AKLAN POLYTECHNIC COLLEGE

Kalibo, Aklan
Bachelor of Science in Customs Administration

Coffee Shop
Feasibility Study

Submitted By:
Rommel B. Samillano and Rolen Samillano
Student

Submitted To:
Dr. Erdyn Magbiro
Instructor

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Table of Contents

Executive Summary................................................................................. 3

Background and History ..........................................................................3

Description of Products ...........................................................................4

Market Description ..................................................................................6

Competition............................................................................................. 6

Marketing Strategies................................................................................ 7
…
Manufacturing Plans............................................................................... 8

Financial Projections.............................................................................. 9

Income Statement .................................................................................. 10

Balance Sheet.........................................................................................11

Cash Flow Analysis.............................................................................. 12

Contingency Plans ............................................................................... 17

Appendices........................................................................................... 18

Letters of Endorsement.........................................................................19

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Executive summary
Coffee Shop is a novel neighborhood bar/espresso/tapas house that gives a well disposed,
powerful place where singles can meet. Coffee Shop is not your common bar where individuals
go to meet different singles. Coffee Shop has a one of a kind administration called the structure
discussion framework that is very successful for permitting singles to meet each other and
furnish them with significant understanding into the other individual through intelligent
discussion. The organized framework give an air that brings down restraints and breeds certainty
permitting singles to meet different singles and pick up knowledge into their identity by method
for insightful talk. Meeting individuals is one of the biggest obstacles 25-45 year old singles
confront. Coffee Shop gives this gathering a powerful arrangement to this issue. On playing this
ideology, as well as, using different Financial Tools on bases of facts and assumptions combined,
this feasibility study will comprehensively convince investors or businessman to start this
venture.
Background and History
The Coffee Shop is a clear surely understood thought where you can benefit as much as possible
from your time with a respectable and exceptional taste of coffee from the excellent source i.e.
from the farms of China in Philippines. The shop is a happy with loosening up place where
people will isolate the kind of high gauge of coffee beans. Coffee Shop or Café business is so
unmistakable everywhere and extraordinarily the English market and our venture will be as one
of these shops.
The Project will be not the same as what is open in the market, as a result of the astounding sort
of coffee that will be given to the customers. The coffee producers from China will supply us
with the stock the whole year time span. The Café will have a menu like what is available in the
contenders' menus, hot and cool refreshments. Moreover, the Café will offer a couple of cakes
like compartment cakes, scones, treats etc. and some light sustenance like sandwiches and
servings of blended greens that are proper for snack.
Starting the ramble, we considered people from both sexual introductions and different
occupations. The study was held using some quick interviews outside campus includes some
request. Our respondents were on a very basic level workers and employees. We principally
drew in our request on how much people will pay and visit the shop and what is their most
adored Café they used to buy from.
We used the numbers and figures we procured from the outline to survey the arrangements by
assessing esteem, number of visitors and the ordinary bit of the general business. For the coming
years, our arrangements are depended upon to increase by the extension rate.
Moving to numbers and examination, we used capital arranging mechanical assemblies with
some unique instruments that help with settling on the decision. The figures we got is enabling,

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we start with a promising positive NPV with IRR and MIRR higher than the cost of capital
(WACC). Moreover, the set apart down payback time span is not precisely the venture life we
acknowledged and what's more the profitability record is more than one. Each one of these
pointers lead us to one decision that is to continue with the venture.
Product Description
Inspirational Grounds sells the entire array of coffee and espresso-based drinks,specialty drinks,
and bakery items, as well as music and books geared toward the spiritual reader.
Specialty Coffees
The primary product of Inspirational Grounds is the specialty coffee. Several unique blends will
be micro roasted for daily serving or specially roasted to order at our customers’ request which
will give our customers the variety they seek. These coffee blends include: Columbia Supremo,
Tanzanian Peaberry, Jamaican Blue Mountain, Guatemalan Antigua, Costa Rican Tarrazu,
Sumatra Mandheling, and Ethiopian Yaefacheffe. Other blends and decaffeinated coffee will be
offered as well.

