MARKETING MANAGEMENT ASSIGNMENT

(MARKETING PLAN)
THE SHIEKH CHILLI CAFE

LDA CHOWK, GAJJUMATA

NEAR RING ROAD, LAHORE

GROUP MEMBERS:

NAME REG NO.

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 TABLE OF CONTENTS

1.0 Executive Summary.............................................................................................................4

1.1 Business Objectives.....................................................................................................4
1.2 Mission Statement.......................................................................................................5
1.3 Guiding Principles.......................................................................................................5
1.4 Keys to Success...........................................................................................................5
2.0 Company Description...................................................................................................5
2.1 Ownership....................................................................................................................6
2.2 Legal Form..................................................................................................................6
2.3 Start-Up Summary.......................................................................................................6
3.0 Products/Services..........................................................................................................7
3.1 Products/Services Descriptions...................................................................................7
3.2 Competitive Comparison.............................................................................................7
3.3 Product/Service Sourcing............................................................................................8
3.4 Inventory Management................................................................................................8
3.5 Warehousing and Fulfillment......................................................................................8
3.6 Future Products/Services.............................................................................................8
3.7 Industry Analysis.........................................................................................................9
3.7.1 Market Size........................................................................................................10
3.7.2 Industry Participants...........................................................................................10
3.7.3 Main Competitors...............................................................................................10
3.7.4 Market Segments................................................................................................13
3.8 Market Tests..............................................................................................................13
3.9 Target Market Segment Strategy...............................................................................13
3.9.1 Market Needs.....................................................................................................14
3.9.2 Market Trends....................................................................................................14
3.9.3 Market Growth...................................................................................................15
3.10 Positioning.................................................................................................................15
4.0 Marketing Strategy and Implementation.................................................................15
4.1 SWOT Analysis.........................................................................................................16
4.1.1 Strengths.............................................................................................................16
4.1.2 Weaknesses........................................................................................................16
4.1.3 Opportunities......................................................................................................16
4.1.4 Threats................................................................................................................17
4.2 Strategy Pyramid.......................................................................................................17
4.3 Unique Selling Proposition (USP).............................................................................17
4.4 Competitive Edge......................................................................................................17
4.5 Marketing Strategy and Positioning..........................................................................17
4.5.1 Positioning Statement.........................................................................................18
4.5.2 Pricing Strategy..................................................................................................18
4.5.3 Promotion and Advertising Strategy..................................................................18
4.5.4 Website...............................................................................................................19
4.5.5 Marketing Programs...........................................................................................19
4.6 Sales Strategy............................................................................................................19
4.6.1 Sales Forecast.....................................................................................................20
4.6.2 Sales Programs...................................................................................................20
4.7 Legal..........................................................................................................................20
4.8 Milestones..................................................................................................................20

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 4.9 Exit Strategy..............................................................................................................21
5.0 Organization and Management.................................................................................21
5.1 Organizational Structure............................................................................................21
5.2 Management Team....................................................................................................21
5.3 Management Team Gaps...........................................................................................21
5.4 Personnel Plan...........................................................................................................21
5.5 Board of Directors.....................................................................................................22
6.0 Financial Plan..............................................................................................................22
6.1 Important Assumptions.............................................................................................22
6.2 Start-Up Costs...........................................................................................................23
6.3 Source and Use of Funds...........................................................................................24
6.4 Break-Even Analysis.................................................................................................25
6.5 Projections.................................................................................................................25
6.5.1 Projected Profit and Loss...................................................................................25
6.5.2 Projected Cash Flow..........................................................................................27
6.6 Business Ratios..........................................................................................................28

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1.0 Executive Summary
The Shiekh Chilli Cafe will be a one of a kind coffee house/cafe located in LDA Chowk
Gajjumata, Lahore. The 1,500 square foot cafe will be located in the newly constructed LDA
Chowk located on the northeast corner LDA Road. The anchor tenant, the Price Chopper
grocery store, has already taken occupancy and the excellent location brings more than
10,000 shoppers weekly.

The Shiekh Chilli Cafe, aptly named for the aromatic brown liquid that will fill the cup, fills
the void of original cafes in the market area, stands out from its corporate peers with their fast
food concepts and fast services. The Shiekh Chilli Cafe is the alternative to fast food /
commercial / coffee shops and offers a much calmer, civilized gourmet coffee experience.
There are no televisions in the cafe, the background music is subtle and work from local
artists will hang on the walls.

