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Legal Page
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Table of Contents

1.0 Executive Summary.....................................................................................................................1

1.1 Mission...........................................................................................................................................2
1.2 Objectives....................................................................................................................................2
1.3 Keys to Success.........................................................................................................................2
Chart: Highlights...........................................................................................................................3
2.0 Company Summary......................................................................................................................4
2.1 Company Ownership................................................................................................................4
2.2 Start-up Summary....................................................................................................................4
Table: Start-up...............................................................................................................................5
Chart: Start-up..............................................................................................................................7
Table: Start-up Funding..............................................................................................................7
3.0 Products............................................................................................................................................8
3.1 Vendors.........................................................................................................................................8
3.2 The Dark Roast Java Menu...................................................................................................8
3.2.1 Coffee and Espresso Drinks..........................................................................................9
3.2.2 Teas......................................................................................................................................10
3.2.3 Juices....................................................................................................................................11
3.2.4 Italian Sodas.....................................................................................................................11
3.2.5 Other Drinks......................................................................................................................12
3.2.6 Snacks and Pastries.......................................................................................................12
3.2.7 Deli Items...........................................................................................................................12
4.0 Market Analysis Summary.......................................................................................................12
4.1 Market Segmentation............................................................................................................13
Table: Market Analysis..............................................................................................................14
Chart: Market Analysis (Pie)...................................................................................................14
4.2 Target Market Segment Strategy......................................................................................15
4.3 Industry Analysis.....................................................................................................................16
4.3.1 Competitive Comparison..............................................................................................17
4.3.2 Competition and Buying Patterns.............................................................................20
5.0 Strategy and Implementation Summary...........................................................................21
5.1 Competitive Edge....................................................................................................................21
5.2 Marketing Strategy.................................................................................................................22
5.2.1 Launch Marketing............................................................................................................22
5.3 Sales Strategy..........................................................................................................................27
5.3.1 Sales Forecast..................................................................................................................29
Chart: Sales Monthly.............................................................................................................29
Chart: Sales by Year..............................................................................................................30
Table: Sales Forecast.............................................................................................................30
5.4 Milestones..................................................................................................................................31
Table: Milestones.........................................................................................................................31
6.0 Web Plan Summary....................................................................................................................32
6.1 Website Marketing Strategy................................................................................................32
6.2 Development Requirements................................................................................................33
7.0 Management Summary.............................................................................................................33
Page 1

Table of Contents

7.1 Personnel Plan..........................................................................................................................34

Table: Personnel..........................................................................................................................34
8.0 Financial Plan................................................................................................................................35
8.1 Important Assumptions........................................................................................................35
Table: General Assumptions...................................................................................................35
8.2 Break-even Analysis...............................................................................................................36
8.2 Break-even Analysis...............................................................................................................36
Chart: Break-even Analysis....................................................................................................36
Table: Break-even Analysis.....................................................................................................36
8.3 Projected Profit and Loss.....................................................................................................37
8.3 Projected Profit and Loss.....................................................................................................37
Chart: Profit Monthly.................................................................................................................37
Chart: Profit Yearly.....................................................................................................................38
Chart: Gross Margin Monthly.................................................................................................38
Chart: Gross Margin Yearly.....................................................................................................39
Table: Profit and Loss................................................................................................................39
8.4 Projected Cash Flow...............................................................................................................41
8.4 Projected Cash Flow...............................................................................................................41
Chart: Cash...................................................................................................................................41
Table: Cash Flow.........................................................................................................................41
8.5 Projected Balance Sheet......................................................................................................43
8.5 Projected Balance Sheet......................................................................................................43
Table: Balance Sheet.................................................................................................................43
8.6 Business Ratios........................................................................................................................44
8.6 Business Ratios........................................................................................................................44
Table: Ratios.................................................................................................................................44
Table: Sales Forecast...........................................................................................................................1
Table: Personnel....................................................................................................................................2
Table: Personnel....................................................................................................................................2
Table: General Assumptions.............................................................................................................3
Table: General Assumptions.............................................................................................................3
Table: Profit and Loss..........................................................................................................................4
Table: Profit and Loss..........................................................................................................................4
Table: Cash Flow...................................................................................................................................6
Table: Cash Flow...................................................................................................................................6
Table: Balance Sheet...........................................................................................................................8
Table: Balance Sheet...........................................................................................................................8

Page 2

Dark Roast Java

1.0 Executive Summary

The concept
Thanks primarily to Starbucks, within the past 20 years the coffeehouse has become a familiar
feature of American life. Every day, millions of Americans stop for an espresso-based coffee
drink. People who would not have dreamed of spending more than 50 cents for a cup of coffee
a few years ago now gladly pay $3 to $5 for their cappuccino, mocha latte or vanilla ice blended
drink.
The specialty-coffee business is growing at a healthy pace. During the past 20 years, there has
not been a single year, despite war and recession, in which specialty coffee sales have not
grown. In many years the increase has been in double digits. In addition, no coffeehouse chains
have failed during this time, although the list of casualties in other industries is quite long.
Starbucks, The Coffee Bean, Peet's, Diedrich's and other major chains serve average quality
drinks in establishments that have the same generic design appearance. Indeed, Starbucks and
The Coffee Bean are often referred to as "fast food" coffeehouses due to their "cookie cutter"
design. Now that Americans' coffee preferences have broadened and matured, many are asking
for more from their coffeehouse.
A niche exists that has yet to be filled for a high-volume, upscale, quality-driven
coffeehouse with a warm, inviting atmosphere. Dark Roast Java meets this need and fills
this niche. We offer high-quality products in an upscale environment. Furthermore, our highprofile location in Pleasantville provides a mixed customer base that will maintain high levels of
business in every season, at all times of the day, every day of the week.
Founders
Ned Powers-Sebastiane, founder of Dark Roast Java, has a long career as an entrepreneur and
marketing executive. He is the founder of Powers-Sebastiane Advertising & Public Relations and
Pan National Motor Tours. Co-owner Curt Yamaguchi has an intuitive understanding of the real
estate market. As a highly successful real estate broker and investor he brings several key
capabilities to the Dark Roast Java team, not the least of which is his ability to procure highly
desirable locations for future stores.
Financials
The company anticipates rapid acceptance of the Dark Roast Java concept in Pleasantville, with
revenues of $600,000+ in the first fiscal year, rising to more than $1,000,000+ in year three.
Net profit is projected to be approximately $99,000 in year one, growing to an estimated
$265,000 by year three.
An advanced and expandable point-of-sale system
After carefully tracking the performance of the Pleasantville store through an expandable and
highly detailed point-of-sale system, we will use this as a "blueprint" for expansion. For
example, daily sales are tracked and analyzed by item, time period and cost of goods. Labor
requirements are matched to projected in-store sales based upon past performance for
maximum efficiency. Even after paying higher than average wages, we expect to allocate no
more than 25% to labor costs.
This Business Plan only provides data on the Pleasantville coffeehouse.
Sources: US Census Bureau, Pleasantville Chamber of Commerce, Specialty Coffee Association of America.

Page 1

Dark Roast Java

1.1 Mission
Our goal is to be the coffeehouse of choice for the local Pleasantville community, downtown
business workers, tourists who visit the city, and students, by providing a higher quality
experience than any competitor. As a result, we intend to create coffeehouses that quickly
achieve profitability and sustain an attractive rate of return (20% or more annually) for our
investors.
We also want to make our contribution to the welfare of the local community by supporting
charitable and civic activities. We will support the farmers who grow our coffee by using Fair
Trade, Sustainable Production and Organic products whenever possible.
Dark Roast Java also awards its business to as many local suppliers as possible, keeping the
business in the community or, at the least, in the state.
1.2 Objectives

Make Dark Roast Java the number one destination for coffee in Pleasantville

Sales of $600,000+ the first fiscal year, $750,000+ the second fiscal year and $1 million the
third fiscal year

Achieve a 15% net profit margin within the first year and 30% by FY3

Achieve a total net profit of $150,000+ in FY1 and $200,000+ by FY3

Be an active and vocal member of the community, and provide continual re-investment
through participation in community activities such as the Chamber of Commerce and
financial contributions to local charities and youth organizations

Create a solid concept in the industry and track performance in order to begin expanding to
other markets within six months

1.3 Keys to Success

The keys to our success will be:

A superior-tasting product backed by a unique quality store

A relaxing, upscale interior design

Prime site selection with an upscale affluent population, year-round tourist activity, heavy
pedestrian traffic by the site, a dynamic student population and a concentration of local
businesses

A market that exposes Dark Roast Java to high-profile "trend-setters" and "key influencers"

Ongoing, aggressive marketing

Highly trained and friendly staff

Page 2

Dark Roast Java

Multiple revenue streams including gift items, gift baskets and coffee gift/frequency cards in
addition to coffee, pastry, chocolates, tea, juice, water and soft drinks

A dynamic website with online sales capability

Chart: Highlights

Page 3

Dark Roast Java

2.0 Company Summary

Dark Roast Java launches with its first coffeehouse located in downtown Pleasantville. Dark
Roast Java will offer residents and visitors a totally new style of coffeehouse - one offering a
uniquely flavorful coffee drink and a comfortable, upscale environment at which to socialize,
relax or work.

