Date 4/30/2003 4/30/2003 4/30/2003 4/30/2003 4/30/2003 4/30/2003 4/30/2003 3/1/2003 5/15/2003 6/15/2003 4/30/2003 4/15/2003 5/30/2003 5/30/2003 5/30/2003 5/30/2003 5/30/2003 5/30/2003 5/30/2003 5/30/2003 5/30/2003 5/30/2003 5/15/2003 5/30/2003 5/15/2003 5/30/2003 5/30/2003 5/30/2003 6/15/2003 6/15/2003 6/15/2003 6/15/2003 9/15/2003 7/20/2003 7/31/2003 9/15/2003 9/30/2003 1/31/2004 Budget $500 $500 TBD TBD $0 $0 $0 $500 TBD TBD TBD $150 $250 TBD $0 $0 $250 $0 $300 $0 $0 TBD TBD $0 $0 $0 $0 $0 $0 $0 $2. etc. L N.500 TBD TBD TBD $1. L N. P-S V. Our business plan includes complete provisions for plan-vs-actual analysis. P-S/V. L N. Although we've projected modest sales because of the difficulty in predicting online sales activity.0 Web Plan Summary We plan to expand the functionality of our website so that it becomes a substantial revenue stream for Dark Roast Java. P-S/V. order Select pastry supplier Select equipment supplier Graphics/brochure design Select confection suppliers Select juice suppliers Credit card companies Create training program Select music system Install wireless Internet Hire manager. Coffee Retailers Select and order lighting Create employee manual Alliance with water company Join Chamber of Commerce Select cash register system Business license. L N.

In-store Internet computing An appealing customer feature at Dark Roast Java will be two Internet access stations with 17" monitors. and Dark Roast Java creates an additional revenue stream that could become substantial over time. The price for this access hasn't been set yet but will be approximately $15 an hour with some fractional division rate structure at 15-minute intervals (perhaps $5 for every quarter hour). testimonials. PR releases. news. 6. health department regulations. Special PR will promote our gift basket business and the sale of our upscale design glass artworks. Here. including: • • • • • • • Whole beans Tea Cocoa mixes Chocolates Gift baskets Gift items Art glass We will sell a variety of high design stained glass. when more stores are opened.1 Website Marketing Strategy All communications materials will include the Dark Roast Java website address. This will provide us with opportunities for media coverage. In this way we provide exposure and additional sales activity for the artists. customers will be able to reload their Dark Roast Java Card online so they can use it in lieu of cash or credit when they make purchases. These will enable people to access the Internet while at the store. bios of key management and reproduceable logos. For the media. stories of interest. company rules. an online press kit will be available which will include downloadable photos. a visiting author may go online to chat with visitors to our website. The Dark Roast Java website home page will be the always-on start page for the monitors. The website will also function as an online "brochure" for both the Dark Roast Java quality story as well as enable visitors to "see" our retail store. Page 33 . chat. Or we may support a charities’ fund-raising activities. glass artwork and accessories featured in our coffeehouses by establishing ourselves as an agent for the artist/manufacturers. Eventually. We will host online "events" for our customers. get directions and maps. the website will function as a means of internal communication through a password-protected area.Dark Roast Java We will sell a number of items at our website. see our menu and find out about special events. "live" internal announcements and virtual meetings will take place. For example. Special downloadable offers good at the retail stores will be posted from time to time on the website. Eventually. We will process the order and the artist will fulfill it.

