King Coffee Shop

I. EXECUTIVE SUMMARY

King Coffee Shop is a café that provides a friendly, comfortable atmosphere

where the customer can receive quality food, service and entertainment at a
reasonable price. The coffee house will offer a variety of choices to the customers.
Coffee and tea of all sorts will be offered. Juice, soda, and non-alcoholic beverages
also will be available. King Coffee also serves breakfast sandwiches with the
freshest ingredients, muffins, croissants, cinnamon rolls, coffee cake, and other tasty
treats. The interior design of the building will focus on projecting a relaxed
atmosphere.

King Coffee Shop will be operated as a Sole Proprietorship. There will be

private investors. Overall management will be the responsibility of the owner. The
general manager will have a minimum of 10 years’ experience. The advertising and
promotion will take a number of avenues. First, flyers will be distributed in the
neighborhood. Ads will be placed in the target areas of the local Grocery, and the
local neighborhood newsletters. First week of the opening King Coffee gives 20% off
of any drink of any size. King Coffee opens from 10:00 A.M. to 10:00 P.M. The site
contains a 3,525 square foot including substantial parking.

II. GENERAL COMPANY DESCRIPTION

King Coffee Shop is located in a commercial area within a walking distance

from the U-belt Universities on the corner of a major thoroughfare connecting
affluent neighborhood with the busy downtown commercial area. The clear window
displays, through which passerby will be able to see customers enjoying their
beverages, and outside electric signs will be aimed to grab the attention of the
customer traffic.

The interior design of the building will focus on projecting a relaxed atmosphere.
King Coffee Shop will be divided into different areas. Some will have tables and
chairs, another will have large antique stuffed couches and chairs, end tables, coffee
tables, book shelves filled with books and magazines, tiffany style lamps and
braided rugs. A PA system will be installed so that the music and entertainment can
be heard throughout. A large selection of table games will be provided.

a. Company’s Goals and Objectives

1. Provide first-rate live entertainment without a cover charge

2. Ensure a friendly comfortable atmosphere
3. Generate monthly sales revenue of at least ₱71,000 per month of 3%
of the target market within 18 months of opening
4. Maintain and use a customer mailing list
5. Maintain a high standard of food quality and service
6. Place monthly ads in neighborhood publications
7. Distribute monthly fliers to neighborhood and businesses
8. Offer discount coupons

b. Business Philosophy

I. We believe in people. We respectfully offer high quality products and

services to our consumers. At the same time, we reward those who
work for the coffee we provide to the end consumer "From Bean To
Cup", farmers, office and production workers, franchisees and
distributors.
II. We are committed to coffee knowledge, innovation and excellence. We
are real explorers and invest heavily in knowledge and innovation, as
they are the driving forces behind our success. Innovation does not
exist as just a concept and promise in Coffee Island, but as the only
way to return the love, appreciation and confidence to coffee lovers.
III. We believe in a fair way of doing business. This means that we believe
in supporting Direct Trade that is, establishing mutually beneficial
relationships with producers at the best coffee farms in the world.
IV. We believe that every activity we develop contributes to the economic,
environmental and social sustainability of the places where we export
our coffee.

c. Industry description

Almost seven decades ago, Philippines was the third largest producer of
coffee globally after Brazil and Colombia. Currently it is the 27th largest producer
of coffee in the world. Even though the country has geographical advantages for
coffee production the supply is currently unable to meet the large demand.
Philippines produces all the four main bean varieties: Robusta, Arabica, Excelsa
and Liberica. In the period July-September 2017, Robusta formed 65.2% of the
total national production, while Arabica formed 27.1%, Excelsa formed 6.9% and
Liberica formed 0.9%. The entry of multinational players in the market has
expanded the market as well as improved the level of know how in the sector. It
also motivates local people to keep high quality, comparable with international
standards. However, while the prices of Robusta and Arabica are climbing,
roasted coffee faces pressure from supermarkets and groceries. Currently, there
is a need to help promote local roasters in the country, as compared with
imported brands.

According to the International Coffee Organization (ICO) and the

Philippine Statistics Authority, Philippine coffee production has been increasing
by 2.9% per year over the past decade vis-a-vis our growing consumption of
coffee. Today, the Philippines produces 30,000 metric tons of coffee a year, up
from 23,000 metric tons just three years ago.
III. PRODUCTS AND/OR SERVICES

King’s Coffee Shop’s Logo & Slogan

A. Products

Coffee Drinks
Other Drinks
1. Espresso 1. Hot Chocolate
2. Cappuccino 2. Hot Tea
3. Macchiato 3. Milk Chocolate
4. Mocha 4. Matcha Tea
5. Latte 5. Milkshakes
6. Black Coffee 6. Lemon Juice
7. Red Eye 7. Buko Juice
8. Cold Coffee
Smoothies
Bakery
1. Mango
2. Mixed Fruit 1. Muffins
3. Banana 2. Croissants
4. Pineapple 3. Cinnamon Rolls
4. Donuts
5. Sandwiches
6. Cookies
7. Pies
8. French Pastries
5. Orange
6. Four Season
7. Avocado
8. Apple
9.
B. Advantages & Disadvantages

