How to Write a Successful Coffee Shop Business Plan

It is no secret that Indians love a cup of freshly brewed tea or coffee any time of the day! In fact, most Indians cannot start their day without a hot cup of tea/coffee! So, with the recent surge in the eating out culture, thanks to western influence, the café business has seen a massive growth in the past decade or so. Amongst the many eating out joints, youngsters specifically gravitate towards cafes as a place for hanging out with friends over some delicious drinks and pocket friendly snacks, some quiet ‘me time’or quality work time. It would be apt to say that cafes have become the go to place for today’s young generation.
From a business point of view, according to recent surveys, the coffee shop business in India is expected to grow at a CAGR of over 11% by 2021. Hence, considering the current boom, opening a coffee shop can prove to be a viable business venture, if done right!
Like with every business, before commencing operations, you need to have a systematic business plan in place to start with.

Basic Ways to Start a Coffee Shop

Starting a coffee shop in India can be an existing venture, given the country’s growing coffee culture. There are three main approaches to entering the business. 

• Purchase a Franchise: This option involves partnering with established coffee brands in India like Cafe Coffee Day or Starbucks. You will benefit from a proven business model and brand recognition. The franchisor typically handles major decisions regarding menu, location, and ambiance. While this approach offers stability, it may limit your creative control and require a significant upfront investment. 

• Purchase an Existing Business: Buying an operational coffee shop can be a smart entry into the market. You will inherit an established customer base and operational structure. However, it is crucial to thoroughly assess the business’s financial health and reputation before purchasing. You may need to invest in renovations or menu updates to align the shop with your vision and current market trends. 

• Start a Completely New Business: This route offers the most freedom but also presents the biggest challenge. You will have full control over every aspect of your coffee shop, from menu to decor. It requires extensive planning, market research, and hands-on involvement. While demanding, this approach can be incredibly rewarding if you succeed in creating a unique and popular coffee destination. 

Let us draw out a step by step business strategy:

Step 1: Decide the type of business:

You will first need to zero in on the kind of café business you want to start:

1. Purchase a franchise of an existing brand
2. Buying out an already existing venture and making amendments to it
3. Starting a café from scratch

Step 2: Market Research

Understand the local cafe market by exploring existing cafes and identifying what works and where the gap exists. Study competitors’ strengths, like menu variety and customer service, to find where you can stand out. Ask yourself questions like, “Is cafe business profitable in India?” to understand the existing market base. 

Keep an eye on emerging trends, such as the growing demand for health-focused options like vegan and organic. Catering to these trends can help you attract a niche audience and differentiate your business. Regularly update your market research to stay informed about new business opportunities and shifts in customer preferences. Continuous learning about your market ensures your coffee shop remains relevant and appealing. 

Step 3: Find location:

after finalising the type of business, you will need to lock in an apt location for your café. The location can potentially be the deciding factor between success and failure. So, you will need to consider the following factors while doing your research on a place and its demographics:

1. Visibility – ensure the location is in a busy market/shopping area and experiences high footfall throughout the day.
2. Accessibility – along with being visible, the location should also be easily accessible to the public, like an area with ample parking space.
3. Target customers – you will also need to decide which demography are you looking to target and accordingly choose a location that is apt for them.
4. Affordability – you will need to consider the rent as well before finalising the location. Check the lease fluctuation patterns of the past few years.

Step 4: Hire employees:

Hiring a skilled set of people is half the battle won! It is of prime importance to employee the right people for the right position as this ensures excellent customer service, which helps foster customer loyalty. You will need to hire:

1. Head chefs and assistant chefs
2. Baristas
3. Manager
4. Accountant/cashier
5. Servers
6. Cleaners

Step 5: Decide on the Menu

Design a menu that features a broad range of coffee options, catering to diverse tastes. It should have traditional brews to unique specialties. Complement drinks with food items like sandwiches, baked goods, and snacks to boost sales and enhance customer experience. Include quick-to-make dishes like wraps and burgers that add variety without complicating your kitchen operations. Regularly refresh the menu with seasonal items or limited-time offers to keep it engaging. Experiment with combo deals to encourage customers to try more, adding value to your coffee shop.

