Essential Café

Logo:

Finance:
Location & Size
The location will be an 1800 sq. ft building at 4364 University avenue. The leasing rate is
$40.00/sq.ft./year amounting to $72,000 ($6,000/month). Our building has a capacity of 75
seated patrons and a max capacity (sitting and standing combined) of 100 patrons.

Utilities
Water- average water usage range= 600-1000 gal/day-> 1,000gal/day source:
http://www.baristaguildofamerica.net/water-usage-in-the-cafe-at-the-farm-and-in-the-future-
episode-1-the-cafe/#_ftnref3
Water Cost = $908/month (1000 gal= 134 HCF, w/4” meter)
 Meter base fee~ $194
 134 HCF~ $714
 Monthly total= $908/month
 SDG&E = $1375/month
  Time Warner Cable Internet= $100/month
 Total Utilities= $2383/month
 Salary Cost (based on 12 employees working 30 hrs/week)= $15,120.00/month
 24 hour operation
 21 hour service

Methodology
Our projections for sales and cost of goods for the first four months is based on sales averaging
400 customers/day at $4.50/customer. Salaries and wages are based on part time employees
(30 hrs/wk), at a rate of $10.50/hour. The depreciation value is based on equipment cost;
estimated to have a 7 year lifespan.

Start Up Costs & Funding Sources

Projected Start Up Cost $250,000.00
Funding sources
Investor 1 $100,000.00
Investor 2 $100,000.00
Personal Savings $50,000.00
Start Up Costs
Rent (6 Months) $36,000.00
Insurance (6 Months) $2,100.00
Utilities (6 Months) $14,298.00
Employee Salary (6 Months) $90,720.00
Cost of Sales (6 Months) $73,622.00
Total $216,740.00

Financing Plan
Our start up costs are estimated to be $250,000. We have two Angel investors, providing
$100,000 each for a total of $200,000 and the remaining $50,000 will come from our personal
savings. From a 6 month point in the business expenses are listed as follows; $36,000 (rent),
$2,100 (insurance), $14,298 (utilities), $86,400 (employee salaries), and $73,622 (cost of sales).
The cost of expenses amounts to $212,420.

Profit/loss statement-
As shown in the chart below, after 4 months; sales totaled to $192,680, cost of sales amounted
to S49,108, and gross profit to $144,572. Operating costs for the 4 month period will be listed
as follows; $57,600 for salaries and wages, $33,600 for rent, utilities and storage, $678 for
equipment depreciation, and $1,400 for insurance, with operating expenses totaling $93,280.
The net income would therefore be $51,292.

Profit & Loss Statement Month 1 Month 2 Month 3 Month 4 Total

Sales
Sales $45,000.00 $47,750.00 $49,113.00 $51,817.00 $192,680.00
 Cost of Sales $12,277.00 $12,277.00 $12,277.00 $12,277.00 $49,108.00
Gross Profit $32,723.00 $35,473.00 $36,836.00 $39,540.00 $144,572.00
Operating expenses
Salaries & wages $15,120.00 $15,120.00 $15,120.00 $15,120.00 $60,480.00
Rent/utilities/storage $8,400.00 $8,400.00 $8,400.00 $8,400.00 $33,600.00
Depreciation $170.00 $170.00 $170.00 $170.00 $678.00
Insurance $350.00 $350.00 $350.00 $350.00 $1,400.00
Total Operating expenses $24,040.00 $24,040.00 $24,040.00 $24,040.00 $96,160.00
Net Income $8,683.00 $11,433.00 $12,796.00 $15,500.00 $48,412.00

MENU
BEAUTY - Rose
Smoothie: strawberry, raspberry, almond milk, rose essential oil
Tea: Rose tea
Muffin: Pistachio rose muffin

CLARITY - Peppermint,
Smoothie: chocolate coconut milk peppermint smoothie
Tea: peppermint wintergreen tea
Coffee: peppermint mocha
Muffin: peppermint cocoa Muffin

PEACE chamomile
Tea: Chamomile tea
Coffee: Chamomile tea latte
Smoothie: strawberries, banana, chamomile and ginger
Muffin: Chamomile honey muffin

HAPPINESS lemon, grapefruit

Smoothie: Spinach, banana, grapefruit, apple juice, lemon, grapefruit essential oil
Tea: lemon ginger tea
Treat: lemon blueberry muffin

HARMONY - lavender, ylang ylang

Smoothie: Peach lavender honey smoothie : peach, honey, milk, vanilla, banana, lavender essential oil
Tea: Ylang Ylang tea
Muffin: Lavender almond muffin

