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Coffee Shop Business Plan

Executive Summary
Java Culture coffee bar is determined to become a daily necessity for local coffee addicts, a place to dream of as you try to escape the daily stresses of life and just a comfortable place to meet your friends or to read a book, all in one. With the growing demand for high-quality gourmet coffee and great service, Java Culture will capitalize on its proximity to the University of Oregon campus to build a core group of repeat customers. Java Culture will offer its customers the best prepared coffee in the area that will be complimented with pastries, as well as free books that its patrons can read to enjoy their visit. The company will operate a 2,300 square foot coffee bar within a walking distance from the University of Oregon campus. The owners have secured this location through a three-year lease with an option for extending. The have also provided $140,000 of the required $170,000 start-up funds. The remaining capital will be obtained through Bank of America commercial loans. The company is expected to grow sales revenue from $584,000 in FY2001 to $706,000 in year three. As Java Culture will strive to maintain a 65% gross profit margin and reasonable operating expenses, it will see net profits grow from $100,000 to $125,000 during the same period.

1.1 Objectives Java Culture's objectives for the first year of operations are:
• • •

Become selected as the "Best New Coffee Bar in the area" by the local restaurant guide. Turn in profits from the first month of operations. Maintain a 65% gross margin.

1.2 Keys to Success The keys to success will be:

• • •

Store design that will be both visually attractive to customers, and designed for fast and efficient operations. Employee training to insure the best coffee preparation techniques. Marketing strategies aimed to build a solid base of loyal customers, as well as maximizing the sales of high margin products, such as espresso drinks.

1.3 Mission Java Culture will make its best effort to create a unique place where customers can socialize with each other in a comfortable and relaxing environment while enjoying the best brewed coffee or espresso and pastries in town. We will be in the business of helping our customers to relieve their daily stresses by providing piece of mind through great ambience, convenient location, friendly customer service, and products of consistently high quality. Java Culture will invest its profits to increase the employee satisfaction while providing stable return to its shareholders.

Company Summary
Java Culture, an Oregon limited liability company, sells coffee, other beverages and snacks in its 2,300 square feet premium coffee bar located near the University of Oregon campus. Java Culture's major investors are Arthur Garfield and James Polk who cumulatively own over 70% of the company. The start-up loss of the company is assumed in the amount of $27,680. 2.1 Company Ownership Java Culture is registered as a Limited Liability Corporation in the state of Oregon. Arthur Garfield owns 51% of the company. His cousin, James Polk, as well as Megan Flanigan and Todd Barkley hold minority stakes in Java Culture, LLC. 2.2 Start-up Summary The start-up expenses include:
• •

• • • • •

Legal expenses for obtaining licenses and permits as well as the accounting services totaling $1,300. Marketing promotion expenses for the grand opening of Java Culture in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580. Consultants fees of $3,000 paid to ABC Espresso Services <name changed> for the help with setting up the coffee bar. Insurance (general liability, workers' compensation and property casualty) coverage at a total premium of $2,400. Pre-paid rent expenses for one month at $1.76 per square feet in the total amount of $4,400. Premises remodeling in the amount of $10,000. Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).

The required start-up assets of $142,320 include:

.000 o Storage hardware (bins.$9.$3. have contributed $70.000. ice machine.750 o Office equipment (PC. toasters. Arthur Garfield and James Polk.000 and a longterm (five years) loan of $20. utensil rack.900 for the first two months and cash reserves for the first three months of operation (approximately $14. glasses. salads. which includes: o Coffee beans (12 regular brands and five decaffeinated brands) . Thus.$900 o Coffee grinder . tea. ventilation. which brings the total investments to $140.027. Both loans were secured through the Bank of America.680. shelves. security.$13. The remaining $30. coffee bags.00 respectively. phone.500 o Serving area equipment (plates. sink. furniture. refrigerator. food case) .000 o Store equipment (cash register.000 o Coffee maker .000 o Coffee filters.000.$3.) . cleaning.123. etc.$200 o Food service equipment (microwave. All other investors have contributed $40.$7.600 o Other miscellaneous expenses .• • • Operating capital in the total amount of $67.$3.) .720 o Counter area equipment (counter top. etc. baked goods. etc. Start-up inventory of $16. etc.840 o Office supplies . dishwasher.000 and $30.$6.) . beverages. signage) .$1. blender.$287 Equipment for the total amount of $59.$6. file cabinets) . sandwiches.900 o Retail supplies (napkins.000. Start-up Requirements .000 needed to cover the start-up expenses and assets came from the two bank loans--a one-year loan in the amount of $10. which includes employees and owner's salaries of $23.400 per month).170: o Espresso machine . flatware) . fax/printer.$18. The following chart and table summarize the start-up assumptions.$500 Funding for the company comes from two major sources--owners' investments and bank loans. total start-up loss is assumed in the amount of $27. Two major owners.