Espresso & Coffee Drinks

The Straight Shot – The foundation of every espresso beverage; served in a demitasse, when
consumed alone.

Espresso Macchiato – Espresso served in a demitasse with a small amount of foamed milk on top

Espresso Con Panna – Variation of the Macchiato substituting whipped cream in place of the
foamed milk.

Caffé Americano – A single or double shot of espresso is combined with hot water from the
espresso machine. This produces a smoother and fresher (as well as hotter) cup of coffee than
conventional brewing.

Cappuccino – Espresso mixed with foamed milk upon the pour; can be garnished with shaved
chocolate.

Caffé Latte – Espresso mixed with steamed milk, and topped with foamed milk; can be garnished
with shaved chocolate.

Mocha – Espresso, steamed milk, and chocolate syrup, usually topped with whipped cream and
chocolate shavings.

The Breve – An extra rich Caffe’ Latte made with half & half instead of milk.

Café Au Lait – Drip coffee with steamed milk added and topped with foamed milk.

Flavor-Based Drinks
Hot Chocolate and Steamers – These drinks are made like lattes and mochas without the addition

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of coffee. Flavored syrups are added to steamed milk and may be topped with whipped cream at
the customer’s request.

Italian Sodas and Creamosas – An Italian soda is a combination of flavored syrup and high
quality carbonated mineral or soda water, served over ice. A creamosa is an Italian soda with
heavy cream or half & half added and gently stirred to making a swirled appearance in the drink.

Granita – An Italian style granular ice drink similar to a slushy but much more dense in
consistency.Granita flavors are usually coffee or fruit based

Other specialty drinks include: Gourmet hot tea, iced Tea, Chai, smoothies, blended coffee and
tea-based drinks, and bottled soft drinks.

Books and Music

Books – The most popular titles will be stocked in limited supply. Such books as Woman, Thou
are Loosed by T.D. Jakes; In Pursuit of Purpose, by Dr. Myles Munroe; Prayers That Heal The
Heart, by Mark & Patti Virkler; A Fresh Word For Today, by Bob Gass; Run Baby Run, by
Nicky Cruz; Morning By Morning, by Charles H. Spurgeon, and others.

Music – Inspirational Grounds will carry the finest in contemporary Christian music. Titles
include Kirk Franklin; Mary Mary; Set Free; Audio Adrenaline; Yolanda Adams, and more.

Bakery Items
Inspirational Grounds will also offer its customers a variety of baked goods, including pastries,
cookies, and cakes. Bread for sandwiches and buns for soup will also be secured. Negotiations
with several local bakeries are now underway. Quality and consistency will be the determining
factors for this decision.

Market Description

Market
A market is characterized as the aggregate of the considerable number of purchasers and dealers
in the zone or area under thought. The zone might be the earth, or nations, locales, states, or
urban areas.
The cost, value and cost of things exchanged are according to powers of free market activity in a
market. The market might be a physical element, or might be virtual. It might be nearby or
worldwide, impeccable and flawed.
Micro Market

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A micro market is an unattended distributing idea differently depicted as: an unattended,
selfcheckout nourishment office situated within an encased building and accessible to a known
gathering of representatives at their work area. Workers can get to prepackaged nourishment
specifically and after that compensation for their choice at a booth. (Wikipedia)
The feasibility of the venture is not new in the adjacent market, the feasibility of the venture is a
traditional cafe like some prominent cafes Star Bucks, Dunkin’s Donuts etc. and that is just the
tip of the chunk of ice. The thing that will isolate the venture from what are in the market is the
new foundation that will be outside made to London appallingly from Colombia. What makes
this foundation so remarkable is the sort of the coffee beans they use.
The cafe will have a menu like what is open in the contenders' menus, hot refreshments and
frigid drinks. Moreover, the cafe will offer a couple of desserts like cupcakes, bread rolls,
muffins, cookies etc. and some light sustenance like sandwiches and plates of blended green
salads that are fitting for snack. Along with this, a separate window will also be provided to
those customers who are in hurry and/or quickly want their snacks and coffee to takeaway. This
would save the time for both, the customer as they don’t need to enter the shop just to takeaway
their orders, and for the workers to handle the takeaway and dine-in orders separately.

