So you’re finally thinking of making the coffee shop of your dreams a reality. Congratulations! A reliable coffee shop is the base of a thriving community, an oasis of relaxation and engagement in your town, and what your regular customers consider their second home. To start this business venture, you must begin by drafting a coffee shop business plan.

If you're unsure where to start, this article is exactly what you need- and it's much easier than you think! This article will show you how to write a business plan to set your cafe up for success!

What is a coffee shop business plan?

A coffee shop business plan explains your business idea and how it will succeed. It indicates the set-up costs, how they will be funded, and how much do you expect to make from your coffee shop. A coffee shop business plan contains information about your competitors, target market, and pricing structure.

When it’s completed and finalized, you can show your business plan to potential investors, bankers, partners, and anybody who will help you open your coffee shop. This is the reason why creating this is crucial to kickstart your coffee shop business. Therefore, it’s worth your time and effort to get it right. Read on, and we'll teach you how.

Begin With A Vision

Since a business plan is the first step in making your coffee shop dream a reality, it's just right to take your time to dream by establishing a clear vision for your coffee shop. What will it look like? What are your interior design themes? Where will it be located? What will be the things on the menu? Who will be your regular customers? You can even be as detailed as thinking about how your customers will navigate your cafe, from when they walk in to when they swipe their card to check out.

Get inspiration from cafes you love, your favorite films or books, coffee shop photos you’ve seen online, and your travels. Start by writing it down or creating a mood board by posting pictures on a wall to organize your inspiration. As you work on your business plan, it will be motivating to glance at your vision and be reminded of the finish line.

Look At Other Business Plans

Studying business plan examples of cafes, coffee shops, and quick-serve restaurants is helpful. Note how they planned their business to ensure that your coffee shop is on the right track.

Real examples from fellow small business owners are also valuable subjects for reflection. Look for current or former coffee shop owners or franchise owners in your local neighborhood and ask them about their best practices and what they would have done differently. Even if local business owners are your competition, they are usually willing to share their experiences.

Your Business Plan Template

Don’t get too overwhelmed. Every business plan starts with a blank page. Thankfully, thousands of business plan templates are available online to help you get started. We’ve outlined the primary sections your business plan must have below and tips on how to craft each one. 

Section 1: The Executive Summary

The executive summary is the first thing your readers will lay their eyes on when they open your business plan. This section provides a detailed and profound overview of the rest of your business plan’s contents. A well-written executive summary will give you a great head start, so be sure to glance at examples to get a feel for how the summary is drafted and how the information is presented.

Just as you consider the customers who will visit your coffee shop, think about who will read your business plan and curate the opening paragraphs for this specific audience. As you prepare to open your coffee shop, your executive summary is your most important marketing tool.

Section 2: How will your business succeed?

“What problem does your cafe solve, and how will your cafe be the solution?” These are the questions this section will answer. Perhaps there are no coffee shops for students to study in your location. Or maybe a neighborhood restaurant just closed down.

This summary delivers a short industry overview, mentions where your coffee shop will be located, and explains how it will thrive. Will your shop specialize in quick coffee and grubs for a busy corporate neighborhood? Will you sell a delicacy famous in the area to cater to tourists? Make sure your business plan's readers understand your vision of how your coffee shop will become a success.

 Section 3: Study your competition

This section of your business plan is usually the part where you analyze your competition. It describes how your cafe will compete with similar businesses in the food and beverage industry. This includes coffee giants like Starbucks and big fast-food chains like McDonald’s. Here, you need also to mention nearby restaurants, coffee shops, and even hubs like movie theaters since these are all your competition. This is the part where you research by visiting your competitors and taking notes of who their customers are, what they sell, and the price range.

By studying the pricing strategy of similar businesses, you’ll know how much to charge for your products to remain competitive in your market. 

Small cafes have small operating incomes due to the high overhead cost. However, your cafe has a higher chance of success if you invest time and effort to analyze your competition thoroughly. This section of your business plan will make your goal of opening a coffee shop or cozy cafe seem more realistic and sustainable.

Section 4: Analyze your target market

Your coffee shop needs a steady flow of customers to succeed. However, attracting foot traffic is always one of the first challenges of a budding coffee shop business. In your business plan, your future customers are called your market, the number of potential customers is your market size and how you’ll reach them- that’s your coffee shop marketing plan. 

In your coffee shop business plan, you’ll then get your market and divide it further into market segments. For example, if your coffee shop is close to an airport, a market segment can be inbound and outbound travelers who need a quick but high-quality Americano to prep them for the journey. Or taking them or picking them up and waiting at the airport as they swig espresso. 

By segregating your market into segments, you can laser in on how to reach each type of customer. You will outline your marketing plan or how you will advertise to your market in your business plan.

Section 5: What Will You Sell And How Will You Sell It?

Now it’s time to create a pricing strategy for your coffee shop! Be smart when creating your menu and prices. You’ll buy ingredients in bulk, so make sure you use the same ingredients in many different dishes.

Get creative. If you charge less for a scone and coffee combination than you do for these items alone, this will encourage customers to buy more and help your business cut down on food waste. Along the way, you’ll most possibly make changes to your menu. But for a business plan, you’ll need to know how much you will charge for the coffee or dish you plan to sell. This will be determined by breaking down the ingredients required to make each item.

 Section 6: Create a marketing plan

Are you planning to advertise your specials every day on social media? Will you partner with another local business for special promotions? Aside from the marketing side, this is also an excellent section to explain your plans for customer retention. Will you offer loyalty programs? With a coffee shop point-of-sale system, it’s easier than ever to give point rewards—and keep your regular customers. 

Section 7: Ownership structure

Explain the expertise you and your partners offer and why you’re the right person to go into business.

 Section 8: Your operations plan

This is the section where you’ll include information about your employees, equipment, facilities, and supplies. Consider the direct rent costs, your employees’ wages, ingredients like coffee beans, and your automation tools. A POS system is a single tool with which you can get several business tasks. It lets your customers check out, your employees' clock in, and it also manages the inventory of your coffee shop.

Estimate how often you’ll need to reorder ingredients like oil, eggs, and flour. Carefully considering your operating costs during the business planning stage will help you in the long run. Save money where you can, and don’t thrift where it’s important, like your espresso machine.

Section 9: Financial planning 

This is usually the most time-consuming and important section of your business plan, especially for lenders and investors. This part should include an overview of your start-up costs, an income statement, projected cash flow, a balance sheet and a break-even analysis.

Startup costs

We've all heard the saying, "it takes money to make money." This is because businesses usually need initial funding to kickstart. The main reason you might be making a business plan in the first place is to secure funding, like a business loan. A business plan lays out how your coffee shop will be funded and how it will cover your business start-up costs.

Income statement

The income statement is an easy-to-digest summary of your expenses such as your operating costs and your projected sales volume to prove that your cafe business will make profit. For this, you can explore some examples of income statements available online.

Looking ahead to the future

A major part of creating a coffee shop business plan is figuring out the projected cash flow you will earn over time. 

Combine those numbers with your personal experience as a customer to project how much you will make in the future. Consider seasonal contrasts, like a spike in business around the holidays in a vibrant shopping center or a lull in business during the summer vacation if your business caters to students.

Keeping the restaurant dream alive

Though creating a coffee shop business plan may seem complicated and intimidating at first, remember that it’s a crucial step you should take before starting your business. A well-crafted business plan proves to others that your cafe can indeed be successful.