How to Write a Coffee Shop Business Plan: Complete Guide

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your coffee shop, you will need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in your coffee shop business plan. Use this template to create a complete, clear and solid business plan that get you funded.

For more information on coffee shops, make sure to read our guides below:
How To Open a Coffee Shop In 10 Steps
How Much Does It Cost To Start a Coffee Shop?
How To Build a Financial Model For a Coffee Shop
9 Coffee Shop KPIs to Track (and How to Calculate Them)

1. Coffee Shop Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it will have the summary of different sections included in the entire plan.

Why do you need a business plan?

The purpose of a business plan is to secure funding through one of the following channels:

  • Obtain bank financing or secure a loan from other lenders (such as a SBA loan)
  • Obtain private investments from investment funds, angel investors, etc.
  • Obtain a public or a private grant

How to write an executive summary for a coffee shop business plan?

The business plan of your coffee shop must start with a high-level overview of every section: the executive summary.

The overview must be small, attention-grabbing, and focus on the concept, problems, solutions, target audience, financial targets, etc. Ideally, the executive summary must not exceed 1-2 pages.

The executive summary usually consists of 5 major sections:

  • Business overview: introduce your coffee shop and the business concept. Briefly describe whether your shop will be a kiosk, pickup, drive-through, or sit-down shop. You must also include your vision of products and menu. Provide a very brief but highly focused overview of the location, ambiance, kitchen storage, goals, etc.
  • Market analysis: provide a brief of your market understanding and provide a summary explaining why you selected the location, who are your competitors, who is your target audience, etc.
  • People: provide a summary of the key people involved. You may be a solopreneur, or you may have partners. Provide a brief of their experience in the coffee industry. Finally, summarize your staff requirements and the management hierarchy.
  • Financial plan: how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits? It is ideal to include a chart depicting your key financials such as revenue, gross profits, and net profit
  • Financial ask: what loan/investment/grant are you seeking? How much do you need? How long will this last?
An example of a Funding Ask slide for a Coffee Shop business plan (source)

2. Business Overview

This is the segment where you will explain everything related to your business model. Since there is no shortage of coffee shops, you will face a stiff challenge. And hence, there must be a good rationale behind your decision to open a coffee shop. Try to answer the following questions in this segment:

  • What inspired you to open a coffee shop and why?
  • What type of coffee shop do you want to operate (kiosk, pickup, drive-through, or sit-down)?
  • What will be your operating hours?
  • Why did you choose the location and what ambiance will you provide?
  • How many staff members will you need for your shop?
  • What will be your menu?
  • Who is your target audience?

The information you provide in the business overview segment must be robust and precise so that the potential lenders and/or investors do not lose interest.

You can always break the business overview segment into different subsections. Let’s look at different subsections that you must include:

a) History of the Project

You need not have prior experience. However, you must be able to display two things – rationale and passion. As long as you can explain the logic behind your business and the selected model, investors will be open to investment.

 The rationale will essentially explain the existing problems (or shortcomings) of the coffee shops operational in the area and how your business will resolve them.

If you have experience in the coffee industry, outline that. For instance, you may have a direct association with the coffee bean suppliers, you may have been an employee of a coffee shop, you may have been a supplier in the past, etc. If you have any experience that you can use, don’t be shy to reveal that no matter how small or insignificant it may sound.

Also, do not forget to provide some data to explain why you decided to open a coffee shop in your area today.

For example, the area where want to operate may have a higher concentration of working-class people who may prefer a grab-and-go coffee shop, but there may not be a single shop in your area with that business model.

b) Business Model

In this segment of the business plan, you must expand on your business model. This segment must answer several important questions such as:

  • Are you going to buy an existing coffee shop, or do you want to start from zero and have a custom-designed coffee shop?
  • What will be your coffee shop model and why do you want to implement that model?
  • What type of technology will you need to run your business without a glitch?