Step 6: Equipment & technology:

in today’s times, you can seldom function without efficient technology. So, you will need to invest in a good coffee shop POS system that offers fast billing, stock and inventory management, real-time reporting as well as integrates customised offers like meal combos etc.
Along with technology, investing in fine quality equipment like coffee machines, ovens and ranges, microwave, refrigerator, freezer, mixer etc is equally important.

Step 7: Designing:

one aspect of the café business that cannot be denied is that in the beginning, arguably, the only way to attract customers to your coffee shop is through its outlook before the other aspects like food quality and customer service step in. So, it is a must to invest in fancy, yet comfortable furniture, attractive crockery and other aspects of the café’s interior design.

Step 8: Operations and Management

A well-organised operations plan is vital for running a successful coffee shop. Set up clear processes for food preparation, order handling, and inventory management to maintain consistency and quality. Use tools like POS systems to streamline operations and reduce errors. Define staff roles clearly, ensuring everyone knows their responsibilities, from baristas to kitchen staff. Regular training on customer survival and hygiene keeps standards high and improves overall customer satisfaction. Continuously assess and refine your management practices to boost efficiency and create a positive customer experience. 

Step 9: Marketing:

with new cafes opening almost every other day, especially in urban areas, the café business is currently experiencing cut throat competition. Therefore, the only way to make a mark in this business right away is an aggressive marketing strategy! From digital marketing platforms like building an attractive website and advertising across various social media platforms to physical marketing tricks like circulating pamphlets, print media advertising and offering unbeatable launch discounts, you will need to make sure you fire from all cylinders as far as marketing is concerned.

Step 10: Financing:

the most vital step in your business strategy will be obtaining the required funds for investment from external sources. Find the answer to how much investment is required to open a cafe before proceeding with your plan. Food business being one of the most common entrepreneurial ventures undertaken in India, it is relatively easy to acquire funds for the same. You may need financial aid for various short term and long term business requirements like:

1. Purchase of property
2. Building or renovation of the café
3. Purchase of equipment’s, furniture, and fixtures
4. Working capital needs

Some of the sources for borrowing funds for your coffee shops would be banks, secured loans, SBA loans, credit loans, equipment financing or NBFCs, that includes digital NBFCs like Lendingkart that have been steadily picking pace in recent times due to the many benefits they offer like:

1. Quick turnaround and disbursal time
2. Fast loan processing
3. Low rate of interest
4. Zero hidden charges
5. Free from bureaucratic red tape
6. Effective digital interface ensures minimum human interference, thus speeding up the whole process.
7. Use of analytical technology and tools that evaluate a huge database from multiple data sources to assess the creditworthiness of businesses fast and accurately.
8. Straightforward application process

Summary of the loan charges at Lendingkart:

Customised rate of interest	Starting from 1.25% per month
Charges for pre-closure of loan	Pre-closure charges are applicable as per the lender’s policy
Instalments	Monthly or fort nightly
Loan Tenure offered	Up to three years
Amount of loan offered	Rs 50000 to Rs 2 crore

Eligibility Criteria:

1. The business should not come under the blacklist of SBA finance
2. Café location should not fall under negative location zone
3. NGOs, trusts and charitable institutions are not eligible for business loans

Documents required:

1. Business registration proof in the form of any one of the below:
   • Trade License
   • TIN
   • VAT Registration
   • Gumastadhara
   • Business Registration Certificate
   • GST Filing
2. Aadhar card
3. PAN card
4. Bank statements of last 12 months
5. Company PAN card copy
6. Copy of Partnership deed, if applicable

Application Procedure:

At Lendingkart, we have a hassle free three step application process:

1. Submit your application by filling up the application form with accurate personal, professional and required loan details on our official website.
2. Upload all the required documents for verification purpose.
3. After due verification, your loan will be sanctioned and disbursed to your bank account in three working days.

Executive Summary

The modern coffee industry’s rapid growth has transformed coffee shops from mere providers of beverages into quintessential lifestyle destinations. The vision for this venture is to establish more than just a place to get a quality drink. Positioned in a strategic urban location, the coffee shop can be geared towards maximising accessibility and capturing significant foot traffic. Financially, estimates show a promising trajectory, with expectations to break even within the first year and achieve profitability by the second if done correctly.
Read on to discover more on how to start a cafe business.

