Hot Bev and Coffee will offer high-quality and premium coffee to business people and office workers in Overland Park, Kansas. The business will be located at the Market Square Plaza, on a 1,500-square-foot space near Mission Street.

The Hot Bev and Coffee, suitably named for the hot beverages and coffee the business will sell, fills the demand for coffee shops offering top-quality coffee in the area. The primary goal of Hot Bev and Coffee is to offer quality at speed to all its customers. The business will have options to eat in and take away customers.

Additionally, Hot Bev and Coffee will stand out from most corporate peers by avoiding the fast services and fast food concepts. Ideally, the shop will focus on being an alternative to most commercial, fast food, and coffee shops by offering a much more civilized calmer, and gourmet coffee experience.

The coffee shop will feature an indoor seating room that can accommodate up to 150 customers at a go. Additionally, a sitting bay will be provided for customers waiting for their takeaway orders to be processed. The Café will have no televisions but feature subtle music in the background, creating an excellent ambiance for everyone –customers and staff alike.

The café will be well decorated with overstuffed chairs and sofas for comfort. While featuring a theme that reminisces the times gone by, the shop will adopt the latest trends and developments, such as having a state of the art espresso machines and fast WiFi for guests.

The area has several other coffee shops. Irrespective of this, the demand for more coffee providers is still high, specifically shops that guarantee a continuous supply of top-quality coffee as demanded.

On the other hand, Hot Bev and Coffee will differentiate itself from the existing competitors in the market by offering a light menu featuring pastries. This choice is informed by the fact that most existing shops focus on beverages alone.

1.1 Business Objectives

The following objectives will drive Hot Bev and Coffee Café:

To grow steadily to achieve a revenue of around $36,000 within the second year of operation, and $73,000 by the third year, with a projected profit margin of 5.2% and 6.90% in Years 2 and 3, respectively
To be the go-to café in Overland Park

1.2 Mission Statement

Hot Bev and Coffee Cafe is entirely committed to its employees and products, which are strong points of success in the market.

1.3 Success Factors

Even though there are numerous coffee shops in the Overland Park area, Hot Bev and Coffee will strive for success by relying on the following aspects:

Experienced baristas: the café will employ high-quality baristas and pay them competitive rates similar to the larger coffee chains. Such a strategy will guarantee the employees of their job security.
Top-quality products: offering outstanding products even at the market prices will help the café retain many clients and even be assured of return business and more referrals.
Converting customers to connoisseurs: the café will capitalize on the fact that few people (40%) in the USA consume whole bean and premium ground coffee.

2.0 Company Overview

The Hot Bev and Coffee will be owned and operated by Pascaline Jones, an experienced restauranteur having served in the industry for over 15 years. It will be located at Overland Park, Kansas, in one of the city’s newly established Market Square plazas. This cozy café will specialize in serving drip coffee, espresso, gourmet coffees, teas, and lattes.

The simple pastry offers will vary depending on the season. However, the primary servings include scones, rolls, cookies, breads, and muffins. The local bakery will get all the pastries sold here daily.

Hot Bev and Coffee café will operate from Monday to Sunday, 7.00 a.m. to 10.00 p.m. daily, but will close at noon on Sundays.

2.1 Ownership

Pascaline Jones will be the sole owner of Hot Bev and Coffee café. Miss Jones has an undergraduate degree in business management from Kansas State University. During high school, Miss Jones worked as a waitress in one of the local coffee houses before getting employed at Starbucks.

Besides being an avid coffee lover, her work gave her a lot of first-hand experience in successfully running a coffee shop. After college, Miss Jones worked at one of the local coffee shops for five years and became the assistant manager.

After graduating, she became a business development manager at a regional restaurant chain, giving her enough exposure and experience in running a business in the food and beverage industry.

2.2 Location and Facilities

The Hot Bev and Coffee Cafe is located in a highly desirable area – Overland Park and the intersection of Mission Street and 135thStreet in the new Market Square Plaza. The location is quite favorable for the business as it is only a 6-minute drive to 69 Highway.

