The Library Caf

Business Report
LOW, Lih Jih
6779274

Table of Contents
1. Introduction..........................................................................2
2. Procedure.............................................................................3
3. Findings................................................................................ 4
3.1 Existing Competitors.........................................................4
3.2 Location............................................................................4
3.3 Social and Environmental..................................................5
4. Conclusion............................................................................ 7
5. Recommendation.................................................................8
6. List of references..................................................................9

1. Introduction

The purpose of this report is to provide local business investor an idea on starting up a
brand new independent coffee shop in Coventry, The Library Caf.
City centre of Coventry has been used in the demonstration report as the analysed
centre. On 8 February 2016, discussion was conducted with three course mate in The
Hub, Coventry University to find out the quantity and frequency of drinking coffee
along with the factors of attracting customers visit to coffee shop.

2. Procedure

This report had discovered top two chains of coffee outlets (Starbucks and Costa) that
provides similar type of food and beverage, they are located close to one another in
city centre of Coventry and also social environmental factor. Analysis and references
made to website and articles.

3. Findings

3.1 Existing Competitors

The main competitors are using diverse way to deal with customers and to expand
their share of coffee sector. Costa is on the top chain of coffee shops, by franchises; it
has more than 1,900 coffee shops in UK and more than 4,200 Costa Express selfserve units (Whitbread PLC 2015). Based on analysis, 10% of total customers made
up for 50% of Costa visits (Digital Strategy Consulting 2012). It brings the important
point of future challenge is to retain existing customers become loyal customers. For
this challenge, Costa introduced the loyalty card to attract new customers who prefer
point collection schemes and currently has around 6 million loyalty cards after
launched in 18 months (Digital Strategy Consulting 2012).
Starbucks, another successful coffee shop industry in UK. The statistics shows that,
there were 428 company operated Starbucks stores and 414 license stores in the UK
(Statista 2016). Starbucks is a recognized leader in the coffee industry in terms of
make good use of information technology and technological developments. Starbucks
has advertise its brand name and sales of products earlier than the competitor by using
mobile applications. Starbucks app offers multiple features, for example, rewards
program,

store

locator

and

nutrition-based

information.

The

ingenuity,

MyStarbucksSignature countenanced customers to create their personal drinks,

design the name of the drink and share the brand-new flavour to public (Business
Today 2014). Meantime, Starbucks utilise a range of social media such as Facebook,
Twitter, and Iphone application to reach their customers, promote their products and
to gain feedback. Therefore, social media would become one of the main strategy, as
it provide opportunities for launching and promoting the new products rapidly to
attract new customers.

3.2 Location
The selection of location will have an overwhelming impact on chances of success.
Consequently, a key success factor for coffee shop is the convenient location, which
could satisfy customers need at the right time and in the ideal place. In the big city,
coffee shop need to bear higher rent, nevertheless, in the countryside with various
products that correspond with the local taste and lower rent might bring benefit to
coffee shops. Coventry demographics support the requirement for a unique coffee
shop and it provide extra chances to target university students and staffs.
4

3.3 Social and Environmental

The ethics of the coffee store chains have been under the public eye, as Starbucks
being publicly shamed over the tax avoidance, meanwhile Ethical Consumer
magazine acknowledge Costas policies as weak in the ratings scorecard (The
Guardian 2015). In October 2012, there were accusation that Starbucks were not
disburse tax in UK, and it was publicised that Starbucks paid only 8.6 million in
corporation tax over the 14 years (BBC 2012). Consumers took this issues to media
induce an ultimately huge dilemma to the company, with their brand status drop a lot
higher than predicted within a calendar month.
In 17 February 2016, a research by Action of Sugar found more than a third of
nations favourite hot drinks contain a worrying amount up to 25 teaspoons of sugar
(International Business Time 2016). A list of the hot beverages from coffee shops
being surveyed, such as Starbucks, Costa Coffee, Greggs, Caffe Nero, and etc. Figure
1 below shows the Top 10 hot drink with highest level of sugar. In term of consumer
priorities, health is now ranked as the top global consumer concern (Nielsen 2014).
Thus a company should take these issues seriously in order to build a success coffee
business.