320 .500 $27.027 $0 $59.680 $142.680 Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets $67.123 $16.300 $500 $3.400 $10. Brochures Consultants Insurance Rent Remodeling Other Total Start-up Expenses $1.000 Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required $27.123 $0 $67.000 Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets $75.Start-up Expenses Legal Stationery etc.197 $67.123 $142.580 $3.000 $2.170 $142.320 Total Requirements $170.320 $170.000 $2.400 $4.

which will include a seating area with 15 tables. OR.000 Loss at Start-up (Start-up Expenses) Total Capital ($27. The lease contract has an option of renewal for three years at a fixed rate that Java Culture will execute depending on the financial strength of its business..000 $20. The floor plan will include a 200 square feet back office and a 2.260 square feet (i. The space in the coffee bar will be approximately distributed the following way--1.3 Company Locations and Facilities Java Culture coffee bar will be located on the ground floor of the commercial building at the corner of West 13th Avenue and Patterson Street in Eugene.000 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $30.500 square feet premises previously occupied by a hair salon. and the remaining 440 square feet (19%) for the customer service area. .000 Capital Planned Investment Arthur Garfield James Polk All other investors Additional Investment Requirement Total Planned Investment $70.320 Total Capital and Liabilities $142.Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities $10. a kitchen.000 $40. The company has secured a one-year lease of the vacant 2.000 $0 $140.000 $30.680) $112.320 Total Funding $170. 600 square feet (26%) for the production area.000 2. 55% of the total) for the seating area.e.300 square feet coffee bar. storage area and two bathrooms.

The coffee bar's open and clean interior design with modern wooden decor will convey the quality of the served beverages and snacks.. as well as some refreshment beverages. Eugene. Subsequently. The store layout. with its liberal and outgoing populace and long rainy winter. small salads and sandwiches. with gourmet coffee having the strongest growth.2 Sales Literature Two thousand flyers will be distributed in the adjacent neighborhood. has traditionally been a great place for coffee establishments. Products Java Culture will offer its customers the best tasting coffee beverages in the area.This property is located in a commercial area within a walking distance from the University of Oregon campus on the corner of a major thoroughfare connecting affluent South Eugene neighborhood with the busy downtown commercial area. at the malls and in the selected office buildings within two weeks prior to the opening of Java Culture. The clear window displays. 3. The menu offerings will be supplemented by free books and magazines that customers can read inside the coffee bar. through which passerby will be able to see customers enjoying their beverages. on the University campus. kitchen and storage area. Along with the espresso drinks. Java Culture will also offer its clients pastries. Java Culture will also be selling coffee beans. Each of these coffee beverages is based on a 'shot' of espresso. or soy milk. Java Culture will strive to build a loyal customer base by offering a . OR. to prepare the espresso-based beverages. coffee consumption has shown steady growth. and outside electric signs will be aimed to grab the attention of the customer traffic. caramel. They favor well-brewed gourmet coffee drinks and demand great service. which is prepared in the espresso machine by forcing heated water through ground coffee at high pressure.S. 3. Such espresso shots are combined with steamed milk and/or other additives like cocoa. and will be in-line with the establishment's positioning as an eclectic place where people can relax and enjoy their cup of coffee. For the gourmet clientele that prefers to prepare its coffee at home.1 Product Description The menu of the Java Culture coffee bar will be built around espresso-based coffee drinks such as lattes. cappuccinos. the size of the coffee particles. skimmed. etc. Each of the espresso-based drinks will be offered with whole. brewed coffee and teas. etc. menu listings and marketing activities will be focused on maximizing the sales of higher margin espresso drinks. The commercially zoned premises have the necessary water and electricity hookups and will require only minor remodeling to accommodate the espresso bar. A minor deviation from the amount of coffee in the shot.. the temperature of milk. mochas. will be sold in the coffee bar. Proper preparation techniques are of paramount importance for such drinks. Coffee drinkers in the Pacific Northwest are among the most demanding ones. free postcards with Java Culture endorsement will be printed to increase the company visibility among the patrons Market Analysis Summary U. This will be achieved by using high-quality ingredients and strictly following preparation guidelines. etc. can negatively affect the quality of the prepared drink.