The café’s property is 95% leased, with other businesses occupying other building sections. The café will target the more than 10,000 shoppers that visit the plaza each week and over 9,400 that stay within a mile radius. Additionally, more than 149,000 other shoppers are staying within a 5-mile radius.

2.3 Startup Summary

The Hot Bev and Coffee will have seating for 40 patrons, and the monthly rent is $2,075. Additionally, Pascaline will take a three to five-year lease. The shop will sit on a 1500 square feet piece of space holding a coffee bar, a dining room, a storage room, and two restrooms.

To achieve a premier status of a coffee house, the premise will require appropriate wiring, plumbing, countertops, new floors, and better painting. The estimated cost of renovating the area is around $71,725, with all materials sourced on sale and with volunteer labor from family members.

The total cost for the café’s equipment will be $38,275 and will include:

A commercial brewer
A commercial blender
Urns
Air pots
Two commercial espresso machines
Top-loading coffee bins
Cold drink dispenser
Barista syrups
Stainless steel prep bar
Microwave
A commercial refrigerator
A frothing equipment

The shop’s furniture will include comfy chairs and leather couches, coffee tables, window treatments, and bookcases. A local artist will be contracted to provide the artwork. The overall cost of furnishing the café is estimated at $14,000. Marketing, rent deposit, furniture, and dishes are other startup expenses.

3.0 Market Analysis

3.1 Overview

Overland Park is an excellent place to live and even work. Over the years, it has been named one of the Midwest’s leading business communities. Additionally, it has been recognized by national organizations and publications for its livability and excellent business environment.

Being at the core of one of U. S’s dynamic local markets, Overland Park provides easy access to most of the city’s amenities. Additionally, it is a significant part of the Kansas City metropolitan area, with some major roads and highways, such as Highway 69, I-635, I-435, and I-35 passing through here.

Three major airports serve this area: Johnson County Executive Airport, the second busiest in the city, Kansas City International Airport, and New Century Air Center.

In terms of labor, Overland Park has been known to have a high number of highly educated workers in the country. For instance, most adults (97%) over 25 years hold at least a high school diploma.

Additionally, Overland Park ranks sixth in terms of adults holding a bachelor’s degree and attains 16^th position when ranked in terms of adults with a professional or graduate degree.

3.2 Industry Analysis

The coffee shop industry in the United States comprises more than 20,000 stores with a projected annual revenue of around $10 billion. Key players in the industry include companies such as Starbucks, Peet’s Coffee, International Coffee & Tea, and Caribou Coffee.

The coffee industry in the country is highly concentrated, with most countries generating more than 70% of sales. This industry forms a significant percentage of the specialty eatery industry, including retail outlets with unique offerings like ice cream, frozen yogurt, donuts, and bagels.

Competitive Landscape

The demand for coffee and hot beverages is driven by personal income and consumer tastes. Each company in the industry draws profits from the store traffic, securing prime locations and high-quality product offers.

Large companies draw competitive advantage from their purchasing power, finance, and marketing capabilities. On the other hand, small companies can still compete favorably if they serve a local market, offer specialized products, or provide superior customer service.

Specialty eateries in this industry include coffee shops and tend to be labor-intensive, with the yearly revenue for workers averaging $50,000. Competition comes from other establishments, including gas stations, convenience stores, donut shops, gourmet food shops, and fast restaurants.

Products, Operations, Technology

The primary products offered in this industry are food and beverages. The beverages range from brewed coffee to tea, espresso drinks such as café lattes and cappuccinos, cold blended beverages, soft drinks, bottled water, and juices.

3.3 Consumer Analysis

Target Market

There are more than 20,000 coffee stores in the US coffee shop industry, contributing to a combined annual revenue of around $10 billion. Some of the key players in the industry

Hot Bev and Coffee targets three types of consumers, especially those with a high preference for unique venues and those who tend to avoid franchises and big chains. Additionally, the café will target consumers who prefer coffee in their neighborhood or support local businesses.