Competition

Honey Bee Coffee and Tea Shop

Honey Bee is another local Austin coffee shop that is also located in the university
neighborhood. The menu is relatively the same, and they also offer a wide variety of teas and tea
products. It has become a favorite for local artists and musicians as the owner allows local talent
to showcase their art there and local musicians are able to play during business hours with a
simple reservation.

Starbucks

Starbucks is one of the most successful franchises in the world. Their scalability, franchise
support, and multiple locations are benefits to a coffee lover. All of their locations offer a drive-
thru and multiple employees who are able to offer expedient and friendly customer service. Their
menu offers seasonal beverages, an assortment of teas, breakfast and lunch/dinner items. Part of
Starbucks success is that they offer a phone app where customers can order items and it will be
ready by the time they arrive, and they can earn rewards through multiple uses of the app

*Competitive Advantage

Exceptional customer service and focus: The owners of Starbucks Bros pride themselves to
being on location everyday and getting to know the majority of their clientele. They believe
when customers receive this type of individualized focus, the customers come back.

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Fresh, local coffee: Starbucks Bros commits to only serving coffee roasted locally in Honey Bee.
The freshness and authentic taste help make the coffee offered exceptional and superior to the
competition.

Tech Friendly locations: Free internet, multiple outlets for laptops and tablets, and a digitalized
menu and ordering system are benefits that their target clientele gravitate towards

Market strategies

Coffee shops serve coffees, teas, deserts and light lunches in bistro-like settings. Small, local
coffee shops can establish a solid reputation in their communities, attracting large volumes of
highly loyal, sometimes daily patrons. Marketing a coffee shop requires more subtlety than
other local businesses, however, as these establishments provide a highly social experience
greatly reliant on word-of-mouth advertising and personal recommendations from existing
customers.

Comprehensive marketing strategies begin with product and service development. Coffee
shops can especially benefit from developing a wide, customer-friendly suite of services, since
word-of-mouth advertising can be an effective way to turn large groups of people into loyal
customers.

Be sure to offer free Wi-Fi in your shop, for example, and to install electrical outlets at each
table for laptops. Book live entertainment in your shop on a regular basis, host poetry readings
and other events with a community feel. If consumers have more than one coffee shop option
in your area, make sure your shop offers something the others do not, so that patrons want to
bring their friends to see the difference.

Advertising on your premises is also a must for coffee shops. All coffee shops should have a
facade that clearly distinguishes the establishment for what it is. This means large windows, if
possible, revealing the inside sitting area, tables set up outside and coffee menus posted
outside.

Set up clear and visible store signage, choose a highly-visible location and place small,
movable signs by the road, by the sidewalk or in your outside seating area. Selecting the right
name can be useful for on-premises advertising, as well. Select a name for your store that
immediately brings up images of a coffee shop.

Promote your store events and sales to customers on your social media channels while
maintaining an active, more conversational presence. Coffee shops thrive on their environment.
Bring your store's vibe with you when sharing content to increase your brand's reach in the
community.

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Leverage social media by posting printable coupons on Facebook and Twitter, or use a service
like Groupon to distribute coupons to internet-users in your local area. When possible, try to
eliminate the printing barrier by incorporating the use of a coupon code or barcodes your
workers can scan from a customer's mobile phone.

You may also want to advertise promotions on leading websites or social media channels
through targeted display ads. Each social site maintains its own ad network while services such
as GoogleAds will connect your advertisements to consumers based on your needs.

Manufacturing Plan

Product Offerings

The existing competition uses lower grade beans, inexpensive equipment, and does not properly
train staff — resulting in inconsistent product quality and dissatisfied customers.

At Java Jake's we are passionate about coffee and intend to focus on consistently serving the
highest quality product by:

 Sourcing premium beans and snacks and maintaining freshness at all times.
 Using a top-of-the line espresso machine and related equipment.
 Providing baristas with professional training.