future development may include items such as tracking. Ned Powers-Sebastiane Ned has more than 35 years experience in marketing/sales with special expertise in the retail sector. • • • President/CEO of the Pleasantville Chamber of Commerce.000 for the basic fee plus the percentage of sales). • • • • • • • President of Powers-Sebastiane Advertising & Public Relations. Founder/Owner of Specialty Agency. equipment ordering. 6. VP/Chief Marketing Officer at ******. Internet access is provided more as a customer service than a revenue source.1991. He has been a motivational speaker and image consultant as well. with assistance from our outside support team. producing $1. marketing/PR. State Business Man of the Year. VP/Creative Director and Team Leader at ******. 1980 . a coffee "chat" room and user Web pages. study or travel information. classy. Sr. Ned Powers-Sebastiane will be responsible for the site development. newsletters. A technical resource may need to be contracted to build the trackable download and the newsletter capabilities. Page 34 . VP/Director of Marketing & Advertising at ******.2003.Dark Roast Java The Internet stations enable customers to check their email or access websites for business. construction supervision. Owner/founder of Pan National Motor Tours.2 Development Requirements Dark Roast Java plans to employ a graphic designer and back-end user interface technical developer to create our simple. The maintenance of the site will be done by contracted outside consultants. Victor Lubitsch Victor has more than 25 years experience in business and selling.800 a month in gross revenue ($21. 2000 . 7. VP/Chief Creative Officer at ******. Ned is a graduate of the Specialty Coffee Association's training program for coffeehouse operation and management. down-loadable menus. the amount is difficult to determine now and so it hasn't been factored into the P&L. President/General Manager of ******.600 annually minus approximately $1. Founded 1982. Although it will return a profit.0 Management Summary The expansion of the Dark Roast Java concept will be managed by Ned Powers-Sebastiane and Victor Lubitsch. yet Internet focused site. website design/development and government issues. Our best estimate is that the two stations will be on for a total of four hours daily. As the website is expanded and improved.

000 $80.600 $9.000 $9. cash flow adequate. menu development.000 $8. interior design and accounting supervision.600 $9.1 Personnel Plan The personnel plan is included in the following table.600 $9.000 $0 $9. margins excellent. • Future cash investments will use NPV projections to achieve maximum return with limited risk. Director of Placement.600 $9.25%.600 $7.600 $9.000 Year 3 $80.600 $9.000 $30. The company will invest residual profits into financial markets or real estate. Page 35 .0 Financial Plan Sales growth will be a minimum of 15% annually. Victor will be responsible for staffing.000 $30.000 $35. Victor is a graduate of the SCAA coffeehouse management program and recently attended several training seminars at Coffee Fest 2003.200 $15. Marketing will remain below 5% of sales. a full-time manager's annual salary. profits at approximately 20% .200 $7. Local Business College.400 8.000 12 $339.000 $34.000 $25.600 $9.Dark Roast Java • • • • Owner/founder of Brilliant! Idea company.600 $9.600 $9.000 $0 10 $183.600 $7.000 $80.600 $9. 7. Top recruiter at ****** Company.600 $9. training. eight part-time salaries for espresso servers and a part-time bookkeeper and/or website supervisor.600 $9.200 $15.600 $9.000 $9.800 $3.600 $2. *Confidential and proprietary information omitted from this sample plan.000 11 $337. product ordering.000 $39.600 $9. Table: Personnel Personnel Plan Year 1 Ned Powers-Sebastiane Victor Lubitsch Manager Manager Barista #1 Barista #2 Barista #3 Barista #4 Barista #5 Barista #6 Barista #7 Barista #8 Bookkeeper Website Supervisor Total People Total Payroll $39.400 Year 2 $80.600 $9.600 $9. Top recruiter at ******.000 $25.000 $35. It shows the owners' salaries.

1 Important Assumptions • The 20-year record of positive growth for specialty coffee drinking will continue at a healthy rate. The resilience of the coffeehouse industry to negative national and world events will continue.Dark Roast Java 8.00% 0 Year 3 3 3.00% 3.00% 3.00% 20.00% 0 Year 2 2 3. Despite recession and war the coffeehouse industry has shown strong growth every year for the past two decades.00% 20.00% 0 Page 36 . increase automation of espresso drinks and mass-produce the roasting process. The quality of national chains will remain the same or decline slightly rather than improve as they standardize their stores. The Specialty Coffee Association says that the market is far from saturation and will not reach maturity until at least 2019.00% 20. Coffee drinks will continue to be considered an "affordable luxury." 15% minimum sales growth rate over the next three years as Dark Roast Java becomes well known.00% 3. • • • • Table: General Assumptions General Assumptions Year 1 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 3.

