Business Plan

The M23 Coffee Shop.

August 4, 2020

email: TheM23cofeeshop@gmail.com
contact: +254799067704

Presented to:

Date: ___/ ___/ _____

Contents
Executive summary.........................................................................................................................2
Business/industry overview.............................................................................................................3
Market analysis and the competition...............................................................................................4
Sales and marketing plan.................................................................................................................5
Ownership and management plan....................................................................................................7
Operating plan.................................................................................................................................8
Financial plan.................................................................................................................................10
appendix.........................................................................................................................................11

1| T h e M 3 2 C o f f e e S h o p .
Executive summary.

The M23 Coffee Shop will be the go-to place for coffee lovers. We plan on serving the highest
quality coffee and snacks in a trendy, comfortable atmosphere. Our convenient location
and excellent customer service should build a steady repeat customer base.

Owners Mesfin Bett, Oliver Thambo and Natalie Kylie have knowledge of the food service
industry, including management experience.

Our main products will be higher margin gourmet coffee products such as espressos,
cappuccinos, lattés, and a variety of snacks, including healthy alternatives.

Strategically located within easy walking distance from the technical school, nursing
colleges, and a variety of office complexes, we intend to cater to students and young office
workers by providing plenty of seating space and superior customer service with a trendy vibe.

In the immediate area, our competition consists mainly of fast-food vendors such as Mimi House
and Sarini Bistro based in Kitale Town. We plan on capturing the upper end of the local coffee
market by serving gourmet, non-machine-made coffee products at reasonable prices. Along with
our superior atmosphere and great customer service, we intend to target sophisticated coffee
consumers.

The location we have selected has 144 square feet of space, and requires minimal renovations.
The space has been vacant for several months and the owner is motivated and has offered a
reasonable monthly rent rate.

We expect sales revenue to grow from Ksh50,000 in the first two months of operation to
Ksh70,000 by the end of the sixth month. To minimize operating expenses, all of the principals
will be onsite on a full-time basis to reduce staffing costs, supervise, and maintain quality
control. We expect net profits to grow from 45,000 to 100,000 perennially.

Ksh120,000 in startup funding is required for lease costs, renovations, equipment, and furniture.
The principals look to obtain the amount from commercial lenders.

2| T h e M 3 2 C o f f e e S h o p .
Business/industry overview

The Coffee Industry

According to recent Kenya’s Census data, millennials have overtaken baby boomers as Kenya’s
largest living generation. Millennials are more social and mobile than previous generations and
prefer to have coffee with friends in trendy, public locations, increasing the popularity of high-
end coffee shops. Kenyan statistics indicate that:

 Specialty coffee sales are increasing by 20% per year

 Kenyans consume more than 45 million cups of coffee per day
 Retail sales of coffee exceed $1 billion per year

Our Position in the Industry

Kitale is an affluent area with a high density of students and young professionals, an ideal market
for a coffee shop such as The M23 Coffee Shop. People in this area can afford to spend money
on specialty coffees and snacks and are willing to do so.

Our market research has shown that seven out of 10 people polled in Kitale consume at least
three cups of specialty coffee per week.

The Competition

While there currently are two other coffee shops within the immediate area, neither offer patio
seating or substantial parking. One does not offer free Wi-Fi.

What Makes TheM23 Coffee Shop Unique

TheM23 Coffee Shop marketing strategy is to cater to the young and young at heart with top
quality products, great service, and plenty of seating indoors. We aim to be the place to meet
with friends, relax, and enjoy a great cup of coffee. Ultrafast Wi-Fi will enable students and
business people to readily communicate and work on school or business activities.

3| T h e M 3 2 C o f f e e S h o p .
Market analysis and the competition.

Given the proximity to schools and office complexes, our primary target market will be students
and professional business people. Both groups are heavy consumers of coffee, tea, and snacks.