By focusing on quality, consistency, and great customer service, we will build a steady repeat
customer base.

Pricing Strategy

We intend to focus on specialty coffees including espresso, cappuccinos, mochas, etc. as the
profit margins are much higher than regular coffee. To command a higher price for regular
coffee, we will not use drip machines. Instead, each cup will be single served using a coffee
press so that every cup is up-to-the-minute fresh and delicious.

Our pricing will be competitive with the higher end of the market. We believe that customers
will be happy to pay top prices for a great cup of coffee.

Sales

We will be offering counter service in a professionally designed, cozy, inviting interior space.
Interior seating will be a mix of smaller individual tables for intimacy, and longer, bench-style
ones for larger groups. Exterior seating will consist of weatherproof tables and chairs with

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available sunshade umbrellas. We intend to be open from 6:30 a.m.-9 p.m. on weekdays, and 7
a.m.-9 p.m. on weekends.

In addition to cash, credit, and debit, we also will be accepting Apple Pay for purchases.

Advertising and Promotion

To minimize costs and connect with our customer demographic, most of our advertising will be
of the digital variety. We intend to aggressively promote our products using the following
methods:

 Posters on the local campus billboards

 Our state-of-the-art website
 Daily specials announced on Facebook, Instagram, and Twitter

Financial Projection

The start-up expenses include an estimated ₱100,000 consisting of several items:

 Legal expenses for obtaining licenses and permits as well as the accounting services
totaling ₱30,000
 Insurance (general liability, workers’ compensation and property casualty) coverage at a
total premium of ₱20.000.
 Premises remodeling in the amount of ₱ 30,000.
 Other start-up expenses including website (₱20,000) and phone and utility deposits
($2,500).

The required start-up assets of ₱70,000 include:

 Plates, glasses, etc. worth approximately ₱20,000

 Equipment for the total amount of approximately 50,000
o Espresso machine
o Coffee maker
o Coffee grinder
o Food service equipment (microwave, toasters, dishwasher, refrigerator, blender,
etc.)
o Storage hardware (bins, utensil rack, shelves, food case)

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 o Counter area equipment (counter top, sink, ice machine, etc.)
o Serving area equipment (plates, glasses, flatware)
o Store equipment (cash register, security, ventilation, signage)
o Office equipment (PC, fax/printer, phone, furniture, file cabinets)
o Other miscellaneous expenses
o

Funding for the company comes from two major sources–owners’ investments and bank loans.
Two major owners, Arthur Garfield and James Polk, have contributed ₱80,000 and ₱40,00
respectively. All other investors have contributed 30,000, which brings the total investments to
₱150,000. The remaining 100,000 needed to cover the start-up expenses and assets came from
the two bank loans–a one-year loan in the amount of 10,000 and a long-term (five years) loan of
20,000. Both loans were secured through the Bank of America. Thus, total start-up loss is
assumed in the amount of 27,680.