The cafe is well appointed with overstuffed leather chairs and sofas in a library like setting.
The cafe is reminiscent of times gone by – yet is cutting edge technologically with WIFI and
state of the art espresso machines.

The Shiekh Chilli Cafe measures its financial success in terms of increased market share and
in earnings. With a total local market of $54 million, this is a tremendous opportunity! The
keys to success will be the ability to offer quality gourmet coffees, take advantage of its small
size, and reliance on an outstanding barista staff. In order to achieve these goals, the cafe will
offer some the area’s finest gourmet beans from local distributors. Because of its small size,
the cafe can enjoy larger margins in the form of lower overhead. The cafe will hand select
baristas and offer salaries comparable to the chains. In turn the baristas will be trained to
cross-sell, and sell the higher margin products.

1.1 Business Objectives

The primary objectives of the business plan for Shiekh Chilli Cafe are below:-
 To increase revenues $36,000 or 5% in Year 2 and by $73,000 or 10% by Year 3
 Achieve a profit margin of 5.2% in Year 2 and 6.90% by Year 3
 Giving a casual and economical environment to customers.

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1.2 Mission Statement
The Shiekh Chilli Cafe is committed to its products and employees which they believe
is the recipe for market success.

1.3 Guiding Principles

The Shiekh Chilli Cafe is committed to values such as excellence, passion, quality,
integrity and leadership which allow them to navigate challenges and provide for future
opportunities. These core beliefs start with their commitment to their products and their
employees.
The Shiekh Chilli Cafe rewards excellence and cherishes loyalty. The cafe will work
with its employees to build strong businesses and a secure future.

1.4 Keys to Success

The Shiekh Chilli Cafe stands out from the competition. Below are their Keys to
Success:-
 Great Products – providing exemplary products at market prices – will make
customers want to return again and again
 Hire Quality Baristas – Pay employees rates similar to the larger chains with
opportunities for long term careers and opportunities for advancement with long
term plans to open a second facility
 Convert Customers to Connoisseurs - Only 40% of the nations coffee drinkers
consume premium ground and whole bean coffee – this will aid in continued
growth

2.0 Company Description

The Shiekh Chilli Cafe will be a coffee house / cafe located in the LDA Chowk, Gajjumata.
Located in the Lahore City area, the cozy cafe will be located in the newly completed Market
Square Plaza. The cafe will serve gourmet coffees, espresso and drip coffee, lattes, and
smoothies. The simple pastry offerings may vary with seasonality but the primary line will
be muffins, breads, cookies, scones, and rolls. All pastries will be supplied daily by a local
bakery.

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The cafe will be owned and operated by Owen Jones, a veteran restaunteur with several years
experience running and managing chain restaurants. The cafe will be open for business
Monday – Thursday 7-10, Fridays and Saturdays 7-11 and closed Sundays.

2.1 Ownership
The Shiekh Chilli Cafe will be owned 100% by Owen Mehboob Elahi. Mr. Mehboob a
graduate of National College of Business Administration & Economics (NCBA&E),
Main Campus, Lahore has an undergraduate degree in business administration. During
high school he worked as a waiter in a local hospital coffee shop that purchased its
beans from a local roaster. In addition to being an avid coffee drinker himself, this job
allowed him to learn about the business first-hand. In college, Mehboob worked in a
campus coffeehouse for four years, eventually rising to the position of assistant
manager. Following graduation, Mehboob secured a business development position for
regional restaurant chain, which provided additional first-hand exposure to the food and
beverage industry - especially the steps involved in establishing new locations.

2.2 Legal Form

The Shiekh Chilli Cafe will be formed as an S-Corporation wholly owned by Mr.
Mehboob.