Based on our customer surveys, there is a strong demand for a high-end coffee shop in a central
location that serves great coffee and has both indoor seating and available parking. The three
most common complaints about the existing competition in the area are:

 Inconsistent product: Discerning customers are reluctant to become regular patrons of a

coffee shop that cannot consistently serve a high-quality product.
 Lack of ideal seating: Many people prefer to consume their food and beverages indoor on
a chilly day.
 Lack of parking: The lack of parking makes it difficult to attract vehicle commuters.

The local customer base consists of approximately:

 250 students from two post-secondary schools

 160 school staff
 1,000 business people and office workers

Both schools have solid attendance and are expanding their student populations. The local
business market is strong and has been relatively unaffected by previous economic downturns.

Compared to our competition, we expect our revenues to grow strongly as we build our customer
base:

Sarini Bistro
Mimi House The M23 Coffee (Year 1)
Restaurant
Est. Annual Revenue Ksh200,000 Ksh75,000 Ksh350,000
Employees 28 10 3
Price High High Average
Quality Low Average High

4| T h e M 3 2 C o f f e e S h o p .
Sales and marketing plan.

Our Product Offerings

The existing competition uses lower grade beans, inexpensive equipment, and does not properly
train staff — resulting in inconsistent product quality and dissatisfied customers.

At TheM23 we are passionate about coffee and intend to focus on consistently serving the
highest quality product by:

 Sourcing premium beans and snacks and maintaining freshness at all times.
 Using a top-of-the line espresso machine and related equipment.
 Providing baristas with professional training.

By focusing on quality, consistency, and great customer service, we will build a steady repeat
customer base.

Pricing Strategy

We intend to focus on specialty coffees including espresso, cappuccinos, mochas, etc. as the
profit margins are much higher than regular coffee. To command a higher price for regular
coffee, we will not use drip machines. Instead, each cup will be single served using a coffee
press so that every cup is up-to-the-minute fresh and delicious.

Our pricing will be competitive with the higher end of the market. We believe that customers
will be happy to pay top prices for a great cup of coffee.

Sales

We will be offering counter service in a professionally designed, cozy, inviting interior space.
Interior seating will be a mix of smaller individual chairs for intimacy, and longer, bench-style
ones for larger groups. We intend to be open from 10:30 a.m.-6 p.m. on weekdays, and 11 a.m.-5
p.m. on Saturdays. We will not be operating on Sundays.

In addition to credit, and debit, we also will be accepting cash for purchases.

Advertising and Promotion

To minimize costs and connect with our customer demographic, most of our advertising will be
of the digital variety. We intend to aggressively promote our products using the following
methods:

5| T h e M 3 2 C o f f e e S h o p .
  Posters on the local campus billboards
 Our direct and indirect networks
 Daily specials announced on WhatsApp, Facebook, Instagram, and Twitter

Statistics demonstrate that loyalty cards are highly effective, and The M23 will use a custom-
designed rewards card to promote repeat business.

6| T h e M 3 2 C o f f e e S h o p .
Ownership and management plan

Ownership Structure

The M23 Coffee Shop will be a hotel registered in Trans Nzoia County. The business will be
100% owned by: Mesfin Bett, Oliver Thambo and Natalie Kylie

Management

Owners, will manage the business, will be present at all times during open hours. The owners
have previous food service management experience and are trained and experienced baristas.

External Resources and Services

Premium roasted coffee beans will be sought from Nestle.

Dairy products will be acquired from a local vendor in the area.

Transmatt Supermarket will supply the baked goods.

Design and planning of the shop will be done by the owner.

7| T h e M 3 2 C o f f e e S h o p .
Operating plan

Facilities

The premises we have chosen is along Kenyatta St. The space features:

 144 square feet of indoor space in a modern, well-maintained building in an excellent

location
 Existing zoning for restaurant usage
 A monthly rent at ksh10,500/month (first deposit for three months ksh30,500)
 The building owner is responsible for trash collection, recycling, pest control, and
security
 Utilities (water, electricity, gas, internet, phone) are estimated to be ksh4,000 per month

The previous tenant was a restaurant, and there are exits and washroom facilities already in
place. A local dealer has offered to sell used kitchen equipment at heavily discounted prices.