Advantages Disadvantages
Habitual Drink Competition
Full Control Getting the Word Out
High-Profit Margin Losing Money
Market Demand Long Hours and Hard Work
Growth & Income Potential Team Building
The Creator of your Lifestyle Time-Consuming

IV. MARKETING PLAN

Marketing Analysis Summary

Filipinos have shifted from being moderate to heavy coffee drinkers, according to
a study by Kantar World panel Philippines. The study, released on October 19,
showed coffee sales growing to 40% in June, 2019, from 12% in June, 2016,
outpacing the total beverage segment growth at 10%. Heavy drinkers buy coffee
products thrice a week, or 126 times a year, and spend minimum ₱75 per shopping
trip. Regular coffee drinkers buy twice a week, or 81 times a year, and spend
minimum of ₱50 per shopping, the study said. Sales growth was driven by increase
of 3-in-1 coffee mix purchases in markets in Metro Manila, South Luzon, and
Mindanao. The increase has been consistent for past two years and 93 percent of
Filipino homes, mostly in Metro Manila, as well as homes with older persons, buy
coffee mixes once a week. For every ₱100 spent on beverages, ₱35 is for coffee, an
increase from last year’s ₱30, it reported.

Marketing Trends and Demands

The market for single-serve coffee in the Philippines is being driven by the
availability of a vast range of product variants and constant innovations by
manufacturers. In addition to this, consumers are now willing to purchase coffee
machines so as to prepare barista-like coffee at their homes which, in turn, is
impelling the growth of the coffee market. Apart from this, the Philippine Government
is encouraging healthy lifestyle choices which has increased awareness among
consumers and led them to incorporate beneficial tea variants in their diet. On
account of this and the increasing number of tea salons in the country, the coffee
market is being catalyzed at a strong pace, especially in the urban areas. Looking
forward, the Philippines coffee and tea market size is projected to reach a value of
US$ 7.2 Million by 2023, expanding at a CAGR of 40% during 2019-2024.
Targeted Customers
Our targeted customers will be to anyone who enjoys coffee, but we will mainly
target people of age 15 and higher, teenagers, Office Workers, Students, faculty and
others.
CUSTOMERS GROWTH YR1 YR2 YR3
Teenager 5% ₱15,000.00 ₱15750 ₱16500.00
Office Worker 4% ₱25,000.00 ₱26,000.00 ₱27,000.00
Faculty 4% ₱20,000.00 ₱21,000.00 ₱22,000.00
Student 7% ₱30,000.00 ₱32100.00 ₱34200.00
Other 1% ₱5,000.00 ₱5,050.00 ₱5100.00
Total 4.2% ₱95,000.00 ₱99,900.00 ₱104,800.00

Major Competitors
Our major competitors would be Starbucks, Beyond Coffee Manila, The Coffee Bean
& Tea Leaf, Amo Yamie Crib España and Black Canyon Coffee.

Marketing Problems
 Consumer changing tastes is a unique risk that the coffee shop business carries.
 Competition in the market poses a threat to the coffee shop.
 Condition of the economy can greatly affect the profits in the coffee shop.
 There should be a proper finances to run the coffee shop.
 Choosing the correct location is very important else it can prove to be a big
constraint and can greatly affect the sales.
Promotional Strategies

 Fly
ers
will
be

distributed in the neighborhood. Ads will be placed in the target areas of the local
Grocery, and the local neighborhood newsletters. First week of the opening King
Coffee Shop gives 20% off of any drink of any size.
 Banners will be placed at the crowded places near coffee shop.
 By promoting and advertising using Digital and Social Media like Facebook and
Twitter.
 Introduction Seasonal and Holydays Promos.
 Providing Free Wi-Fi to the Costumers.

Promotional Budget
Flyers ₱10,000.00
Banners ₱20,000.00
News Paper ₱15,000.00
Others ₱15,000.00
TOTAL ₱60,000.00

