Business Plan

Ashish Datta - 08
3/8/2010

Starbucks Coffee House
Launch of Starbucks Coffee House in India

Index Topic Executive Summary Product Mix Marketing Strategy Sales Strategy Start up Summary SWOT Analysis Page Nos 2 4 6 9 10 14 2 .

Cafes are increasingly becoming more than places to sip coffee. Every day. business workers. we at ‘ Starbucks Coffee House’ are looking at becoming the number one destination for coffee by offering a "total experience" which would include right coffee. Wi Fi-enabled environment. tourists who visit the city. As a result. making its presence in the world market as well as in the domestic retail arena as more and more Indians prefer the drink. People who would not have dreamed of spending more than 10 Rs for a cup of coffee a few years ago now gladly pay anywhere between 50 Rs to 100 Rs for their cappuccino. Objectives 3 . A lot many things in life and work happen over a cup these days. Sustainable Production and Organic products whenever possible.Executive Summary Within the past 10 years the coffeehouse has become a familiar feature of modern life. a number of Indians stop for an espresso-based coffee drink. we intend to create coffeehouses that quickly achieve profitability and sustain an attractive rate of return for our investors. food. mocha latte or vanilla ice blended drink. by providing a higher quality experience than any competitor. The specialty-coffee business is growing at a healthy pace. Mission Our goal is to be the coffeehouse of choice for the local community. India has always been predominantly a tea drinking nation. India has now become one of the fastest growing coffee markets in the world. However. We will support the farmers who grow our coffee by using Fair Trade. jukeboxes and live music. It is taking great strides on both counts. Coffee had been only moderately popular in some southern states. there has been a sudden change in this trend with coffee becoming more and more popular in recent times especially among the youth. With India's middle class aspiring to be in sync with global culture. and students. We also want to make our contribution to the welfare of the local community by supporting charitable and civic activities.

United States. 4 . Create a solid concept in the industry and track performance in order to begin expanding to other markets within six months. Provide customers the finest quality beverage in the most efficient time. A global coffee brand built upon a reputation for fine products and services. Many of the company's products are seasonal or specific to the locality of the store. music. gift baskets and coffee gift/frequency cards in addition to coffee. Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle. and items such as mugs and tumblers. Through the Starbucks Entertainment division and Hear Music brand.635 stores in 49 countries. coffee beans. A dynamic website with online sales capabilities. Starbucks is the largest coffeehouse company in the world. nearly 1.068 in the United States. and film. espresso-based hot drinks. pastry. pastry. Starbucks sells drip brewed coffee. other hot and cold drinks. upscale interior design.000 in Canada and more than 800 in Japan. Ongoing. A relaxing. including 11. Be an active and vocal member of the community. and provide continual re-investment through participation in community activities. chocolates. tea. juice. year-round tourist activity. with 16. Washington. salads. a dynamic student population and a concentration of local businesses. Coffee House the number one destination for coffee in India.• • • • • • Make Starbucks the number one destination for coffee in Mumbai. heavy pedestrian traffic by the site. Prime site selection with an upscale affluent population. Achieve a 20-30% net profit margin by FY3. Multiple revenue streams including gift items. aggressive marketing. Company Ownership and Profile: Starbucks Coffee House is jointly owned by Starbucks Cooperation and Noida based Jubilant Group. Keys to Success • • • • • • • • A superior-tasting product backed by a unique quality store. water and soft drinks. the company also markets books. hot and cold sandwiches and paninis. Highly trained and friendly staff. snacks.

Jubuilant Group has created a strong presence as an integrated pharmaceuticals industry player and a leading Indian Private Sector player in Oil & Gas. Jubilant Foodworks is the India franchisee for Domino’s. adapted these changes and spread its wings to the outer world and moved away from being industry oriented to sharing knowledge. Product Mix COFFEE & TEAS HOT COFFEE Cappucino Caffe Mocha Caffe Latte Hot Chocolate DESERT COFFEE Esperano Americano Caramel Macchiato Liate Biango COLD COFFEE Coffee Special Cold Sparkle Iceland House Blend REFRESHING ALTERNATIVES SMOOTHIES Guava Mango Grapes MILK BASED Strawberry Chickoo ICED TEA Lemon Peach OTHER DRINKS Kinley Soda Kinley Water ICE-CREAM Vanilla Splash Chocolate Splash OTHER EATABLES SANDWICH Cheese Cheese & Chicken Cheese & Paneer Masala ROLLS Veg Roll Paneer Chicken Masala PASTAS Tangy Pasta Chicken Pasta Deserts Dark Temptation Chocolate Mousse Apple Cake Chocolate Chip Cake Serving Size = 240ml / 300ml / 340 ml Merchandise In addition to its core business Starbucks Coffee House will also sell various kinds of merchandise through its stores. exploration and production business. the pizza chain. • • • Coffee Mugs Coffee Beans Coffee Powder 5 . Jubilant identified the increased globalization of Indian economy and its first alignment with international economic trends.

students and families in SEC A category.• • • • T-shirts Music Albums Coffee House Vouchers Other Accessories like key chains. • Sizeable population of executives. With the liberalization of the economy. bracelets etc Product Sources: Different people have different tastes and Coffee House acknowledges this fact. The most modern technology available will be used to maintain consistency and roast the coffee beans to the demanding specifications of the discerning coffee consumers. Brazil is the world's largest coffee bean producer. The average cost of coffee at Barista is nearly 10 times that of a local restaurant's. Milk by Amul and Water by Kinley. The pricing strategy to be adopted will be that of skimming.35 to Rs. and the price inevitably falls due to increased supply and intense competition. The price for a cup of coffee at Café Coffee Day ranges from Rs. To cater to a variety of customer needs Coffee House sources its coffee beans from around the world. where they wait for some time for the customer to pick up the order but if the customer takes too long then the order is delivered on his table. there are a large number of young Indians with good jobs and attractive incomes. Apart from this Coffee House will also grow the coffee it serves in its cafes. Pricing Strategy: Reports indicate that customers at existing retail coffee shops are students and professionals between 18 and 35 years old. Starbucks has a strong brand image and enjoys economies of scale which will work to its advantage. but a major supplier will be Brazil. The high price tends to attract new competitors into the market.75. The merchandise will come in via international and local sources. The selection of the cities was based on the following criteria. 6 . The eatables at Coffee House will be catered by different vendors: example: ice creams will be catered by Kwality. The coffee beans will be supplied to all the cafe outlets. Selection of Location: The management at Starbucks Coffee House has devoted substantial management time and effort in zeroing in on the cities where they are now situated. The process will be carried out under the control of experienced personnel to meet highest quality standards. Starbucks will setup a well-equipped roasting unit catering to the specific requirement of the consumers. Process: The order process at Starbucks Coffee House is a flexible delivery process.

WI-FI enabled. art glasswork. compared to the other coffeehouses A significantly higher quality. where marketing is viewed as essential to gaining market share. High level or organized retail activity. Finally the location selected for its operations was Mumbai since it is the commercial and entertainment centre of India. Level of commercial importance (Industrial cities. Chennai and Hyderabad.economic development.) Number of educational establishments and opportunities available for employment. in the area includes the following: • • • Competitive Edge: Our competitive edge. On the basis of the above criteria. A brand known globally for its superior product and customer service. Also a number of foreign delegates frequently visit Mumbai. The only coffeehouse downtown to provide regular weekend evening entertainment. better tasting coffee product. • • • Marketing Strategy Launch Marketing The retail coffee industry is a sales-oriented business with historically very little experience in marketing and advertising. Rapid socio. gift items and gift baskets. Mumbai. Mediterranean Riviera style furnishings and outdoor dining. An ambiance superior to all other coffeehouses in the area with upscale "Cote d'Azur" look. Our Internet website will include sales of whole coffee beans. the shortlisted cities were Delhi. This is likely why little is done. It features stained glass decorations. Starbucks Coffee House will gradually expand to the other cities. Bangalore. tea. chocolates. state capitals etc. the major players have not been taken over by sophisticated companies like Pepsico. As yet. 7 .• • • • • • High disposable income with people looking for new vistas in leisure and lifestyle oriented concepts.

Launch marketing will promote awareness. business persons. This event will help the company to get wide spread awareness in the country. Public Relations 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. It will help set the stage for future brand identification. sports person. the world’s best selling coffee. in India. build customer traffic and establish a strong brand image in India as in other countries. The purpose of this event is to gain media coverage and announce the entry of Starbucks. build immediate traffic and establish our brand image via several methods: • • • • • • • • • Launch Event Public relations/publicity Direct mail Local print and broadcast media Design and packaging Community involvement Sampling Superior location Desirable store ambiance Launch Event . Local/Regional/National Print Media • • • • • • • • BusinessWeek The Financial Express Times of India Hindustan Times Daily News and Analysis Femina Men’s Health Magazine Forbes 8 . politicians etc. Local market awareness is vital because more than 50% of sales will come from people living within a 5-mile radius of the store.An event will be held for the launch of the product. This event will be attended by celebrities. National awareness will help drive the expansion by generating opportunities created by the media buzz and familiarizing people with our brand name.An element of our differentiation from other coffeehouse chains will be our use of advertising and marketing to gain awareness.

Local business people – Many business people live in and around Bandra.000 tourists visit Mumbai every year.000. Starbucks Coffee House does not become overly dependent on any single consumer group. Affluent local residents Tourists Local business people Students These groups are all potentially strong customer segments. Key influencers.000 of the most affluent people in Mumbai. several local coffeehouses with primarily student customers do poorly during the non-school months. 4. trendsetters. artists.Direct Mail • • Ongoing direct mail generated from our website data Visa or MasterCard local direct mail program Website Our website will be fully e-commerce functional and could easily become a significant revenue source.More than 5. 1. 9 . Most tourists will stop by at the Starbucks Coffee House location as it is familiar to them.Within five miles of Starbucks Coffee House are 200. by appealing to several market segments. • • • Affluent locals. The benefit of this mix of customers is that it helps maintain consistent business throughout the year. 3. Tourists. For example. Also. Starbucks Coffee House will avoid these peaks and valleys in business with a mix of customers. tea Gift baskets Gift items Furnishings Market Segmentation Starbuck Coffee Houses’ customer base is comprised of five target groups. writers and celebrities have homes in Bandra. 2. We will eventually sell the following items online: • • • • Whole coffee beans. Homes in adjacent areas sell for around 3-5 cr INR.

although it's hard to determine how profitable with any accuracy until the local response is measured. MET. Starbucks cards With a Starbucks card you can have coffee at any of the Starbucks location in the world! We will promote our program of gift cards and customer frequency cards to drive business and stimulate cash flow. Mumbai has many events every year. It will also potentially be very profitable. gift cards have proven to be a popular holiday item accounting for more than 5% of total sales during December. Sales Strategy Our sales strategy includes: 10 . Portable Kiosk Within 6 to 8 months we will create a portable kiosk to sell and market our products at special events and community activities. 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 kiosk will be highly visible and fun. Also. Rizvi etc including many prestigious private schools and academies. Industry records indicate that 25% 40% of all gift card amounts go unused.• Students. It will be an excellent way to publicize Starbucks coffee. These cards promote customer loyalty as well. By tying in with our computerized sales and inventory system we will be able to track usage and allocate the expense to marketing. again accounting for a significant percentage of sales. 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.Bandra is home to a number of colleges namely National College.

enthusiastic staff to make customers feel welcome and appreciated. farmer's markets. pre-paid cards. aggressive marketing program Be an active member of the community.000 6. gift baskets and glass artwork on our website Establish coffee service at local businesses Sell gift cards.000 30. include of short and long-term assets. be visible at charitable functions Solicit customer feedback to constantly improve and streamline our operation Start up Summary The Start-up requirements.25. etc. art shows. Sell coffee. frequency cards. and offer discounts to key groups Create an ongoing sampling program Conduct a consistent.000 11 .000 50. Long term assets: 26703500 INR Undercounter Refrigerators Service/Prep Counter Ice Machine Large Refrigerator Milk Coolers (3) Cash register (2) 1.• • • • • • • • • • • 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. below.500 30. and (B) create efficient product ordering Create a mobile kiosk to take Starbucks coffee into the community at special events.00. constant staff training to assure the best quality possible State-of-the-art sales/inventory system to (A) reduce customer waiting time.000 13.

00.00.00.000 12 .Espresso Machine Fetco Coffee Brewer Counters/Condiment bar/shelving Land 4.00.000 5. Printer Telephones.000 1.000 20.00.25.00.00.000 30.50.50.000 25000000 Short-term assets: 750000 INR Tables.000 1.000 1.000 20.000 1.00.00.000 2.00.000 10.000 20.00.55.000 7.000 15.000 Other Start up Expenses: 8235000 INR CONSTRUCTION Site Design/Architectural plan Labor Electrical Lighting/Others Flooring Plumbing Painting City Licenses LEGAL Accounting Legal Insurance MARKETING Advertising Brochures Menu boards OFFICE Equipment Computer.000 10.000 1.000 3.000 10.000 12.000 3.000 50. Chairs. Fax Stationery Display items APPLIANCES Preparation equipment Dishwashers Microwave Storage racks 10. Furnishings Persian Carpet Lighting Fixtures 6.000 4.00. Scanner.000 15.00.00.000 50.000 11.000 20.