Figure 1. Top 10 hot drinks with highest levels of sugar (International

Business Time 2016)

4. Conclusion

According to the previous analysis, the coffee industry is growing up, but there is a
couple issues that the company need to concern with, such as location, ethical
behaviour and consumer health consciousness. Open an independent coffee shop
might need to face trim experience, yet it can build up its own particular style of
coffee shop to attract customers. Based on coffee shop smaller size, Coventry have
numerous area worth to develop as the rent is not as high as big city such as London.
The Library Caf will assemble to each customer groups who demand on their daily
cup of fresh coffee in a comfortable environment. Customers might in varies age
level, though the place is near to the university which implies almost all of our
customer will be university students and staffs that look towards better quality coffee.
Furthermore, perhaps that most the university student prefer a convenient location of
coffee shop to read books or meet with friends without paying any cover charges, and
this will provide an incredible opportunities to build a trustworthy customer base.

5. Recommendation

Analysis shows the dominant customers groups like university students and staffs,
offices employees, and on refined teenagers are the most likely to purchase gourmet
coffee products. The Library Caf should concentrates its marketing activities to reach
to targeted customer groups. As coffee expenditure is prevalent throughout varies
income levels and ordinarily hinge on higher education level, a short walking distance
to the Coventry University will give access to the targeted customer. Thus, the
location suggested should be close to Coventry University, such as Lanchester
Library.
The Library Caf intended to be a daily coffee shop choice for local coffee lovers, an
area where everyone can get away from stressed and perhaps a comfy area to study or
to meet with peers. In order to establish a core group of loyal customers, The Library
Caf should draw advantage on its proximity to the University campus and place itself
as a distinctive coffee shop where the consumers can not only have a cup fresh coffee,
yet to spend their day in a comfy atmosphere with free accessible internet, free books,
magazines, and etc. Herewith, comfortable furniture like couches and chairs, soft and
comfortably light, and soft melody can help the customers to relax and will ascertain
The Library Caf from competitors.
The Library Caf should be aware of the customer health consciousness as the
consumers nowadays are far more concerned about everything from food ingredients.
In contemplation to develop the customer base, The Library Caf should use posters
and flyers to promote its coffee shop, make use of customer referrals and crosspromotions with other associations in the community (Bplans.co.uk 2016). Meantime,
customer loyalty programs should apply to retain the customers, and make sure they
are visiting again to The Library Caf.
(1198 words)

6. List of references

BBC (2012) Starbucks 'paid just 8.6m UK tax in 14 years' [online] available from
<http://www.bbc.co.uk/news/business-19967397> [19 February 2016]
Bplans.co.uk (2016) Coffee Shop Business Plan [online] available from
<http://www.bplans.co.uk/coffee_shop_business_plan/strategy_and_implementation_
summary_fc.cfm> [20 February 2016]
Business Today (2014) Brewing innovation [online] available from
<http://www.businesstoday.in/lbs-case-study/how-starbucks-survived-the-financialmeltdown-of-2008/story/210059.html> [18 February 2016]
Digital Strategy Consulting (2012) How Costa used customer insight to achieve
brand loyalty [online] available from
<http://www.digitalstrategyconsulting.com/intelligence/2012/07/how_costa_used_cus
tomer_insigh.php> [16 February 2016]
International Business Times (2016) 'Shocking' sugar levels found in hot drinks sold
by Starbucks, Costa and Cafe Nero [online] available from
<http://www.ibtimes.co.uk/shocking-sugar-levels-found-hot-drinks-sold-bystarbucks-costa-cafe-nero-1544339> [19 February 2016]
Nielsen (2014) WHAT WILL ENTICE CONSUMERS TO OPEN WALLETS IN 2014?
[online] available from <http://www.nielsen.com/us/en/insights/news/2014/what-willentice-consumers-to-open-their-wallets-in-2014.html> [19 February 2016]
Statista (2016) Number of Starbucks stores in the United Kingdom from 2005 to 2015
[online] available from <http://www.statista.com/statistics/218388/number-ofstarbucks-stores-in-the-uk/> [18 February 2016]
The Guardian (2015) Starbucks and Harris + Hoole share the dregs in ethical coffee
rankings [online] available from <http://www.theguardian.com/sustainablebusiness/2015/apr/21/starbucks-caffe-nero-costa-tesco-ethical-coffee-rankings> [18
February 2016]
Whitbread PLC (2015) Annual Report and Accounts 2014/15 [online] available from
<https://www.whitbread.co.uk/content/dam/whitbread/download_centre/reports_and_
results/2015/Interactive-Annual-Report-2015.pdf> [15 February 2016]
International Business Times (2016) 'Shocking' sugar levels found in hot drinks sold
by Starbucks, Costa and Cafe Nero [online] available from
<http://www.ibtimes.co.uk/shocking-sugar-levels-found-hot-drinks-sold-bystarbucks-costa-cafe-nero-1544339> [19 February 2016]