Market Needs

Any coffee consumer, naturally, looks for something special, which explains why most consumers would pay a lot of money for a single cup of coffee. Most consumers who frequent big national chains would look for a different and better taste from a local shop.

Customer Segmentation

The target market comprises three primary segments, accounting for 39% of the Overland Park area’s population.

The Boomburbs group (29%)
Features younger families with upscale lifestyles and busy schedules
The majority of the consumers in this group are a median age of 34
Most households have two incomes, averaging $100,000
The purchase pattern is a reflection of the suburban lifestyle
Technically Savvy (10%)
This group comprises consumers active in swimming, tennis, and golf.
The median age of this group is 32, which an average median household income of $65,000
Their lifestyle reflects mobility, youth, and growing consumer clout.
This group often goes to the coffee shops.
They love traveling and exercising and often stay connected through PCs and cell phones
Prosperous Empty Nesters (12%)
This group consists of experienced and well-educated consumers
They are mainly transiting from child-rearing to retirement
The median age is 46, with a median household income of $64,000
This segment comprises financially stable and physically active individuals
They have a lot of interest in communities and homes

4.0 Competitive Analysis

Hot Bev and Coffee will be a premier coffee café offering coffee and other beverages to Overland Park, Kansas residents.

Given that the café is just starting, a lot of focus will be on offering premium and specialized services to its consumers.

4.1 Competitors

Hot Bev and Coffee café will deal with indirect and direct competition from other establishments.

The main competitors are:

Take Five Coffee Bar
1. located along 5336 W 151^st St, this coffee shop has a food space of 3,300 square foot
1. Besides serving smoothies and coffees, Take Five Coffee Bar offers light breakfast, a full-service kitchen, wraps, and sandwiches.
1. Additionally, the café entertains its customers in the evenings with musicians.
1. Its broad menu excludes this coffee shop from being a true competitor of Hot Bev and Coffee café.
Roasterie Café
Located in Leawood, Kansas, at 4511 W 119^th St
It has been in operation since 2005 and has establishments in Leawood and Brookside.
Its offerings include an assortment of cookies, bagels, and pastries
The beverages side comprises specialty drinks, espressos, signature blends, Harney and Sons teas
Homer’s Coffee House
Located in Overland Park, Kansas, at 66204 – 3715, 7126W 80^th St
Based at the shopping center, with a space of 6,300 square foot
Its first shop was started in 2001
Employs more than 20 employees and gets a competitive advantage from its quieter, cozier, and small environment
Morning Glory Espresso
It is located at 5606 Johnson Dr, Mission, Kansas, and operates on 900 square feet of space.
It has been in business since 2005
In addition to pastries, the shop has complete kitchen offerings and traditional breakfast

4.2 Competitive Advantage

Hot Bev and Coffee café will position itself as a premier local café offering a cozy environment to coffee lovers in Overland Park.

The café will offer competitive prices and, where necessary, charge prices similar to the existing chains while ensuring that the quality and service offering commensurate with the product prices.

The coffee house will be designed to create a beautiful and convenient place where friends can meet to enjoy more than just a cup of coffee but also comfy overstuffed chairs, chess games, and free WiFi.

In addition, the café will draw a competitive advantage from having unique offers away from the fast food breakfasts. Ideally, the café comes in as an alternative to regular fast-food coffee shops, franchises, and food chains.

5.0 Marketing Plan and Implementation

Hot Bev and Coffee will offer a relaxed and cozy environment for friends and family to meet and enjoy tasty smoothies and gourmet roasted coffee. Focusing on originality, the café will capture a significant market share by targeting individuals and businesses looking for a different, top-quality coffee taste.