V. SALES FORECAST

Start – up Cast

 First Month Rent: ₱ 20,000/- month

 Modernize Fee: ₱ 200,000/-( Impression, Calm, Comfortable ,soft mood ,
light, music, painting makes guests feel like home)
 Furniture Fee: ₱ 120,000/-( Sofa, Bar Counter, Tables, Chairs)
 Equipment Fee: ₱ 360,000/-(Wi-Fi, Espresso Machine, Blender, Coffee
Grinders. etc.)
 Supplies Fee: ₱ 40,000/-(Coffee Snack, Cups, Napkin, Fork, Spoon,
Knives .etc.)
 First Month Utensils Fee: ₱ 16,000/-(Water and Electricity.)
Advertising and Promoting Fee: ₱ 10,000/-(for first month.)
 Total Startup Costs to open: ₱ 800,000/-
Operating Cost
 ₱ 16,000/-per month for utilities (including fuel, water, electricity charges)
 Rent: ₱ 2,40,000/- each year
 Salary : ₱ 75,400/-
 Supply Cost: ₱ 40,000/-per month (including Coffee, snacks, cups, napkins
.etc)
 Advertising Cost : ₱ 60,000/-per year
 Insurance : ₱ 20,000/-per year
 An Estimate total operating cost per month: ₱ 1, 63,086/-(per month.)
Employee Pay
 Waiter & Waitress & Cashier & Coffee maker: ₱ 50/- per hour
 Manager: ₱ 15,000/- per month
 Accountant: ₱ 10,000/- per month
 Total Month Pay: ₱ 75,400/- per month

Price & Revenue

 Coffee & Smoothies & Juices: ₱ 50/- to ₱ 150/-(Depending on the Flavor)

 Cake : ₱ 60/- to ₱ 300/-(Depending on the Flavor)
 Cookies & Bakery items: ₱ 45/- to ₱ 250/-(Depending on the Flavor)
 Estimated Sell 150 cups (Coffee & Smoothies & Juices), 50 pieces of cakes
and 50 pieces of cookies & Bakery items.
 Day Revenue: 75 X 150 + 150 X 50 + 125 X 50 = ₱ 25,000/-
 Monthly Revenue: 25,000 X 30 = ₱ 750,000/-

Government Taxes

 Sales Tax: 5% X ₱ 7,50,000(Revenue)= ₱ 37,500 /-

 City Planning Tax: : 1.5% X ₱ 7,50,000(Revenue)= ₱ 11,250/-
 Total Monthly Tax Expense: ₱ 48,750/-

Monthly Profit
 Total operating cost= ₱ 163,086 /-
 Monthly Profit :
Total Revenue-Total operating cost- total Taxes
₱ 750,000 - ₱ 163,086 - ₱ 48,750 = ₱ 538,164/-

Funds Borrowed

 ₱ 800,000 /- from BDO for 1 year

 Interest rate is 12.50%
Monthly Payment = ₱ 100,000/-
Pay for the loan
 Monthly Profit – Monthly Payment= Remaining Profit
₱ 538,164 - 100,000 = ₱ 438,164 /-

VI. OPERATIONAL PLAN

a. Production

Coffee and other Beverages items brought and delivered by ABC Coffee
Factory with good quality and price. Cake and Bakery items are baked by
bakers.

b. Location
King Coffee Shop will be located on the ground floor of the commercial
building at the corner Morayta Street in Recto. The company has secured a one-
year lease of the vacant 2,500 square feet premises previously occupied by a
hair salon. The lease contract has an option of renewal for three years at a fixed
rate. This property is located in a commercial area within a walking distance from
the U-belt Universities on the corner of a major thoroughfare connecting affluent
neighborhood with the busy downtown commercial area. The clear window
displays, through which passerby will be able to see customers enjoying their
beverages, and outside electric signs will be aimed to grab the attention of the
customer traffic.

c. Legal Environment

 Free high speed Wi-Fi.

 Point of Sale System
 Cup, Lid & Straw Organizer
 Commercial Espresso Machine
 Commercial Coffee Grinders
 Drip Brewers
 Toasters, Microwave and Ovens
 Furniture (Tables, chairs, & stools)
 Small Wares (Knives, spoons, frothing spoons, etc.)
 Menu Boards
 Freezers and Fridges
 Dishwasher
 Paper (Includes paper cups, take out carriers, napkins, toilet paper,
etc.)
 Display Case
 Exterior Decoration Lighting
 Shelving/ Storage
 Blender

VII. BREAK-EVEN ANALYSIS

Monthly earnings for Break-even

 Total Revenue = ₱ 750,000/-

Total Cost= Total Revenue(₱ 750,000) + Total operating cost(₱163,086) +
total Taxes(₱48,750)+ Monthly Bank Loan Payment(₱ 100,000)= ₱ 311,836/-
 Coffee & Smoothies & Juices: ₱ 50/- to ₱ 150/-(Depending on the Flavor)
 Cake: ₱ 60/- to ₱ 300/-(Depending on the Flavor)
 Cookies & Bakery items: ₱ 45/- to ₱ 250/-(Depending on the Flavor)
 For Break- Even we need to Sell estimate 46 cups (Coffee & Smoothies &
Juices), 23 pieces of cakes and 28 pieces of cookies & Bakery items.
 Day Revenue for break-even = 75 X 46 + 150 X 23 + 125 X 28 = ₱ 10,400 /-
 Monthly Revenue for break-even= Day Revenue for break-even X 30 = ₱
312,000 /-