Income Statement

FY 1 FY 2 FY 3 FY 4

Revenues

Total Revenues ₱360,000 793,728 875,006 964,606

Expenses & Costs

Cost of goods sold ₱64,800 142,871 157,501 173,629

Lease ₱50,000 51,250 52,531 53,845

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 FY 1 FY 2 FY 3 FY 4

Marketing ₱10,000 8,000 8,000 8,000

Salaries ₱157,015 214,030 235,968 247,766

Initial expenditure 10,000 0 0 0

Total Expenses & Costs ₱291,815 416,151 454,000 483,240

EBITDA ₱68,185 377,577 421,005 481,366

Depreciation ₱27,160 27,160 27,160 27,160

EBIT ₱41,025 350,417 393,845 454,206

Interest ₱23,462 20,529 17,596 14,664

PRETAX ₱17,563 329,888 376,249 439,543

INCOME

Net Operating Loss 0 0 0 0

Use of Net Operating Loss 0 0 0 0

Taxable Income ₱17,563 329,888 376,249 439,543

Income Tax Expense ₱6,147 115,461 131,687 153,840

NET INCOME ₱11,416 214,427 244,562 285,703

Balance Sheet

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 FY 1 FY 2 FY 3 FY 4

ASSETS

Cash ₱154,257 348,760 573,195 $838,550

Accounts receivable 0 0 0 $0

Inventory ₱30,000 33,072 36,459 $40,192

Total Current Assets ₱184,257 ₱381,832 609,654 878,742

Fixed assets ₱180,950 180,950 180,950 180,950

Depreciation ₱27,160 54,320 81,480 108,640

Net fixed assets ₱153,790 126,630 99,470 72,310

TOTAL ASSETS ₱338,047 508,462 709,124 951,052

Cash Flow Analysis

FY2019 FY2020 FY2021

Net Cash Flow from

Operations

Net Profit ₱18,499 47,907 72,147

Depreciation & ₱12,000 12,000 12,000

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Amortization

Change in Accounts
0 0 0
Receivable

Change in Inventory (₱5,815) (2,950) 0

Change in Accounts
₱0 0 0
Payable

Change in Income Tax

₱2,232 (116) 1,068
Payable

Change in Sales Tax

₱0 0 0
Payable

Change in Prepaid
Revenue

Net Cash Flow from

₱26,917 56,840 85,216
Operations

Investing &
Financing

Assets Purchased or
Sold

Net Cash from

Investing

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Investments Received

Dividends &
Distributions

Change in Short-Term
(₱9,850) 156 163
Debt

Change in Long-Term
(₱3,833) (3,989) (4,152)
Debt

Net Cash from

(₱3,683) (3,833) (3,989)
Financing

Cash at Beginning of
₱67,000 80,234 133,240
Period

Net Change in Cash ₱13,234 53,007 81,226

Cash at End of
₱80,234 133,240 214,467
Period

Balance Sheet

Starting FY2019 FY2020 FY2021

Balances

Cash ₱67,000 80,234 133,240 214,467

Accounts 0 0 0 0

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Receivable

Inventory ₱16,000 ₱21,815 24,765 24,765

Other Current
Assets

Total Current
₱83,000 102,048 158,005 239,232
Assets

Long-Term
₱60,000 60,000 60,000 60,000
Assets

Accumulated
(₱12,000) (24,000) (36,000)
Depreciation

Total Long-
₱60,000 48,000 36,000 24,000
Term Assets

Total Assets ₱143,000 150,048 194,005 263,232

Accounts
0 0 0
Payable

Income Taxes
₱2,232 2,116 3,184
Payable

Sales Taxes
0 0 0
Payable

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Short-Term Debt $13,683 ₱3,833 3,989 3,152

Prepaid Revenue

Total Current
₱13,683 ₱6,065 6,105 7,336
Liabilities

Long-Term Debt ₱16,317 12,484 8,495 4,343

Long-Term
₱16,317 12,484 8,495 4,343
Liabilities

Total Liabilities ₱30,000 18,549 14,600 11,679

Paid-In Capital ₱140,000 140,000 140,000 140,000

Retained
(₱27,000) (27,000) (8,501) 39,406
Earnings

Earnings ₱18,499 47,906 72,148

Total Owner’s
₱113,000 131,499 179,406 251,553
Equity

Total Liabilities
₱143,000 150,048 194,005 263,232
& Equity

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Contingency Planning

This marketing plan is just that, a plan. Plans don't always work out and we have to be ready to
deal with the likelihood that JavaNet won't make good on the projections outlined in this plan.
We also have to prepare ourselves for overwhelming success.