Here’s a detailed marketing plan:

5.1 SWOT Analysis

5.1.1 Strengths

Hot Bev and Coffee intend to capitalize on several strengths, including the following:

Prime location, which serves most businesses and residents
The owner’s experience in the food and restaurant industry will be an added advantage
Experienced baristas committed to serving the customers

5.1.2 Weaknesses

Some of the café’s weaknesses include:

Franchises are easy to enter the coffee and beverages industry
Minimal operating budget
High competition from established cafes in the market

5.1.3 Opportunities

Ease of entry into the market
High demand for a unique coffee house in Overland Park
The need to convert customers into connoisseurs
High market value for coffee in the region

5.1.4 Threats

Threats from mergers and acquisitions
Competition from large coffeehouses and cafes

5.2 Unique Selling Proposition

Hot Bev and Coffee Cafe focus on standing out from the crowd of coffee franchises and chains. Its small and cozier size is a tremendous advantage in achieving this objective. Besides, the café will offer premium coffee prepared and served by experienced baristas.

5.3 Competitive Advantage

Hot Bev and Coffee get its competitive edge from its small size. Since their scale of operation is small, the café gets leverage over red tape. Additionally, the coffee house can adjust its operations significantly to meet any needs in the market.

5.4 Marketing Strategy and Positioning

The Hot Bev and Coffee café uses a focus strategy to gain a relevant market share. With the focus on three main segments, the café will gain a significant market share over a short time.

Here are the groups that the coffee house will target in its marketing strategy:

Senior Market: The senior market comprises individuals aged above 45 years. This category of coffee consumers can drive downtown, but they prefer a local café with the ambiance they need to relax and unwind.
Newly employed: the marketing team will target individuals newly hired by offering them access to free internet and the chance to play exciting games with their friends and colleagues in the customer area.
Young Families: the other group of consumers that the café will target is the younger families category. By offering conducive and kid-friendly areas, the coffee house will attract several young families who have been avoiding cafes because of the perception that most coffeehouses need to be “child friendly.

Promotion and Advertising Strategy

Hot Bev and Coffee will use a combination of various approaches to create awareness, generate leads, and grow its customer base.

Online advertising: the café will use major social media platforms, including Instagram and Facebook, to advertise. The rationale for this approach is that online advertising is more cost-friendly and has a high chance of reaching many of the targeted groups.
Website: the café will have a simple website designed to offer basic information about the business and give access to the coffeehouse’s menu and location. With solid SEO, the website will make it easy for people to find it whenever searching online for “a coffeehouse near me.”
Radio and Print Media: Hot Bev and Coffee will combine print media and radio advertising to create more awareness, especially during the first six months in business.

5.5 Pricing

Hot Bev and Coffee plans to use pricing as a competitive aspect. With moderate yet on-par pricing, the coffeehouse will attract new customers looking for a unique coffee taste and pocket-friendly prices.

Additionally, the pricing strategy would help create an impression on customers that they receive great value for their money.

6.0 Operations and Management Plan

The organization and management of Hot Bev and Coffee Cafe will include the following:

6.1 Organizational Structure

The coffeehouse will be an S-Corporation 100% owned by Pascaline Jones.

Her duties and responsibilities will include:

Owner and company president
Overseeing all the other staff
Managing client relations

6.2 Management Team

Miss Jones, a graduate of Kansas State University, will be the sole owner of Hot Bev and Coffee café. She has a bachelor’s degree in Business Administration and has served in different coffee and beverage industry positions.

She has grown through ranks from working as a waitress to being an assistant manager and business development manager in a regional chain restaurant.

Her educational background and work experience are handy in the management and growth of Hot Bev and Coffee.

6.3 Personnel Plan

The coffeehouse will initially employ two part-time servers, five baristas, and one manager. However, after a year in business, the café will employ an additional barista. Any other staff will be hired on a need basis.