Variety: No other coffeehouse in the area will provide the range of coffee drinks, tea,
cocoa, juice, smoothies and other products that Dark Roast Java does.

Location: Dark Roast Java will be located in the prime section of downtown Pleasantville in
the heart of the shopping and entertainment district. Dark Roast Java locations are designed
for high volume year round, with revenues and profits to match.

Expansion: Assuming this store is successful, it will be the first of a chain of Dark Roast
Java coffeehouses located in markets that have similar demographic profiles, significant
traffic by the store, year-round tourist activity and a sizeable student population.

The Dark Roast Java Concept

At one time Cadillac was the acknowledged quality automobile in America. Then came
Mercedes-Benz. And then Lexus, with its superb product and service approach. Dark Roast Java
will be the first "Lexus" of the coffeehouse chain industry, offering a higher quality product
and better quality service in an exceptional environment. The only coffeehouse that comes
close to being as upscale as our concept in the Pacific Northwest is Torrefazione, with its high
style Italian decor (they were recently part of a $72 million dollar buy-out by Starbucks).
The first Dark Roast Java is located in Pleasantville. Other Dark Roast Java coffeehouses will
eventually be located in select affluent markets that support the business model (e.g. Mount
Hill, Newburg, Springfield, Bayview, Orchard Valley, Beachey Head, Capital City).
Dark Roast Java offers a superior coffee product, delicious pastries, fresh juices, the finest tea
drinks, Ghirardelli cocoa, gourmet chocolates and gift items.
The Dark Roast Java staff members who prepare the coffee (baristas) are highly trained and
experienced. They know how to prepare an excellent espresso-based drink and brew tasty
coffee. We use the highest quality equipment and ingredients to deliver a noticeably superior
product.
Our design style is different from all other coffeehouses, an upscale "Cote d'Azur" look. It
features stained glass decorations, art glasswork, Mediterranean Riviera style furnishings and
outdoor dining.
2.1 Company Ownership
Dark Roast Java is a privately held corporation. It is registered as a state LLC Corporation, with
ownership shared by Ned Powers-Sebastiane, Victor Lubitsch, Curt Yamaguchi and other outside
investors.

Page 4

Dark Roast Java

2.2 Start-up Summary

Start-up expenses are in line with those of other coffeehouse chains. For example, Starbucks
spends approximately $380,000 on average to build-out a new store location. Our costs are an
estimated $225,000 and $25,000 for opening inventory and operating capital. Future stores
should cost no more than $175,000 to build out since many of the costs incurred here will not
have to be repeated later.
The Start-up requirements, below, include $77,000 of short and long-term assets.
Long term assets: $62,000
Undercounter Refrigerators
Service/Prep Counter

$5,000
$12,000

Ice Machine

$3,500

Large Refrigerator

$1,000

Milk Coolers (3)

$1,000

Cash register (2) Point of Sale System

$14,000

Espresso Machine

$11,000

Fetco Coffee Brewer

Counters/Condiment bar/shelving

$2,500
$12,000

Short-term assets: $15,000

Tables, Chairs, Furnishings

$12,000

Persian Carpet

$1,000

Lighting Fixtures

$2,000

Table: Start-up

Start-up

Requirements

Start-up Expenses
CONSTRUCTION
Site design, architectural plan
Demolition/Construction
Electrical, Lighting
Electrical, Other
Flooring/installation
Bathroom Construction
Plumbing
Fireplace Construction
Painting

$0
$10,000
$25,000
$12,000
$10,000
$5,000
$4,000
$10,000
$5,000
$2,500

Page 5

Dark Roast Java

City permits/licenses/fees
Inserted Row
LEGAL
Accounting
Legal
Insurance
Inserted Row
MARKETING
Opening marketing/advertising
Graphic design for signage, menu boards
Outside Signage
Frequency Cards, Brochures
Inserted Row
OFFICE
Office equipment
Computer, scanner, printer
Telephones/Fax/DSL
Stationery etc.
Gift item displays (3)
Inserted Row
APPLIANCES, ETC
Preparation equipment
Dishwasher
Blenders (3)
Microwave
Panini maker
Storage racks
Music system
Food display case
Storage room shelving
Bulk bean grinder
Sinks (2), prep counters
Menu board construction
Cups/Lids (50,000)
Total Start-up Expenses

$6,500
$0
$0
$2,000
$4,000
$2,500
$0
$0
$3,000
$2,000
$1,500
$1,500
$0
$0
$600
$2,000
$500
$1,000
$1,500
$0
$0
$1,000
$3,500
$2,000
$500
$700
$1,000
$800
$6,000
$1,000
$700
$1,200
$2,500
$14,000
$147,000

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

$1,500
$25,000
$15,000
$62,000
$103,500

Total Requirements

$250,500

Page 6

Dark Roast Java

Chart: Start-up

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$147,000
$103,500
$250,500

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$102,000
$1,500
$0
$1,500
$103,500

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$0
$0
$0
$0

Capital

Planned Investment
Investors
Other
Additional Investment Requirement
Total Planned Investment

$250,000
$500
$0
$250,500

Page 7

Dark Roast Java

Loss at Start-up (Start-up Expenses)

Total Capital

($147,000)
$103,500

Total Capital and Liabilities

$103,500

Total Funding

$250,500

3.0 Products
Dark Roast Java sells high-quality specialty coffee beverages, tea, juice, water, soft drinks,
pastries, chocolates and gift items. Despite being an upscale coffeehouse, our prices are in line
with the leading national chains.
3.1 Vendors
Coffee roasting is provided by Grizzly Mountain Coffee Company, Pleasantville.
Tea is primarily supplied by Harney & Sons Tea, Connecticut.
Our water vendor is Crystal Geyser, St. Helena, CA
Juices are provided by Longhorn Orchards, Corpus Cristi, TX (fresh orange juice and
lemonade) and Genesis Juice, Eugene, OR
Pastries are provided by local Pleasantville companies such as D'Angelo's Bakery, Pleasantville
Biscotti and Pleasantville Cheesecake.
Chocolates and cocoa are from Ghirardelli Chocolate Company, San Francisco, Bellagio, Los
Angeles and Black Forest Chocolates, Arnold, CA
Gift items are from various vendors
Soft drinks are provided by Sprecher's Brewery, Milwaukee, WI, and Thomas Kemper Soda,
Seattle, WA
3.2 The Dark Roast Java Menu
The Dark Roast Java menu sets us apart from other coffeehouses, giving us a competitive edge.

We offer six groups of drinkscoffee, tea, Italian sodas, smoothies, juice and cocoawith
several choices within each group. This enables us to provide more variety than our
competitors while keeping the preparation of the drinks easy to execute.

We are taking advantage of the immense popularity of flavored drinks and Chai tea by
offering a product mix that includes items the other coffeehouses don't carry as well as
more familiar drinks.

We are the only coffeehouse to have a wide range of gourmet hot cocoa.

Dark Roast Java offers several smoothie drinks and Italian sodas.

We carry the highest quality fresh juices.

Prices have been determined after a thorough analysis of all food costs for every item in each
drink. In some cases, an average price has been calculated and applied to all similar drinks in
order to keep the menu from confusing the customer.

Page 8

Dark Roast Java

3.2.1 Coffee and Espresso Drinks

COFFEE
Coffees of the day: Dark Roast Java Blend, Riviera Roast, and Molokai Swiss water
process DeCaf.
$1.60 Regular $1.85 Large
ESPRESSO
Name

Description

Regular

Espresso

A double shot of straight espresso.

$1.75
Double

Large

Caffe Americano Espresso combined with hot water, a gourmet brewed coffee. $1.85

$2.25

Cappuccino

Espresso with a smooth topping of milk foam.

$2.50

$3.50

Caffe Latte

Espresso combined with steamed milk, topped with a small

amount of velvety milk foam.

$2.75

$3.25

Caffe Mocha

A Caffe Latte combined with Ghirardelli chocolate, topped

with whipped cream and chocolate shavings.

$3.00

$3.75

Espresso
Macchiato

A straight shot of espresso topped with a spoonful of rich milk

$1.75
foam.

$2.50

Espresso Con
Panna

A straight shot of espresso topped with a generous dollop of

whipped cream.

$1.75

$2.50

Espresso Latte
Breve

Our famous latte made even more creamy with half and half. $2.50

$3.50

Espresso "Red
Eye"

Espresso combined with our gourmet coffee of the day to get

$2.00
your day going.

$2.75

COFFEE DRINKS
Name

Description

Small Large

The Banana
Nut Java

Coffee. Warm milk. Banana, macadamia nut and vanilla syrups.

Topped with whipped cream and cinnamon dusting.

$2.75 $3.75

The Cafe
Milano

Coffee. Warm milk. Amaretto and vanilla syrups topped with

whipped cream and almonds.

