Coffee Shop Business Plan Industry Analysis

Welcome to the Coffee Shop Sample Business Plan Industry Analysis

Table Of Contents
MARKET ANALYSIS SUMMARY   MARKET SEGMENTATION   TARGET MARKET SEGMENT STRATEGY   INDUSTRY ANALYSIS

The coffee industry has grown by tremendous amounts in the U.S. over the past five years. Starbucks, the national leader, had revenues in fiscal 2000 of $2.2 billion. That is an increase of 32% over Fiscal 1999. Starbucks plans to increase revenues to over $6.6 billion from 10,000 retail outlets by 2005. Even general coffee sales have increased with international brands such as Folgers, Maxwell House, and Safari coffee reporting higher sales and greater profits. America is definitely a coffee country and the coffee industry is reaping the rewards.
4.3.1 Industry Participants
There is only one national Drive-thru coffee franchise operation in the U.S. with any legs, and that is a subsidiary of Chock Full 'o Nuts called Quikava. Quikava operates predominantly on the East Coast and in the Upper Great Lakes. The East and West coasts, and even some Mountain and Midwest states, have smaller local drive-thru chains such as Caffino, Java Espress, Crane Coffee, Java Drive, Sunrise Coffee, and Caffe Diva. However, other players in the premium coffee service industry would include Starbucks, Gloria Jean's, Caribou Coffee, Panera and locally owned and operated coffee shops or "cafes."
4.3.2 Distribution Patterns
The cafe experience comes from the Italian origins of espresso. The customer comes in to a beautifully decorated facility, surrounded by wondrous aromas and finds himself involved in a sensory experience that, more often than not, masks an average product at a premium price. However, the proliferation of cafes in the United States proves the viability of the market. It is a duplication of the same delivery process as currently exists in Europe.
4.3.3 Competition and Buying Patterns There are four general competitors in THE LOST TREASURE OF ‘ARABICA’'s drive-thru market. They are the national specialty beverage chains, such as Starbucks and Panera, local coffee houses--or cafes--with an established clientele and a quality product, fast food restaurants, and convenience stores. There is a dramatic distinction among the patrons of each of these outlets. Patrons to a Starbucks, or to one of the local cafes, are looking for the "experience" of the coffee house. They want the ability to "design" their coffee, smell the fresh pastry, listen to the soothing Italian music, and read the local paper or visit with an acquaintance. It is a relaxing, slow paced environment. Patrons of the fast food restaurants or the convenience stores are just the opposite. They have no time for idle chatter and are willing to over-pay for whatever beverage the machine can spit out, as long as it's quick. They pay for their gas and they are back on the road to work. Although they have the desire and good taste to know good from bad, time is more valuable to them. Competitors to the Mobile Cafes on campuses would include fast food restaurants--assuming they are close enough to the consumer that they can get there and back in the minimal allotted time, vending machines, and company or school cafeterias. The consumers in this environment are looking for a quick, convenient, fairly priced, quality refreshment that will allow them to purchase the product and return to work, class, or other activity. Competitors to the Mobile Cafes at events such as festivals and fairs would include all the other vendors who are licensed to sell refreshments. Attendees to such events expect to pay a premium price for a quality product.
4.3.4 Main Competitors
When measuring head-to-head, direct competitors, we have found that there are none in the metropolitan area. THE LOST TREASURE OF ‘ARABICA’ will be the first double-sided, drive-thru coffee house in the metropolitan area. However, there is still significant competition from traditional coffee houses and other retailers. National Chains: Starbucks, the national leader, had revenues in fiscal year 2000 of $2.2 billion. That is an increase of 32% over fiscal year 1999. Starbucks plans to increase revenues to over $6.6 billion from 10,000 retail outlets by 2005. Panera had revenues of $151 million from corporate owned stores and $350 million from franchised locations in fiscal year 2000. This fiscal year revenue was an increase in 28.9% on a per store basis versus fiscal year 1999.

THE LOST TREASURE OF ‘ARABICA’ believes it has a significant competitive advantage over these chains because of the following benefits:

• Drive-thru Service
• More Substantial Customer Service
• Community Benefit
• Mobile Cafes
• Selection
• Higher Product Quality

Local Cafes: The toughest competitor for THE LOST TREASURE OF ‘ARABICA’ is the established locally owned cafe. THE LOST TREASURE OF ‘ARABICA’ knows the quality and pride that the local cafe has in the product purchase by their customers. Any local cafe has a customer base that is dedicated and highly educated. The quality of beverages served at an established cafe will surpass any of the regional or national chains. The competitive edge THE LOST TREASURE OF ‘ARABICA’ has on the local cafes is based on the attributes of:

• Drive-thru Service
• Supply Discounts
• Mobile Cafe
• Consistent Menu
• Community Benefit
• Quality Product

Drive-thru Coffee Houses: There is not a drive-thru specialty beverage retailer with significant market presence in the central United States. The only company with similar depth to that of THE LOST TREASURE OF ‘ARABICA’ is Quikava, a wholly owned subsidiary of Chock Full'o Nuts. However, Quikava has limited its corporate footprint to the East Coast and the Great Lakes Region. In the drive-thru specialty beverage market, THE LOST TREASURE OF ‘ARABICA’ has a competitive edge over the smaller retailers, and even Quikava, due to:

• Mobile Cafes
• Consistent Menu
• Community Benefit
• Quality Product
• Supply Discounts
• Valued Image
• Greater Product Selection

Fast Food and Convenience Stores: These are two industries where THE LOST TREASURE OF ‘ARABICA’ will experience a certain level of competition. The national fast food chains and national convenience store chains already serve coffee, soda, and some breakfast foods. The national fast food chains obviously know the benefits and value to customers of drive-thru. THE LOST TREASURE OF ‘ARABICA’ knows that within the specialty coffee and tea market, the quality of the products sold will be much greater than what can currently be purchased at fast food and convenience stores. The addition of domestic soda sales for these stores is a large part of revenue. THE LOST TREASURE OF ‘ARABICA’ knows the quality of our products, along with the addition of domestic soda and the ease of drive-thru, gives it a competitive edge over fast food and convenience stores.

Other competition:
THE LOST TREASURE OF ‘ARABICA’ knows that once it has entered the market and established a presence, others will try to follow. However, THE LOST TREASURE OF ‘ARABICA’ believes that the corporate missions and even the organizational design will be imitated, but never duplicated. THE LOST TREASURE OF ‘ARABICA’ will constantly evaluate its products, locations, service, and corporate missions to ensure that it remains a leader in the specialty beverage industry.