682 19.489 5.00% 1.000 35. 4.great tasting coffee in a relaxing environment of its coffee bar located close to the bustling University of Oregon campus. people working in offices located close to the coffee bar and on sophisticated teenagers.659 5.102 3.2 Target Market Segment Strategy Java Culture will cater to people who want to get their daily cup of great-tasting coffee in a relaxing atmosphere.265 Year 2 Year 3 Year 4 Year 5 CAGR 2.360 3.060 8.63% 4. Such customers vary in age.323 5.000 18.160 5.122 8.030 8. proximity to the University of Oregon campus will provide access to the targeted customer audience. a lot of college students consider coffee bars to be a convenient studying .000 35.00% 1.000 5. Since gourmet coffee consumption is universal across different income categories and mostly depends on the level of higher education.00% 2.00% 0.000 3.110 19. Market Analysis Year 1 Potential Customers Students and Faculty Teenagers Office workers Other Total Growth 2% 1% 2% 0% 1. The chart and table below outline the total market potential (in number of customers) of gourmet coffee drinkers in Eugene.1 Market Segmentation Java Culture will focus its marketing activities on reaching the University students and faculty.63% 18. Our market research shows that these are the customer groups that are most likely to buy gourmet coffee products. Our market research shows that these are discerning customers that gravitate towards better tasting coffee. OR.000 34. Furthermore.727 3.550 18.484 3.000 8.091 8.000 34. although our location close to the University campus means that most of our clientele will be college students and faculty.000 36.

The local climate. with the remaining market share split among other establishments. cozy and comfortable environment.1 Market Needs General trend toward quality among U. many customers favor smaller.2 million. The UO Bookstore.S. Eugene had 45 established snack & non-alcoholic beverage bars (NAICS 722213) with total sales of $14. However. coffee consumption is uniform across different income segments. which will help us grow our market share in this competitive market. for something more exotic and unique. provide a good selling opportunity for coffee bars.3. Among other establishments that offer coffee drinks to their customers are most of Eugene's limited. Pacific Northwest. In 1994.and full-service restaurants.5 billion) of that. Additionally. is very conducive for the consumption of hot non-alcoholic beverages. where they can read or meet with peers without the necessity to pay cover charges.5% growth rate in the United States over the last decade. which they can consume in a relaxing environment. Although. We strongly believe that selling coffee with a great service in a nice setting will help us build a strong base of loyal clientele. and other Food service establishments that offer coffee. such factors as desire for small indulgencies.1 Competition and Buying Patterns Competition According to the 1997 Oregon Food service Statistics (NAICS 72).2. Cafe Roma appeals to 25% of customers. Its discerning coffee drinkers are in favor of well-prepared. which established corporate establishments lack. We estimate that Starbucks holds approximately 35% market share in that neighborhood. Java Culture's direct competitors will be other coffee bars located near the University of Oregon campus. strong coffeebased beverages.5 billion with gourmet coffee representing 33% (or $2. 4. despite of Starbuck's entrenched market position. with a long rainy season. Cafe Roma is a good example of such competition. The retail coffee industry is flourishing in the U. We will cater to customers' bodies and minds. this will provide a unique possibility for building a loyal client base. For us. At the same time. total sales of coffee were approximately $7. quick service and pleasant atmosphere. independent establishments that offer cozy atmosphere and good coffee at affordable prices. The UO Bookstore caters to another 10%. These include Starbucks. Java Culture will position itself as a unique coffee bar that not only offers the best tasting coffee and pastries but also provides home-like. . consumers definitely plays an important role in the recent growth in gourmet coffee. Cafe Roma. 4.or meeting location. Java Culture will price its product offerings competitively.3 Industry Analysis Coffee consumption has shown a steady 2. hot dry summers drive people into cafes to order iced drinks. Buying Patterns The major reason for the customers to return to a specific coffee bar is a great tasting coffee. coffee has really become a part of the lifestyle in the Pacific Northwest. Starbucks will definitely be one of the major competitors because of its strong financial position and established marketing and operational practices. as stated before. 4.S. Further.

