Caffeine Café

Alexandra Dizes, Natalie Massey, Julia Means, Narissa Moriarty, Berlin Rodriguez MGMT 1101 – Business Plan Project

April 23, 2019

Executive Summary

The Caffeine Café is a reinvention of a food truck. Instead of food, it will include a small

variety of international coffees (Cuban, Columbian, Americano, Espresso, Regular, etc.),

international teas (Oolong, Matcha, Spanish, English, Chai, etc.) and bakery products (muffins,

churros, scones, etc.). The Caffeine Cafe intends to be located on Commonwealth Avenue near

entrances to Boston University academic buildings. As the business grows, it can include more

varieties of international coffee, bakery and fruit products, and even other caffeine-containing

drinks. The competitive advantage of The Caffeine Café is the convenience of its location to our

customers; students can grab a quick coffee and a bite to eat on their way to class, as well as the

variety of international coffees offered. The Corporate Social Responsibility (CSR) will include

biodegradable cups, lids, napkins etc.

Marketing strategies will include handouts of flyers and business cards to locals and

college students; flyers inside Boston University buildings upon permission, and

creation/promotion of the company through many different strategies such as coupon deals and

sampling. Our primary segmentation is demographic; we target people of younger age and of

cultural diversity in the nearby area. The truck will be wrapped, painted and decorated to

resemble an atlas or a world map to emphasize our products’ cultural and global diversity, also

drawing in the attention of potential customers.

All items will be made to order within the truck. The international coffees and bakery

products will be bought in bulk from multiple online wholesalers. Shifts will be booked and

purchased ahead monthly, and hours of operation will estimate from earliest 7:00 am to latest

5:00 pm on weekdays to start. The Caffeine Café can quickly assess which times of the day

produce the most customers and book those shifts accordingly.

Investments to ensure the success of The Caffeine Café will include each of the five

members contributing $15,000 each for a total of $75,000 to be used in the purchasing of

everything needed to start up the business. Things to be purchased will include the truck itself,

decoration of the truck, gasoline, coffee, cups, lids, napkins, select bakery products, and the costs

of booking the shifts to sell at certain times on certain days. Our projected Net Sales is $10,000.

We predict our Cost of Goods Sold will be $22,534.90 and Net Loss will be $40,331.34. As a

team, we believe that the first year will be the most difficult to make up for all the money spent

on startup and that it will take some time before some significant profits will show.

SWOT Analysis

Strengths

1. Prime Spot for College Students

2. International Products

3. Environmentally Safe Products

4. Enterprising company

Weakness

1. Limited Funds

2. Slow Sales in the Startup Process

3. School Breaks

4. Prices on Recycled Products

Opportunity

1. Raising Food Truck Market

2. Advertising

3. Collaborate with Local Bakeries

4. Demand for coffee

Threats

1. Competitor Food Trucks

2. Higher Prices Than the Competition

3. Rising Outsourcing Prices

4. Not a Third Space

Strengths:

The Caffeine Café is a modern food truck service that is located on Commonwealth Ave

in Boston, Massachusetts. The primary source of its sales will most likely come from the college

students and staff in the area due to the truck being located outside of Boston University and

neighboring colleges. This company's biggest strength is that they sell international based coffees

and teas, which will give the customers more of a variety to choose from also allowing them to

broaden their horizons trying something new. Because of the uprising trend in specialty coffee,

we believe that having a wide variety of luxury coffees with influence consumers to try our

product ( Sethi, 2017). Our company also uses environmentally safe products such as

biodegradable cups, lids, and napkins which can be a huge selling point in an environment where

recycling is becoming very important. This opportunity is great for the company attracting

customers who want to reduce their carbon footprint. This company statistically should keep

moving forward because companies utilizing food trucks have been a growing source of interest

for the food and restaurant industry (Terenzio, 2018). Food truck revenues have increased by

12.4% over the last 5 years making this a great investment (Holmes, 2018). As an enterprising

business, our company will always be striving for greatness, weather it is through the interaction

with customers or our staff learning more about the products we distribute and being able to use

the resources at hand to make improvements. We as a company will keep moving forward to

make stopping at the Caffeine Café an easy and enjoyable experience.