Staffing

Three full-time and one part-time barista will be hired at industry standard wages. The one full-
time employee is a previous understudy of the owners. The part-time employee will be sourced
from the local post-secondary institutions.

Owners and staff will share all regular duties, including taking orders, making coffee/tea,
clearing tables, restocking, dishwashing, maintaining washroom facilities, etc.

To increase employee loyalty, a bonus/profit sharing system will be put in place.

Equipment

The following equipment will be purchased:

 Coffee Maker
 Toaster
 Electric kettle
 Microwave
 Juicer
 Milk foam maker
 Music system
 Water dispenser
 Espresso grinder
 Protective gear (Masks, gloves, Hairnet and Sanitizers)

We currently are negotiating the purchase of used commercial equipment from the previous
tenant, including:

8| T h e M 3 2 C o f f e e S h o p .
  Glassdoor fridge
 Microwave
 Misc. shelving, storage bins, etc.

Maintenance contracts for the equipment will be negotiated with local vendors.

Supplies

I have negotiated an agreement with Khetia’s Drapers Limited to supply premium gourmet
Nestle coffee/espresso beans with immediate shipping. Milk, juices, soft drinks, fruit, etc. will be
sourced from the local Market.

Muffins, scones, cookies, yogurt fruit cups, and sandwiches will be supplied on a daily basis.

Burgers and hotdogs will be made on site.

9| T h e M 3 2 C o f f e e S h o p .
Financial plan

Income Statements:

These are our projected revenues, expenses, and Net profits. For the 1st year.

 Cash Flow Projections:

This is our projected cashflow in a year arranged quarterly

Cash in-flow 1st Q 2ndQ 3rdQ 4thQ

Coffee sales 97,600 102,600 107,600 112,600
Non-coffee 48,750 51,750 54,750 57,750
sales
Snacks sales 41,250 42,000 42,000 42,000
Totals 187600 196350 204350 212350
st nd rd
Cash 1 Q 2 Q 3 Q 4th Q
expenditures
Capital 19,413 2,499 0 0
(equipment
purchase)
Materials 16,000 16,000 16,000 16,000
Rent 44,000 44,000 44,000 44,000
Maintenance 2,000 2,000 2,000 2,000
and repair
Advertising 1,200 1,200 1,200 1,200
Licensing and 6,000 0 0 0
insurance
Totals 88613 65699 63200 63200

*The licensing fee is to be paid yearly to the county government of Trans Nzoia county

Net Cash-Flow

1st Q 2nd Q 3rd Q 4th Q

Totals 98,987.00 130,651.00 141,150.00 149,150.00

 Balance Sheet:

10| T h e M 3 2 C o f f e e S h o p .
 An official balance sheet of all assets, earnings, profits and losses will be provided on
demand to the investor. It will normally be sent to the investor on a monthly basis. Every
transaction in the business will be captured to ensure transparency and full accountability.

 Breakeven Analysis:

Projected Cash Flow for Year 1

250,000.00

200,000.00

150,000.00

100,000.00

50,000.00

0.00
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Cash In-flow Cash Expenditures

Projected Cash flow for Year 1

250,000

200,000

150,000

100,000

50,000

0
1st Q 2nd Q 3rd Q 4th Q

Cash In-flow Cash Expenditures

11| T h e M 3 2 C o f f e e S h o p .
 Projected Net cash Flow
160,000.00

140,000.00

120,000.00

100,000.00

80,000.00

60,000.00

40,000.00

20,000.00

0.00
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Net cash Flow

appe
ndix

12| T h e M 3 2 C o f f e e S h o p .
Business logo

Main Menu

13| T h e M 3 2 C o f f e e S h o p .
Business Poster

For more information and queries contact:

Mesfin Bett.

Tel: +254799067704

Email: messybett@gmail.com`

14| T h e M 3 2 C o f f e e S h o p .