The chart and table below outline our projected sales forecast for the next three years. All sales data logged on the computerized point-of-sale terminal will be later analyzed for marketing purposes. customer retention programs will be used to make sure the customers are coming back and spending more at the coffee bar.2. 5. getting customers to spend more and come back more often. . at least two employees will be servicing clients--while one employee will be preparing the customer's order. Establishing a loyal customer base is of a paramount importance since such customer core will not only generate most of the sales but also will provide favorable referrals.Strategy and Implementation Summary Java Culture's marketing strategy will be focused at getting new customers. dimmed light and quiet relaxing music will help the customers to relax from the daily stresses and will differentiate Java Culture from incumbent competitors. Proximity to the University campus will dictate certain sales seasonality with revenues slightly decreasing during the school vacation periods. In order to build up its client base. Comfortable sofas and chairs.1 Sales Forecast Food costs are assumed at 25% for coffee beverages and 50% for retail beans and pastries. At the same time. the other one will be taking care of the sales transaction.1 Competitive Edge Java Culture will position itself as unique coffee bar where its patrons can not only enjoy a cup of perfectly brewed coffee but also spend their time in an ambient environment. 5. To speed up the customer service.2 Sales Strategy Java Culture baristas will handle the sales transactions. utilize customer referrals and cross-promotions with other businesses in the community. retaining the existing customers. 5. Java Culture will use banners and fliers.

000/yr) will be hired who will oversee all the coffee bar operations. because of the investors' other commitments they will not be involved into the daily management decisions at Java Culture. A professional manager ($35. the restaurant has consistently increased sales while maintaining a lower than average level of operating expenses.984 $87. Under Mr. He's worked for several years as an independent business consultant. Polk has a Bachelor's Degree in Psychology from the XYZ State University.600 $43.400 $224.440 $423.400 $706.600 $176.Sales Forecast Year 1 Sales Coffee beverages Coffee beans Pastries. 6. The candidate (who's name is withheld due to his current employment commitment) has had three years of managerial experience in the definitely industry in Oregon. This person's responsibilities will include managing the staff. ordering inventory.180 $80.660 $584.000 $160. Polk's management. We believe that our candidate has the right experience for this role.840 $247. Four more part-time employees will be hired to fulfill the staffing needs.360 $105. A profit-sharing arrangement for the manager may be considered based on the first year operational results. Mr. etc. Two full-time baristas ($25. However. Mr.360 $48. he owned the ABC Travel Agency. Mr.640 Direct Cost of Sales Coffee beverages Coffee beans Pastries.324 Management Summary Java Culture is majority-owned by Arthur Garfield and James Polk. . OR. dealing with suppliers. a successful Italian restaurant in Portland. developing a marketing strategy and perform other daily managerial duties.400 $385.600 $96.996 Year 2 Year 3 $146.996 $52.300 Year 3 $105.800 $73. etc.000 $642.998 $88. Year 1 $87. Garfield holds a Bachelor's Degree in Business Administration from the University of ZYX. For the last five years he has worked as a manager of DEF Ristorante.000/yr each) will be in charge of coffee preparation.1 Management Team A full-time manager will be hired to oversee the daily operations at Java Culture. which he profitably sold four years ago. Previously. Total Sales $350.000 Year 2 $96. Garfield has extensive business contacts in Oregon that he will leverage to help his new venture succeed.330 Subtotal Direct Cost of Sales $204. In the second and third year of operation one more part-time employee will be hired to handle the increased sales volume.

00% 10.00% 10.000 7 8 8 Total Payroll $124.2 Management Team Gaps Despite the owners' and manager's experience in the definitely industry.00% 25.800 $155. 6.3 Personnel Plan The table below outlines the personnel needs of Java Culture coffee bar.000 $58.800 $40.000 $37.00% 25.00% Tax Rate Other 25.42% 0 Year 3 3 Long-term Interest Rate 10. The owners have provided the company with sufficient start-up capital. This company has over twenty years of experience in the retail coffee industry and has successfully opened dozens of coffee bars across the U.S. the consultants who have helped to develop the business idea for Java Culture.1 Important Assumptions General Assumptions Year 1 Plan Month Current Interest Rate 10. customer satisfaction surveys and to provide additional input into the evaluation of the new business opportunities. will provide enough cash to finance further growth.144 Financial Plan Java Culture will capitalize on the strong demand for high-quality gourmet coffee. 7.600 $143.00% 1 10.824 $50.000 $54. the company will see its net worth doubling in two years. With successful management aimed at establishing and growing a loyal customer base. which combined with reasonable operating expenses.600 $52. Personnel Plan Year 1 Manager Baristas Employees Total People Year 2 Year 3 $35.000 $56.6. Java Culture will maintain a healthy 65% gross margin.320 $39. Consultants will be primarily used for market research. the company will retain the consulting services of ABC Espresso Services.42% 0 .00% 0 Year 2 2 10.