Business Description

A coffee shop is where people buy and drink coffee, tea, and sometimes eat snacks like pastries. It’s not just about the drinks but also the comfortable setting where friends meet to chat or where some come to work or read. Each coffee shop has its own special look and feel. Some even focus on selling coffee that’s good for the environment or directly from farmers. Decorations, music, and how the place is set up make each coffee shop different from the next.

Management Profile

In coffee shops, what brews behind the counter is just as critical as what’s brewing in the pot. The management team are the key players that make the magic happen:

• Founder’s Story: Introduce the leaders. What’s their connection to coffee, and why did they start this business?
• Roles & Responsibilities: Who does what? Highlight the expertise each brings to the table.
• Leadership Philosophy: Emphasise the team’s commitment to excellent customer service and a positive work culture.
• Training & Development: Describe plans for keeping the team updated with skills, from coffee brewing to customer handling.
• Team Growth Strategy: How will you expand your team as business grows? Address strategies for attracting and retaining talent.
• Advisors & Partnerships: Mention any key connections, like bean suppliers or industry experts, who offer guidance.
• Success Stories: Share your team’s notable achievements or experiences in the coffee world.

Market Analysis

Analyse the coffee shop market in your chosen Indian location. Consider factors like local coffee consumption habits, disposable income levels, and a mix of traditional chai drinkers and modern coffee enthusiasts. Identify your target demographic, whether it is young professionals, students or families. Access the competition, including both international chains and local cafes, to find your unique selling proposition. 

Information about the Coffee Industry and Your Competition

If you are wondering how to start cafe business in India? Here is some information. Coffee is super popular. A lot of people drink it every day, not just in one country but all over the world. Some people like plain coffee, some like it with flavours and others like cold versions like iced coffee or frappuccinos. Coffee shops make a lot of money, and that’s why there are so many of them around.

Who Sells Coffee?

• There are big names that almost everyone knows who do coffee business in India.
• But there are also smaller coffee shops in towns and cities, often run by local people. Some folks prefer these because they feel more special and unique.
• Plus, nowadays, you can even get coffee from places that aren’t coffee shops, like fast-food restaurants and gas stations.

How Do Coffee Shops Compete?

• Big brands use their famous names and special deals to get customers.
• Small coffee shops might offer unique flavours, cosy settings, or events like music nights to stand out.
• Price, taste, and how fast you get your coffee can also make a big difference in where people choose to go.

Marketing and Publicity

Develop a marketing strategy that resonates with the audience for your cafe business plan India. Utilise social media platforms popular in India, such as Instagram and WhatsApp to build brand awareness. Consider partnering with food bloggers or influencers for promotions. Explore opportunities to participate in local food festivals or cultural events to increase visibility. 

Sample Menu

Create a menu that balances international coffee trends with local flavours. Include classic espresso-based drinks alongside innovative offerings like masala cold brew or cardamom latter. Do not forget to include non-coffee options like chai and local snacks to cater to a wider audience. Clearly outline your sourcing strategy, emphasising the quality of your coffee beans and any unique preparation methods. 

Branded Graphics

Develop a brand identity that reflects both modern coffee culture and Indian aesthetics. Your logo, colour scheme, and overall design should appeal to your target demographic while standing out in the local market. Ensure your branding is consistently applied across all touchpoints, from your shop’s interior to your social media presence. 

Cash Flow Statement

Simply put, the Cash Flow Statement is a record that shows how money moves in and out of your coffee shop over a period of time. Think of it as tracking the journey: from the moment you spend on buying beans to when you receive cash from a customer buying their morning latte. It is also an important part of your coffee shop business plan.

Why is it Important for a Coffee Shop?

Cash flow statement should be a part of the cafeteria business plan because:

• See Where Money Goes: You can pinpoint costs, like how much you’re spending on supplies, wages for staff, or rent for the shop’s location.
• Track Sales Revenue: By checking how much money comes in from selling coffee and snacks, you can gauge which products are most popular and profitable.
• Plan for the Future: Knowing your cash flow helps you make decisions. For example, can you afford to introduce a new type of coffee or renovate your shop?