000 $48.000) ($15.409 $34. we need approximately $35.400 and $4.000) $0 $6.000 per month to break-even.000 $20.000 $0 ($5.000 Table: Break-even Analysis Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost 23% $26.000 $5.000 $24.50 an average sale.422 Page 37 .000 $66.000) ($20. Chart: Break-even Analysis Break-even Analysis $25.000 $30.000 $42.Dark Roast Java 8. With fixed costs of $26.000 $12.000) ($10.000 $10.000 $54.000) ($25.000 $18.000 $15.000 $60.2 Break-even Analysis A break-even analysis table has been completed on the basis of average costs/prices.000 $36.

owner/operator salaries. they also ultimately contribute to higher earnings and profits.000 $10. First fiscal year gross revenues are expected to exceed $600. We expect growth of 15% annually for the first three years before leveling off at the 800 . factoring in the local conditions. Our margins are very good. Higher staff salaries.900 customer per day average traffic rate.000 $14.000 $2. marketing costs and rent for a premium location depress profits but.000 by the third fiscal year-end.000 $4.000 and after-tax net profits of approximately $99.000—increasing to more than $260.This is due in large part to the low direct cost of sales as well as the low operating costs in general for coffeehouses.000 $6. Chart: Profit Monthly Profit Monthly $16.000 $0 Month 1 Month 3 Month 5 Month 7 Month 9 Month 11 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12 Page 38 .3 Projected Profit and Loss We project high net profits starting in the first year.000 $8.000 $12.Dark Roast Java 8. conversely. Our growth rate is based upon industry averages.

000 $0 Month 1 Month 3 Month 5 Month 7 Month 9 Month 11 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12 Page 39 .000 $90.000 $35.Dark Roast Java Chart: Profit Yearly Profit Yearly $270.000 $40.000 $0 Year 1 Year 2 Year 3 Chart: Gross Margin Monthly Gross Margin Monthly $50.000 $25.000 $15.000 $5.000 $240.000 $60.000 $30.000 $210.000 $30.000 $20.000 $10.000 $120.000 $180.000 $45.000 $150.

054 $118.197 $441.000 $200.000 $165.314 $144.000 $2.510 $0 $24.472 $0 $24.000 $14.000 $501.000 $500.000 $700.500 $6.894 $337.000 $8. fees Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred $183. cleaning.609 $28.000 $100.000 $50.400 $8.000 $600.494 Page 40 .Dark Roast Java Chart: Gross Margin Yearly Gross Margin Yearly $900.000 $170.054 $0 $22.000 $800.000 $316.910 $124.035 $32.609 $616.035 $844.000 $4.000 $176. training.950 $114.200 $2.613 $142.472 $130.75% Expenses Payroll Sales and Marketing Depreciation Rent Utilities Insurance Legal/accounting Payroll Taxes Mobile Kiosk Misc .400 $12.020.550 $0 $25.279 82.500 $6.469 $336.400 $6.004 78.900 $9.000 $300.000 $50.400 $6.910 $0 $25.197 $24.000 $16.000 $27.579 $141.000 $0 Year 1 Year 2 Year 3 Table: Profit and Loss Pro Forma Profit and Loss Year 1 Sales Direct Cost of Sales Other Costs of Goods Total Cost of Sales Gross Margin Gross Margin % $606.maintenance.000 $2.31% Year 3 $1.810 $332.000 $400.000 $45.77% Year 2 $786.000 $4.000 $60.811 $339.382 72.000 $511.469 $0 $66.000 $55.

Dark Roast Java Net Profit Net Profit/Sales $99.60% $265.243 11.577 16.975 26.42% $91.07% Page 41 .