For example, you may open any of the following types of coffee shops:

  • Coffee bar: It provides a living room environment feeling complete with fresh coffee, Wi-Fi access, and lounge music.
  • Traditional coffee shop: The overall atmosphere will be relaxed, and people can order a wide range of coffee drinks along with baked goodies.
  • Graband-go model: There will be no sitting space for people to relax and order coffee and food. Instead, it is a drive-through or a pickup model where people pay for the coffee, get the product, and leave.

c) Products & Services

The products and services that you offer will depend on the type of coffee shop you want to open. For instance, a grab-and-go model will not offer services like Wi-Fi, a family gaming zone, baked products (maybe), etc.

You must have a vision of your menu and the services you want to offer. Provide a broad outline of your products and services.

When doing so, we strongly recommend to include a pricing table. Indeed, your pricing strategy will allow investors to tie it with your financial projections.

d) Target Audience

In this section, you must provide an overview of your target audience. The target audience are the customers you are looking for and focusing on for your products and services.

For coffee shops, you can for example focus on busy professionals that need a coffee to go (e.g. Starbucks) or instead a sit-in coffee for with comfortable tables, chairs and sofas.

Likewise, you may focus on expensive specialist vs. affordable coffee products depending on your target audience.

e) Legal Structure

Finally, your business overview section should specify what type of business structure you want. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry?

Get a rock-solid business plan with the Coffee Shop financial model

  • 5-year financial plan already built
  • 20+ charts for your business plan
  • Video tutorial 🎥
  • 5,900+ downloads

3. Market Analysis

A complete understanding of the market where you want to operate is important for the success of your business.

For example, if you plan to open your coffee shop with students in mind while the local population’s major chunk is made of working-class people who prefer grab-and-go models, your business will not succeed.

Similarly, if your coffee shop is located in a low-income neighborhood and you try to sell expensive coffee brews or expensive food items, you cannot increase the sales.

Break this section into 3 sub-sections that will include:

a) Coffee Shop Market trends

It is vital to understand the coffee consumption trends because it will allow you to come up with effective marketing strategies.

For instance, if your location is situated close to a college campus, you can expect the college crowd to flock to your coffee shop. They will prefer usually free services like free Wi-Fi, free charging facility, etc. Also, they will be budget consumers, and hence, they may prefer cheaper products.

Understanding market trends isn’t easy. You can, to some extent, rely on 3rd party market research, but it is always better to speak directly to your potential customers. This will give you a clear understanding of their needs & choices and the factors that influence their decisions.

While interacting with your target audience you can ask questions such as:

  • When do they prefer to drink coffee?
  • What type of coffee do they prefer?
  • Whether they prefer sit-in coffee shops or do they prefer takeaway-style shops?
  • What type of food do they expect to find at coffee shops?
  • How much time do they usually spend in a coffee shop?

b) Coffee Shop Competition Analysis

Studying your competitors’ business models is vital. You need to understand what makes them successful or why they fail. A clear understanding of their products and services, marketing strategies, etc. will allow you to provide a better service.

If your competitors are offering nearly the same products, then what is their market share and how do they market their products & services to attract new customers?

It is always a good idea to do some research and create a comparative table summarizing their product & service offerings, marketing strategies, target audience, etc.

Here is a sample table that you can use:

Competitor #1Competitor #2Competitor #3
Locationxxxxxx
Sit-in coffee
Coffee go-to
Coffee products and pricesxxxxxx
Other drinks and pricesxxxxxx
Food products and pricesxxxxxx
Shop size1,500 sq. ft.900 sq. ft.1,275 sq. ft.
Google Rating4.5 (170+ reviews)4.3 (350+ reviews)4.7 (180+ reviews)
Instagram
followers
2,000+1,100+1,600+
Seating arrangementCounter seats
Individual tables
Group tables
NoneCounter seats
Group tables
Staff635

c) Coffee Shop SWOT Analysis

Try to provide a SWOT analysis. It must be crisp and highly focused. SWOT stands for Strength, Weakness, Opportunities, and Threats.