2.3 Start-Up Summary

The Shiekh Chilli Cafe will have seating for 40 patrons. The rent is $2,075 a month,
with a three-five-year lease available. The site consists of 1500 square feet of leased
space consisting of a dining room, a coffee bar, two restrooms, and a storage room in
back. To be used as a restaurant, this storefront needs to be plumbed and wired
appropriately. Painting, new floors, and countertops are also needed. A custom coffee
bar needs to be built. With materials bought on sale and volunteer labor, the cost to
renovate will be $71,725. The coffeehouse equipment will consist of two commercial
espresso machines, air pots and urns, a commercial blender, commercial brewer, top
loading coffee bins, barista syrups, cold drink dispenser, frothing equipment, a
commercial refrigerator, microwave and stainless steel prep bar. The cost for the
equipment is $38,275. The furniture will consist of leather couches, and chairs
(purchased at auction), coffee tables, bookcases, and window treatment. The artwork

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 will come from local artists and will be sold on a consignment basis. The books were
secured via donations. Total cost to furnish is $14,000. Other startup expenses will be
dishes, furniture, rent deposit, and marketing.

3.0 Products/Services
3.1 Products/Services Descriptions
The Shiekh Chilli Cafe’s primary offering is gourmet roasted coffees with such varieties
such as mocha, carmelicious, white mocha, candy bar latte, and brewed coffee.
Complementing the coffee will be a smoothie line including wild berry, strawberry,
peach, mango and lemonade. Rounding out the simple menu line will be pastries
obtained with an outside supplier, freshly made and delivered daily. The pastry offerings
may vary with seasonality but the primary line will muffins, breads, cookies, scones, and
rolls.

3.2 Competitive Comparison

The research methodology is based on unique coffee shops/cafes in the greater metro
area and omits larger chains or franchises. The findings reveal eight unique competitors.

Roasterie Cafe
4511 W 119th St Leawood, KS 66209
http://www.theroasterie.com/Cafe/

Take Five Coffee Bar

5336 W 151st St Overland Park, KS 66224-8701
http://www.takefivecoffeebar.com/Welcome_to_Take_Five_Coffee_Bar

Homer’s Coffee House

7126 W 80th St Overland Park, KS 66204-3715
http://www.homerscoffeehouse.com/about.php

Morning Glory Espresso

5606 Johnson Dr Mission, KS 66202-3323
http://www.morninggloryespresso.com/

Revo Cup Coffee

11030 Quivira Rd
Overland Park, KS 66210-1239
http://revocup.com/blog/

Daily Dose Coffee and Bar

12056 W 135th St,
LDA Chowk, Gajjumata

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 Java Crossing
8830 W 95th St
Overland Park, KS 66212-4051

Hattie’s Fine Coffees

4195 Somerset Dr
Prairie Village, KS 66208-5242
http://www.hattiesfinecoffee.com/Home_Page.html

3.3 Product/Service Sourcing

The Shiekh Chilli Cafe has negotiated supplier agreements with several local food-
service wholesalers and coffee wholesalers in the Overland Park area that have a
reputation for quality and reliability:
 Mean Beans Coffee Roasters
 Overland Park Brewers
 Healthy Harvest Bread Co.
 Mary's Organics

In the event that one of the aforementioned specialty suppliers cannot meet their needs,
the following national suppliers can both provide all of the food-service products that
they require. In addition, the following wholesalers will supply the cafe with general
restaurant supplies:
 Lawrence Food Products Corp.
 Gerry Food Supply Inc.

3.4 Inventory Management

N/A

3.5 Warehousing and Fulfillment

N/A

3.6 Future Products/Services

Young families which comprise the third largest market share in Overland Park, are
often overlooked in the coffee market. Coffeehouses traditionally have not been
considered ‘kid’ friendly. To overcome this hurdle, the Shiekh Chilli Cafe has long
term plans (5 years) to open a 2nd coffee shop: A combination indoor play area / coffee

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 bar. This concept allows parents and caregivers an opportunity to meet and relax with
other adults while the children can enjoy the indoor playground amenities.

Additional future services will include in-store sales for home purchase as well as an
online store.

The website will have an option to purchase prepaid gift card program – Prepaid gift
cards not only provide immediate cash, but also reduce credit card transaction charges
and draw new customers to the business.