Sales Forecast Conservatively.00. These estimates are likely conservative.000 30. In addition to footfalls there are also online sales which will add to the average expenditure.000 40. The total investment comes to approximately 3. reaching 400+ customers per day within a year and more than 500+ within three years. We expect growth to occur across all categories at about 10% annually as the business becomes more established and well-known. We have estimated our customer expenditure to be slightly higher due to the premium price we will charge for some of our items. 1st Year Average Footfalls = 300/ day Total Revenue = Average Footfalls * Number of Days * Average Expenditure =300 * 365 * 180 = 19710000 INR ( approx 2 cr) 2nd Year 13 . However this location is highly profitable and hence the company has decided to go ahead with the plan.000 1. This figure was arrived at by surveying the customer traffic at the nearest competing coffeehouses ( Café Coffee Day which has footfalls of 600+ customers per day and an average customer expenditure of 150 INR). we are forecasting an average of 300 customers per day during the first year with an average guest check expenditure for all items of 180 INR.000 Apart from these expenses there will be other expenses also but they can be adjusted as the cost of each item above has been taken above the prevailing market rate.000 20.Music system Food display case Sinks crockery Menu board 20.6 cr INR largely because of the exorbitant cost of land.

Web Plan Summary We plan to expand the functionality of our website so that it becomes a substantial revenue stream for Starbucks Coffee House.3 cr) As you can see from the above calculations the approach used is very conservative. we believe the potential exists for Internet sales to become a substantial percentage of our revenue. We will sell a number of items at our website. Actual sales can vary greatly.7 cr) 3rd Year Average Footfalls = 500/day Average Expenditure = 160 Total Revenue = 500*365*180 = 32850000 INR (approx 3. Although we've projected modest sales because of the difficulty in predicting online sales activity. including: • • • • Whole beans Tea Cocoa mixes Chocolates 14 . The break even will be achieved in the second year itself.Average Footfalls = 400/day Average Expenditure = 165 Total Revenue = 400 * 365 * 180 = 26280000 INR (approx 2.

"live" internal announcements and virtual meetings will take place. While the financials in this Business Plan only address the Bandra location. news. get directions and maps. The remaining locations will incorporate the knowledge we gain with our first store. Eventually. future development may include items such as tracking. For the media. newsletters. health department regulations. the website will function as a means of internal communication through a password-protected area.25 within five years. Special PR will promote our gift basket business and the sale of our upscale design glass artworks. company rules. see our menu and find out about special events. chat. testimonials. bios of key management and reproduceable logos. 15 . A technical resource may need to be contracted to build the trackable download and the newsletter capabilities. an online press kit will be available which will include downloadable photos.• • Gift baskets Gift items Special downloadable offers good at the retail stores will be posted from time to time on the website. The Future The number of locations could easily reach 20 . Customers will be able to reload their Starbucks Card online so they can use it in lieu of cash or credit when they make purchases. The maintenance of the site will be done by contracted outside consultants. The website will also function as an online "brochure" as well as enable visitors to "see" our retail store. down-loadable menus. Starbucks Coffee House's start-up. Here. Website Marketing Strategy All communications materials will include the Starbucks Coffee House’s website address. we can extrapolate from the store's performance to get a general idea of the chain's projected profitability. implementation and operation in Bandra will be the "blueprint" for future efficient expansion. a coffee "chat" room and user Web pages. PR releases. stories of interest. As the website is expanded and improved. when more stores are opened.

2. High visibility locations to attract customers. c. Established brand/logo. Brand extension. c. 16 . Opportunities a. b. d. Presence of Barista and Café Coffee Day.SWOT Analysis 1. Continued domestic expansion. f. e. g. Globalized. Technological Advances. New Products. e. c. Weaknesses a. Distribution agreements. d. b. Majority customers in age group of 18-35. Product Pricing expensive. Too much focus on expansion. Strong financial condition. Economies of scale. Industry market leader. b. d. h. Strengths a. Good relationships with suppliers. 3. Largest coffee house company in the world.

Competition. Threats a. Coffee price volatility in developing countries. Cultural and Political Issues. 49 per cent cap on foreign direct investment (FDI) in single-brand retail. 17 . d. e. Negative publicity from poorly treated farmers in supplying countries.4. c. b.

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