Here is a brief example of a SWOT analysis you can use as a reference for a coffee shop:

  • Strengths: More coffee brews than competitors, home-cooked breakfasts & meals, home-baked go-to snacks, highly trained & experienced staff
  • Weaknesses: Location, lack of brand name and reputation
  • Opportunities: Area with high disposable income, nearby college campus and increased preference for new & unique coffee brews
  • Threats: Big & established players like CCD, Barista, McDonald’s, Starbucks, etc.

A clear understanding of your strengths and weakness along with opportunities and threats in the real market can help you to design your marketing strategy. It also helps potential investors to assess the risk and reward profile of your business.

d) Customers

This is the sub-section where you will provide a detailed analysis of demographics and your target audience in your area.

Whilst we presented in the Business Overview section who were your target customers, here instead we will show that they actually live in the area and/or transit through where your store is located. All in all, you must prove here that your coffee shop and its products and services are well suited for the local population.

Some important points that you must include in your customer analysis include:

  • Age and gender distribution (you can get local demographic data from census.gov)
  • Average monthly income and disposable income
  • Average order value
  • Coffee and food preferences
  • Tendency to buy non-related items like merchandise, etc.
  • Expected services
  • Things they dislike about existing coffee shops and what they expect to be improved

You can add as many data points as required to validate your business decision. The idea here is to display your deep understanding of the target audience and the needs, preferences, and expectations. This knowledge can help you to tailor your products & services to attract new customers.

Get a rock-solid business plan with the Coffee Shop financial model

  • 5-year financial plan already built
  • 20+ charts for your business plan
  • Video tutorial 🎥
  • 5,900+ downloads

4. Marketing Strategy

This is the section where you outline your customer acquisition strategy. Try to answer the following questions:

  • What are your Unique Selling Points (USPs)?
  • What are the different marketing strategies you will use (social media, billboards, referrals, etc.)?
  • How do you intend to track the success of your marketing strategy?
  • What is your CAC or customer acquisition cost?
  • What is your marketing budget?
  • What introductory promos and offers do you intend to provide for attracting new customers?

What marketing channels do coffee shops use?

A few marketing channels that coffee shops typically use are:

  • Content marketing (share content like brewing tips, best raw material, etc.) on platforms like blogs, social media, etc.
  • Customer interaction through social platforms like Instagram, Facebook, etc.
  • Print media
  • Reward programs
  • Email marketing

It is not necessary to use all channels. You can start by focusing on a few of them, or you can instead include other marketing strategies later.

You must have a fair and nearly accurate estimate of your marketing budget. Failure to display a well-planned and adequate cash flow for advertising and marketing can lead to investors losing confidence. That’s because investors are fully aware that if adequate funds are not allocated for marketing, the business will be derailed before becoming a success.

A few examples of a coffee shop Instagram feed template

What are your Unique Selling Propositions (USPs)?

In other words, how do you differentiate yourself vs. competitors? This is very important as you might need to win customers from competitors.

A few examples of USPs are:

  • Products (e.g. high-quality coffee products)
  • Amenities (e.g. pet-friendly coffee shop)
  • Pricing (low-cost products for the campus nearby)

Your USP will depend on your business model, competitor analysis, and target audience. Whatever your USP be, it should appeal to your potential customers and attract them. Plus, The USP you offer should be convincing enough for investors and lenders.

5. Management & Organizational Structure

You must address two things here:

  • The management team and their experience
  • The organizational chart: what are the different teams and who reports to whom?

a) Management

Small businesses often fail because of managerial weaknesses. Thus, having a strong management team is vital. Highlight the experience and education of senior managers that you intend to hire to oversee your coffee shop business.

Describe their duties, responsibilities, and roles. Also, highlight their previous experience and explain how they succeeded in their previous roles.