3.7 Industry Analysis

The US coffee shop industry includes about 20,000 stores with combined annual revenue
of about $10 billion. Major companies include Caribou Coffee, International Coffee &
Tea (The Coffee Bean & Tea Leaf), Peet’s Coffee, and Starbucks. The industry is
concentrated: the top 50 companies generate more than 70 percent of sales. Coffee shops
are part of the specialty eatery industry, which also includes retail outlets specializing in
products such as bagels, donuts, frozen yogurt, and ice cream. (First Research)

Competitive Landscape
Consumer taste and personal income drive demand. The profitability of individual
companies depends on the ability to secure prime locations, drive store traffic, and
deliver high-quality products. Large companies have advantages in purchasing, finance,
and marketing. Small companies can compete effectively by offering specialized
products, serving a local market, or providing superior customer service. Specialty
eateries, which include coffee shops, are labor-intensive: average annual revenue per
worker is about $50,000. Coffee shops compete with businesses such as convenience
stores, gas stations, quick service and fast food restaurants, gourmet food shops, and
donut shops. (First Research)

Products, Operations, Technology

Major products include beverages and food. Beverages include brewed coffee and tea;
espresso drinks (cappuccinos, cafe lattes); cold blended beverages; bottled water; soft
drinks; and juices. Food includes pastries, bakery items, desserts, sandwiches, and candy.
Many coffee shops sell whole or ground coffee beans for home consumption. Some

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 coffee shops sell coffee or espresso-making equipment, grinders, mugs, and other
accessories. (First Research)

3.7.1 Market Size

The US coffee shop industry includes about 20,000 stores with combined annual
revenue of about $10 billion. Major companies include Caribou Coffee, International
Coffee & Tea (The Coffee Bean & Tea Leaf), Pet’s Coffee, and Starbucks. The
industry is concentrated: the top 50 companies generate more than 70 percent of sales.
(First Research)

3.7.2 Industry Participants

Within 5 miles of the subject, are 37 businesses involved in the coffee industry,
including chains, restaurants, and tea houses reporting annual revenues in excess of
$54 million. Of these 37 businesses, 20 are Starbucks coffee shops capturing $35.7
million in revenues or 66% of the market share. An additional 8 coffee houses are
franchises capturing $9.7 million represent 18% of the market share. The comparables
– those closely held coffee shops/cafes that will compete for the subject’s business
represent $8.3 million in annual revenues or 15% of the total market.

The Shiekh Chilli Cafe is targeting three primary groups residing in their direct
marketing area. These individuals prefer unique venues and avoid the big chains and
franchises. They prefer their local neighborhood and will support local businesses if
the business warrants.

3.7.3 Main Competitors

Roasterie Cafe
4511 W 119th St Leawood, KS 66209
http://www.theroasterie.com/Cafe/

This competitor has been operating in the greater MSA since 2005 opening its first
cafe in Brookside, Lahore and then at the Leawood location in 2010. The 3,300

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square foot cafe offers an assortment of pastries, bagels and cookies. Beverages
include Harney and Sons teas, signature blends, espresso and specialty drinks. The
cafe has 11 employees and generated $11 million in revenues in 2011. The subject’s
advantage is its smaller, cozier environment.

Take Five Coffee Bar

5336 W 151st St Overland Park, KS 66224-8701
http://www.takefivecoffeebar.com/Welcome_to_Take_Five_Coffee_Bar

This competitor operates from a 3,300 square foot space. The cafe has WI-FI. In
addition to serving coffees and smoothies, the cafe offers more food offerings with a
full service kitchen offering light breakfasts, and sandwiches and wraps. In the
evenings the cafe has musicians performing on a small stage. The Cafe also has a full
liquor license. The broad offerings of amenities do not make this a true comp for the
subject.

Homer’s Coffee House

7126 W 80th St Overland Park, KS 66204-3715
http://www.homerscoffeehouse.com/about.php

This competitor operates from a 6,300 square foot space in a shopping center. The
shop was established in 2001 and in 2011 reported $2 million in revenues. The shop
employs 21 employees and provides music on the weekends. The subject’s advantage
is its smaller, cozier, and quieter environment.

Morning Glory Espresso

5606 Johnson Dr Mission, KS 66202-3323
http://www.morninggloryespresso.com/

This competitor is similar in size to the subject operating from 900 square feet in a
retail shopping center. The Morning Glory Espresso has been operational since 2005
and has 3 employees and reported revenues of $300,000 in 2011. The coffee shop is
open 6 days a week and open for breakfast. The shop has a full kitchen and in
addition to pastries provides traditional breakfast offerings. The store is for sale,
which could potentially impact market share.