Key Sections in the Statement:

• Operating Activities: This section reveals money earned from daily business tasks, like selling coffee.
• Investing Activities: Here, you’ll see cash spent or received from things like buying new machines or selling old furniture.
• Financing Activities: This covers money matters related to your business’s finances, like loans taken out to start the shop or repayments made to lenders.

Reading the Numbers:

• Positive Cash Flow: More money coming in than going out. It’s a sign that the coffee shop is doing well and a chance to invest in improvements or save for future needs.
• Negative Cash Flow: More money going out than coming in. This might happen if you’ve recently made a big purchase or if sales are slow. It’s a signal to check where expenses can be reduced or sales can be boosted.

Income Statement or P&L

Imagine you have a big jar. Every time someone buys coffee, you put money in. This is your sales or revenue. But running a shop isn’t free. You pay for coffee beans, milk, and the place itself. Each time you spend, you take money out. These are your expenses. At the end, you see what’s left. If there’s a lot, yay! You made a profit. If not, it’s a loss.
So, the Income Statement just shows:

• Money in (sales)
• Money out (expenses)
• What’s left (profit or loss)

It’s important because it tells you if your shop is making money or if you need to make some changes. Keep an eye on it to keep your coffee brewing smoothly!

Balance Sheet

A coffee business plan should have proper financial management as one of its key elements:

• A balance sheet is like a snapshot of a business’s financial health at a point in time. For a coffee shop, it will show what the shop owns and what it owes.
• On one side, you’ll see ‘Assets.’ These are things the coffee shop owns. This includes cash in the register, supplies (like coffee beans and pastries), equipment (like coffee machines and furniture), and maybe even the building if they own it.
• On the other side, you’ll see ‘Liabilities’ and ‘Owner’s Equity.’ Liabilities are what the coffee shop owes. This might be loans taken to start the business or money owed to suppliers. Owner’s Equity, on the other hand, is the owner’s share of the business. If you subtract liabilities from assets, you get this amount.
• In simple terms, the balance sheet ensures that the coffee shop’s assets equal the sum of its liabilities and owner’s equity. It’s a way to see if the business is on solid financial ground.

Planning for Growth 

Outline potential expansion strategies suitable for the Indian market. This could include opening multiple locations in different neighbourhoods or cities. You can develop a coffee roasting business, or create a line of packaged coffee products for retail sale. Consider partnerships with local businesses or expansion into corporate catering services. Demonstrate how your initial business model can be scaled to support these growth plans. 

How to Write a Coffee Shop Business Plan (Description, Examples, Proposals)

This is how you get started with writing a coffee shop business plan for any cafe business ideas you get:
Description:

• Overview: Start by describing what your coffee shop is about. Is it a cosy place for readers? Or a bustling spot for busy folks?
• Location & Design: Where’s your shop? How does it look? If it’s near a school, maybe you’ll get lots of students!
• What You Sell: Of course, you’ll have coffee. But what about cookies, sandwiches, or even smoothies?
• Who Are Your Customers: Think about who’ll come to your shop. Busy office people? Or maybe families?

Proposals (if you’re asking for money):

• How Much Money: Clearly say how much money you need.
• What’s It For: Explain why you need the money. Maybe for new chairs or a fancy coffee machine.
• What They Get: If someone gives you money, what do they get? A share in your shop? Or maybe you’ll pay them back with interest.

Example: 
Here is the business plan for coffee shop example that you can use to understand better.
Summary:
Located on Main Street near the city library and tech hub, aims to be the go-to spot for professionals, students, and locals. We offer a mix of traditional and unique coffee drinks, light snacks, and comfortable ambiance, complete with Wi-Fi and a reading book.
Offerings:
Classic espressos, innovative cold brews, pastries, and sandwiches with health-conscious options.
Target:
Students, professionals, and city residents.
Marketing:
Social media engagement, loyalty programs, local business partnerships, and weekly events like book clubs or open mics.
Partnerships:
Seeking collaborations for local ingredient supply and event organisation to enrich community involvement. A successful coffee shop business plan will have all these elements in it.