Weaknesses:

Some weaknesses of starting a company include, having limited funds to start the

business, they will more likely run into issues with purchasing items and finding products that

are within their budget but are still great quality for the customers. It is estimated that for all of a

food companies purchases it will cost around 25-33% (Terenzio, 2018). The cost to have a

running food truck is 50,000 dollars, with the small contribution we all are making a food truck

is something possible. Though using biodegradable products is good for the earth and in some

cases attracts customers, these products are more expensive. It means our company is spending

more money on products rather than using regular paper product, this is something we have to

budget for. When being a new company it is important to keep track of the cost of products in

comparison to the money made to make sure the company continues to be successful. Also

starting off, it is important to get the name of the company out there in order to increase sales and

the popularity of our products. Location can also contribute to the success of a company, where

there are a lot of students located in our area, business could become slow with the school

breaks.

Opportunities:

Starting a company means there are many different opportunities leading to the success

of our company. With the rising food truck market and fast-paced life of the city, grabbing coffee

from a truck can become very appealing to students on their way to class or business people on

their way to work. Once we begin to grow out business we can also, with our location we can

utilize the local bakeries, buying their products which will make their company money as we

could give them some of the profits from the baked goods, also while advertising their company.

Along with this we would be advertising other companies products, there are also many ways we

can advertise our own company. Some ways of advertisement include, business cards, flyers,

emails, bus stop ads, and so many more. A major opportunity for our company is the rising

demand for coffee. In the U.S. the rates for people are purchasing coffee are higher than ever. In

an article published by Fortune it states that the demand for coffee beans is poised to hit a record

this year as people around the world are consuming more of the beverage, and Americans are

leading the way (Budds, D. 2018). Having a coffee company will hopefully skyrocket with the

expectations of the rising coffee demand.

Threats:

Some threats include, the competition with other local coffee shops and cafes. Competing

for more sales may take a toll on the company during the startup process, which is where their

advertising strategies will come into play. The advertisements are going to need to catch the eyes

of the local people so the company’s prospective sales are met to keep the company running.

Since this company is not a chain the food and drinks may be more expensive than a coffee and

breakfast treat from other well-known companies such as Starbucks. As of now, Starbucks and

Pavement Coffeehouse are our biggest competitors because they have some items that could be

considered luxury. With these competitors comes the change in space; places like starbucks and

pavement coffeehouse have places for customers to sit which we will not have that. Sit down

spaces like that are referred to as a third space. This mean that there is a place where the social

surroundings is separate from the home and the workplace (Starbucks Coffee Company, 2019).

Also, with the quality of international coffees and teas outsourcing for products could also

become expensive, leading to increased prices as well.

Target Market

Benefit Segmentation: Currently, there are only 6 other food trucks that rotate the area,

usually only filling one time slot a week. We plan to differ from these markets because they are

mostly food-based where we are a drink based company with some food options, also we plan to

be in service 3- 5 days a week (City of Boston food trucks schedule. 2019).

Demographic Segmentation: Because of our convenient location near Boston University-

west campus, we expect to have customers ranging from mostly college students to business

professionals in the area. Although Boston University’s student body is mostly white (38.6.%),

they have a large percentage of international students (22.1%), as well as Asian American (18%),

Hispanic American (11.9%), black/ African American (6.9%) and other (4.5%) (BU Academic

Profile). Our international drink options would draw in these customers. Our hope is that our

wide variety of international coffee can make the 22.1% of students feel as though they are at

home but also allow the 77.9% to feel like they are getting a taste of a different culture. Because

there is no major research into whether males and females drink more coffee, our other main

focus is to people of the age. We are marketing to a young adult audience because they are

typically interested in up and coming trends that small businesses like ours adhere to.