Dark Roast Java 8.000 $80.579 $786.000 $40.000 $120.314 $1. giving Dark Roast Java an excellent cash structure.000 $20. Our initial investor contributions are designed to provide us with a strong cash position at all times. Fifty percent of cash above $20.020. while sales are in cash.000 $100. HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $606. Chart: Cash Cash $140.613 $1.4 Projected Cash Flow We are positioning ourselves in the market as a low to medium risk concern with relatively steady cash flows.613 $786. Accounts payable is paid at the end of each month.020. VAT.314 Page 42 .000 $60.000 will be invested into semi-liquid stock portfolios to decrease the opportunity cost of cash held.000 $0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Net Cash Flow Cash Balance Table: Cash Flow Pro Forma Cash Flow Year 1 Cash Received Year 2 Year 3 Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax.579 $606.

029 $248.852 $197.639 $131.579 Year 1 $786.139 $0 $0 $0 $0 $0 $0 $26.Dark Roast Java Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax.600 $476.400 $406.761 $66.000 $356.400 $275.991 $0 $0 $0 $0 $0 $0 $26.361 $339.020. HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $606.340 $337.940 $459.314 Year 3 $183. VAT.940 $129.285 $446.400 $719.400 $772.361 $693.229 $745.629 $0 $0 $0 $0 $0 $0 $17.613 Year 2 $1.276 Page 43 .

000 $52.788 $0 $33.423) $91.000 $48.500 ($164.321 $33.579) $265.591 $15.683 Year 3 $131.730 $185.276 $14.730 $197. Future assumptions will not be based on past performance but rather on economic cycle activity. Table: Balance Sheet Pro Forma Balance Sheet Year 1 Assets Year 2 Year 3 Current Assets Cash Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $33.253 $250.407 $15.730 Year 1 $62.935 $250.500 ($91.500 ($26.256 Year 2 $62. We expect solid growth in net worth beyond the year 2003.256 $446.Dark Roast Java 8.000 $56.000 $475.000 $227.000 $162.000 $218.577 $185.000 $523.683 Page 44 .935 $0 $0 $28. regional industry strength.253 $0 $0 $33.788 $250.991 $14.264 $15.935 $0 $28.139 $16.253 $0 $33.683 $489.000 $279.5 Projected Balance Sheet All of our tables will be updated monthly to reflect past performance and future assumptions.975 $489.256 $250.477 $28.000 $6.896 $62.600) $99.788 $0 $0 $33.243 $250.000 $10.477 $218.896 $523.000 $14. and future cash flow possibilities.321 $279.

Dark Roast Java 8.83% 9.97% 3. The only industry ratio category currently available.69% 7.00% 61.87% 63. and Return on Assets to increase steadily over the three-year period.50% 100.59% 6.45% 14.a.a 1.00% 78.75% 56.45% 67.45% 93.74% 56.08% 2.11% 56. SIC Code 5812.20% 0. proving that we have the cash flows to remain a going concern independent of outside capital infusion.86% 74. due to the unique nature of our business.00% 15.62% 0. These businesses are significantly different from the Dark Roast Java coffeehouse concept.a n.55% 1.32% 0.75% 2.56% 40.00% 14.36 10. Return on Equity will decrease due to lower equity needs and higher cash inflow.00% 10.29% n.52% 100.49% Year 3 26.41% 55.24% Page 45 .00% 6.17% 100.55% 4.11% 5.58% 100.00% 72.40% 25.39 15.64% 2. includes cafes.00% 32. restaurants and other businesses serving coffee.07% 54. gross margin.48% 44.71% Industry Profile 5.38% 18.00% 6. Net working capital generated by the business will increase steadily each year.45% 0. Table: Ratios Ratio Analysis Year 1 Sales Growth Percent of Total Assets Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling.0304. it's important to point out that in key areas the numbers are excellent.95 n.54% 0.86% 90.a 4.84% Year 2 11.93% 100.14 0.20% 84.89 4.00% 20.62% 100.08 13.36% 0.24 12.37% 81.00% 82.77% 56.20% 67.36% 45.11% 43.80% 5.82 10.36% 89.a n.59% n.26% 100.00% 18. General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover 10.93% 25.68% Year 3 29. While our ratios are not all in sync with those of the industry.38% 7.17 28 1.60% 100.00% 10.10 9.42% 53.30 27 2.a n.34% 35.85 7.05 12.31% 66.00% 15.60% 36.97% 7.77 9.17 32 2.91% Year 1 16.91% 39.6 Business Ratios We expect our net profit margin.a n. Year 2 29.79 49.65 6.