It is also important that you explain how their experiences and qualifications help you in implementing the coffee shop you are proposing. If they have specialized training and education (someone may be a coffee brewing expert, a raw material expert, an expert in customer acquisition & retention, etc.), add that information.

b) Organizational Chart

Even if you haven’t already hired senior managers, accountants, marketing professionals, billing personnel, baristas, pastry chef, kitchen staff, and other relevant staff members, you must provide a flowchart of the organizational structure defining the hierarchy of reporting.

Such a flowchart will demonstrate your management skills and plans to the interested investors or lenders. If necessary, they may even suggest changes to improve the management structure.

An example of a coffee shop organizational chart

6. Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any business plan.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your coffee shop is an attractive investment.

There should be 3 sections to your financial plan section:

  • Your historical financials (only if you already operate the business and have financial accounts to show)
  • The startup costs of your project (if you plan to open a new coffee shop, renovate your store, purchase new equipment or furniture, etc.)
  • The 5-year financial projections

Historical Financials (if any)

In the scenario where you already have some historical financials (a few quarters or a few years), include them. A summary of your financial statements in the form of charts e.g. revenue, gross profit and net profit is enough, save the rest for the appendix.

If you don’t have any, don’t worry, most new businesses don’t have any historical financials and that’s ok. If so, jump to Startup Costs instead.

Coffee Shop Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project. For a coffee shop, startup costs are all the expenses you incur before you start to receive customers and make money.

Startup costs vary based on a number of factors such as the location and size of your coffee shop, the quality of the barista equipment, whether you have a kitchen or not, the design and furniture, whether you rent or buy the space, etc.

On average, it costs $38,500 to $134,000 to open a standard coffee shop. See below a few examples of the startup costs you should budget for. For more information on how much it costs to open and run a coffee shop in the US, read our complete guide here.

Note that these costs are for illustrative purposes and depend on a number of factors that might not fully apply to you.

Startup costAmount
Coffee machines$4,000 – $12,000
Building refurbishment $20,000 – $100,000
Initial inventory$14,000 – $21,000
Licenses$500 – $1,000
Total$38,500 – $134,000

Get a rock-solid business plan with the Coffee Shop financial model

  • 5-year financial plan already built
  • 20+ charts for your business plan
  • Video tutorial 🎥
  • 5,900+ downloads

Coffee Shop 5-Year Financial Projections

In addition to startup costs, you will now need to build a solid 5-year financial model as part of your business plan for your coffee shop.

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in your business plan.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

  • How much revenue do you expect to generate over the next 5 years?
  • When do you expect to break even?
  • How much cash will you burn until you get there?
  • What’s the impact of a change in pricing (say 20%) on your margins?
  • What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

  • The number of customers (or orders) over time ;
  • Your expected revenue ;
  • Operating costs to run the business ;
  • Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing and the number of customers as a small change in these assumptions will have a big impact on your revenues.

When it comes to the costs, consider both startup and operating costs. For more information on how much it costs to start and run a coffee shop, read our complete guide here.

Source: Coffee shop financial model template

7. Funding Ask

This is the last section of the business plan of your coffee shop. Now that we have explained what your coffee shop sells and to whom, what’s your marketing strategy, where you go and how you get there, this section must answer the following questions:

  • How much funding do you need?
  • What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
  • How long will this funding last?
  • Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

If you raise debt:

If you raise equity

  • What percentage ownership are you selling as part of this funding round?
  • What is the corresponding valuation of your business?

Use of Funds

Any business plan should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment to buy the real estate and do the renovations and design of the coffee shop? Or will it cover mostly the cost of the barista equipment, the furniture and pay for the salaries of your employees the first few months?

Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections. If you’ve built solid projections like in our coffee shop financial model template, you won’t have any issues answering these questions.

For the use of funds, we recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.

An example of a Funding Ask slide for a Coffee Shop business plan (source)

Get a rock-solid business plan with the Coffee Shop financial model

  • 5-year financial plan already built
  • 20+ charts for your business plan
  • Video tutorial 🎥
  • 5,900+ downloads