000 $584.7.400 $0 $0 $0 $0 $0 $0 $0 $706.640 $706.640 Additional Cash Received Sales Tax. the company will maintain a healthy cash flow position.640 Expenditures Year 1 Year 2 Year 3 Expenditures from Operations . 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 $0 $0 $0 $0 $0 $0 $584. which will allow for timely debt servicing and funds available for future development. VAT.400 $706.000 $0 $0 $0 $0 $0 $0 $0 $642.400 $642. Pro Forma Cash Flow Year 1 Cash Received Year 2 Year 3 Cash from Operations Cash Sales Subtotal Cash from Operations $584.2 Projected Cash Flow As the chart and table below present.000 $642.

600 $327. VAT.800 $388.585 $0 $2.000 $296.290 $417.4 Break-even Analysis With average monthly fixed costs of $20.358 $101. . Java Culture's break-even sales volume is around $31. HST/GST Paid Out $0 $0 $3.300 per month.235 $195. the company is expected to generate such sales volume from the outstart.350 Principal Repayment of Current Borrowing $3.715 $532.300 in FY2001 and an average margin of 65%.Cash Spending Bill Payments Subtotal Spent on Operations $124.3 Key Financial Indicators 7.515 $155.358 $121. As shown further.648 7.144 $420.089 Additional Cash Spent Sales Tax.400 $0 $3.000 $0 $585.300 Other Liabilities Principal Repayment $0 Long-term Liabilities Principal Repayment $0 Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent $0 $0 $0 $455.300 $0 $3.865 $452.000 $0 $541.765 Net Cash Flow Cash Balance $128.300 $0 $3.945 $576.961 $0 $2.465 $143.

Overall. The table below outlines the projected Profit and Loss Statement for FY2001-2003.247 Assumptions: Average Percent Variable Cost 35% Estimated Monthly Fixed Cost $20.00% $459.400 $0 $204.324 Year 3 Gross Margin Gross Margin % $379.63% in FY2003.840 Year 2 $706.324 $0 $247.640 $247.400 $224.000 $204.311 7.5 Projected Profit and Loss Annual projected sales of $584.316 65.Break-even Analysis Monthly Revenue Break-even $31. Pro Forma Profit and Loss Year 1 Sales Direct Cost of Sales Other Total Cost of Sales $584.600 65.560 65.000 in FY2001 translate into $254.00 of sales per square foot.00% .00% $417.06% in FY2001 to 17.840 $0 $224. its net profitability increases from 17. which is in line with the industry averages for this size of coffee bar. as the company gets established in the local market.400 $642.

690 $0 Total Operating Expenses $243.491 17.144 $31.400 $6.000 by the end of FY2001 to approximately $443.000 $5.840 $9.270 $2.366 $149.424 $9.326 $35.62% 7.800 $6.034 $1.358 $296.000 in FY2003.000 $23.424 Net Profit Net Profit/Sales $99.821 $33.175 $0 $23.730 $273. The table below summarizes the projected balance sheets for this period.000 $5.000 $6. Pro Forma Balance Sheet Year 1 Assets Year 2 Year 3 Current Assets Cash Inventory Other Current Assets Total Current Assets $195.500 $52.400 $48.293 $0 $25.500 $52.600 $5.800 Depreciation Rent Rent Maintenance Utilities/Phone Payroll Taxes Other $5.782 Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred $135.534 $174.194 $290.533 $319.58% $124.Expenses Payroll $124.618 $42.000 $18.622 $0 $216.500 $21.066 $10.740 $144.358 $417.866 $2.00% $106.270 .000 $7.600 $143.308 17.651 $443.6 Projected Balance Sheet The company's net worth is expected to increase from approximately $212.648 $21.800 $27.510 $168.530 16.800 $6.272 $0 Sales and Marketing and Other Expenses $25.870 $141.570 $0 $155.

The last column represents industry average business ratios for Specialty Eating Places (SIC 5812).700 $0 $31.628 $99.674 Long-term Liabilities Total Liabilities $20. Ratio Analysis Year 1 Sales Growth 0.900 $50.170 $10.770 $270.040 Net Worth $211.000 ($27.936 Subtotal Current Liabilities $38.491 $211.00% 10.303 $369.762 $12.7 Business Ratios The table below outlines the company's business ratios.770 Accumulated Depreciation $5.674 $16.170 $16.Long-term Assets Long-term Assets $59.650 Total Liabilities and Capital $270.159 $106.00% Year 3 Industry Profile 7.680) $71.000 $140.000 $140.400 Total Long-term Assets Total Assets $53.270 $63.303 $369.000 $58.308 $178.170 $61.650 7.400 $0 $35.415 $51.530 $124.390 Paid-in Capital Retained Earnings Earnings Total Capital $140.159 $442.040 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities $31.974 $6.159 $442.921 $490.454 $47.836 $100 $0 $34.921 $490.60% .628 $318.947 $3.347 $34.628 $318.00% Year 2 10.400 $46.