00 $441. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.07 1.a n.36 3.00 n.00 n.a Page 46 .00 0.65 2.18 0.14 0.00 $198.10 n.27 0.12 1.29 0.321 0.39 3.36 10% 7.a n.a n.a 0.a $129. to Liab.Dark Roast Java Debt Ratios Debt to Net Worth Current Liab.477 0.51 6% 13.00 0.a n.18 1.08 0.896 0.36 15% 4.a n.a n.

soft drinks.080 $20.500 $11.000 $500 $65.100 $27.000 $12.635 $4.750 $24.086 $7.950 $4.428 $220 $0 $160 $900 $250 $15.840 $18.000 $100 $0 $300 $500 $500 $54. food items Coffee beans Events/mobile kiosk Coffee service to businesses Internet sales Gift items Total Sales 0% 0% 0% 0% 0% 0% 0% 0% $11.975 $2.216 Month 6 $2.000 $300 $0 $500 $2.000 $500 $64.650 $4.400 $11.155 Month 3 $3.500 $19.500 $17.958 $23.277 Month 4 $2.909 $25 $0 $0 $0 $282 $38.530 $185 $0 $125 $450 $250 $13.000 $500 $61.500 $14.000 $17. mobile kiosk coffee service to businesses Internet sales Gift items Subtotal Direct Cost of Sales Month 1 $2.600 $25. juice Pastries.300 $28.786 Month 7 $3.000 $500 $63.550 $5.000 $400 $0 $500 $2.500 $100 $0 $100 $0 $300 $42.500 $15.778 $9.525 $65 $0 $25 $0 $1.700 $13.700 $1.600 $10.542 $25 $0 $25 $0 $1.949 $18.700 $6.825 $2.500 $19.960 Month 2 $5. food items Coffee beans Events.000 $11.500 $13.114 $185 $0 $75 $450 $259 $12.925 $5.980 $645 $1.202 Month 12 $4.620 $65 $0 $25 $0 $1.350 $11.000 $15.800 $29.915 $4.355 $4.425 $2.000 $19.000 $300 $0 $300 $1.925 $5.168 $3.217 $185 $0 $125 $900 $250 $13.500 $300 $0 $500 $1. juice Pastries.380 $18.650 $1.899 $12.916 $65 $0 $75 $225 $250 $11.500 $15 $0 $0 $100 $1.000 $15.336 Month 8 $3.132 $50 $0 $0 $0 $2.200 $2.083 Page 1 .500 $35 $0 $0 $0 $800 $5.500 $18.290 $4.833 Month 9 $4.590 Month 10 $4.600 $50 $0 $500 $0 $300 $38.776 $2.022 $1.Appendix Table: Sales Forecast Sales Forecast Month 1 Sales Coffee drinks Tea. soft drinks.000 $80 $0 $0 $0 $300 $41.500 $11.700 $1.217 $185 $0 $125 $900 $250 $13.200 $10.125 $2.800 $28.900 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Direct Cost of Sales Coffee drinks Tea.080 $14.701 $4.000 $500 $67.500 $15.750 $100 $0 $100 $0 $300 $44. water.350 $11.727 Month 11 $3.032 Month 5 $2.340 $12.867 $50 $0 $0 $0 $1. water.000 $12.850 $5.000 $300 $0 $500 $2.450 $2.