Revo Cup Coffee

11030 Quivira Rd
Overland Park, KS 66210-1239
http://revocup.com/blog/

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This competitor occupies a 2,100 square foot shop and has 7 employees. In 2011 its
annual sales were reported to be $700,000. The Revo Cup is a specialized roaster.
The owners from Ethiopia roast the Ethiopian coffee in the store themselves,
providing a truly unique roasted coffee experience. Due to its unique roasting
methods, and its limited food offerings, the subject should do well against this
competitor.

Daily Dose Coffee and Bar

12056 W 135th St,
Overland Park, KS

This competitor occupies 2,700 square feet in a strip center and has been in operation
since 2003. The coffee shop/bar is open 7 days a week and has a full kitchen. The
shop occasionally offers live music on the weekends. The shop employs 9 and
reported revenues in excess of $900,000 in 2011.

Java Crossing
8830 W 95th St
Overland Park, KS 66212-4051

This competitor leases a 2,700 square foot stand alone pad in a shopping center. The
shop has drive throughs on both sides with a small walk up. The business was
established in 2003 and is privately held. The store employs 9 and reported annual
revenues of $900,000 in 2011. Known primarily for its convenience and breakfast
sandwiches, this shop does not directly compete with the subject’s indoor sit down
experience.

Hattie’s Fine Coffees

4195 Somerset Dr
Prairie Village, KS 66208-5242
http://www.hattiesfinecoffee.com/Home_Page.html

Established in 2005, Hattie’s has a staff of 17 and annual revenues of $1,700,000.

The store is larger than the subject and occupies 5,100 square feet. Hattie’s Menu
options are similar to the subject with a focus primarily on coffee, lattes, pastries and
simple breakfast sandwiches. The facility has a great reputation and following. To
capture a portion of this market, the subject will have to convince these customers
that a cozier and quieter atmosphere is a more enjoyable cafe experience.

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3.7.4 Market Segments
The Shiekh Chilli Cafe is targeting the three top segments of the population
representing 39% of the population in the Overland Park area:-
 Boomburbs (29%) – Younger families with a busy, upscale lifestyle. Median age
of 34. Most households operate on two incomes; median household income is
$100,000. Product purchases reflect a suburban lifestyle; one of the top markets
for SUVs, lawn /garden purchases and casual apparel. Technically savvy; active in
golf, tennis and swimming.
 Enterprising Professionals (10%) - Young, highly educated, working
professionals. Single or recently married, median age of 32, median household
income is $65,000. Lifestyle reflects youth, mobility, and growing consumer
clout. Residents go where the jobs are located. Love to travel and exercise; rely
heavily on cell phones, PCs and the internet to stay connected.
 Prosperous Empty Nesters (12%) – Well educated and experienced, residents are
enjoying the transition from child rearing to retirement. Median age is 46; median
household income is $64,000. This market segment is active physically and
financially. Display interest in homes/communities.

(Source: North Star)

3.8 Market Tests

Research from Yelp, Four Square, and Google Places, indicates the Overland Park
market is in need of a new local cafe. The locals have been clamoring for the current
private shops to improve service and/or reduce prices to keep pace with larger chains
and franchises, thus providing a unique niche for the right entrant.

While employed by a national restaurant chain, Mr. Mehboob was constantly directing
patrons to offsite coffeehouses for those seeking that final dessert and cup of coffee
prior to finishing their evening. This is the reason he ultimately began seeking the
location for his coffee house.

3.9 Target Market Segment Strategy

Most adult coffee drinkers said their lifelong habit began during their teenage years. In
fact, 54% said they began drinking coffee between 13 and 19. Another 22% reported

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 their coffee cravings started between the ages of 20 and 24. This means that 76% of
adult coffee drinkers began drinking coffee by the time they were 24. So, despite the
large amount of marketing and advertising directed at the younger age groups, savvy
coffee shop owners will not forget to cater some of their offerings to the adult and
senior market. (National Coffee Drinking Study).

The Shiekh Chilli Cafe will offer a unique experience for coffee aficionado by offering
a quiet and cozy yet sophisticated cafe and offer a sense of refinement and peace in an
otherwise hectic and fast paced world. While other coffee shops cater to convenience
with drive throughs or loud music venues late into the night, the Shiekh Chilli Cafe will
stand apart from its competitors with its quiet yet soothing ambience, capturing a truly
unique (and much needed) market niche.