General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes 100.85% 100.Percent of Total Assets Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets 7.87% 49.89% 100.62% 28.70% Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets 5.44% 13.27% 100.54% 9.31% 7.11% 19.05 21.38 13.00% 65.11 12.54% 100.22% 9.00% 47.00% 6.12% Year 3 n.91 11.11 12.70% 56.65 61.00% 48.13% 2.47% 100.58% 33.04 8.a n.20% 1.20% 38.95 9.40% 21.64% 38.23% 0.60% 35.30% 100.30% 0.60% 43.50% 39.71% 34.a n.a .47% 2.69 11.71% 62.00% 47.67% 37.25 27 10.99% 44.59% 100.70% 28.a Activity Ratios Inventory Turnover Accounts Payable Turnover Payment Days 10.00% 65.06% 0.a n.30% Additional Ratios Net Profit Margin Return on Equity 17.17 30 10.67% 90.26% 23.83% 0.60 5.29% 9.99% 86.00% Current Liabilities Long-term Liabilities Total Liabilities Net Worth 14.00% 86.17 29 n.40% 12.98 0.50% 61.94% 2.71% 78.41% 13.56% 4.01% 7.93% Year 1 16.46% 9.37% 2.00% 60.18% 22.00% 3.00% 65.80% Percent of Sales Sales Gross Margin Selling.00% 90.80% 3.00% 5.20% 0.33% 32.70% 4.00% 46.26% 23.00% 80.48% Year 2 17.

125 $6.000 $28.750 Month 3 $7.05 2.350 $12.00 0.200 $3.750 $11.00 n.800 Month 4 $7.11 0.800 $13.250 $49.334 104.625 $15.a n.000 $48.a Liquidity Ratios Net Working Capital Interest Coverage $177.000 $16.000 $16.000 $52.000 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 beverages Coffee beans Pastries.250 $45.200 $8.600 $6.600 $6.750 $55.000 $16.200 $12.800 Month 8 $7.200 $12.000 $48.000 $48.200 $3.68 0.400 $7.800 $3.350 $3.375 $5.13 n.000 $16.200 $3.125 $17. etc.200 $3.800 $7.800 $7.000 $3.125 $6.a Appendix Sales Forecast Month 1 Sales Coffee beverages Coffee beans Pastries.000 $16.60 0.000 $33.500 $18.000 $16.875 $19.875 $19.a n.000 $40.250 $13.16 1.000 $48.000 $8.600 $6.250 $13.74 1.46 14% 5.000 $5.200 $12.a n. etc.250 $8.000 $28. to Liab.800 Month 6 $7.16 0.000 $28.a n.800 $7.Total Asset Turnover 2.a Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.a Debt Ratios Debt to Net Worth Current Liab.200 $12.200 $3.250 $4.600 $6.800 Month 9 Month 10 Month 11 Month 12 $7.304 62.000 $31.000 $33.000 $6.858 48.76 0.00 0.800 Month 5 $7.150 $7.000 $48.44 n.a n.000 Month 2 $6.900 $6.66 0.200 $12.800 Month 7 $7.800 $7.000 $10.38 2.000 $29.69 7% 11.58 10% 8.07 $408.74 n.250 Personnel Plan .800 $7.675 $6. Total Sales 0% 0% 0% $24.750 $3.200 $12.600 $6.16 $284.000 $28.000 $6.800 $7.a n.600 $6.28 0.000 $48.000 $28.200 $7.000 $8. Subtotal Direct Cost of Sales Month 1 $6. 0.000 $14.750 $55.000 $27.200 $3.02 0.000 $28.95 1.250 $4.