000 $5.000 $0 $800 $800 $800 $800 $800 $800 $400 $500 $500 $0 10 Month 8 $5.000 $5.000 $3.000 $0 $800 $800 $800 $800 $800 $800 $400 $500 $500 $0 10 Month 10 $5.000 $0 $800 $800 $800 $800 $800 $800 $0 $0 $1.000 $0 $800 $800 $800 $800 $800 $800 $400 $500 $500 $0 10 Month 9 $5.200 $19.000 $0 9 Month 4 $0 $0 $3.000 $3.300 $18.000 $3.000 $3.800 $8.Appendix Table: Personnel Personnel Plan Month 1 Ned Powers-Sebastiane Victor Lubitsch Manager Manager Barista #1 Barista #2 Barista #3 Barista #4 Barista #5 Barista #6 Barista #7 Barista #8 Bookkeeper Website Supervisor Total People 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% $0 $0 $1.000 $5.000 $0 $800 $800 $800 $800 $800 $800 $0 $0 $1.000 $0 $800 $800 $800 $800 $800 $800 $0 $0 $1.000 $0 9 Month 5 $4.800 $16.000 $3.000 $0 9 Month 2 $0 $0 $3.200 $19.000 $5.200 $19.200 Page 2 .000 $0 $800 $800 $800 $800 $800 $800 $400 $500 $500 $0 10 Month 11 $5.000 $0 $800 $800 $800 $800 $800 $800 $400 $500 $500 $0 10 Total Payroll $6.000 $0 $800 $800 $800 $800 $800 $800 $400 $0 $500 $0 10 Month 7 $5.200 $19.700 $19.000 $3.000 $0 $800 $800 $800 $800 $800 $800 $400 $500 $500 $0 10 Month 12 $5.000 $0 $800 $800 $800 $800 $800 $800 $0 $0 $500 $0 9 Month 6 $5.000 $4.000 $5.000 $0 $800 $800 $800 $800 $800 $800 $0 $0 $1.000 $3.000 $0 9 Month 3 $0 $0 $3.800 $8.000 $5.000 $3.000 $5.200 $19.800 $8.

00% 20.00% 3.00% 20.00% 3.00% 20.00% 0 Month 2 2 3.00% 0 Month 6 6 3.00% 0 Month 9 9 3.00% 0 Month 4 4 3.00% 3.00% 3.00% 3.00% 20.00% 3.00% 3.00% 0 Month 3 3 3.00% 0 Month 11 11 3.00% 3.00% 0 Month 7 7 3.00% 0 Month 5 5 3.00% 3.00% 20.00% 20.00% 3.00% 0 Month 12 12 3.00% 0 Month 8 8 3.00% 20.00% 20.00% 20.00% 20.Appendix Table: General Assumptions General Assumptions Month 1 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 3.00% 0 Month 10 10 3.00% 3.00% 0 Page 3 .00% 20.00% 20.00% 3.