Conclusion

Starting a coffee shop in India presents an existing opportunity in a growing market. Success requires a deep understanding of local tastes combined with international coffee expertise. While building a brand takes time, strategic marketing and consistent quality can accelerate growth. The Indian market, with its blend of traditional and modern beverage preferences, offers unique possibilities for innovative coffee businesses. As you develop your plan, consider exploring financing options from both traditional banks and alternative lenders like Lendingkart, which specialises in small business loans. 

Remember, adaptability is key in the dynamic Indian market- stay responsive to customer feedback and evolving trends to ensure long-term success in your coffee shop venture. 

Apply for Loan Now

Read More:

Business Plan – How to Write a New Business Plan & Elements, Types

Restaurant Business Plan

Bakery Business Plan

Hotel Business Plan

Transport Business Plan FAQs:

1. Is there a way to expedite the loan approval process?

We, at Lendingkart already have a faster loan approval process than most lenders. However, you can still expedite the process by submitting accurate details and documents from your end while filling up the application form on our website.

2. How does Lendingkart manage to provide loans at a lower rate of interest compared to others?

Since Lendingkart is an online NBFC, the loan application process in completely digitised, which ensures least manual loan processing cost. This makes it possible to offer loans at a lower rate of interest compared to our competitors in the market.

3. Is there any collateral required for business loans?

Since all business loans at Lendingkart are unsecured, we do not demand any collaterals against loans.

4. Why is it advisable to pay loan instalments bi weekly?

As a rule of thumb, the faster you repay your loans, the faster you can renew your loans, thus ensuring revolving credit. This is especially beneficial if you are using a loan for working capital optimisation.

5. How much loan can we get for a coffee shop business at Lendingkart?

We offer loans ranging from Rs 50000 up to Rs 2 crore to all eligible Small and Medium Enterprises.

6. What is the difference between the business loan processing time of Lendingkart compared to other lenders?

At Lendingkart, we process business loans in as little as three days compared to most of our competitors who take about 8 to 10 days for the same.

7. What are the key components of identifying the best location for the
coffee-shop?

Before, opening a coffee-shop, the most vital thing to consider is the
location. The applicant needs to take the following into consideration:
• Visibility of the coffee-shop to ensure footfall, should be spotted easily
and must be located on the main street
• Accessibility with ample parking space
• Target audience according to the desired customer base
• Affordable Rent Rates/possession of the land

8. What is an efficient Coffee-shop POS system which needs to be looked
into?

It is a wise decision to invest in the right technology and a great POS system
with an effective output comprises quick billing procedure, management of
stock and inventory, real time reporting, monitoring, supervision and control and
controlled integration of all services of the coffee-shop.

9. What kind of staff is required at the Coffee Shop?

Coffee-shop business must have:
• Baristas
• Waiters and Servers
• Managers
• Chef (for snacking and little meals)
• Cleaning Staff
• Administrative and Operational staff

10. What are the best marketing technique used to highlight the Coffee
shop?

To make a coffee shop famous, the best marketing technique is to provide
great customer service, a sumptuous menu and a relaxing ambience for the
public to come and enjoy their cuppa coffee. Besides that, rave reviews,
overwhelming word of mouth, physical marketing like ads, posters, slogans,
marketing techniques on social media, discounts and offers, making it a home-
like-atmosphere are a few techniques that help in marketing the coffee-shop.

11. What is an approximate cost of opening up a coffee shop in India?

Depending on the different kinds of Coffee-shops that one can open, the
cost varies:
• Coffee shop with Seating arrangement – Rs. 5-30 Lakhs
• Coffee shop with seating and take-away/drive-thru – Rs. 10-30 Lakhs
• Kiosks of Coffee shops – Rs. 5-10 Lakhs
• Mobile Coffee stalls – Rs. 3-6 Lakhs

12. What are the different kinds of Licenses required to open a coffee-
shop?

• Health Trade License by the Municipal Corporation
• License for eating out by the Police headquarters
• Insurance
• Fire safety certificate
• License for playing songs/videos
• Trademark Registration
• GST Registration
• Shop and establishment Act
• FSSAI central license
• Basic license
• State license
• Company Registration