3.9.1 Market Needs

Coffee shop customers, by nature, are looking for something special - that’s why they
are willing to pay so much for a cup of coffee! Many customers of the big national
chains, while satisfied with their daily coffee would be intrigued to find a local coffee
that is different. (SBA National Information Clearinghouse)

3.9.2 Market Trends

 Unique products (specialized roasts, local ingredients, locally themed or named
drinks, custom drinks by the ‘star’ barista, etc.)
 Games, puzzles, mind benders and other activities that encourage customers to
linger over their coffee
 Hosting or sponsoring local events (entertainment, readings, book clubs, etc.)
 Using technology to creatively compete in marketing with the big chains services
like Four Square, Yelp, and Google Places can increase visibility in the local
market.
 Delivering amazing service from knowledgeable baristas spend lots of time
training staff and utilize online services like the American Coffee & Barista
School
 Selling coffee-related items (and track down any co-marketing opportunities with
a local community college or other student-related group in the area)

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3.9.3 Market Growth
Despite the economic woes, 37% of total coffee consumed in the United States in
2011 was classified as “Gourmet.” According to the National Coffee Drinking Study
This suggests consumers were set on drinking good coffee and visiting their local
coffee shop even in the face of an uncertain economy. (First Research)

The sales of coffee dominate sales of hot beverages, making up 83.3% of the total hot
beverage market in the U.S. Coffee consumption is expected to increase through 2015
at an average annual rate of 2.7%, while tea consumption is expected to increase
through 2015 at an average annual rate of 3.1%. Positive expectations for continued
growth in coffee sales, despite its “mature” product position in the market, are due to
the innovations in premium coffee products (pods, single-serving instants, etc.) (First
Research)

3.10 Positioning
The Russet Mug will position itself as a local coffeehouse or a ‘suburban’ coffeehouse
providing a sanctuary for those in the ‘burbs’ without the hassle of having to drive
downtown
 By charging similar prices as the large chains – the service and quality of the
product will commensurate with the price
 The Shiekh Chilli Cafe is genuinely unique place to gather and meet friends, and
enjoy coffee
 Amenities such as free WIFI, chess games, comfy overstuffed chairs, create a
relaxing environment
 The market does not need a cafe offering fast food breakfasts or another after
hours bar
 The Shiekh Chilli Cafe will position itself as the alternative to the
chain/franchise/fast food coffee house.

4.0 Marketing Strategy and Implementation

The Shiekh Chilli Cafe will provide a quiet and relaxing environment to enjoy gourmet
roasted coffee and smoothies and an opportunity to visit with friends, catch up on one’s
email, or read a chapter of a book. The Cafe will fill the great void providing originality

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 in a sea of facsimile, corporate coffee shops. The cafe’s baristas will be extremely
knowledgeable and offer assistance in any coffee purchase while simultaneously
providing customers with outstanding service.

4.1 SWOT Analysis

The SWOT analysis examines the cafe’s strengths and weaknesses that need to be
addressed. Further, this section examines the opportunities presented to Cafe as well as
potential threats.

4.1.1 Strengths
 Based on its smaller size, the fact that it is not a franchise, the Shiekh Chilli Cafe
is a unique coffee shop concept unlike any other in the Overland Park market.
 The owner has firsthand experience, in operating and starting new restaurants,
 Handpicked baristas will bring professionalism and enthusiasm to the shop.

4.1.2 Weaknesses
 Franchises are the easiest way and often the safest conduit to start a cafe; the cafe
will not have the backing of one of these established entities.
 The Shiekh Chilli Cafe has a minimal budget and is competing against larger and
more established coffeehouses for market share.

4.1.3 Opportunities
 The Overland Park demographics support the need for a unique coffee shop.
 Additional opportunities to target the active and recently retired target market and
45 years+ age group.
 A small slice of a much bigger pie is the goal. Only 40 percent of the nation’s
coffee drinkers are consuming premium ground and whole bean coffee.
Encouraging coffee drinkers to become coffee connoisseurs is the key to
continued growth.
 The local coffeehouse/cafe market is $54 million

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4.1.4 Threats
 The Morning Glory Coffee shop is currently for sale; should another independent
purchase this cafe, it could pose significant threat to market share.

4.2 Strategy Pyramid

 In the short-term, a number of promotions and activities are planned around
launch of the business to create awareness. The coffee shop will have a contest
offering 20 bottomless mugs and will publicize this promotion via radio
advertising, as well as countertop displays and posters in the shopping plaza.
 In addition, during its first year of operations the coffee shop will pass out a
limited number of coupons for a free cup of coffee to prospective customers
visiting the shopping center.