383 $10.150 $2.00% 9 10.800 $0 $16.00% 10.00% Expenses Payroll Sales and Marketing and Other Expenses Depreciation Rent Rent Maintenance Utilities/Phone Payroll Taxes Other 15% $10.150 $2.00% 10.383 $10.800 $0 $16.558 $0 $450 $4.00% $31.750 $48.917 $4.300 7 Month 2 $2.000 $17.167 $3.000 $19.00% 0 25.200 65.00% 10.383 $10.558 $0 $450 $4.558 $0 .000 $16.383 $10.00% 0 25.300 7 Month 5 $2.167 $3.150 $2.800 $48.400 $500 $480 $750 $1.000 $16.Month 1 Manager Baristas Employees Total People 0% 0% 0% $2.800 $48.00% 4 10.383 $10.558 $0 $450 $4.000 $16.00% 0 25.800 $48.000 $19.300 7 Month 8 $2.00% Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 10.400 $500 $490 $750 $1.000 $45.400 $500 $480 $750 $1.800 $0 $16.300 7 Month 3 $2.800 $48.917 $4.00% 10.000 $18.917 $4.000 $0 $14.383 $10.00% 0 25.00% 0 25.000 65.250 65.167 $3.00% $31.917 $4.00% 0 25.400 $500 $520 $750 $1.383 $10.167 $3.00% 30.000 $15.300 7 Month 9 Month 10 Month 11 Month 12 $2.750 $0 $15.00% 10.00% $31.400 $500 $480 $750 $1.383 $10.00% 11 10.167 $3.150 $2.383 $10.00% 10.800 $0 $16.300 7 $2.383 $10.400 $500 $550 $750 $1.250 $0 $19.300 7 $2.850 65.917 $4.00% 10.917 $4.917 $4.000 $16.167 $3.00% 0 25.00% $33.300 7 Month 7 $2.000 $16.00% $31.383 $10.150 $52.917 $4.250 $0 $19.558 $0 $450 $4.800 $0 $16.383 $10.00% 0 Pro Forma Profit and Loss Month 12 $55.383 General Assumptions Month 12 12 10.300 7 Month 4 $2.558 $0 $450 $4.00% 0 25.00% 0 25.00% 6 10.383 $10.200 65.917 $4.200 65.383 $10.917 $4.150 $450 $0 $500 $400 $750 $1.00% $31.00% 10.400 $500 $480 $750 $1.150 $0 $17.00% $31.750 65.00% $29.300 7 Total Payroll $10.167 $3.00% 0 25.383 $10.383 $10.200 65.558 $0 $450 $4.150 $2.167 $3.250 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Sales Direct Cost of Sales Other Total Cost of Sales $40.558 $0 $450 $4.383 $10.383 $10.200 $55.150 $2.800 65.917 $4.250 Gross Margin Gross Margin % $26.917 $4.200 $0 $18.150 $2.00% 3 10.300 7 Month 6 $2.00% 2 10.750 65.800 $49.00% 5 10.167 $3.558 $0 $450 $4.558 $0 $450 $4.00% 7 10.383 $10.400 $500 $480 $750 $1.167 $3.167 $3.300 7 $2.167 $3.000 $14.00% $31.00% 8 10.558 $0 $450 $4.400 $500 $550 $750 $1.000 $16.383 $10.150 $2.558 $0 $450 $4.383 $10.00% 10.150 $2.400 $500 $450 $750 $1.383 $2.383 $10.00% $35.00% $35.400 $500 $480 $750 $1.150 $2.00% 10.800 $0 $16.200 65.00% 10.00% 0 25.200 65.800 $48.00% 1 10.150 $2.00% 10 10.

089 $15.496 $40.671 $20.834 $39.641 $20.000 $48.529 $10.383 $10.539 $227 $3.09% $7.383 $10.735 $13.383 $10.74% $9.671 $20.741 Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred $9.845 $30.000 $49.000 $48.671 $20.169 $13.979 $232 $2.112 $32.000 $48.424 $32.529 $10.009 $10.000 Subtotal Cash from Operations $40.671 $20.447 $29.110 $44.Total Operating Expenses $16. VAT.741 $20.809 $8.696 $15.529 $10.000 $52.000 $52.16% $11.000 $48.000 $48.721 16.671 $20.868 $9.383 $10.000 $55.000 $48.09% $8.000 $55.000 $48.000 $49.090 20.572 $10.191 $20.697 Net Profit Net Profit/Sales $6.383 $10.829 $39.228 $40.383 Bill Payments $728 $22.715 16.619 $229 $2.979 $241 $2.529 $11.383 $10.000 $55.459 $223 $3.000 $48.450 $29.94% $7.73% $6.000 $45.55% $11. HST/GST Received 0.088 20.693 16.112 $29.574 $10.009 $15.578 Additional Cash Spent Sales Tax.000 $45.808 $43.720 16. VAT.08% $7.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash Received $40.979 $243 $2.000 $48.574 $11.000 $48.195 Subtotal Spent on Operations $11.671 $20.830 $39.000 $48.459 $225 $3.711 $20. HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Principal Repayment of Current Borrowing $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 .716 16.000 $55.979 $234 $2.08% $7.000 $49.000 $48.07% $7.529 $10.000 $45.979 $236 $2.000 $48.979 $239 $2.000 $48.000 $48.383 $10.529 $10.000 $48.723 16.000 $55.727 $34.474 $30.216 $15.952 $39.383 $10.857 $40.205 16.259 $248 $2.000 $52.449 $29.573 $10.091 $10.572 $10.445 $29.000 $48.000 $48.000 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 $10.059 $245 $2.647 18.383 $10.832 $39.681 $20.569 $29.718 16.609 $10.000 $55.000 Additional Cash Received Sales Tax.08% $7.383 $10.383 $10.273 13.16% Pro Forma Cash Flow Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cash Received Cash from Operations Cash Sales $40.573 $10.