$2.75 $3.75

Page 9

Dark Roast Java

FLAVORED ESPRESSO DRINKS

All flavored drinks feature quality Monin and Ghirardelli syrups.
Name

Description

Regular Large

Vanilla Cappuccino Cappuccino made with vanilla flavored milk foam.

$2.50

$3.50

Vanilla Latte

A Caffe Latte with vanilla essence added.

$3.00

$4.25

White Chocolate
Latte

Espresso, white chocolate flavoring and steamed milk topped

$3.00
with velvety foam and white chocolate shavings.

$4.25

The 50/50 Latte

Espresso. Vanilla and orange syrups, steamed milk and

whipped cream topping.

$3.00

$4.25

The Raspberry
Mocha Latte

Coffee. Raspberry and chocolate syrups. Half and half.

Whipped cream topping.

$3.25

$4.50

Chai Latte

Espresso. Chai. Steamed milk and whipped cream.

$3.00

$4.25

HOT COCOA DRINKS

All hot cocoa drinks are $2.75
Name

Description

French Vanilla Cocoa

Hot cocoa with vanilla and whipped cream.

White Chocolate Cocoa Hot cocoa with white chocolate and whipped cream.
Chocolate Truffle Cocoa Rich dark hot cocoa with whipped cream topping.
Holiday Spice Cocoa

Rich hot cocoa and holiday spices. Topped with whipped cream.

Peppermint Cocoa

Rich chocolate and refreshing peppermint. Topped with whipped cream.

Ovaltine

Ovaltine Chocolate Malt and milk.

SMOOTHIES
All smoothies are $3.75
Name

Description

The Espresso Chocolate Malt

A chocolate malt for grownups.

The Double Dutch Chocolate Smoothie

Very chocolatey!

The Mocha Smoothie

An all-time favorite.

The Vanilla Smoothie

Rich natural vanilla flavor.

50/50 Smoothie (Orange and Vanilla)

A 50's favorite.

3.2.2 Teas
ICED TEAS
Classic American Iced Tea, just like you remember as a kid.
$1.50 Small, $1.75 Medium, $2.00 Large
HOT TEA
$1.50 Regular

Earl Grey
English Breakfast

Page 10

Dark Roast Java

Peppermint
Herb Apricot
Earl Grey Lavender
Darjeeling
Formosa Oolong
Golden Flowers Herbal
Herbal Lemon
Tropical Green

CHAI TEAS (hot or ice blended)

Chai Original (regular or decaf):
Vanilla Chai:

$2.00 Regular $3.00 Large

$2.00 Small $2.50 Medium $3.00 Large

3.2.3 Juices
Name

Description

Regular Large

Fresh squeezed orange juice

Exclusively from Longhorn Orchards,

Corpus Cristi, TX

$1.50

$2.75

Old-fashioned Lemonade

Made fresh daily from Pleasant County

$1.50
lemons.

$2.75

Genesis Juice

Protein Boost, Green Machine,

Mango and Guava.

$2.95

Martinelli's Apple Juice (regular

and sparkling)

A San Francisco favorite.

$2.00

Crystal Geyser Juice Squeeze

$2.50

3.2.4 Italian Sodas

ICED ITALIAN SODAS
Sparkling spring water, flavoring and ice. Blended or on the rocks.
Medium $1.50, $2.25 Large

Orange Soda
Strawberry Soda
Lemon Soda
Cherry Soda
Raspberry Soda
Cream Soda (made with half & half)
Peach Soda
Kiwi Soda

Page 11

Dark Roast Java

Melon
Apple

SPECIALTY ITALIAN SODAS

All $1.75 Regular, $2.50 Large
Name

Description

The Dreamsicle
Soda

Sparkling spring water, ice, half and half, vanilla and mandarin orange
syrups.

Cherry Vanilla Soda Sprite, ice, cherry and vanilla syrups.

The Chocolate Soda Our version of an egg cream.
3.2.5 Other Drinks
Name

Description

Price

Geyser Peak Natural Spring Water

From Northern California mountain springs.

$1.25

Soft drinks from Sprecher's, Stewart's

and Thomas Kemper.

Root beer, Orange Cream, Ginger Ale, Vanilla

Cream and Key Lime.

$1.50

Crystal Geyser Tejava Tea

$2.50

RockStar Energy Drink

$2.00

Orangina Citrus Drink

$2.00

3.2.6 Snacks and Pastries

Item

Price

Pleasantville Cheesecake, made just for us by Pleasantville

Cheesecake Company.

$2.00

Fresh scones, hot from the oven.

$1.75

Bagels

$1.00

Brownies

$2.00

Blueberry Muffins

$2.00

Croissants

$2.00

Black Forest chocolate-covered espresso beans

$4.00

Best Ever Bakery Fancy Cookies

$1.75

3.2.7 Deli Items

Item

Price

Sandwiches: Turkey, Roast Beef, Ham and Salami.

$6.75

Soup

$3.50

Quiche

$4.50

Page 12

Dark Roast Java

4.0 Market Analysis Summary

Dark Roast Java launches with an exciting new coffeehouse concept in a receptive and steadily
growing market segmentthe specialty coffee retail business.
Despite economic downturns in recent years the specialty coffee business has been a bright
spot. While literally hundreds of businesses in many categories are facing poor sales, negative
balance sheets and even bankruptcy, coffee chains continue to show strong growth.
It's clear that America's love for good coffee continues during good times and bad.
Pleasantville: The Perfect Launch Market
By launching Dark Roast Java in the Pleasantville market we maximize our potential for success
due to several factors:

The highly affluent local population

Year-round tourist activity
Ever-changing upscale student population
Excellent auto and pedestrian traffic by our location
Low media costs
High number of local special events
Prime site location

Dark Roast Java is located at what is arguably one of the best locations for a coffeehouse in
Pleasantvillein the heart of the tourist and business district, adjacent to fine dining and
shopping, next to the historic Egyptian Theatre and just steps from the busiest intersection in
town.
Dark Roast Java Coffee has all the ingredients necessary for immediate success.
4.1 Market Segmentation
Dark Roast Java's customer base in Pleasantville is comprised of five target groups.
1.
2.
3.
4.
5.

Affluent local residents

Tourists
Local business people
Students
Travelers passing through

These groups are all potentially strong customer segments. The benefit of this mix of
customers is that it helps maintain consistent business throughout the year. For example, while
tourism is strong all year long in Pleasantville, it peaks during the summer months. Conversely,
the student population is not as strong during the summer as it is from September through
June of each year.
The other customer segments (local residents, local business and pass-through traffic on US
66) provide a consistent foundation all year long.
Also, by appealing to several market segments, Dark Roast Java does not become overly
dependent on any single consumer group. For example, several local coffeehouses with

Page 13

Dark Roast Java

primarily student customers do poorly during the non-school months. They must also market
themselves anew each year to the incoming students. Dark Roast Java will avoid these peaks
and valleys in business with a mix of customers.

Affluent locals. Within five miles of Dark Roast Java are 200,000 of the most affluent
people in America. Homes in adjacent Niceburg sell for $1 million to $50 million. Key
influencers, trendsetters, artists, writers and celebrities have homes in Pleasantville.

Tourists. More than 5,000,000 tourists visit Pleasantville every year. Most will pass by the
Dark Roast Java location. Tourist come to "America's Riviera" for the beaches, shopping,
dining and nearby vineyards.

Local business people. Dark Roast Java is located on the corner of 'A' Street and First
Avenue in the heart of the prime downtown business district. It's across from the exclusive,
chic, Descarte (I Spend, Therefore I Am) department store, and one block from the number
one shopping destination in Pleasantville, Lucre Galerie. 'A' Street and Frist Avenue are the
two most heavily traveled streets in Pleasantville.

Students. Pleasantville is home to a major branch of the State University as well as dozens
of other schools, including many prestigious private schools and academies. Pleasantville
High School is less than a mile from Dark Roast Java.

Travelers on US 66. One of the state's two major north/south routes passes through
Pleasantville. According to Dept of Transportation, more than 35 million auto trips will pass
through the city. Many of these travelers will stop for a meal, to refuel and have a cup of
coffee. US 66 is also a heavily traveled commuter route to Shorewood and Beachey Head to
the south.

Sources: Department of Transforation, State University, Pleasantville Chamber of Commerce.