Psychographic segmentation: The psychographic profile we are marketing to is the on the

go, fast-paced lifestyles. This makes the most sense for us because the truck will be in a

convenient location to grab and go beverages and quick pastries. Our customers will benefit

from our business because they will be caffeinated and energized to keep their busy day going.

For marketing strategies, we plan to do we put up flyers at local T stop and elevators of BU

dorms- places where our prospective customers have time to quickly read the flyer and be

intrigued by what we are selling.

Pricing and Positioning

The pricing strategy that the Caffeine Café will be using is the high-low pricing which is

setting our prices at a higher point than the everyday prices while offering certain sales where

prices are lower than the competitors. Having sales is important because it makes the customer

believe that they are saving money, though the price may be higher. Our prices are about

seventy-five cents more than the average of our competitor’s, so it allows us to establish our

brand as a higher-end product while allowing us to use promotions. We will have offers such as

coupons and buy one get one free deal at certain points throughout the year to attract customers.

These promotions will attract our main target market, that being Boston University Students

because it is where many college students live and they will be drawn to the discounts that we

will offer.

The prices of our products will be considered more luxury pricing because we are slightly

higher in cost than the average food truck. The top two competitors would be Pavement

Coffeehouse and Starbucks, which are both on Boston University’s campus near our food truck

location. The espresso at Pavement is three dollars and at Starbucks, it is two forty-five, but

ours is three seventy-five (Starbucks 2019) (Pavement 2019). Our prices are about seventy-five

cents more than the competitors for each type of drink and bakery item because we have a

unique international aspect that makes us different than the other coffee places.

Promotions Strategy

Month Promotion

August Sampling

September Sampling

October Email Promotions

November Unique Promotion Strategy

December Viral Marketing

January Self Advertising

February Self Advertising

March Viral Marketing

April Unique Promotion Strategy

May Email Promotions

June Sampling

July Self Advertising

We will start off promoting our business by giving out samples of our product to people

who pass by our area to allow potential customers to see if they like what we serve. Then we will

incorporate other strategies throughout the months as we get noticed more and will move into

email promotions and self advertising, this will encourage customers to buy with the idea that

they will save money while receiving the best quality. For self advertising, we can stand on the

streets near where our cart is located and hand out our business cards that we have purchased

from VistaPrint. By using Infousa, we can email promotions to certain email addresses in our

specific area and demographic that we have purchased. Once the Caffeine Cafe has been open

for several months and have built consistent customer relationships, we can use viral marketing

to allow the customers to advertise for us and attract their friends. Positive advertisement by

customers is important when building upon customer relationships. We can also have different

unique displays on things like bus stops or different street areas around our food truck area to

make our company stand out and catch the eye of potential customers.

Distribution Plan

The Caffeine Café is a specialty store, selling a wide variety of different international

coffees. This type of store would categorize as a retailer. This means that the Caffeine Café is a

business that buys from specific manufacturers or wholesalers and markets the products to the

public. We are able to save money through buying our food truck off ebay (Appendix A). Also

many of our products will be bought from a wholesaler, allowing us to buy in bulk which will

not only save us money but ensures that we will have enough supplies. The coffee will also be

bought through wholesaler companies that offers a wide variety of different international

coffees. Through this customer will then be able to buy our products directly from our food

truck.

Our food truck will be located on Commonwealth Ave. by Boston University, a spot that

will hopefully increase our sales and popularity due to the large student population and their urge

to always try something new. With owning a food truck comes the cost of renting a space in the

city for our truck to sell its products. Renting a spot in the city will cost around $750.00.

Depending on the amount of supplies we order, and the popularity of our business will

determine how often we will have to order more supplies. This would be the job of inventory

management. For a year’s worth of supplies we will spend approximately $7,581.62 on

materials. Where our food truck will have to purchase perishable and nonperishable items, we

plan to buy the perishable items weekly to ensure freshness and then purchasing non perishable

items monthly. We will also check supply levels biweekly to ensure that we will not run out of

non perishable items such as coffee cups.