860 $58.000 $20.462 $122.815 $56.480 $18.876 $171.736 $107.914 $153.680) ($27.586 $33.075 $7.462 $29.680) ($27.220 $53.720 $58.680) ($27.966 $115.000 $140.500 $164.000 $50.335 $31.320 $169.804 $189.680) ($27.607 $156.020 $55.Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash Spent $11.680) ($27.868 $10.170 $59.700 Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Current Liabilities $10.556 $59.893 $7.291 $133.680) ($27.000 $140.286 $260.900 $8.920 $56.050 $4.533 Long-term Assets Long-term Assets $59.674 Long-term Liabilities $20.105 $40.435 $156.856 $183.464 $28.000 Retained Earnings ($27.120 $54.170 $58.500 $4.000 $140.109 $40.538 $211.570 $55.725 $9.270 $57.013 $125.286 $133.970 $220.000 $140.762 $57.469 $28.820 $57.092 $31.020 $145.170 $59.350 $8.613 $12.170 $59.150 $111.587 $28.067 $38.503 $41.286 $133.325 $18.000 $20.762 $37.856 $183.000 $20.000 $9.170 $59.175 $21.092 $36.970 $220.127 $138.700 $3.853 Net Cash Flow $28.000 $140.175 Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Current Assets $83.154 $163.538 $211.770 Total Assets $142.235 $130.664 $248.762 $198.860 $38.107 $40.800 $7.680) ($27.497 $6.596 $185.966 $115.891 $7.815 $36.834 $51.480 $18.480 $18.616 $206.811 $162.303 Net Worth $112.606 $270.170 $59.308 Total Capital $112.400 Total Long-term Assets $59.291 $181.170 $59.615 $10.250 $2.211 $195.147 Cash Balance $95.836 $60.000 $140.465 $28.450 $200.836 $40.600 $4.000 $20.132 $41.303 Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Current Liabilities Accounts Payable $0 $21.664 $248.414 $227.000 $140.000 $20.865 $20.104 $40.917 $11.170 $59.083 $43.539 $36.127 $138.717 $148.628 .085 $205.218 $99.896 $8.000 $140.320 $119.000 $140.450 $9.387 $32.674 Paid-in Capital $140.000 $20.000 $20.462 $122.680) ($27.229 $7.470 $56.679 $173.286 $260.085 $205.262 $36.480 $18.275 $58.175 $8.170 $59.275 $38.484 $77.027 $15.804 $189.561 $191.000 $140.000 $140.092 $56.013 $125.773 $7.370 $56.150 $3.800 $2.679 $173.394 $172.118 $28.628 Total Liabilities and Capital $142.115 $43.170 $59.544 $193.467 $28.262 $56.527 $212.369 $57.320 $169.170 Accumulated Depreciation $0 $450 $900 $1.000 $20.599 $179.000 Total Liabilities $30.762 $198.599 $179.211 $195.170 $59.358 Pro Forma Balance Sheet Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Assets Starting Balances Current Assets Cash $67.435 $156.123 $95.895 $7.680) ($27.596 $185.000 $20.680 $28.250 $6.279 $67.358 Inventory $16.227 $40.400 $17.950 $5.975 $6.480 $18.974 Current Borrowing $10.539 $56.525 $7.000 $140.876 $171.680) ($27.020 $145.843 $38.527 $212.020 $21.170 $59.000 $20.680) Earnings $0 $6.843 $58.130 $88.414 $227.561 $191.480 $18.235 $130.861 $236.000 $140.000 $20.966 $20.670 $54.811 $162.154 $163.914 $153.715 $148.320 $119.170 $59.825 $29.397 $36.861 $236.067 $58.606 $270.000 $20.136 $125.771 $40.386 $216.450 $200.717 $148.350 $1.369 $37.000 $30.942 $140.736 $107.625 $8.680) ($27.693 $12.000 $140.385 $44.680) ($27.