4.3 Unique Selling Proposition (USP)

The Shiekh Chilli Cafe truly stands out from a crowded sea of coffee chains and
franchises. What sets them apart from the competition is primarily its smaller cozier
size combined with premium coffees served by knowledgeable baristas providing so
much energy and enthusiasm for the products they sell.

4.4 Competitive Edge

The Shiekh Chilli Cafe’s competitive edge, its size, is also its greatest attribute.
Because they are small there is no red tape, and they can easily adjust business hours to
say accommodate an afterhours book reading session whereas the corporate chains do
not provide such an accommodation. The Shiekh Chilli Cafe will truly cater to its
patrons needs.

4.5 Marketing Strategy and Positioning

The Shiekh Chilli Cafe utilizes a focus strategy on its market. By specifically targeting
three primary segments they can cater specifically to their needs.

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 Senior Market (age 45+)
The Shiekh Chilli Cafe will target this market simply by its well selected location.
Although this demographic group could readily drive downtown, they prefer a local
cafe to unwind and relax and historically become some of the most loyal patrons.

Newly Hired Employees

The cafe will attract regular customers (weekly or more) - particularly the newly
employed (first job) by providing free WIFI services and providing interesting games in
the customer area.

Young Families
The third targeted markets, younger families, often find that coffeehouse are not ‘kid’
friendly. The company has long term plans to create a combination coffee shop / play
area so that parents and caregivers will have a place to meet with other adults while the
children can enjoy the bounce houses, slides and indoor playground equipment.

4.5.1 Positioning Statement

The Shiekh Chilli Cafe is a gourmet coffee lover’s gem. It is truly one of a kind coffee
house offering outstanding gourmet coffees and blends, served by enthusiastic and
knowledgeable baristas, in a warm, relaxed environment. It is the place to go to visit
with friends or cozy up in a quiet corner with a good book either from the library or
from one of the patron’s personal E-Books.

4.5.2 Pricing Strategy

The Shiekh Chilli Cafe primarily utilizes competition based pricing. The cafe does not
utilize coupons and discounts (other than opening promotion) because they believe
that the most valuable customer demographic of daily coffee consumers is not
influenced by discount programs or coupons.

4.5.3 Promotion and Advertising Strategy

 Online Advertising - The Shiekh Chilli Cafe will advertise regularly on popular
social media sites, such as Facebook. Compared to traditional print advertising,
this is a cost effective tactic that will allow them to reach prospects in a highly
targeted way (e.g., based on criteria such as age, gender, geography, etc.).

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  Web Site - the Shiekh Chilli Cafe will develop a simple Web site, which will
provide basic information about the business, the menu, and links to their presence
on the aforementioned social media channels.
 Radio Advertising - During the first six months of operation, and during the busy
holiday shopping season, the business will advertise on local radio stations.
:
4.5.4 Website
The Shiekh Chilli Cafe will have a simple website identifying its menu items of
gourmet coffees, smoothies and pastries, along with the address, map and hours of
operation. The website will also have a calendar of any upcoming events or
sponsorships. The site will also have links to their social media sites – such as
Facebook & Twitter.

4.5.5 Marketing Programs

The cafe will also rely on signage and draw to its location. Price Chopper brings
10,000 shoppers weekly to its location.

4.6 Sales Strategy

The Shiekh Chilli Cafe will use the following methods to increase sales revenue (as
recommended by Andrew Hetzel on Better Coffee, Better Business):
 The menu will focus on the most profitable products sold. The cafe will always
draw customer attention to the most profitable products.
 As warranted, the cafe will raise prices to bolster brand image. Prices
communicate a perceived value of a product; so if set too low, the customers
might assume that the beverages are inferior compared to the competition.
 Monitor flavoring inventory – Excess flavoring inventory ties up capital and
valuable back room space for storage. The cafe will utilize 4-6 varieties, including
sugar free offerings.
 Control waste and theft – audit sales and inventory reports to evaluate ingredient
waste due to inefficient preparation, returned drinks and employee consumption.
Retail locations can easily waste 20% or more of their daily sales these three key
categories, which is a substantial and unnecessary loss.
 Monitor and evaluate hours of operation

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  Run employee sales contests – The baristas are the salespeople and have a great
deal of influence over the customer ordering process. All baristas will have some
form of sales and customer service training to make each transaction active, rather
than passive. Sales contests will emphasize high margin items or cross selling
 
4.6.1 Sales Forecast
The sales forecast assumes a conservative 5% increase in revenues during Year Two
and 10% increase in Year Three. The following Table shows estimated sales over the
next three years.