DETOX - wild orange, ginger

Smoothie: Orange carrot ginger smoothie: oranges, carrots, apple juice, ginger essential oil
Tea: Orange-ginger tea
Muffin: pumpkin ginger cranberry muffin
Products and Services
Essentials aims to serve top quality fair-trade coffee, fruit smoothies, loose leaf teas, and fresh
baked goods while providing a place of relaxation, healthful rejuvenation, and productivity. Our
essentials line of products will incorporate the healing effects of essential oils. The menu will
consist of six main rejuvenating effects; Beauty, Clarity, Peace, Happiness, Harmony, Detox,
and Immunity. Each category will be comprised of an essential smoothie, tea, and pastry. Some
will have a coffee as well. These combinations pair specific essential oils and ingredients known
to have certain effects or benefits. This standing menu can be added to, to include seasonal
favorites. Another goal of Essentials is to provide an environment that is relaxing, rejuvenating,
and productive. The facility will provide comfortable and functional areas for people to study,
socialize, relax, and rejuvenate. Special meeting rooms will be incorporated to facilitate this
goal.

Industry Analysis
The food and drink industry in the United States is expected to see sales around 782 billion
dollars in 2016. Coffee houses make up just a small percentage of this, but compete by selling
baked goods, sandwiches, etc.
According to the United States National Coffee Association (2016), the daily consumption of
coffee in cups per day has decreased over the past 2 years from its high in 2014 of 2.01
cups/day to 1.85 in 2015, and 1.64 in 2016. The number one reason for decreasing coffee
consumption among consumers is to limit caffeine consumption (45%), the second reason being
the expense of it (40%), and the third being concerns of it not being healthy (29%). Forty-eight
percent of consumers said they drink coffee to wake up, and 32% consume it to warm up.
Personal health and wellness product sales on the other hand, have been seeing a large growth
rate in the market. According to the Consumer Technology Association (2016), market revenue
for health and wellness products has grown from $3.3 billion in 2013, to $5.9 billion in 2016, and
is expected to continue increasing to $8 billion in 2018. Among people who participate in the
healthy habits of eating a balanced diet, making regular doctor visits, and exercising regularly,
higher majorities in all of these areas said that they would or do consume dietary supplements,
and 31% of U.S. adults in 2015 said they use herbals and botanical supplements. With
education and the percentage of the population to graduate from college on the rise from 7.7%
in 1960 to 32.5 % in 2015, we feel the market is in need of a product line like Essentials Cafe to
provide a place of health, rejuvenation, and an atmosphere for productivity. With these trends
presenting themselves, an alternative healthful choice, along with the favored feel and comfort
of a coffee house is believed to be an upcoming trend in the industry.

Market Share and Competition

The most popular limited service beverage and snack restaurants in the United States in 2015
according to Statista.com are as follows: Smoothie King 67%, Krispy Kreme Doughnuts 64.5 %,
Peet’s Coffee & Tea 63.8%, Starbucks Coffee 62.3%, Cinnabon 61.5%, Tropical Smoothie Café
60.9%, Caribou Coffee 59.5%, Jamba Juice 59.2%, Ms. Fields Cookies 57.5%, and Great
American Cookies 57.5%. We chose our biggest competition based on Statistics in the United
states, but also internationally and based on their origin. We believe our biggest competition to
be Starbucks, The Coffee Bean, Jamba Juice, and small local coffee house hangouts like The
Living Room. These companies offer competing products to our market, however we feel there
is enough significantly different to set us aside from the competition. Where Starbucks and The
Coffee Bean only offer coffees and teas, they do not offer smoothies. Jamba juice offers
smoothies but does not offer any warm or hot options. A large majority of coffee and tea
drinkers purchase these for the warming effects they provide. Starbucks offers a drive thru
which makes it very convenient and which may hurt our sales, however we believe the relaxing
and rejuvenating nature of our facilities will counter this weakness. Unique establishments such
as The Living Room will provide all of the products and services that Essentials will provide,
plus some. Our strength in this will be the consistency that a larger franchised chain can
provide. Where small establishments rely on word of mouth and trained personnel and unique
products, Essentials will hold a large share of the market along with the larger limited service
beverage and snack restaurants listed above.

Competitive Analysis

Company Trend Location Products Market Advantages Disadvantag

es

Essentials Rejuvenat Internationa Essential oil Middle Health How to

LOGO HERE e, relax l- based aged and minded. incorporate
and heal Startup in smoothies, elderly, Rejuvenatin in drinks?
your San Diego. coffees, middle g. Mixed
senses. teas, baked class, New trend. opinions
goods, college Complete about health
hangout, students concept. implications.
room and
rentals. executive
s.

Wholesom Internationa Juices, All ages. Healthy. No hot

e and l shots, Middle Convenient. options.
healthy bowls, class No
living one boosts, health atmosphere.
cup at a smoothies, minded
time. tasty bites, individual
branded s.
merchandis
e.

Highest Internationa Coffee, tea, Middle Energizing. Not health

quality cup l pastries, age, Well known. minded. High
of coffee. music, middle Drive thru. calorie, high
hangout, class. EVERYWHER caffeine.
branded E
merchandis
e.
 Finest Internationa Coffee, tea, Middle Well known. Has
coffees l powders, age, Established. Starbucks as
and teas. office coffee middle direct
“Find Your and food class. competition.
Flavor.” services, Not health
branded minded.
merchandis
e.

Top-notch San Diego Breakfast, Middle Full menu. Poor parking.

seating based lunch, age, Great Limited
conditions dinner, middle environmen locations.
and a desserts, class, t. High training
massive coffee, tea, college required by
menu. smoothies, students. staff.
drinks/spirit
s, souvenirs,
hangout.
Target Market and Demographics:
San Diego is home to over a million people who are constantly on the go. Of the
percentage of adults who drink coffee, 66% of them buy their coffees and teas outside
of their homes. With the increased popularity of coffee shops across the nation, the
West coast has actually seen the highest rise in these new cafes, making San Diego a
great place to launch our business. The average age of San Diego residents is
approximately 35 years with 25% of its population being under the age of 20.
(sandiego.gov). Most of these coffee drinkers who frequent coffee shops and cafes are
younger, more affluent and educated and are actually 42% more likely to be between
the ages of 18-34 (sbdcnet.org). Many people in this age demographic are college,
students and young professionals who need a space where they can plan their days,
accomplish their to-do lists, meet with groups, relax and enjoy a smoothie, tea or coffee
and that’s where Essential comes into play.
Aromatherapy and the use of essential oils has also seen a large increase in
demand over the past few years. Food & beverages emerged as one of the main
applications of essential oils with demand share estimated at over 30% in 2014
(PRnewswire.com). With the growing awareness of essential oils and their health
benefits we expect our business to cater to the needs and wants of these individuals
seeking a place they can relax, unwind, study or connect with others all while benefiting
from the advantages of essential oils.

 http://www.sbdcnet.org/small-business-research-reports/coffee-shop
 http://www.prnewswire.com/news-releases/essential-oil-market-size-to-reach-1167-
billion-by-2022-grand-view-research-inc-531216151.html
 https://www.sandiego.gov/economic-development/sandiego/population

Marketing Strategy
Goals and Action Plan:

Goal Action Plan

Earn a 4+ star rating We will offer the 10% discount to those who review us on
within the first 6 yelp if they show us their review. Reviews will also be
months. monitored so that they can respond to any negative review
quick and efficiently.
Short Term

Increase sales by Through the use of our user – friendly app. Our company
60% within the first will offer our customers with points for spending their
year. money at our location. Customers will then be able to use
their points towards future purchases.
Short Term
 Open 1 more location Hire a marketing consultant to help us with the expansion of
near another college the company. Hire more people to ensure that there are
campus in 6 years. well trained employees at the new location as well.

Long Term

Advertising:
Advertising for our company will be done through various different ways. Since social
media is very present in the day to day lives of people, it will be one of our main ways of
advertising. The use of social media will allow us to reach out to a broader audience and help us
build a stronger brand for ourselves. Our social media use will range from facebook to
instagram and twitter. Because our location will be close to a college campus we will also be
handing out flyers to students to encourage them to come and use our establishment for their
studies. Through the use of our user friendly app we will also hope to encourage our customers
to continue coming back to us. Our mobile application will help our customers scan our menus
before coming in so that they can make healthier decisions. Our customers will also be
rewarded for their purchases, this way encouraging them to keep coming back.

Emerging technologies:
Objective: Build brand awareness using social media and internet

Goal: To build a network of active followers

Action plan: With growing technology a mobile app is much faster than the web. It takes
a second to launch a Mobile App. It can take up to several minutes for a Mobile Website
to load in an area with bad reception. It is at the fingertips of the user with instant
access to menu and products.

Facebook and Instagram: Create a Facebook and Instagram account

Display business and contact information
Encourage followers to share their ideas
Advertise products and give points when liked 200 times
Post daily creative appealing pictures of products for sale

Twitter: Create a Twitter account

Create weekly discount tweets for the first 25 customers who tweet a picture of
themselves drinking an Essential cafe product, create a unique hashtag for
discount

Yelp: Create a Yelp business page with contact information, menu, hours and webpage.

Mobile application proposal: Develop a mobile application that will display business and
contact information, menu of products and prices, and
appealing pictures of products for sale
User interaction: User will be able to browse menu and order products online for pickup
App will save user points to receive free products for items they
purchase
App will provide weekly coupons
User reward points will be earned and saved for future use

Business opportunity: Mobile app will be free to download

Mobile app will build relationships, build loyalty, reinforce
brand,
increase visibility and accessibility, increase exposure
across mobile devices, generate repeat business.
Users will receive notifications of special events and
discounts, one-touch
access to your contact information, directions to location
from wherever they are, users will receive automatic
reminder of their points