When running a food truck, it is important to have somewhere to not only cook and store

the food but to also clean out the truck and store it overnight. The Commonwealth Kitchen in

Dorchester is a commissary that offers many different options for small businesses such as food

trucks. Also, through the commissary we will be able to store the truck overnight, the lot holding

the truck allows for power to be supplied to the truck at all times, allowing us to keep all

products on the truck and fresh. Everyday functions within the small space of a food truck can

lead to many messes, but through the commissary there is also a place for use to hose off and

cleanout the truck at the end of each day.

Through the Commonwealth Kitchen commissary, we will be able to store all our

products ordered, which will save us space on the truck and limit the number of places where we

store things. With having a food truck, it is important to prep and cook foods prior to sending the

truck out each day. The commissary has kitchen space that allows for all companies to prep their

foods, offering all appliances that may be needed. Though our machines for making coffee will

be on the truck and convenient for the amount of coffee we may have to make throughout the

day, the kitchen within the commissary will come in use when prepping and storing the few food

options we have to offer. There will be a fryer on the truck for the churros, but the kitchen will

allow us to prep the churros, as well as cook any other baked goods such as muffins and scones.

With places to store frozen foods, there are places for dry products as well as refrigerated

products. Having the supplies on the site of the commissary as well as the truck will make it

easy to restock the truck each day

Keeping the Caffeine Café Truck at the commissary would require joining their

membership. This would include filling out an application for the membership and paying the

fees that come with that. For a membership at a commissary it comes to $350 a month but offers

everything we need when operating our food truck.

In order to make handling money easier on the food truck, our company plans to

use Square Payments Processing, this system will allow us to process credit cards and debit cards

while also accepting cash. For the Square Payment Processing we would buy two units that

would connect to an iPhone making it convenient for all employees. The squares will cost us $10

a piece, adding up to $20 if we were to purchase 2, as well as the standard charge rate of 2.75%

per swipe.

Financial Projections

Income Statement - 12 Months

Period Starting: August 2019 Totals

Sales

Sales $10,000

Other 0

Total Sales $10,000

Less Cost of Goods Sold

Materials $7,581.62

Labor 0

Overhead $14,530.28

Other 0

Total Cost of Goods Sold $22,534.90

Gross Profit

Operating Expenses

Salaries and wages N/A

Employee benefits N/A

Payroll taxes N/A

Rent $4,200

Utilities $8,000

Repairs and maintenance 0

Insurance $385

Travel $250

Telephone N/A

Postage N/A

Office supplies 0

Advertising $1,576.44

Marketing/promotion $1,385

Professional fees $750

Training and development N/A

Bank charges N/A

Depreciation N/A

Miscellaneous $1,250

Other 0

Total Operating Expenses $17,796.44

Income (loss) Expenses: $40,331.34

The Caffeine Café’s total sales are predicted to be $10,000 initially. Due to it being our

first year in business, we would only make about 10 percent of a normal food truck service’s

annual sales which is around $100,000, according to Clover Food Lab.

For materials in our cost of goods it is predicted we spend $7,581.62 total. All of our

bulk paper materials come from Webstaurant.com. Due to our primary good being beverages, we

plan to spend about $2,238.40 on 12 oz biodegradable cups/lips sets and $2478.40 on 16 oz

biodegradable cups/lids for each is about 16,000 cups for each size. We also would need

sustainable food carry away bags which for 32 orders of 500 per a case would be $367,68 which

would be 16,000 food holders. With that we would also need biodegradable stirrers and napkins.