7.0 Financial Management

7.1 Key Assumptions

This financial projection is based on the following key assumptions:

The sales forecast is conservative and is assumed to increase by 5% after the first year and 10% in Year 3
Economic seasonality is accounted for in the analysis
The owner takes a smaller salary in comparison to the other staff
All sales are recorded on a cash basis. Hence there is nonaccrual accounting
The baristas are paid an average of $50,000
The net profit margin of cafes is 3$ while the gross profit margin is 85%

7.2 Funding Requirement and Use of Funds

Hot Bev and Coffee Coffeehouse is looking for $300,000 in debt finance to start operations at the Overland Park location, hoping to open a new branch during the second year of operation. This amount will be used to lease the area and renovate it to the owner’s desired shape and design.

Here’s a simple breakdown of the use of the funds:

Table 1: Requirement and Use of Funds

Source of Funds
Lease and renovation	$100,000
Working capital	$25,000
Inventory	$25,000
Overheads	$ 100,000
Working Capital	$ 50,000
Total Use of Funds	$300,000

7.3 Financial Projections

7.3.1 Income Statement

The following shows the income statement for Hot Bev and Coffee for three years:

Table 2 Income Statement

	Year 1	Year 2	Year 3
Revenues
Overall Revenues	$360,000	$793,728	$875,006
Overheads and Expenses
Cost of Goods	$64,800	$142,871	$157,501
Premises ease	$50,000	$51,250	$8,000
Marketing and advertising	$10,000	$8,000	$12,731
Wages and Salaries	$157,015	$214,030	$235,968
Initial expenditure	$10,000	$0	$0
Total Expenses & Costs	$291,815	$416,151	$454,000
EBIT	$41,025	$350,417	$393,845
Interest	$23,462	$20,529	$17,596
PRETAX INCOME	$17,563	$329,888	$376,249
Operating Loss (Net)	$0	$0	$0
Use of Net Operating Loss	$0	$0	$0
Income(taxable)	$17,563	$329,888	$376,249
Income Tax Expense	$6,147	$115,461	$131,687
NET INCOME	$11,416	$214,427	$244,562

7.3.2 Balance Sheet

The table below shows the balance sheet for Hot Bev and Coffee café for year 1, year 2, and year 3.

Table 3 Balance Sheet

Table 4 Balance Sheet

Balance Sheet	Y1	Y2	Y3
Assets
Cash Assets	$154,257	$348,760	$573,195
Accounts Receivables	$0	$0	$0
Inventory	$30,000	$33,072	$36,459
Other Current Assets	–	–	–
Total Current Assets	$184,257	$381,832	$609,654

Fixed Assets	$180,950	$180,950	$180,950
Accumulated depreciation	$27,160	$54,320	$81,480
Net Fixed Assets	$153,790	$126,630	$99,470
Total Assets	$338,047	$508,462	$709,124

Liabilities and Capital
Debt	$315,831	$270,713	$225,594
Accounts Payable	$10,800	$11,906	$13,125
Total Liability	$326,631	$282,618	$238,719
Share Capital	$0	$0	$0
Retained Earnings	$11,416	$225,843	$470,405
Total Liabilities and Capital	$338,047	$508,462	$709,124

7.3.3 Cash Flow Statement

The table below is shows Hot Bev and Coffee café’s cash flow for Year 1, year 2, and Year 3

Table 5 Cash Flow Statement

Cash Flow	Year 1	Year 2	Year 3
CASH FLOW FROM OPERATIONS
Net Income (Loss)	$11,416	$214,427	$244,562
Change in working capital	($19,200)	($1,966)	($2,167)
Depreciation	$27,160	$27,160	$27,160
Net cash from operations	$19,376	$239,621	$269,554

CASH FLOW FROM INVESTMENTS
Cash from equity	$0	$0	$0
Cash from debt	$315,831	($45,119)	($45,119)
Net Cash Flow from Financing	$315,831	($45,119)	($45,119)
Net Cash Flow	$154,257	$194,502	$224,436
Cash at Beginning	$0	$154,257	$348,760
Bills Paid
Cash at the Beginning of Period	$154,257	$348,760	$573,195

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3.3 Consumer Analysis

5.0 Marketing Plan and Implementation

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