4.6.2 Sales Programs

The Shiekh Chilli Cafe will run employee sales contests – The baristas are the
salespeople and have a great deal of influence over the customer ordering process. All
baristas will be required to have sales and customer service training to make each
transaction. The sales contests will emphasize high margin items and cross selling.

4.7 Legal
The Shiekh Chilli Cafe is organized as an S-Corporation formed in the state of Lahore.

4.8 Milestones
Listed below are the milestones for the Shiekh Chilli Cafe:-
Milestone Date
Secure occupancy of Land Completed
Tenant improvements and build outs Mar 20XX
Purchase furniture and decor Apr 20XX
Assemble and hire barista team May 20XX
Advertise on local radio station / mail fliers May 20XX

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 Open for Business Jun 20XX

4.9 Exit Strategy

In the event the store would have to close for business all assets would be sold at
auction.

5.0 Organization and Management

5.1 Organizational Structure
The Shiekh Chilli Cafe is formed as an S-Corporation wholly owned by Owen
Mehboob Elahi.

5.2 Management Team

The Shiekh Chilli Cafe will be owned 100% by Owen Mehboob. Mr. Mehboob a
graduate of National College of Business Administration & Economics (NCBA&E),
Main Campus, Lahore, has an undergraduate degree in business administration. During
high school he worked as a waiter in a local hospital coffee shop that purchased its
beans from a local roaster. In addition to being an avid coffee drinker himself, this job
allowed him to learn about the business first-hand. In college, Mehboob worked in a
campus coffeehouse for four years, eventually rising to the position of assistant
manager. Following graduation, Mehboob secured a business development position for
regional restaurant chain, which provided additional first-hand exposure to the food
and beverage industry especially the steps involved in establishing new locations.

5.3 Management Team Gaps

The Shiekh Chilli Cafe will rely on its POS (Point of Sale) system to generate daily
accounting and cost activity reports. Mr. Mehboob will supply these to an outside
bookkeeper for preparation of annual income taxes.

5.4 Personnel Plan

Initially the cafe will hire 1 manager, 5 baristas, and 2 part time servers. In Year 2, the
cafe plans to hire 1 additional full time barista.

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 Personnel Plan

5.5 Board of Directors

NA

6.0 Financial Plan

The financial plan will cover the following:-
 Required Cost of Start-Up
 Profit and Loss
 Cash Flow
 Balance Sheet
 Financial Ratios

6.1 Important Assumptions

 The sales forecast is conservative and assumes a 5% increase in Year 2, and a 10% in
Year 3.
 The analysis accounts for economic seasonality – wherein some months revenues
peak (such as holidays ) and wane in slower months.
 The analysis assumes the owner will take a much smaller salary compared to his
baristas; at any time it is assumed that owner’s withdrawal is available at his
discretion.
 Sales are cash basis – nonaccrual accounting
 Moderate ramp- up in staff over the 3 years forecast
 The average barista salary in 2012 is $50,000.
 In general, most cafes have an 85% gross profit margin

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  In general most cafes have a 3% net profit margin

6.2 Start-Up Costs

Following are the needed start-up costs associated with the Shiekh Chilli Cafe:

Table (c) Start-Up Costs

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6.3 Source and Use of Funds

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6.4 Break-Even Analysis

6.5 Projections

6.5.1 Projected Profit and Loss

The estimated profit and loss for the Shiekh Chilli Cafe are as follows:

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Table 7.5.1 Pro Forma Profit and Loss

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6.5.2 Projected Cash Flow
The statement of cash flow shows the incoming and outgoing cash of the business.
Table 7.5.2 Pro Forma Cash Flow

Projected Balance Sheet Table 7.5.3 Pro Forma Balance Sheet

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6.6 Business Ratios
The analysis is based on NAICS (North American Industry Classification System)
722213 – Restaurant / Lodging – Snack and Non-Alcoholic Beverage Bars.

Table 7.6 Ratio Analysis

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