200 $1.094 22.000 $19.330 $18.880 $0 $2.155 $2.202 Month 12 $67.94% $49.000 $12.980 ($1.700 $1.220 $18.320 $0 $2.920 $18.727 Month 11 $63.000 $13.800 $13.000 $8.72% $49.320 $0 $2.600 $11.786 $2.910 19.155 Month 3 $38.590 $2.032 Month 5 $42.000 $500 $3.000 $19.21% $11.000 $14.080 $11.91% $28.830 $0 $3.840 $10.750 $11.032 $2.000 $500 $3.800 $800 $200 $500 $2.800 $13.200 $1.964 69.09% $15.786 Month 7 $54.000 $500 $3.664 22.23% $2.000 $500 $3.200 $1.000 $13.800 $1.Appendix Table: Profit and Loss Pro Forma Profit and Loss Month 1 Sales Direct Cost of Sales Other Costs of Goods Total Cost of Sales $23.463 5.079 $3.000 $8.900 $15.967 Net Profit Net Profit/Sales ($880) -3.277 $2.100) ($600) $0 ($220) $6.618 $18.874 22.083 $2.336 Month 8 $61.000 $500 $3.159 $0 $132 $10.445 $0 $2.348 68.120 65.666 $18.58% $46.817 74.92% $48.800 $400 $200 $500 $1.000 $15.252 $0 $1.387 $0 $2.000 $15.833 $2.000 $19.100 $12.000 $500 $3.900 $800 $200 $500 $2.833 Month 9 $64.805 $0 $2.000 $13.900 $800 $200 $500 $2.78% $14.573 75.800 $1.17% $50.887 $15.920 $18.880 $0 $2.45% $25.320 $0 $2.000 $500 $3.880 $0 $2.960 $2.201 $6.880 $0 $2.977 $18.37% Page 4 .000 $13.51% $24.000 $7.093 $0 $3.083 Gross Margin Gross Margin % $15.672 65.800 $800 $200 $500 $2.000 $17.000 $18.727 $2.384 $10.880 $0 $2.800 $800 $200 $500 $2.000 $19.210 75.000 $500 $3.005 $6.800 $1.000 $8.428 $9.380 $30.800 $800 $200 $500 $1.216 $2.000 $500 $3.500 $500 $3. training.800 $1.928 $0 $1.598 76.337 $0 $3.87% $7.960 Month 2 $38.000 $500 $3.maintenance.81% $4.307 15.590 Month 10 $65.19% $41.880 $30.880 $0 $2.000 $19.49% $14.51% $30.980 $30.624 71.920 $27.62% $5.542 18.000 $16.202 $2. fees Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred 15% 15% $6.080 $5.63% $14. cleaning.000 $13.000 $15.505 $0 $1.719 $17.84% Expenses Payroll Sales and Marketing Depreciation Rent Utilities Insurance Legal/accounting Payroll Taxes Mobile Kiosk Misc .402 13.524 $19.18% $8.980 $30.593 $19.545 $30.305 $30.216 Month 6 $44.800 $800 $200 $500 $1.800 $800 $200 $500 $1.350 $9.884 $0 $2.000 $16.267 75.886 $3.880 $31.264 75.804 12.020 $0 $2.200 $1.000 $500 $3.579 $0 $616 $659 $1.077 $14.300 $13.870 23.380 $11.800 $800 $200 $500 $2.118 $0 $3.752 $7.000 $19.300 $1.200 $1.200 $1.837 $20.949 $11.48% $30.336 $2.900 $800 $200 $500 $2.277 Month 4 $41.75% $527 1.800 $800 $200 $500 $2.925 65.

Appendix Page 5 .

200 $29.800 $17. HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Page 6 .917 $19.840 $0 $0 $0 $0 $0 $0 $0 $44.800 $63.800 $357 $7.200 $30.800 $0 $0 $0 $0 $0 $0 $0 $65.800 $64.840 $42.750 $54.200 $31.157 $8.900 Additional Cash Received Sales Tax.100 $64.600 $0 $0 $0 $0 $0 $0 $0 $61.446 $26.141 $50.378 $33.594 $48.900 Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations $6.100 $61.794 Additional Cash Spent Sales Tax.080 $38.750 $0 $0 $0 $0 $0 $0 $0 $54.00% $0 $0 $0 $0 $0 $0 $0 $23.900 $67.466 $19.380 $0 $0 $0 $0 $0 $0 $0 $42.815 $41.256 $50.341 $19.600 $61.800 $10.800 $0 $0 $0 $0 $0 $0 $0 $67.515 $19.828 $50.080 $38. VAT.028 $19.949 $0 $0 $0 $0 $0 $0 $0 $41. HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received 0.840 $44.800 $65.200 $31.080 $38.080 $0 $0 $0 $0 $0 $0 $0 $38.800 $67.515 $18.949 $41.200 $26.200 $26.Appendix Table: Cash Flow Pro Forma Cash Flow Month 1 Cash Received Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cash from Operations Cash Sales Subtotal Cash from Operations $23.456 $19.928 $19.728 $45.300 $63.380 $42.178 $16.800 $24.380 $41.300 $0 $0 $0 $0 $0 $0 $0 $63.300 $65.717 $8.300 $24.080 $0 $0 $0 $0 $0 $0 $0 $38.750 $44.215 $40.100 $0 $0 $0 $0 $0 $0 $0 $64.949 $38.700 $22. VAT.080 $23.246 $8.600 $54.266 $45.