The following are some possible scenarios:

Revenues exceed projections - A serious increase in revenues over projections will give us an
opportunity to increase our marketing budget above the allocated 20%. We'll be able to hire the
marketing manager earlier, and we'll be able to provide more equipment and possibly add an
additional location.
Revenues miss projections - We have to be prepared for this possibility. If we miss our
projections, we simply have to re-double our marketing efforts. The danger in this scenario is
that the first reaction to missed projections is to decrease spending, particularly marketing
expenses. We can't do that! We have to get our message out to the target market, and we can't do
that if we stop spending on marketing. Additional capital infusions may become necessary and
that possibility is detailed in the business plan.
Internet side of business plays a lesser role - Our customers might not be willing to pay for
Internet access or JavaNet memberships as Internet access costs and hardware costs continue to
fall. If this scenario materializes, we will need to move our focus to beverages and pastry items,
perhaps even providing deli-style lunches. Internet services in the scenario would still play an
important role in attracting customers; we'd just have to charge less and move our numbers
around to accommodate this trend.

Appendices

Appendix
Sales Forecast

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Sales

Fresh Brewed 0% ₱3,239 3,271 3,304 3,337 3,371 3,404 3,438 3,473
Coffee

Espresso Based 0% ₱4,219 4,261 4,304 4,347 4,390 4,434 4,479 4,523
Beverages

Specialty Drinks 0% ₱2,738 2,765 2,793 2,821 2,849 2,878 2,906 2,936.
$

Pastries/Desserts 0% ₱1,140 1,151 1,163 1,175 1,186 1,198 1,210 $1,222

Music/CDs 0% ₱915 924 933 943 952 962 971 $981

Books 0% ₱915 924 933 943 952 962 971 $981

Fresh Roasted 0% ₱1,525 1,540 1,556 1,571 1,587 1,603 1,619 $1,635.
Coffee

Misc 0% ₱1,350 1,364 1,377 1,391 1,405 1,419 1,433 $1,447

Candies/Products

Total Sales ₱16,041 16,201 16,363 16,527 16,692 16,859 17,028 $17,198

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Direct Cost of Month 1 Month2 Month3 Month4 Month5 Month6 Month7 Month 8
Sales

Fresh Brewed 108 109 110 111 112 114 $115 116
Coffee

Espresso Based 304 307 310 313 316 320 $323 326
Beverages

Specialty Drinks 569 575 580 586 592 598 604 610

Fresh Roasted ₱458 463 467 472 477 $481 $486 $491
Coffee

Pastries/Desserts 50% 570 576 581 587 593 $599 $605 $611

Candies, etc. 50% ₱675 682 689 695 $702 $709 $717 $724

Books/Music ₱916 925 934 944 953 $963 $972 $982

Subtotal Direct ₱3,600 3,636 3,672 3,709 3

Cost of Sales

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Letter of Endorsement
Rommel Samillano
Maria, Laua an, Antique
Antique, Philippines,5705

DATE

Mr. Rolie Alcoreza

Sanjose, Antique Philippines
Sanjose, 5698

RE: Cover letter for a loan to open a coffee shop

Dear, Mr. Rolie Alcoreza:

This is a formal letter to accompany my request for a small business loan. I have worked in my
Coffee Shop at Maria, Laua an, Antique for the past five years.

The first four years I worked part-time while I finished my degree in business administration,
and the last year I worked there full-time as the manager. It is my aim to open my own coffee
shop at Maria, Laua an Antique near the Techno Park. There is no coffee shop in this area and
my market research shows that a good coffee shop would be a success.

I have secured the location on the main road into the Park and all of the government certificates
and permission to open the shop. I have also received a certificate of approval from the health
department.

My aim is to open the shop on December 25, 2022, but I do not have the funds to finish fitting
out the interior. I plan to seat 20 in a relaxing and stylishly designed environment.

I will serve freshly brewed coffee from 6am – 8pm six days a week and closed on Sundays from
beans supplied by my vendors at Brazil Coffee Beans.

I also plan to serve homemade cake and cookies from a local vendor that also has restaurant
permission certificates. My friends and family have provided half of the amount I need, and I
have purchased the coffee-making equipment. I am requesting you to give the other half, which
is 3.500,000.00

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I hope all of your questions are answered in my formal proposal. If not, I can be reached at
Phone Number or at Email Address. I am hoping for a favorable reply soon. Thank you for
taking the time to consider my proposal.

Sincerely,
Signature of Borrower
Rommel B. Samillano
Enclosed: Formal business plan and proposal

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