Table: Market Analysis

Market Analysis

Potential Customers

Growth

Local residents
Tourists
Travelers on US 66
Students
Local businesses
Total

2%
5%
5%
1%
1%
3.22%

Year 1

Year 2

Year 3

Year 4

Year 5

75,000
100,000
20,000
40,000
20,000
255,000

76,500
105,000
21,000
40,400
20,200
263,100

78,030
110,250
22,050
40,804
20,402
271,536

79,590
115,763
23,153
41,212
20,606
280,324

81,181
121,551
24,311
41,624
20,812
289,479

CAGR
2.00%
5.00%
5.00%
1.00%
1.00%
3.22%

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Chart: Market Analysis (Pie)

4.2 Target Market Segment Strategy

Overall, our strategy is to maintain a constantly high customer count by leveraging our
appeal to five groups of potential customers.
Local Residents. Approximately 200,000 people live within five miles of our Dark Roast Java
location. The most affluent of these live even closer, within three miles. It is a short 5 minute
drive to Dark Roast Java for most of our potential local customers. Excellent public parking is
available within 100 yards.
Local customers form the loyal core of our business. We will reach out to them through local
marketing, involvement in the Chamber of Commerce, support of local charitable organizations
and sponsorship of events and youth sports teams.
Tourists. Pleasantville has excellent year-round tourist activity. About 5 million people will visit
the area during the next year. While hotels are virtually sold out during the summer months,
tourism all year is exceptionally strong. This is due in large part to the temperate climate,
weekend or day-trip visitors from the greater Ontopolis area and an unusually large number of
special events (e.g. film festivals, concerts, art shows) scheduled throughout the year.
With a troubled economy and fears of terrorism, more people are opting for the relatively
inexpensive, easy and safe short trip to Pleasantville for recreation. And, according to the
Chamber of Commerce, 90% of all tourists visiting Pleasantville will pass by the Dark Roast
Java location.
We will target these potential customers with ads in local tourism guides.
Local businesses. Many local businesses, both private and government, are within two blocks
of Dark Roast Java. Lucre Galerie, the prime shopping center of Pleasantville, is one block away.

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The county courthouse is two blocks away. Dark Roast Java is in the heart of the shopping and
dining area.
Because much of the employee parking is out of the immediate area with shuttle service to
downtown, most people stay near their place of employment during breakfast, lunch and for
after-work relaxing. A significant number of these local business people find Dark Roast Java an
inviting and convenient destination.
We also offer coffee service to local restaurants, night spots and businesses. Coffee service
brings in additional revenue and promotes Dark Roast Java among employees at these
businesses.
We will also reach business customers through Chamber of Commerce activities and by
personally visiting the shops and businesses to distribute discount coupons and menus.
Students. The area has more than 30,000 students in several schools, including nearby City
College and State University. Students, most of whom are under the drinking age, have few
places they can go to meet their friends. Coffeehouses have proven to be very popular with
studentseven high school studentsas an "in" place to go that's also affordable.
To reach students we offer special student discount cards, pass out free coffee coupons at
student events and offer entertainment on weekends.
Students represent an excellent customer segment for several reasons:

Students bring an energy and youth to the coffeehouse

By attracting students we generate excellent word-of-mouth
Students represent a large base of potential part-time employees
Often under the drinking age, students need an affordable place to hang out with their
friends

Travelers on US 66. The Dept of Transportation estimates that there will be 35 million auto
trips through Pleasantville this year, a number that is increasing every year. US 66 is one of two
major freeways in the state and the one favored by travelers who want to take a bit more time
and make a few stops during their trip. It's also a major commuter route to the cities to the
south in Sunshine County.
Our primary method of reaching this target customer group will be our participation as a AAA
member, offering a 20% discount on all coffee and tea drinks when AAA members show their
membership card.
We also conduct PR activities in media outside the local market to expose the Dark Roast Java
name to a wider state and national audience.
Source: Dept of Transportation, Pleasantville Chamber of Commerce, US Census Bureau.

4.3 Industry Analysis

The specialty retail coffee business as we know it today began in 1982 after Howard Schultz
purchased the Starbucks name and began the expansion of the modern Starbucks chain. Prior
to his transformation of the business, Starbucks sold only whole bean coffee.

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Coffeehouses in America have existed since the 1600's, and the coffeehouse concept is more
than 400 years old. In the United States, even as recently as the 1970's, coffeehouses have
been primarily independent businesses, typically with an eclectic Bohemian style.
Cafe Trieste in San Francisco is typical. It was once a gathering place for "Beats" and "Hippies."
Poetry readings were held weekly. It still retains much of its original flavor. Many of these
independent coffeehouses continue to enjoy a loyal following.
Starbucks' success has encouraged others to enter this potentially lucrative business. Today
there are more than 13,000 coffeehouses in the U.S. However, compared with Italy, which has
200,000 espresso bars and coffeehouses, there is still much room for growth. The Specialty
Coffee Retailers Association believes the market has not approached maturity and, as yet, no
coffee chain has differentiated itself significantly from the others.
While overall coffee sales have not grown significantly in recent years, the specialty coffeehouse
segment is growing steadily at a healthy pace every year. The low food cost of coffee drinks,
relatively modest investment capital requirements, and low overhead, lead to high profit
margins in the coffeehouse industry.
There are 108 million coffee drinkers in the United States, according to the National Coffee
Association's report "2000 Coffee Drinking Trends." 77% of coffee drinkers consume coffee
daily. Coffee drinkers spend an average of $164.71 on coffee annually, and drink an average 3.1
cups daily. It's easy to see why coffee is second only to oil as the largest commodity in the
world.
Twenty-five years ago, almost nobody consumed espresso or espresso-based drinks in the
United States. Now they account, for more than half of all specialty coffee consumed.
Obviously, America's coffee-drinking habits are changing.
In the past five years the number of "gourmet" coffee drinkers has increased from 7 million to
27 million. In 2001 53% of all adults in the U.S. drank specialty coffee. By 2002 the percentage
had grown to 62%. Year after year, the growth continues at sizeable rates.
Starbucks, once known for quality and customer service, has recently come under attack by
customers and business commentators for becoming too big. Their size (6,300 stores
worldwide) is the reason why Starbucks is now often called the "McDonald's" of coffee chains. If
Starbucks' image becomes one of a "fast food" purveyor of coffee, it leaves the market open for
a smaller, more nimble competitor like Dark Roast Java, where quality and service are
paramount.
As the graph below showing Year 2000 per capita coffee consumption illustrates, the United
States is not presently one of the stronger markets for coffee drinking. It's easy to see there is
significant room for growth in consumption. The coffeehouse chains of America are leading this
growth.

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Coffee drinking per capita by country.

4.3.1 Competitive Comparison
"Until everybody can walk to a coffeehouse and get a properly prepared espresso
drink, we're not even approaching market saturation."
-- Mike Ferguson, Marketing & Communications Director
Specialty Coffee Association, Long Beach. 2002.
Leaders in the specialty coffee chain category in the United States include:
Starbucks (6,300 stores). Started the specialty coffee chain phenomena in America in 1982.
99% are company owned. Revenues exceeded $6 billion in 2002. Average store gross revenue
is $805,000. Now in 30 countries. Same store sales increased by 10% in 2002.
Caribou Coffee (260 stores). Second largest all company-owned chain. Founded in 1992 in
Minneapolis.
Tully's (103 stores). The third largest company-owned chain. Another Seattle-born company.
The only coffeehouse chain that has not experienced excellent growth every year;
business.com cites poor management as as the reason. New management seems to leading a
turnaround.
Coffee Bean & Tea Leaf (210 stores). Oldest privately held specialty coffee retailer in the U.S.
(founded 1963). 90% of stores are franchises.
Peet's (58 stores) One of the few successful IPO's in 2001. 58% of revenues come from sales
of whole coffee beans. Gross profit last year was 49.5%.
Gloria Jean's (291 stores, 195 in U.S.). Only 19 stores are company owned.
Seattle's Best (150 stores). Owned by AFC, which also owns Popeye's Chicken, Church's,
Cinnabon and Torrefazione Italia Coffee (21 stores). Seattle's Best is also distributed at
7,000 locations such as grocery stores and office buildings.

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Diedrich Coffee Company Originally founded in 1916 when the owners inherited a coffee
plantation. Headquartered in Southern California. First coffeehouse in 1982. Owns the Gloria
Jean and Coffee People chain. 386 outlets total and 370 wholesale accounts. Although they
serve an excellent product they have operated "below the radar."
Bucks County Coffee A Mid-Atlantic chain of 40 stores founded in 1982. Has a very good
reputation.
PJ's Coffee & Tea (22 stores). This New Orleans-area chain owns four of their stores.
Java Dave's (14 stores). Mostly in the Oklahoma area, 12 are franchises and two are company
owned.
Quikava (68 locations). A unit of the Massachusetts-based Chock Full O'Nuts organization.
Many are kiosks. All but three are franchises.
New World Coffee (33 stores). Mostly concentrated in the New Jersey/New York area. All but
three are franchises. A division of Manhattan Bagel.
Bad Ass Coffee Company (29 stores). Begun in Hawaii, this company has grown rapidly by
offering a Hawaiian-grown coffee and a milder, mellower brew.
It's a Grind (86 stores). Fast-growing chain that began in Long Beach, California seven years
ago. Most locations are franchises. Concentrated in Southern California and Las Vegas.
Company reported $12 million in revenue in 2002. Its stores average more than $500,000
gross revenue.
Dunkin' Donuts More than 800 outlets serving a surprisingly good coffee. Many people think
it's the best.
Specialty coffee chains in Canada:
Blenz (27 stores).
Second Cup (401 stores)
Tim Horton's (2,100 stores/150 in U.S.). This store is very close to being a Dunkin' Donuts
style operation where baked goods are the primary products.
Although the specialty coffee industry is successful and expanding rapidly, there is still much
room for growthespecially in niche market segments, according to The Specialty Coffee
Association of America. Market maturity is not expected to be reached until at least 2019.
Sources: Business.com, Yahoo Business, Dun & Bradstreet, Hoover's Business Data, Starbucks Corporation, Specialty Coffee
Association, National Coffee Association. 2002.

