In this report, business plan for the coffee shop is developed. the purpose of this report is to critically analyse, evaluate the available business opportunity. On the basis of this, informed judgments are made for new venture to demonstrate the human resource management knowledge and entrepreneurial skills. This report identifies and evaluates the tasks, resources and plans for the new venture where it is analysed that how the challenges of new venture should be dealt.

1.Background of the entrepreneur

The entrepreneur is currently enrolled in MBA program where it has gained necessary business management skills. The previous degree of entrepreneur was also in the business administration; hence the entrepreneur possess sufficient knowledge and skills to start the venture. Moreover, one of the uncles of the entrepreneur is already running a café which will prove helpful for the entrepreneur to understand the café and restaurant industry in a better manner. The family member’s experience in the food industry will guide the entrepreneur to fulfil the market needs in an effective manner. 

2.Introduction to Business concept   

This business plan is aimed for introducing a coffee shop with the name of ‘Hi-Taste Coffee’ which aims to become a dairy necessity for the addicts of coffee. It aims to provide a dream place to escape from dairy life stresses and it offers a comfortable environment for socialising and relaxing. Analysing the growing demand for good taste gourmet coffee along with brilliant customer service (Lewin, Giovannucci and Varangis, 2004), ‘Hi-Taste Coffee’ aims to capitalise on its proximity to the University of Wales Campus where it can gain a core group of customers who could become its loyal and repeated customers. Hi-Taste Coffee will offer the best taste coffee in the area which will be offered with the bakery items. This will provide free books and Wi-Fi facility to its customers to stay at coffee shop for a longer period of time.

3.Assessment of Product/Service

Hi-Taste Coffee aims to offer the best taste coffee in Cardiff City Hall, United Kingdom. This is to be ensured through the use of high quality ingredients and strict guidelines for preparing the coffee. As said by Wilson et al., (2012), with the help of store layout, marketing activities, and menu listings, the effort will be focused towards on increasing the high margin espresso drinks of Hi-Taste Coffee. The product line will include brewed coffee and teas, espresso drinks and refreshment beverages. This coffee café will also have small salads, pastries and sandwiches. The product offering will also have the magazines, free books and Wi-Fi facility. The espresso-based drinks will also include the skimmed, soy and whole milk. The product is designed on the basis of the need of the people living in the area nearby University of Wales. It is analysed that currently students and office workers are in the need of high quality tasted coffee (Minten et al., 2015). Therefore, this coffee café will be introduced. The coffee will be prepare using the strict guidelines where expert chefs and baristas will be preparing the coffee for customers.

4.Assessment of Industry

Over the last decade, coffee consumption has showed a significant growth rate of 10% in United Kingdom market (Kolk, 2013). This retail coffee industry is also growing in the Cardiff City. The climate of this city is also conducive for coffee consumption. Coffee has become a part of the lifestyle of many people living in the Cardiff city. The young generation of Cardiff City is also in favour of the well-prepared and strong coffee based beverages. The demand for relaxing environment is also observed (Elder, Lister, and Dauvergne, 2014). The industry assessment could be done using the framework provided by Porter (1991).

Source: Porter 1991

Threats of new entrants; In this industry, there is a high threat of new entrants as there are less capital requirements for this business. Moreover, there are no such government policies which restrict the entry of new coffee businesses (Euromonitor, 2016). So threats of new entrants is high.

Supplier power: There are large number of suppliers that are providing the coffee supplies. There is also availability of substitute inputs. The products of different suppliers are not much different from each other (Euromonitor, 2016). So, suppliers power is not high in this industry.

Threat of substitute products: There are various beverages and non-alcoholic drinks which could be used as the substitute of the coffee. The relative price of such substitute is almost similar to coffee (Davidson, 2016). But as Hi-Taste Coffee is having the low prices for the coffee therefore its threat of substitute products is moderate.

Buyer Power: There are large number of buyers in the market of Cardiff City. The customers will be attracted to Hi-Taste Coffee shop for its great taste, customer service and reasonable pricing (Euromonitor, 2016). It is believed that Hi-Taste Coffee can build a strong base of loyal clientele with the help of less competitive pricing strategy, great taste and brilliant customer service. Though, customers’ switching cost is quite low but it will use the strategy of membership of this café for retaining customers.

Rivalry among existing firms: There are many snacks and non-alcoholic beverage bars that are currently working in Cardiff City. There are many full service restaurants as well (Davidson, 2016). All the coffee bars located near to the University of Wales are competitors of Hi-Taste Coffee. The names of these coffee shops are Coffee Bakers, Pettigrew Tea Rooms, Waterloo Tea and Starbucks. Though, market leaders like Starbucks already possess the significant market share, the Hi Taste Coffee shop will position itself with the coffee shop which provides Hi Taste Coffee at reasonable prices. Moreover, the home like, comfortable and cosy environment will help it to be differentiated from other coffee shops.