We plan to order 10,0000 stirrers for $12.60 and 12,000 napkins for $37.38. Since we will be

brewing a lot of coffee, we also need coffee filters which will come out to $49.25 for 5 cases

(Commercial Restaurant Supplies & Equipment from WebstaurantStore). For our beverages we

had to find different wholesalers. For our regular coffee we will be spending about $310 on a

typical Breakfast Blend (Retail & Wholesale Coffee Service in CT, MA, NY & RI). This order

also includes complimentary mini creamers and sugars we will need in order for customers to

make their coffee the way they like it. For plan espresso and the americano, we will be using the

same espresso which is sold for about $8 and we will be ordering about 25lb of that to make it

$398 total (Espresso Kaldi Blend). Due to it being a specialty good, our Colombian coffee is a

definitely more expensive. For 24 bags it is about $480 but because we are ordering in bulk, the

price drops down to $398 (Colombia Huila Coffee - Premium Single-Origin Coffee). The Cuban

coffee has to be ordered by a subscription. Per a bag the Key West Sunrise Cuban coffee is

$14.95 and ordering 26 bags will be $388.70 (Cuban Coffee Queen). We plan on having four

different types of milk so that consumers have a variety of options to fit their needs. Whole milk

will be bought weekly for $3.99 a gallon which will be about $207.48 a year (Fresh Direct.,

2019). As stated before, creamer is included with our breakfast blend coffee (Retail & Wholesale

Coffee Service in CT, MA, NY & RI). Almond milk is sold for 6 gallons per a case for $23.24.

We predict we will only need about 3 cases throughout the year for a total of $69.73. Skim milk

is from the same provider and predicted to need the same amount except, it is $25.30 per a case

for a total of $75.90 a year. All of our tea will come from the same vendor, International Tea

Vendor. Once you order a package of tea with over $25 bags it has a set price. A package of

Oolong tea is $37, Matcha is $18.50, English tea is $5, Chai tea is $7, and Spanish tea is $15

(International Tea Vendor). In order to bake our scones, muffins and churros, we plan to order

all the baking necessities. On Webstaurantstore.com, for 100lb each, flour is $37.70, sugar is

$55.58, and baking soda is 47.68. For 50 lb each, baking powder is $97.45 and cinnamon is

$59.99. Chocolate chips are $209.00 for 200lb (Commercial Restaurant Supplies & Equipment

from WebstaurantStore.)

For the overhead section, that is made up of the truck and all of the machines we needed

to purchase in order to brew coffee. The total comes out to $14,530.28 and the calculations are

to follow. The truck itself was found on ebay for $10,100. (Ebay., 2019). We need an ice bin

which we found on Webstaurantstore.com for $196.28. The truck also needs a 12-cup twin

brewer with 6 lower warmers for all of our coffee and tea needs. The brewer is $1,309. We

would need an espresso machine to correctly brew the beans for espressos and americanos. The

machine is $29,696. (Commercial Restaurant Supplies & Equipment from WebstaurantStore).

Finally, For the Square Payment Processing will cost us $10 per square, adding up to $20 since

we are purchasing two. Total Cost of Goods Sold: $22,534.90

Due to the business being completely run by the 5 shareholders in the first year, we will

not need to pay salaries, wages, employee benefits, and/ or payroll taxes, yet. Our commissary,

located in Dorchester, MA has a rent of $4,200 for the year which includes repairs and

maintenance to our food truck (Commonwealth kitchen., 2019). For utilities, we predict it is

going to cost about $8,000 comparing it to Clover Food Lab. The truck’s insurance is about $385

(Ebay., 2019). Travel will cost about $250 in gas driving to and from BU to Dorchester (Clover

Food Lab). Our advertising is going to cost $1,576.44 for Boston University email addresses

(InfoUSA). Our marketing and promotion will cost $1,385 total. For 5,000 business cards it is

$140 and for 50 of our banners it will cost $1,245 (Vistaprint: Business Cards, Marketing

Materials, Signage & More). Our professional fees are $12,000 health and safety inspection

insurance which we can get through our commissary (Commonwealth Kitchen, 2019). Our

miscellaneous costs would be $500 for the site application for the as well as $750 for the total

rent of the food truck site at BU West which total $1,250 (City of Boston, 2019). Total Operating

Expenses come out to $17,796.44.

Our total income (loss) before taxes is $40,331.34.

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Appendix A

Food Truck: