Table of Contents

1.0 Executive Summary...............................................................................................................................1 1.1 Mission...............................................................................................................................................1 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..............................................................................................................................4 Table: Start-up.....................................................................................................................................5 Chart: Start-up......................................................................................................................................6 Table: Start-up Funding.......................................................................................................................6 3.0 Products..................................................................................................................................................8 3.2 The Dark Roast Java Menu................................................................................................................8 3.2.2 Teas...........................................................................................................................................10 3.2.3 Juices.........................................................................................................................................11 3.2.4 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..................................................................................................................12 4.1 Market Segmentation.......................................................................................................................13 Table: Market Analysis......................................................................................................................14 Chart: Market Analysis (Pie).............................................................................................................14 4.2 Target Market Segment Strategy.....................................................................................................15 4.3 Industry Analysis.............................................................................................................................16 5.0 Strategy and Implementation Summary...............................................................................................18 8.2 Break-even Analysis........................................................................................................................20 Chart: Break-even Analysis...............................................................................................................21 Table: Break-even Analysis...............................................................................................................21 ................................................................................................................................................................21 8.3 Projected Profit and Loss.................................................................................................................22 Chart: Profit Monthly.........................................................................................................................22 Chart: Profit Yearly............................................................................................................................23

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Appendix

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

1.1 Mission Our goal is to be the coffeehouse of choice for the local Pleasantville community, downtown business workers, tourists who visit the city, and students, by providing a higher quality experience than any competitor. As a result, we intend to create coffeehouses that quickly achieve profitability and sustain an attractive rate of return (20% or more annually) for our investors.

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water and soft drinks A dynamic website with online sales capability Page 2 .000+ the first fiscal year. 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. $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 • 1.000+ in FY1 and $200.Appendix We also want to make our contribution to the welfare of the local community by supporting charitable and civic activities. year-round tourist activity. tea. juice. 1. keeping the business in the community or. aggressive marketing Highly trained and friendly staff Multiple revenue streams including gift items. gift baskets and coffee gift/frequency cards in addition to coffee. chocolates. heavy pedestrian traffic by the site. Dark Roast Java also awards its business to as many local suppliers as possible. upscale interior design Prime site selection with an upscale affluent population.3 Keys to Success The keys to our success will be: • • • • • • • • A superior-tasting product backed by a unique quality store A relaxing. Sustainable Production and Organic products whenever possible.2 Objectives • • • • • Make Dark Roast Java the number one destination for coffee in Pleasantville Sales of $600. at the least. pastry.000+ by FY3 Be an active and vocal member of the community.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. in the state.

000 $600.000 $200.100.000 $800.000 $400.000 $0 Year 1 Year 2 Year 3 Sales Gross Margin Net Profit Page 3 .000 $300.000 $500.000 $100.Appendix Chart: Highlights Highlights $1.000 $700.000 $1.000.000 $900.

Victor Lubitsch. The Dark Roast Java staff members who prepare the coffee (baristas) are highly trained and experienced. gourmet chocolates and gift items. Curt Yamaguchi and other outside investors. Then came Mercedes-Benz. • The Dark Roast Java Concept At one time Cadillac was the acknowledged quality automobile in America. delicious pastries. Future stores should cost no more than $175. Expansion: Assuming this store is successful. Bayview. Our costs are an estimated $225. with its high style Italian decor (they were recently part of a $72 million dollar buy-out by Starbucks). tea. cocoa. Ghirardelli cocoa. Starbucks spends approximately $380. Dark Roast Java will be the first "Lexus" of the coffeehouse chain industry. 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. offering a higher quality product and better quality service in an exceptional environment. upscale environment at which to socialize. 2. It is registered as a state LLC Corporation. It features stained glass decorations. The only coffeehouse that comes close to being as upscale as our concept in the Pacific Northwest is Torrefazione.g. with revenues and profits to match.000 to build out since many of the costs incurred here will not have to be repeated later.one offering a uniquely flavorful coffee drink and a comfortable. Dark Roast Java locations are designed for high volume year round.2 Start-up Summary Start-up expenses are in line with those of other coffeehouse chains. Beachey Head.1 Company Ownership Dark Roast Java is a privately held corporation. Springfield. Newburg.000 and $25. art glasswork. They know how to prepare an excellent espresso-based drink and brew tasty coffee. Location: Dark Roast Java will be located in the prime section of downtown Pleasantville in the heart of the shopping and entertainment district. 2.0 Company Summary Dark Roast Java launches with its first coffeehouse located in downtown Pleasantville. an upscale "Cote d'Azur" look.000 for opening inventory and operating capital. the finest tea drinks. Mount Hill. juice. We use the highest quality equipment and ingredients to deliver a noticeably superior product.000 on average to build-out a new store location. Other Dark Roast Java coffeehouses will eventually be located in select affluent markets that support the business model (e. • • Variety: No other coffeehouse in the area will provide the range of coffee drinks. Dark Roast Java offers a superior coffee product. Mediterranean Riviera style furnishings and outdoor dining.Appendix 2. Page 4 . Capital City). with its superb product and service approach. year-round tourist activity and a sizeable student population. fresh juices. Our design style is different from all other coffeehouses. smoothies and other products that Dark Roast Java does. For example. Orchard Valley. significant traffic by the store. Dark Roast Java will offer residents and visitors a totally new style of coffeehouse . And then Lexus. with ownership shared by Ned Powers-Sebastiane. relax or work.

000 $14.000 $25. below. include $77. Other Flooring/installation Bathroom Construction Plumbing Fireplace Construction Painting City permits/licenses/fees Inserted Row LEGAL Accounting Legal Insurance Inserted Row MARKETING Opening marketing/advertising Graphic design for signage.500 $1.000 Start-up Requirements Start-up Expenses CONSTRUCTION Site design.000 of short and long-term assets.000 $2.500 $0 $0 $3.500 $0 $0 $2.500 $0 $0 $600 Page 5 . architectural plan Demolition/Construction Electrical. Chairs.000 $2.000 $10.000 $5.000 $2. Lighting Electrical.500 $1.000 $1.000 $1.000 $1.500 $12.000 $3. Long term assets: $62.000 $2.000 Short-term assets: $15. menu boards Outside Signage Frequency Cards.000 Tables.000 $5.Appendix The Start-up requirements. Brochures Inserted Row OFFICE Office equipment $0 $10.000 $4.000 $12.000 $2.500 $6.000 $4.000 $11.000 $12. Furnishings Persian Carpet Lighting Fixtures Table: Start-up $12.000 $10.000 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.

printer Telephones/Fax/DSL Stationery etc.000 $120. prep counters Menu board construction Cups/Lids (50.000 $1.000 $60.500 $2.000 $0 Expenses Assets Investment Loans Table: Start-up Funding Page 6 . scanner.000 $210.000 $150.000 $700 $1. Gift item displays (3) Inserted Row APPLIANCES.000 $15.000 $90.000 $30.000 $1.000) Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements $2.500 Chart: Start-up Start-up $240.000 $800 $6.000 $62.000 $500 $700 $1.500 $250. ETC Preparation equipment Dishwasher Blenders (3) Microwave Panini maker Storage racks Music system Food display case Storage room shelving Bulk bean grinder Sinks (2).000 $1.500 $14.500 $25.000 $147.000 $500 $1.000 $103.500 $0 $0 $1.000 $180.000 $3.200 $2.Appendix Computer.

Appendix Start-up Funding Page 7 .

• • Page 8 .500 $0 $0 $0 $0 $0 Total Capital and Liabilities Total Funding $103. our prices are in line with the leading national chains. Italian sodas.000 $103.0 Products Dark Roast Java sells high-quality specialty coffee beverages.500 3.500 ($147. • We offer six groups of drinks—coffee. 3. giving us a competitive edge.500 $250. soft drinks.000 $500 $0 $250.000) $103.500 $0 $1.000 $1.500 $102. water. Despite being an upscale coffeehouse. 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. juice. tea. juice and cocoa—with several choices within each group. smoothies. tea. chocolates and gift items. We are the only coffeehouse to have a wide range of gourmet hot cocoa.500 $103. pastries.500 $250.500 Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Investors Other Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital $250.Appendix 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 $147.2 The Dark Roast Java Menu The Dark Roast Java menu sets us apart from other coffeehouses. This enables us to provide more variety than our competitors while keeping the preparation of the drinks easy to execute.

topped with whipped cream and $3. In some cases. A Caffe Latte combined with Ghirardelli chocolate. macadamia nut and vanilla syrups. a gourmet brewed coffee. Warm milk. Amaretto and vanilla syrups topped with whipped cream and almonds.75 $1.75 Double $1. Our famous latte made even more creamy with half and half.75 Coffee.75 $3. an average price has been calculated and applied to all similar drinks in order to keep the menu from confusing the customer.85 Large ESPRESSO Name Espresso Caffe Americano Cappuccino Caffe Latte Caffe Mocha Espresso Macchiato Espresso Con Panna Espresso Latte Breve Description A double shot of straight espresso. Banana.50 $2. $1.1 Coffee and Espresso Drinks COFFEE Coffees of the day: Dark Roast Java Blend. Espresso combined with hot water.25 $3. $2.75 $2.60 Regular $1.Appendix • • Dark Roast Java offers several smoothie drinks and Italian sodas.50 $2.50 $2. topped with a small amount of velvety milk $2.2.85 $2.75 Large Espresso combined with steamed milk. Topped with whipped cream and cinnamon dusting. Prices have been determined after a thorough analysis of all food costs for every item in each drink. Espresso with a smooth topping of milk foam.75 $2. 3. Warm milk.75 $3. Regular $1.50 $3.25 $3. $1. We carry the highest quality fresh juices.50 $2.00 chocolate shavings.75 Page 9 .75 foam. Coffee. A straight shot of espresso topped with a spoonful of rich milk foam. and Molokai Swiss water process DeCaf.00 Espresso "Red Espresso combined with our gourmet coffee of the day to get your day going.50 $3. A straight shot of espresso topped with a generous dollop of whipped cream. Eye" COFFEE DRINKS Name The Banana Nut Java The Cafe Milano Description Small Large $2. Riviera Roast.

Raspberry and chocolate syrups.50 $4.50 Regular • Earl Grey Description Hot cocoa with vanilla and whipped cream. Rich natural vanilla flavor.50 $4. Rich dark hot cocoa with whipped cream topping. Name Vanilla Cappuccino Vanilla Latte White Chocolate Latte The 50/50 Latte Description Cappuccino made with vanilla flavored milk foam. $1.50 $3. A Caffe Latte with vanilla essence added. HOT COCOA DRINKS All hot cocoa drinks are $2. Rich chocolate and refreshing peppermint.00 $3. Regular Large $2.25 The Raspberry Mocha Coffee. Hot cocoa with white chocolate and whipped cream. Espresso. Very chocolatey! An all-time favorite.00 Large HOT TEA $1. Topped with whipped cream. Steamed milk and whipped cream.75 Name The Espresso Chocolate Malt The Double Dutch Chocolate Smoothie The Mocha Smoothie The Vanilla Smoothie 50/50 Smoothie (Orange and Vanilla) 3.00 $3. steamed milk and whipped cream topping. Page 10 . Description A chocolate malt for grownups. Topped with whipped cream.25 $4. A 50's favorite. just like you remember as a kid. Half and half.50 Small.2.75 Name French Vanilla Cocoa White Chocolate Cocoa Chocolate Truffle Cocoa Holiday Spice Cocoa Peppermint Cocoa Ovaltine SMOOTHIES All smoothies are $3. Rich hot cocoa and holiday spices.00 $3. Latte Chai Latte Espresso.75 Medium. $2. Vanilla and orange syrups. Chai. Espresso.2 Teas ICED TEAS Classic American Iced Tea. Ovaltine Chocolate Malt and milk.25 $4. white chocolate flavoring and steamed milk topped with velvety foam and white chocolate shavings.25 $4.25 $3.00 $3.Appendix FLAVORED ESPRESSO DRINKS All flavored drinks feature quality Monin and Ghirardelli syrups. Whipped cream topping. $1.

50 $2.4 Sodas ICED SODAS Sparkling spring water. Green Machine.00 Large $2. Protein Boost.75 $2.25 Large • • • • • • • • • • Orange Soda Strawberry Soda Lemon Soda Cherry Soda Raspberry Soda Cream Soda (made with half & half) Peach Soda Kiwi Soda Melon Apple Page 11 . Mango and Guava.00 Small $2.50. A San Francisco favorite. flavoring and ice.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.Appendix • • • • • • • • • English Breakfast 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. Regular Large $1.95 $2. TX Made fresh daily from Pleasant County lemons.2.50 $2. Corpus Cristi.2.00 $2. Blended or on the rocks.50 $1. Medium $1.00 Large 3.75 $2. $2.00 Regular $3.50 Medium $3.

00 3. Price $6. Price $1.00 Page 12 .00 $2. $2. ice.50 $4.2. Vanilla Cream and Key $1.50 Price $1. It's clear that America's love for good coffee continues during good times and bad.00 $1. Ginger Ale.7 Deli Items Item Sandwiches Soup Quiche 4.50 $2. vanilla and mandarin orange syrups. Bagels Brownies Blueberry Muffins Croissants Black Forest chocolate-covered espresso beans Best Ever Bakery Fancy Cookies 3. cherry and vanilla syrups.75 $1. Orange Cream.25 Geyser Peak Natural Spring Water Soft drinks from Sprecher's. Crystal Geyser Tejava Tea RockStar Energy Drink Orangina Citrus Drink Root beer.2.Appendix Name The butterscotch Soda Cherry Vanilla Soda The Chocolate Soda 3. half and half.00 $2.50 Lime.00 $2. Despite economic downturns in recent years the specialty coffee business has been a bright spot. ice. Description From Northern California mountain springs. made just for us by Pleasantville Cheesecake Company. coffee chains continue to show strong growth. Sprite. Our version of an egg cream. negative balance sheets and even bankruptcy.00 $2. While literally hundreds of businesses in many categories are facing poor sales.6 Snacks and Pastries Item Fresh scones. $2.5 Other Drinks Name Description Sparkling spring water. hot from the oven.75 $3.75 Pleasantville Cheesecake.2.00 $4.0 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. Stewart's and Thomas Kemper.

local business and pass-through traffic on US 66) provide a consistent foundation all year long.000. 'A' Street and Frist Avenue are the two most heavily traveled streets in Pleasantville. Dark Roast Java is located on the corner of 'A' Street and First Avenue in the heart of the prime downtown business district. while tourism is strong all year long in Pleasantville. Therefore I Am) department store. 4. Within five miles of Dark Roast Java are 200.000 tourists visit Pleasantville every year. Tourist come to "America's Riviera" for the beaches. The benefit of this mix of customers is that it helps maintain consistent business throughout the year. 4. and one block from the number one shopping destination in Pleasantville. Most will pass by the Dark Roast Java location. For example. • Affluent locals. They must also market themselves anew each year to the incoming students. It's across from the exclusive.000 of the most affluent people in America. Also. trendsetters. Dark Roast Java will avoid these peaks and valleys in business with a mix of customers.1 Market Segmentation Dark Roast Java's customer base in Pleasantville is comprised of five target groups. Dark Roast Java Coffee has all the ingredients necessary for immediate success. 1. the student population is not as strong during the summer as it is from September through June of each year.Appendix 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. shopping. several local coffeehouses with primarily student customers do poorly during the nonschool months. Descarte (I Spend. Homes in adjacent Niceburg sell for $1 million to $50 million. Local business people. next to the historic Egyptian Theatre and just steps from the busiest intersection in town. More than 5. artists. 2. Dark Roast Java does not become overly dependent on any single consumer group. writers and celebrities have homes in Pleasantville. Conversely. • • Page 13 . For example. 5. Tourists. by appealing to several market segments. chic. The other customer segments (local residents. Key influencers. adjacent to fine dining and shopping. Lucre Galerie. dining and nearby vineyards. it peaks during the summer months. Affluent local residents Tourists Local business people Students Travelers passing through These groups are all potentially strong customer segments. 3.

00% 5.Appendix • Students.22% 75. Many of these travelers will stop for a meal.153 41.402 271.536 79.212 20.000 20.500 105.00% 1.000 255. US 66 is also a heavily traveled commuter route to Shorewood and Beachey Head to the south.181 121.624 20.200 263.000 76.763 23. to refuel and have a cup of coffee.590 115.030 110.00% 3.00% 5. According to Dept of Transportation.000 40.000 40.804 20. including many prestigious private schools and academies.311 41.22% Chart: Market Analysis (Pie) Market Analysis (Pie) Local residents Tourists Travelers on US 66 Students Local businesses Page 14 . 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% 3.050 40. Travelers on US 66.000 20.324 81. • Sources: Department of Transforation. State University. Pleasantville High School is less than a mile from Dark Roast Java.400 20. more than 35 million auto trips will pass through the city.000 21.250 22.000 100.479 Year 2 Year 3 Year 4 Year 5 CAGR 2.100 78.812 289. One of the state's two major north/south routes passes through Pleasantville.606 280.00% 1. Pleasantville Chamber of Commerce. Pleasantville is home to a major branch of the State University as well as dozens of other schools.551 24.

art shows) scheduled throughout the year. according to the Chamber of Commerce. our strategy is to maintain a constantly high customer count by leveraging our appeal to five groups of potential customers. And. We will reach out to them through local marketing. concerts. A significant number of these local business people find Dark Roast Java an inviting and convenient destination.000 students in several schools. Dark Roast Java is in the heart of the shopping and dining area. students need an affordable place to hang out with their friends Page 15 . weekend or day-trip visitors from the greater Ontopolis area and an unusually large number of special events (e. easy and safe short trip to Pleasantville for recreation. most people stay near their place of employment during breakfast. 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. most of whom are under the drinking age. Excellent public parking is available within 100 yards. Approximately 200. support of local charitable organizations and sponsorship of events and youth sports teams. Local Residents. Lucre Galerie.Appendix 4. Students. Pleasantville has excellent year-round tourist activity. is one block away. pass out free coffee coupons at student events and offer entertainment on weekends. involvement in the Chamber of Commerce. Because much of the employee parking is out of the immediate area with shuttle service to downtown. have few places they can go to meet their friends. The area has more than 30. including nearby City College and State University. About 5 million people will visit the area during the next year. With a troubled economy and fears of terrorism. To reach students we offer special student discount cards. It is a short 5 minute drive to Dark Roast Java for most of our potential local customers. Local customers form the loyal core of our business. The county courthouse is two blocks away. Tourists. lunch and for after-work relaxing. tourism all year is exceptionally strong.g. Coffee service brings in additional revenue and promotes Dark Roast Java among employees at these businesses. We also offer coffee service to local restaurants. We will target these potential customers with ads in local tourism guides. This is due in large part to the temperate climate. film festivals. The most affluent of these live even closer. Coffeehouses have proven to be very popular with students—even high school students—as an "in" place to go that's also affordable.2 Target Market Segment Strategy Overall.000 people live within five miles of our Dark Roast Java location. Many local businesses. night spots and businesses. 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. the prime shopping center of Pleasantville. Students. more people are opting for the relatively inexpensive. While hotels are virtually sold out during the summer months. both private and government. Local businesses. are within two blocks of Dark Roast Java. within three miles. 90% of all tourists visiting Pleasantville will pass by the Dark Roast Java location.

more nimble competitor like Dark Roast Java.000 espresso bars and coffeehouses. America's coffee-drinking habits are changing. By 2002 the percentage had grown to 62%. Starbucks' success has encouraged others to enter this potentially lucrative business. Starbucks. even as recently as the 1970's." 77% of coffee drinkers consume coffee daily. Coffee drinkers spend an average of $164. Our primary method of reaching this target customer group will be our participation as a AAA member. and low overhead. a number that is increasing every year. In 2001 53% of all adults in the U. it leaves the market open for a smaller. Coffeehouses in America have existed since the 1600's. Prior to his transformation of the business. However. the growth continues at sizeable rates. almost nobody consumed espresso or espresso-based drinks in the United States. offering a 20% discount on all coffee and tea drinks when AAA members show their membership card. relatively modest investment capital requirements. 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. which has 200. where quality and service are paramount. The low food cost of coffee drinks. has recently come under attack by customers and business commentators for becoming too big. In the past five years the number of "gourmet" coffee drinkers has increased from 7 million to 27 million. It's easy to see why coffee is second only to oil as the largest commodity in the world. 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. Cafe Trieste in San Francisco is typical. drank specialty coffee. If Starbucks' image becomes one of a "fast food" purveyor of coffee.300 stores worldwide) is the reason why Starbucks is now often called the "McDonald's" of coffee chains. It still retains much of its original flavor. Twenty-five years ago. Their size (6. according to the National Coffee Association's report "2000 Coffee Drinking Trends. Page 16 . While overall coffee sales have not grown significantly in recent years. Starbucks sold only whole bean coffee. coffeehouses have been primarily independent businesses. typically with an eclectic Bohemian style. as yet. Year after year. once known for quality and customer service. there is still much room for growth. lead to high profit margins in the coffeehouse industry. The Specialty Coffee Retailers Association believes the market has not approached maturity and. for more than half of all specialty coffee consumed.71 on coffee annually.1 cups daily. no coffee chain has differentiated itself significantly from the others.000 coffeehouses in the U.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.S. It was once a gathering place for "Beats" and "Hippies. In the United States. The Dept of Transportation estimates that there will be 35 million auto trips through Pleasantville this year. Pleasantville Chamber of Commerce. and the coffeehouse concept is more than 400 years old. Source: Dept of Transportation. the specialty coffeehouse segment is growing steadily at a healthy pace every year. Now they account. Obviously. compared with Italy. Many of these independent coffeehouses continue to enjoy a loyal following. US Census Bureau.S. and drink an average 3. It's also a major commuter route to the cities to the south in Sunshine County. 4. There are 108 million coffee drinkers in the United States.Appendix Travelers on US 66. Today there are more than 13." Poetry readings were held weekly.

relax or catch up on work. mass bean buying and other efficiency measures. And when times are bad the coffeehouse industry is great. inviting environment for people to socialize. Young people under the legal drinking age are one of the fastest-growing segments of the coffee drinking market. most of the largest chains are bowing to the pressures of growth and are cutting corners on quality by introducing fully automatic espresso machines. sophisticated customer base now and in the future.Appendix As the graph below showing Year 2000 per capita coffee consumption illustrates. Page 17 . Coffee drinking per capita by country. 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. the coffeehouse is an intimate yet inexpensive venue. "When times are good the coffeehouse industry is great. Coffeehouses need to produce a quality product to back up the perceived "little luxury" image. fast-paced Americans consider a stop at their local coffeehouse a necessary part of their day. Despite major economic recessions. FACT: The coffeehouse business has grown every year since 1982. Conversely. One industry observer said." America's love for good coffee is stronger than ever and increasing in size faster than any other industry. they can meet with their friends. coffeehouses provide a calm. The coffeehouse chains of America are leading this growth. Coffeehouses provide them with a much-needed place to meet with their friends. It's easy to see there is significant room for growth in consumption. Lifestyle factors converge to make the coffee industry strong at all times. the specialty coffee industry has grown every year. . receptive. Entertainment on weekend nights draws a young group of enthusiastic customers. relax or work. Currently. The stimulant effect of coffee is an important reason why many hard-working. the United States is not presently one of the stronger markets for coffee drinking. terrorist attacks and two wars over the past two decades. The surge in interest in coffee drinking among young people assures a diverse. FACT: Not a single coffeehouse chain has failed during the past 20 years. Older adults also enjoy the fact that for the relatively modest price of a cup of coffee and snack.

tea Gift baskets Gift items Furnishings And in a first for any coffeehouse in the world. Our promise is in our location. Location Page 18 . juice drinks and gift items are added to the menu.Appendix Coffee drinking is now an all-day activity. Dark Roast Java expects that guest checks will average about $4. in recent years coffee drinking has become an all-day activity. pre-packaged sandwiches. the average customer expenditure has risen. snacks. chocolates. It's not unusual for a well located coffeehouse to exceed a daily average of 900 customers. 5. 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 Website Our website is fully e-commerce functional and could easily become a significant revenue source.0 Strategy and Implementation Summary The Dark Roast Java coffeehouse uses a strategy of total quality—in product and service. As pastries. We will eventually sell the following items online: • • • • Whole coffee beans. many coffeehouses are packed with patrons. tea. Even late at night.50. Once concentrated in the early morning hours or mid-afternoon. 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. the products we sell.$6 range. Many popular coffeehouses report averages in the $4 . We will act as the sales agent for a number of participating stained glass. we will also sell a catalog of glass artwork representative of our store decor. the people we attract and the atmosphere we create. Customer guest check averages are rising. and art glass artisans.

Outside Dining The coffeehouse/cafe experience is indelibly linked to its European origins.$100. and Capital City. across from the Mount Hill Inn and The Junction Restaurant. Oregon. Pleasantville has more than 130 such events every year. 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.000 . a radio station. 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. as this is the key element in a successful operation. Orchard Valley. etc. We believe it could generate $75.g. It will be an excellent way to publicize Dark Roast Java coffee. Page 19 . Shorewood. Montana. Sidewalk dining also provides an excellent way for prospective customers to see and "check out" the coffeehouse for the first time. where al fresco dining is a way of life. Sampling We will engage in several sampling activities to introduce potential customers (and current customers) to Dark Roast Java's range of drink options. We will build Dark Roast Java coffeehouses in the best locations possible. Americans have embraced sidewalk dining. Our second site on busy Shoreline Road in Mount Hill will feature our flagship store. 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. Exceptions will be made for some sites if they are deemed to be potentially very profitable. Bayview.000 annual revenue. The kiosk will be highly visible and fun. It is one of the fastest growing additions to the American dining scene. Idaho. It is by far the best location in Mount Hill—one of America's most affluent cities. Plans are to locate Dark Roast Java coffeehouses in the Western states for efficiency of supply and management. Beachey Head. the newspaper and at select government offices (e. New Mexico. It will be located just off the Oak Patch Road and Highway 66 exit. • • • • • 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. It will also potentially be very profitable. Colorado.Appendix The location of the first Dark Roast Java in Pleasantville is a prototype of future sites. although it's hard to determine how profitable with any accuracy until the local response is measured. Springfield. Sites in other states might include Utah. Washington.

By tying in with our computerized sales and inventory system we will be able to track usage and allocate the expense to marketing. when fully realized. re-loadable. The Future The number of Dark Roast Java locations could easily reach 20 . Industry records indicate that 25% . With ten coffeehouses the gross revenues. These cards promote customer loyalty as well. we need approximately $35.400 and $4. A 25-store chain would easily top $2. 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.Appendix Pre-paid.50 an average sale. Sources: SRDS. Page 20 . With fixed costs of $26. While the financials in this Business Plan only address the Pleasantville location.2 Break-even Analysis A break-even analysis table has been completed on the basis of average costs/prices. and become our "flagship" operation.25 within five years. Our new Mount Hill location will incorporate the knowledge we gain with our first store as well as new creative ideas. Scarborough Market Data Survey. 8. Discount cards are used to build goodwill among specific groups such as the Chamber of Commerce members and college students. Even factoring in the cost of additional staff and other resources.40% of all gift card amounts go unused. Interep Radio. a 10-store chain would likely generate a minimum of $1 million in profits annually. implementation and operation in Pleasantville will be the "blueprint" for future efficient expansion. frequency and discount cards We will promote our program of gift cards and customer frequency cards to drive business and stimulate cash flow. Also. 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. Dark Roast Java's start-up. while building significant valuation. would be more than $10 million using the third year performance figures. gift cards have proven to be a popular holiday item accounting for more than 5% of total sales during December. Pre-paid and re-loadable cards have also proven to be very popular with the major chain coffeehouses. again accounting for a significant percentage of sales.000 per month to break-even.5 million in annual profits.

000) $0 $6.000 $30.000 $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 $10.000 $54.000 $66.000 $24.000 $42.000 $36.000 $0 ($5.000 $12.000 $18.Appendix Chart: Break-even Analysis Break-even Analysis $25.000) ($25.000 $20.000) ($10.000 $48.000) ($15.422 Page 21 .000 $60.000 $15.000) ($20.409 $34.

factoring in the local conditions.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 and after-tax net profits of approximately $99.000 $10.3 Projected Profit and Loss We project high net profits starting in the first year.000 $12. owner/operator salaries.000 $14.000 $8. We expect growth of 15% annually for the first three years before leveling off at the 800 . conversely.900 customer per day average traffic rate.Appendix 8. Higher staff salaries.000— increasing to more than $260.000 $4. Our margins are very good.000 by the third fiscal year-end. Chart: Profit Monthly Profit Monthly $16. 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 22 . First fiscal year gross revenues are expected to exceed $600.000 $6. they also ultimately contribute to higher earnings and profits.000 $2. marketing costs and rent for a premium location depress profits but.

000 $90.000 $120.000 $0 Year 1 Year 2 Year 3 Page 23 .000 $150.000 $210.000 $240.000 $60.000 $180.Appendix Chart: Profit Yearly Profit Yearly $270.000 $30.

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