Local Competition
Surprisingly, the leading coffeehouse chain, Starbucks, has only mediocre stores in the
Pleasantville area (eight locations). Its highest volume store (1,150 customers daily) is at an
excellent location on 'A' Street, the main thoroughfare in town, but the store is unattractive,
small and lacks outside seating.

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The other high-volume Starbucks is located at the end of a shopping mall in Mount Hill and
averages 952 customers daily. It is not a particularly attractive store, although it does have a
sizeable lounge area and some outside seating.
Other Starbucks locations in the Pleasantville area are even less memorable, with small facilities
and mediocre locations. Photos of some of these locations are shown in the appendix.
Coffee Bean also has an excellent location directly across the street from Starbucks on 'A'
Street in downtown Pleasantville. This busy coffeehouse is very small. A counter inside and a
couple of tables outside are the only areas for customers to sit down. A second Coffee Bean
opened in 2002 on the northern end of 'A' Street, about three miles from downtown. Another
location in Mount Hill is scheduled to open in Summer 2004.
Other competitors include three independent coffeehouses. Paradiseo is located on State Street
in a good location. They serve good coffee but have a limited menu and a very "funky" decor. It
is a big hangout for the "Goth" and "punk" crowd. A second Paradiseo is located in Shorewood.
New managers are trying to improve the store but without success so far.
Another independent is Grounds for Action, located in a residential neighborhood but on a busy
street in what was once a gas station. This coffeehouse is also very "collegiate" in its decor, and
a favored haunt of the law school students, but manages to average more than 250 customers
per day. They have a second location in Springfield.
Ambrosia Kaffe is primarily a student hangout located about three blocks off First Avenue in the
northern end of the business district. Its business is modest. The business has undergone
changes in management during recent years.
Both Barnes & Noble and Borders Books have integrated cafes that serve espresso drinks into
their store plans. Both of these are within two blocks of the Dark Roast Java site.
The Barnes & Noble coffee cafe is very small, located in the rear of the store, and not very busy
despite serving Starbucks coffee.
The Borders Books cafe is larger, about 1,000 square feet, and does a good business. They are
in a good location, adjacent to the same major parking garage as Dark Roast Java and they
also draw from book shoppers and drop-ins from 'A' Street. The quality of their coffee and
pastries does not compare with ours, and the service can often be quite slow.
The Pleasantville Roastery is a bean roaster and coffeehouse with brick walls and a "San
Francisco" style. The coffee is roasted on site. They do much of their business by mail order.
They suffer from a very poor location in a difficult to find (or even see) shopping mall off
lower 'C' Street. A second, small outlet opened in 2003 in Lucre Galerie. Despite their poor
location, this is probably the most formidable competitor in town. They make a quality cup of
coffee and have a loyal following.
4.3.2 Competition and Buying Patterns
Competition is dominated by the presence of Starbucks, fast becoming the "McDonalds" of the
specialty coffee industry. Other major chains are Caribou Coffee, Peet's Coffee & Tea, Coffee
Bean & Tea Leaf, Seattle's Best, Gloria Jeans and Diedrich Coffee. All of these chains are
considered "clones" of Starbucks. Few vary much from what is perceived as a proven formula
for success.

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FACT: The coffeehouse business has grown every year since 1982.
FACT: Not a single coffeehouse chain has failed during the past 20 years.
Despite major economic recessions, terrorist attacks and two wars over the past two decades,
the specialty coffee industry has grown every year. One industry observer said, "When times
are good the coffeehouse industry is great. And when times are bad the coffeehouse industry is
great." America's love for good coffee is stronger than ever and increasing in size faster than
any other industry.
Lifestyle factors converge to make the coffee industry strong at all times. The stimulant effect
of coffee is an important reason why many hard-working, fast-paced Americans consider a stop
at their local coffeehouse a necessary part of their day. Conversely, coffeehouses provide a
calm, inviting environment for people to socialize, relax or catch up on work.
Young people under the legal drinking age are one of the fastest-growing segments of the
coffee drinking market. Coffeehouses provide them with a much-needed place to meet with
their friends.
Entertainment on weekend nights draws a young group of enthusiastic customers. The surge in
interest in coffee drinking among young people assures a diverse, receptive, sophisticated
customer base now and in the future.
Older adults also enjoy the fact that for the relatively modest price of a cup of coffee and snack,
they can meet with their friends, relax or work. Instead of going to a bar and paying for an
alcoholic drink or a restaurant where a meal usually comes with a hefty price tag, the
coffeehouse is an intimate yet inexpensive venue.
Quality is deteriorating even as the industry is growing.
Coffeehouses need to produce a quality product to back up the perceived "little luxury" image.
Currently, most of the largest chains are bowing to the pressures of growth and are cutting
corners on quality by introducing fully automatic espresso machines, mass bean buying and
other efficiency measures.
Coffee drinking is now an all-day activity.
Once concentrated in the early morning hours or mid-afternoon, in recent years coffee drinking
has become an all-day activity. Even late at night, many coffeehouses are packed with patrons.
It's not unusual for a well located coffeehouse to exceed a daily average of 900 customers.
Customer guest check averages are rising.
As pastries, chocolates, tea, pre-packaged sandwiches, snacks, juice drinks and gift items are
added to the menu, the average customer expenditure has risen. Many popular coffeehouses
report averages in the $4 - $6 range. Dark Roast Java expects that guest checks will average
about $4.50.

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5.0 Strategy and Implementation Summary

The Dark Roast Java coffeehouse uses a strategy of total qualityin product and service. Our
promise is in our location, the products we sell, the people we attract and the atmosphere we
create.
Strategic Assumptions:

People want a better-tasting coffee drink

Coffee drinkers want a more inviting coffeehouse environment
Coffee drinks are considered an affordable luxury
The coffeehouse industry is largely unaffected by the economy and world events
Dark Roast Java offers several unique advantages over all other coffeehouses

5.1 Competitive Edge

Our competitive edge, compared to the other coffeehouses in the greater Pleasantville area
includes the following:

A significantly higher quality, better tasting coffee product.

Our current location can arguably be considered the best in the marketin the heart of the
downtown shopping, dining, entertainment and cultural district in Pleasantville and adjacent
to the historic Egyptian Theatre.

An ambiance superior to all other coffeehouses in the area with upscale "Cote d'Azur" look.
It features stained glass decorations, art glasswork, Mediterranean Riviera style furnishings
and outdoor dining.

The only coffeehouse downtown to provide regular weekend evening entertainment.

A wider variety of popular drinks than our competitors, including flavored coffee drinks, tea,
chai, cocoa, juice and Italian sodas. We have several drink options for people who don't
drink coffee: tea, cocoa, juice and smoothies.

Our Internet website will include sales of whole coffee beans, tea, chocolates, gift items
and gift baskets.

5.2 Marketing Strategy

Other coffeehouses rely almost entirely on word-of-mouth marketing to generate business. We
will engage in an ongoing aggressive marketing program that will help us establish profitability
quickly and set the stage for continual growth.
Our strategy will be to position Dark Roast Java as the "Lexus" of coffeehouses, offering a high
quality product and superb service in a superior environment.
5.2.1 Launch Marketing
Most coffeehouse chains do little or no marketing and advertising. For example, Starbucks'
philosophy is that their ubiquity in the marketplace is all they need to sustain and grow their

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customer base. They spend less than 1% of gross revenues on advertising, and when they do
spend, it is usually to introduce a new product.
The retail coffee industry is a sales-oriented business with historically very little experience in
marketing and advertising. This is likely why little is done. As yet, the major players have not
been taken over by sophisticated companies like Pepsico, where marketing is viewed as
essential to gaining market share.
An element of our differentiation from other coffeehouse chains will be our use of advertising
and marketing to gain awareness, build customer traffic and establish a strong brand image.
We intend to create immediate customer awareness and not wait for word-of-mouth. We are
also building customer traffic immediately with an aggressive Launch Marketing Plan.
Launch Marketing
Launch marketing will promote awareness, build immediate traffic and establish our brand
image via several methods:

Public relations/publicity
Direct mail
Local print and broadcast media
Design and packaging
Community involvement
Sampling
Superior location
Desirable store ambiance

Public Relations
A strong public relations/publicity program uses as its primary "hook" these three main points:
1. Dark Roast Java is Pleasantville's first true gourmet coffeehouse
2. Our unique quality products
3. Our distinctive latte "art"
The goal of the PR/publicity is to achieve local market awareness and establish the brand on a
wider scale to set the stage for future expansion. Local market awareness is vital because more
than 50% of sales will come from people living within a 5-mile radius of the store.
National awareness will help drive the expansion by generating opportunities created by the
media buzz and familiarizing people with our brand name. It will help set the stage for future
brand identification.
Local Media

The Pleasantville Gazette

Pleasantville Magazine
The Mount Hill Journal
The Pleasantville Weekly
Mount Hill Magazine
Pleasantville Dining

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Pleasantville Seasons
ABC-TV (KTBO)
KATF radio
KEZI radio
KWAS radio
KSNZ radio
KOBR radio
KPML radio
KKMN radiO
KJBU radio
KSEC radio
KION radio

Regional/National Print Media

BusinessWeek
The Ontopolis Business Journal
Time
Newsweek
US News
Entrepreneur
Wall Street Journal
Fortune
Forbes
Robb Report
Newspapers in top 50 US markets

National Broadcast Media

Feature programming (e.g. Oprah, Good Morning America)

1,500 radio stations nationwide

Direct Mail

Ongoing direct mail generated from our website data

Visa or MasterCard local direct mail program

Website
Our website is fully e-commerce functional and could easily become a significant revenue
source.
We will eventually sell the following items online:

Whole coffee beans, tea

Gift baskets

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Gift items
Furnishings

And in a first for any coffeehouse in the world, we will also sell a catalog of glass
artwork representative of our store decor. We will act as the sales agent for a number of
participating stained glass, and art glass artisans.
The website also markets Dark Roast Java with:

A monthly newsletter
Interesting information about the coffee industry
A map to our store
Store hours
Special events
Coffee recipes

Most of these functions are already up and running.

Trend-setters
Pleasantville and the southern part of the state are home to thousands of individuals who can
be important to the successful positioning of Dark Roast Java. One mention on a TV talk
program or in a 'lifestyle' magazine can (and has) launched many successful careers and
businesses.
With literally hundreds of celebrities and wealthy business people as local residents, the wordof-mouth recommendations from these people can drive significant business to us as well as
generate favorable publicity.
Many celebrities visit Pleasantville or have second homes here. The wife of the billionaire owner
of Nationwide Communications owns the Pleasantville newspaper. A former actor owns a local
vineyard and is a major hotel developer. Politicians and entertainers have interests in several
restaurants. Our Mount Hill location will be in a building owned by a clothing brand multimillionaire.
Celebrities in Pleasantville are also actively involved in the community, many supporting several
local charities. Our involvement in the community will enable us to garner exposure for Dark
Roast Java among an important group of local residents.
Key individuals will be targeted with gift baskets from Dark Roast Java containing samples of
our products to entice them to visit Dark Roast Java and talk about us with their friends.
Design style
The interior design of Dark Roast Java is unlike any other coffeehouse chain. While there are
some upscale designs, they are all of the modern Italian or Starbucks look. Our upscale
stylized "Cote d'Azur" Mediterranean Riviera design, featuring stained glass decorations, art
glasswork, differentiates us from all others.
Gift Items

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We carry a wide variety of quality gift items, including gift baskets. Gift basket business could
eventually grow to be substantial. However, since it is difficult to project at this time we have
not included it in the financial computations. We also offer sales of stained glass and glass
artwork by the artisans who produced our decor furnishings.
Community Involvement
We will make ourselves an integral part of the local and world community. This will generate
goodwill, create opportunities to forge important contacts with key people and live up to our
company Mission Statement.
Some of these community involvement goals include:

Take an active role in the Chamber of Commerce

Supply complementary product to local charities for fund-raising activities
Sponsor local sports teams
Create and sponsor a Pleasantville to La Pine cross-mountain foot race following the
old Stone Canyon stage route
Purchase fair trade coffee whenever possible
Support Fair Trade, organic, sustainable farming

Location
The location of the first Dark Roast Java in Pleasantville is a prototype of future sites. Our
second site on busy Shoreline Road in Mount Hill will feature our flagship store. It will
be located just off the Oak Patch Road and Highway 66 exit, across from the Mount Hill Inn and
The Junction Restaurant. It is by far the best location in Mount Hillone of America's most
affluent cities.
We will build Dark Roast Java coffeehouses in the best locations possible, as this is the key
element in a successful operation.
Site selection criteria include:

High traffic location

Small or mid-size affluent market
Year-round tourist activity
Nearby (within 5 miles) student population
Outside dining

Other sites that meet these criteria include Newburg, Springfield, Bayview, Shorewood, Orchard
Valley, Beachey Head, and Capital City.
Exceptions will be made for some sites if they are deemed to be potentially very profitable.
Sites in other states might include Utah, New Mexico, Oregon, Washington, Montana, Idaho,
Colorado, etc. Plans are to locate Dark Roast Java coffeehouses in the Western states for
efficiency of supply and management.
Outside Dining

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The coffeehouse/cafe experience is indelibly linked to its European origins, where al fresco
dining is a way of life. Americans have embraced sidewalk dining. It is one of the fastest
growing additions to the American dining scene.
Sidewalk dining also provides an excellent way for prospective customers to see and "check
out" the coffeehouse for the first time.
Sampling
We will engage in several sampling activities to introduce potential customers (and current
customers) to Dark Roast Java's range of drink options.

Samples will be distributed at the coffeehouse

Samples will be given to passers-by on the street
Discount coupons will be distributed on the street, via direct mail and at special events
Complementary coffee will be served at charitable and civic events
Free coffee service will be provided to the Chamber of Commerce, a radio station, the
newspaper and at select government offices (e.g. the Planning and Zoning Department)

Portable Kiosk
Within 6 to 8 months we will create a portable Dark Roast Java kiosk to sell and market our
products at special events and community activities. Pleasantville has more than 130 such
events every year. It will be an excellent way to publicize Dark Roast Java coffee.
The kiosk will be highly visible and fun. It will also potentially be very profitable, although it's
hard to determine how profitable with any accuracy until the local response is measured. We
believe it could generate $75,000 - $100,000 annual revenue.
Pre-paid, re-loadable, frequency and discount cards
We will promote our program of gift cards and customer frequency cards to drive business and
stimulate cash flow. Industry records indicate that 25% - 40% of all gift card amounts go
unused. Also, gift cards have proven to be a popular holiday item accounting for more than 5%
of total sales during December.
Pre-paid and re-loadable cards have also proven to be very popular with the major chain
coffeehouses, again accounting for a significant percentage of sales. These cards promote
customer loyalty as well.
Frequency cards rewarding the repeat customer with a free drink after a specified number of
visits are popular and proven methods to forge customer loyalty.
Discount cards are used to build goodwill among specific groups such as the Chamber of
Commerce members and college students.
By tying in with our computerized sales and inventory system we will be able to track usage
and allocate the expense to marketing.
The Future

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The number of Dark Roast Java locations could easily reach 20 - 25 within five years. While the
financials in this Business Plan only address the Pleasantville location, we can extrapolate from
the store's performance (which will be carefully monitored and tracked) to get a general idea of
the chain's projected profitability.
With ten coffeehouses the gross revenues, when fully realized, would be more than $10 million
using the third year performance figures. Even factoring in the cost of additional staff and other
resources, a 10-store chain would likely generate a minimum of $1 million in profits annually,
while building significant valuation. A 25-store chain would easily top $2.5 million in annual
profits.
Dark Roast Java's start-up, implementation and operation in Pleasantville will be the "blueprint"
for future efficient expansion. Our new Mount Hill location will incorporate the knowledge we
gain with our first store as well as new creative ideas, and become our "flagship" operation.
Sources: SRDS, Interep Radio, Scarborough Market Data Survey.

5.3 Sales Strategy

Our sales strategy includes:

Staff salaries that are 10% above the industry average in order to attract the best people

Hiring for attitude so that we always have a friendly, enthusiastic staff to make customers
feel welcome and appreciated; constant staff training to assure the best quality possible

State-of-the-art sales/inventory system to (A) reduce customer waiting time, and (B) create
efficient product ordering

Create a mobile kiosk to take Dark Roast Java into the community at special events,
farmer's markets, art shows, etc.

Sell coffee, gift baskets and glass artwork on our website

Establish coffee service at local businesses

Sell gift cards, frequency cards, pre-paid cards, and offer discounts to key groups

Create an ongoing sampling program

Conduct a consistent, aggressive marketing program

Be an active member of the community; be visible at charitable functions

Solicit customer feedback to constantly improve and streamline our operation

Key Strategy: an advanced and expandable point-of-sales system

After carefully tracking the performance of the Pleasantville store through an expandable and
highly detailed point-of-sale system, we will use this as a "blueprint" for expansion. For
example, daily sales are tracked and analyzed by item, time period and cost of goods. Labor
requirements are matched to projected in-store sales based upon past performance for

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Dark Roast Java

maximum efficiency. Even after paying higher than average wages we expect to allocate no
more than 25% to labor costs.
Sales are linked to inventory to both streamline the efficiency of ordering and reduce
"shrinkage" by instantly alerting us to unusual shortages compared with revenues.
Scheduling can be done online and easily revised to accommodate changesall while projecting
weekly, monthly, quarterly or annual labor costs. Schedules can be sent via email to staff
members.
Cost of goods can be monitored for increased efficiency too. As we continually research
methods of delivering a high quality but cost-efficient product, and by making small incremental
improvements in the costs of items we expect to increase overall COG by a minimum of 5%
during the first year of operation.
As expansion occurs, the POS system can be adapted to each individual location and allow the
central office to monitor the stores remotely as well as the overall combined operation. Close
monitoring will allow us to achieve a high level of communication between stores as well as spot
problems immediately and take corrective action.

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Dark Roast Java

5.3.1 Sales Forecast

Conservatively, we are forecasting an average of 300 customers per day during the first year
with an average guest check expenditure for all items of $4.10. This figure was arrived at by
surveying the customer traffic at the nearest competing coffeehouses which have a range
of 150 - 500 customers per day and an average customer expenditure of $4.10. We have
estimated our customer expenditure to be slightly higher (2.5%) due to the premium price we
will charge for some of our items. Total cost of sales is approximately 25%.
We expect growth to occur across all categories at about 10% annually as the business
becomes more established and well-known, reaching 400+ customers per day within a year and
more than 500+ within three years. These estimates are likely conservative. However, it is
possible we could attain a 1,000-per-day customer count within three years.

Chart: Sales Monthly

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Dark Roast Java

Chart: Sales by Year

Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Coffee drinks
Tea, soft drinks, water, juice
Pastries, food items
Coffee beans
Events/mobile kiosk
Coffee service to businesses
Internet sales
Gift items
Total Sales

$265,101
$167,007
$154,126
$2,105
$0
$3,300
$8,500
$6,440
$606,579

$344,631
$217,109
$200,364
$2,526
$0
$3,630
$10,625
$7,728
$786,613

$448,021
$282,241
$260,473
$3,031
$0
$3,993
$13,281
$9,274
$1,020,314

Direct Cost of Sales

Coffee drinks
Tea, soft drinks, water, juice
Pastries, food items
Coffee beans
Events, mobile kiosk
coffee service to businesses
Internet sales
Gift items
Subtotal Direct Cost of Sales

Year 1
$43,828
$26,054
$55,241
$1,280
$0
$760
$3,925
$10,109
$141,197

Year 2
$44,266
$26,315
$55,793
$1,293
$0
$768
$3,964
$10,210
$142,609

Year 3
$44,709
$26,578
$56,351
$1,306
$0
$775
$4,004
$10,312
$144,035

Sales

5.4 Milestones
The accompanying table lists important program milestones, with dates and managers in
charge, and budgets for each. The milestone schedule indicates our emphasis on planning for
implementation. A similar milestone development program will be developed for our Mount

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Dark Roast Java

Hill location to insure its timely execution. What the table doesn't show is the commitment
behind it. Our business plan includes complete provisions for plan-vs-actual analysis, and we
will hold follow-up meetings every month to discuss the variance and course corrections.
Table: Milestones

Milestones
Milestone
Business/Marketing Plan
Secure Funding
Secure lease
Secure name licensing
Marketing plan
Structure company type
Develop investor program
Attend Coffee Fest
Health Dept.
Select and order furnishings
Site plans
Select construction contractor
Join Spec. Coffee Retailers
Select and order lighting
Create employee manual
Alliance with water company
Join Chamber of Commerce
Select cash register system
Business license, etc.
Select paint contractor
Choose paint palette
Select and order flooring
Gift items, suppliers, order
Select pastry supplier
Select equipment supplier
Graphics/brochure design
Select confection suppliers
Select juice suppliers
Credit card companies
Create training program
Select music system
Install wireless Internet
Hire manager, baristas
Select business insurance
Design, print stationery
Pre-opening parties
GRAND OPENING
Acheive 700+ daily customers
Totals

Start Date
2/1/2003
2/1/2003
2/10/2003
2/10/2003
2/10/2003
2/15/2003
2/15/2003
2/27/2003
3/1/2003
5/1/2003
3/1/2003
3/15/2003
3/15/2003
4/1/2003
4/1/2003
4/1/2003
4/1/2003
4/15/2003
4/15/2003
4/15/2003
4/15/2003
4/15/2003
4/15/2003
4/15/2003
4/15/2003
4/15/2003
4/15/2003
4/15/2003
4/30/2003
4/30/2003
5/1/2003
5/1/2003
7/1/2003
7/1/2003
7/15/2003
9/1/2003
9/15/2003
12/12/2003

End Date
4/30/2003
4/30/2003
4/30/2003
4/30/2003
4/30/2003
4/30/2003
4/30/2003
3/1/2003
5/15/2003
6/15/2003
4/30/2003
4/15/2003
5/30/2003
5/30/2003
5/30/2003
5/30/2003
5/30/2003
5/30/2003
5/30/2003
5/30/2003
5/30/2003
5/30/2003
5/15/2003
5/30/2003
5/15/2003
5/30/2003
5/30/2003
5/30/2003
6/15/2003
6/15/2003
6/15/2003
6/15/2003
9/15/2003
7/20/2003
7/31/2003
9/15/2003
9/30/2003
1/31/2004

Budget
$500
$500
TBD
TBD
$0
$0
$0
$500
TBD
TBD
TBD
$150
$250
TBD
$0
$0
$250
$0
$300
$0
$0
TBD
TBD
$0
$0
$0
$0
$0
$0
$0
$2,500
TBD
TBD
TBD
$1,000
$1,000
$1,000
$0

Manager
N. P-S
N. P-S
N. P-S
N. P-S
N. P-S
N. P-S
N. P-S
N. P-S/V. L
N. P-S/V. L
N. P-S/V. L
N. P-S
N. P-S
N. P-S/V. L
N. P-S/V. L
N. P-S
N. P-S
N. P-S/V. L
N. P-S
N. P-S/V. L
V. L
N. P-S/V. L
N. P-S/V. L
V. L
V. L
N. P-S
N. P-S
N. P-S/V. L
N. P-S
N. P-S
V. L
N. P-S/V. L
N. P-S/V. L
N. P-S/V. L
N. P-S
N. P-S
V. L
N. P-S/V. L
N. P-S/V. L

Department
Marketing
Marketing
Admin
Marketing
Marketing
Marketing
Marketing
Marketing
Admin
Admin
Admin
Admin
Marketing
Marketing
Personnel
Admin
Admin
Admin
Admin
Admin
Admin
Marketing
Marketing
Admin
Admin
Marketing
Admin
Admin
Admin
Personnel
Admin
Admin
Personnel
Admin
Admin
Marketing
Admin/Marketing
Admin/Marketing

$7,950

6.0 Web Plan Summary

We plan to expand the functionality of our website so that it becomes a substantial revenue
stream for Dark Roast Java.
Although we've projected modest sales because of the difficulty in predicting online sales
activity, we believe the potential exists for Internet sales to become a substantial percentage of
our revenue.

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Dark Roast Java

We will sell a number of items at our website, including:

Whole beans
Tea
Cocoa mixes
Chocolates
Gift baskets
Gift items
Art glass

We will sell a variety of high design stained glass, glass artwork and accessories featured in our
coffeehouses by establishing ourselves as an agent for the artist/manufacturers. We will
process the order and the artist will fulfill it. In this way we provide exposure and additional
sales activity for the artists, and Dark Roast Java creates an additional revenue stream that
could become substantial over time.
Special downloadable offers good at the retail stores will be posted from time to time on the
website.
Eventually, customers will be able to reload their Dark Roast Java Card online so they can use it
in lieu of cash or credit when they make purchases.
The website will also function as an online "brochure" for both the Dark Roast Java quality story
as well as enable visitors to "see" our retail store, get directions and maps, see our menu and
find out about special events.
6.1 Website Marketing Strategy
All communications materials will include the Dark Roast Java website address. For the media,
an online press kit will be available which will include downloadable photos, PR releases, stories
of interest, testimonials, bios of key management and reproduceable logos.
Special PR will promote our gift basket business and the sale of our upscale design glass
artworks.
We will host online "events" for our customers. For example, a visiting author may go online to
chat with visitors to our website. Or we may support a charities fund-raising activities. This will
provide us with opportunities for media coverage.
Eventually, when more stores are opened, the website will function as a means of internal
communication through a password-protected area. Here, company rules, health department
regulations, news, chat, "live" internal announcements and virtual meetings will take place.
In-store Internet computing
An appealing customer feature at Dark Roast Java will be two Internet access stations with 17"
monitors. These will enable people to access the Internet while at the store. The price for this
access hasn't been set yet but will be approximately $15 an hour with some fractional division
rate structure at 15-minute intervals (perhaps $5 for every quarter hour). The Dark Roast Java
website home page will be the always-on start page for the monitors.