5.Assessment of Market

As previously stated, significant growth is observed in the U.K. coffee consumption where the demand for gourmet coffee is highest. According to British Coffee Association (2016), coffee drinkers of Cardiff City are among the most demanding ones for the coffee drinks. Especially, the young people or university going students of Cardiff City are in favour of well-brewed gourmet coffee (Euromonitor, 2016). Moreover, the observation and interviews with the local university students has revealed that they also demand excellent customer service along with the relaxing environment in the location nearby the University of Wales, United Kingdom. As suggested by Perreault Jr, Cannon and McCarthy (2013), through the focus on the marketing activities, it will be ensured that the University students and faculty, sophisticated teenagers and office going workers could be attracted towards this Hi Taste Coffee. The market research results has also proved that customers living around this area are interested in the gourmet coffee products. Moreover, as said by Wu (2013), it should not be neglected that the coffee consumption is a universal phenomenon among the people who belongs from different categories thus it will be easier to target the customers in the coffee industry.

6.Organisational assessment

This is an entrepreneurial venture which is owned by the ABC who holds the degree in business administration and is pursuing the masters degree from University of Wales.ABC will be the CEO of this coffee shop.As per recommended of Mathis et al., (2015), as this is a small coffee shop, hence, it will have only few workers. It will also hire part time workers for this coffee shop. The following hierarchy shows the organisational structure. As it will grow, more personnel will be hired for this coffee shop.

 

7.Financial assessment

Hi Taste Coffee is going to capitalise on the strong demand which exists in the market of Cardiff City for gourmet coffee. ABC do have the adequate start up capital. With effective management practices, this coffee shop aims to establish and grow a loyal customer based and it forecasts its net worth doubling in coming 2 years. It is planning to maintain the gross margin of 65% which will provide sufficient cash for operating expenses and future growth. The expected average fixed cost of this business is £20,3000 where average margin will be of 65%. The sales volume of £31,300 per month is expected.                      

The following figure and table shows the break-even analysis for Hi Taste Coffee.

 

 

 

8.Business Model Canvas for Hi-Taste Coffee

 

The following figure provides the overview of the business model canvas.

Source: Joyce, Paquin,  and Pigneur (2015)

Key Partners: The farmers who could provide beans and other raw material for the coffee products are key partners. Moreover, the dairy farmers providing the milk are also the key partners. The other ingredients for coffee will be obtained for renowned suppliers of U.K.

Key Activities: The distribution of coffee beverages will be through the chain of coffee shop which will be opened near the University of Wales, Cardiff City, United Kingdom. The customer relationship will be managed through introduction of membership schemes. The membership holders will be provided with 15% discount on all transactions. The revenue will be from the selling of coffee beverages and related bakery items.

Key Resources: The key resources are human resource and financial resource. The success of this business depends on how effectively human resource is managed such that objectives of excellent customer services are achieved.

Value Proposition: The value proposition for customers is the good taste, high quality coffee which will be available at reasonable price. Moreover, the home-like, comforting and relaxing environment is another value proposition for customers.

Customer Relationships: The customers will be attracted through free sampling of coffee in the University of Wales. At this booth, the membership cards will be offered to customers. these membership cards will help it to retain customers for longer time.

Customer Segments: It is targeting students and faculty members of University of Wales, teenagers and officer workers of Cardiff City. The following chart shows the percentage of customers segments.

 

Channels: Like other coffee shops, this coffee shop will reach its customers through its outlet which will be located near the University of Wales. This one is the most effective distribution channel for this business.

Cost Structure: The most important cost will be the raw material i.e. beans, milk powder and other ingredients. Likewise, initially, the coffee making machines are also needed which are going to be quite expensive.

Revenue Streams: The average price of the cup of coffee in United Kingdom is £2.5, but it will be charging the £2.25. Customers will be attracted easily with this price, hence, revenue stream will be smooth.                                

9.HR Strategy

This business is following the cost leadership strategy where it is going to provide the coffee beverages at the lower prices than its competitors. Therefore, as per suggestion of Purce (2013), this business strategy will also be reflected in its HR strategy.

Recruitment and Selection: It will hire baristas, waiters, receptionists and managers through a rigours process. It will be ensured that experienced employees are hired so there is less need of training. The selection will be on the basis of interview which will be conducted by the CEO who will select those employees who could provide best customer service (Oke, 2016).

Training and development: There will be training program which will start when this business concept will be launched. For providing best taste of coffee, high quality of coffee and excellent customer service, professional trainers will be used. However, this will be on time training program. Later on, mentoring program will be started where manager and CEO will act as the mentor (Bratton and Gold,  2012.).

Compensation and Benefits: The basic wages of the human resource will be below market as it has to keep it market below the competitors. But to attract and retain the employees, benefits will be provided. Moreover, the work environment and culture will be the differentiating factor for the employees (Armstrong and Taylor, 2014).

10.Conclusion

In this report, business plan for the coffee shop is developed. The purpose was to evaluate the available business opportunity in the coffee industry and Cardiff City market.  This report has also analysed the impact of environment i.e. market and industry on the business concept. From the analysis conducted in this report, it becomes clear that there exists an opportunity for the coffee business in this market, hence, this entrepreneurial venture should be started as soon as possible.

 

 

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