246 $0 $33.200 $50.472 $64.035 $57.704 $48.178 $2.200 $48.157 $0 $19.128 $2.200 $43.906 $131.423 $18.200 $52.572 $114.715 $2.202 $56.490 $8.Appendix Dividends Subtotal Cash Spent $0 $7.200 $47.228 $2.016 $12.363 $35.259 $90.817 $1.233 $16.786 $12.717 $0 $26.692 $124 $56.200 $52.200 $42.139 Page 7 .324 $13.758 $12.644 $102.656 $2.923 $17.994 Net Cash Flow Cash Balance $15.541 $2.661 $11.852 $6.715 $2.666 $2.434 $77.200 $52.

761 $200.447 $33.500 $250.958 $25.000 $59.577 $185.135 $15.000 $103.758 $14.477 $250.500 $59.000 $51.000 $4.000 $164.500 ($151.000) ($147.000 $143.000 $500 $61.000 $2.000 $0 $62.139 $16.459 $21.858 $0 $25.368 $120.808 $177.000 $1.447 $0 $28.761 Month 10 $62.331 $103.500 ($153.874 $90.965 $15.858 $250.099 $0 $30.Appendix Table: Balance Sheet Pro Forma Balance Sheet Month 1 Assets Starting Balances Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Current Assets Cash Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital $62.847 $28.000 $5.000 $58.730 Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $0 $0 $0 $0 $0 $0 $10.500 ($164.228 $0 $25.500 $17.465 Month 9 $62.000 $218.500 $102.000 $124.395 Month 3 $62.165 $125.228 $0 $0 $25.924 $9.000 $83.522 $15.500 $102.500 $60.786 $12.827 Month 4 $62.631 $103.949 $15.400) $54.923 $0 $0 $21.228 $250.569 $23.054 $57.000 $15.500 $58.400) $19.424 $112.324 $12.470 $15.075 $134.226 $29.500 $25.226 $0 $0 $30.613 $83.569 $0 $0 $23.447 $0 $0 $28.500 ($147.000 $3.459 $0 $23.913 $171.826 $120.255 Month 11 $62.099 $250.000 $57.343 $0 $10.755 $131.000 $3.000) ($147.661 $15.000 $91.500 $150.847 $0 $0 $29.827 $56.816 $64.847 $0 $29.600) $99.000 $2.868 $19.490 $12.800) $40.326 $16.631 $250.000 $63.343 $0 $0 $10.500 $250.500 $57.395 $143.620 $107.874 Month 8 $62.040 $15.620 $107.793 $77.913 $171.874 $134.591 $15.775 $164.858 $0 $0 $25.500 $56.500 $136.226 $0 $30.826 $120.099 $0 $0 $30.775 $30.253 $0 $33.000 $60.816 Month 6 $62.000) ($149.500 $112.500 $142.343 $16.253 $250.692 $12.255 $147.057 $48.827 $142.000 $143.963 Month 1 $62.633 $23.000) ($147.000 $162.000 $56.000 $144.238 $15.200) $0 ($880) $3.858 $118.500 $250.500 $250.424 $112.239 $159.057 $136.739 $69.000 $1.000 $132.293 $125.730 Month 12 $1.958 $144.554 $103.000 $119.065 $30.500 $112.500 $250.293 Month 7 $62.000 $83.057 Month 2 $62.271 $15.923 $25.600) $28.500 $250.633 $0 $0 $16.708 $147.500 $250.459 $0 $0 $23.065 $150.817 $11.808 Page 8 .500 ($155.500 $62.965 $102.633 $0 $16.500 $177.000 $4.200) ($162.000 $106.816 $118.000 $41.116 $15.730 $185.000) ($160.368 $120.239 $159.463 $35.000) ($147.923 $0 $21.100 $15.405 $15.895 $56.477 $218.253 $0 $0 $33.569 $0 $23.000 $6.423 $19.000 $189.233 $14.554 Month 5 $62.963 $124.500 $200.016 $14.000 $5.000 $61.500 ($158.465 $189.000 $75.000 $85.852 $12.761 $114.