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Dark Roast Java

The Internet stations enable customers to check their email or access websites for business,
study or travel information.
Internet access is provided more as a customer service than a revenue source. Although it will
return a profit, the amount is difficult to determine now and so it hasn't been factored into the
P&L.
Our best estimate is that the two stations will be on for a total of four hours daily, producing
$1,800 a month in gross revenue ($21,600 annually minus approximately $1,000 for the basic
fee plus the percentage of sales).
6.2 Development Requirements
Dark Roast Java plans to employ a graphic designer and back-end user interface technical
developer to create our simple, classy, yet Internet focused site.
The maintenance of the site will be done by contracted outside consultants. As the website is
expanded and improved, future development may include items such as tracking, newsletters,
down-loadable menus, a coffee "chat" room and user Web pages. A technical resource may
need to be contracted to build the trackable download and the newsletter capabilities.
7.0 Management Summary
The expansion of the Dark Roast Java concept will be managed by Ned Powers-Sebastiane
and Victor Lubitsch, with assistance from our outside support team.
Ned Powers-Sebastiane
Ned has more than 35 years experience in marketing/sales with special expertise in the retail
sector.

President of Powers-Sebastiane Advertising & Public Relations. Founded 1982.

Owner/founder of Pan National Motor Tours.
Sr. VP/Chief Creative Officer at ******.
President/General Manager of ******.
VP/Director of Marketing & Advertising at ******.
VP/Chief Marketing Officer at ******.
VP/Creative Director and Team Leader at ******.

Ned Powers-Sebastiane will be responsible for the site development, construction supervision,
equipment ordering, marketing/PR, website design/development and government issues. Ned is
a graduate of the Specialty Coffee Association's training program for coffeehouse operation and
management.
Victor Lubitsch
Victor has more than 25 years experience in business and selling. He has been a motivational
speaker and image consultant as well.

President/CEO of the Pleasantville Chamber of Commerce, 2000 - 2003.

Founder/Owner of Specialty Agency, 1980 - 1991.

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Dark Roast Java

State Business Man of the Year.

Owner/founder of Brilliant! Idea company.
Director of Placement, Local Business College.
Top recruiter at ****** Company.
Top recruiter at ******.

Victor will be responsible for staffing, menu development, training, product ordering, interior
design and accounting supervision. Victor is a graduate of the SCAA coffeehouse management
program and recently attended several training seminars at Coffee Fest 2003.
*Confidential and proprietary information omitted from this sample plan.
7.1 Personnel Plan
The personnel plan is included in the following table.
It shows the owners' salaries, a full-time manager's annual salary, eight part-time salaries for
espresso servers and a part-time bookkeeper and/or website supervisor.
Table: Personnel

Personnel Plan
Ned Powers-Sebastiane
Victor Lubitsch
Manager
Manager
Barista #1
Barista #2
Barista #3
Barista #4
Barista #5
Barista #6
Barista #7
Barista #8
Bookkeeper
Website Supervisor
Total People
Total Payroll

Year 1

Year 2

Year 3

$39,000
$39,000
$34,000
$0
$9,600
$9,600
$9,600
$9,600
$9,600
$9,600
$2,800
$3,000
$8,000
$0
10

$80,000
$80,000
$35,000
$30,000
$9,600
$9,600
$9,600
$9,600
$9,600
$9,600
$7,200
$7,200
$15,000
$25,000
11

$80,000
$80,000
$35,000
$30,000
$9,600
$9,600
$9,600
$9,600
$9,600
$9,600
$9,600
$7,200
$15,000
$25,000
12

$183,400

$337,000

$339,400

8.0 Financial Plan

Sales growth will be a minimum of 15% annually, margins excellent, profits at approximately
20% - 25%, cash flow adequate.
Marketing will remain below 5% of sales.
The company will invest residual profits into financial markets or real estate.

Future cash investments will use NPV projections to achieve maximum return with limited
risk.

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Dark Roast Java

8.1 Important Assumptions

The 20-year record of positive growth for specialty coffee drinking will continue at a healthy
rate. The Specialty Coffee Association says that the market is far from saturation and will
not reach maturity until at least 2019.

The resilience of the coffeehouse industry to negative national and world events will
continue. Despite recession and war the coffeehouse industry has shown strong growth
every year for the past two decades.

The quality of national chains will remain the same or decline slightly rather than improve as
they standardize their stores, increase automation of espresso drinks and mass-produce the
roasting process.

Coffee drinks will continue to be considered an "affordable luxury."

15% minimum sales growth rate over the next three years as Dark Roast Java becomes well
known.

Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

1
3.00%
3.00%
20.00%
0

2
3.00%
3.00%
20.00%
0

3
3.00%
3.00%
20.00%
0

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Dark Roast Java

8.2 Break-even Analysis

A break-even analysis table has been completed on the basis of average costs/prices. With fixed
costs of $26,400 and $4.50 an average sale, we need approximately $35,000 per month to
break-even.

Chart: Break-even Analysis

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$34,422

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

23%
$26,409

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Dark Roast Java

8.3 Projected Profit and Loss

We project high net profits starting in the first year. Our growth rate is based upon industry
averages, factoring in the local conditions. We expect growth of 15% annually for the first three
years before leveling off at the 800 - 900 customer per day average traffic rate.
First fiscal year gross revenues are expected to exceed $600,000 and after-tax net profits of
approximately $99,000increasing to more than $260,000 by the third fiscal year-end.
Our margins are very good.This is due in large part to the low direct cost of sales as well as the
low operating costs in general for coffeehouses.
Higher staff salaries, owner/operator salaries, marketing costs and rent for a premium location
depress profits but, conversely, they also ultimately contribute to higher earnings and profits.

Chart: Profit Monthly

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Dark Roast Java

Chart: Profit Yearly

Chart: Gross Margin Monthly

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Dark Roast Java

Chart: Gross Margin Yearly

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

Sales
Direct Cost of Sales
Other Costs of Goods
Total Cost of Sales

$606,579
$141,197
$24,000
$165,197

$786,613
$142,609
$28,000
$170,609

$1,020,314
$144,035
$32,000
$176,035

Gross Margin
Gross Margin %

$441,382
72.77%

$616,004
78.31%

$844,279
82.75%

Payroll
Sales and Marketing
Depreciation
Rent
Utilities
Insurance
Legal/accounting
Payroll Taxes
Mobile Kiosk
Misc - maintenance, cleaning, training, fees

$183,400
$12,500
$6,000
$45,900
$9,200
$2,400
$6,000
$27,510
$0
$24,000

$337,000
$8,000
$4,000
$55,000
$14,000
$2,400
$6,000
$50,550
$0
$25,000

$339,400
$8,000
$4,000
$60,000
$16,000
$2,500
$6,000
$50,910
$0
$25,000

Total Operating Expenses

$316,910

$501,950

$511,810

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

$124,472
$130,472
$0
$24,894

$114,054
$118,054
$0
$22,811

$332,469
$336,469
$0
$66,494

Expenses

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Dark Roast Java

Net Profit
Net Profit/Sales

$99,577
16.42%

$91,243
11.60%

$265,975
26.07%

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Dark Roast Java

8.4 Projected Cash Flow

We are positioning ourselves in the market as a low to medium risk concern with relatively
steady cash flows. Accounts payable is paid at the end of each month, while sales are in cash,
giving Dark Roast Java an excellent cash structure. Fifty percent of cash above $20,000 will be
invested into semi-liquid stock portfolios to decrease the opportunity cost of cash held.
Our initial investor contributions are designed to provide us with a strong cash position at all
times.

Chart: Cash

Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

$606,579
$606,579

$786,613
$786,613

$1,020,314
$1,020,314

$0
$0
$0
$0
$0
$0
$0

$0
$0
$0
$0
$0
$0
$0

$0
$0
$0
$0
$0
$0
$0

Cash Received

Cash from Operations

Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received

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Dark Roast Java

Subtotal Cash Received

$606,579

$786,613

$1,020,314

Year 1

Year 2

Year 3

$183,400
$275,940
$459,340

$337,000
$356,361
$693,361

$339,400
$406,229
$745,629

Sales Tax, VAT, HST/GST Paid Out

Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

$0
$0
$0
$0
$0
$0
$17,600
$476,940

$0
$0
$0
$0
$0
$0
$26,400
$719,761

$0
$0
$0
$0
$0
$0
$26,400
$772,029

Net Cash Flow

Cash Balance

$129,639
$131,139

$66,852
$197,991

$248,285
$446,276

Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

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Dark Roast Java

8.5 Projected Balance Sheet

All of our tables will be updated monthly to reflect past performance and future assumptions.
Future assumptions will not be based on past performance but rather on economic cycle
activity, regional industry strength, and future cash flow possibilities. We expect solid growth in
net worth beyond the year 2003.
Table: Balance Sheet

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

$131,139
$16,591
$15,000
$162,730

$197,991
$14,264
$15,000
$227,256

$446,276
$14,407
$15,000
$475,683

$62,000
$6,000
$56,000
$218,730

$62,000
$10,000
$52,000
$279,256

$62,000
$14,000
$48,000
$523,683

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$33,253
$0
$0
$33,253

$28,935
$0
$0
$28,935

$33,788
$0
$0
$33,788

Long-term Liabilities
Total Liabilities

$0
$33,253

$0
$28,935

$0
$33,788

$250,500
($164,600)
$99,577
$185,477
$218,730

$250,500
($91,423)
$91,243
$250,321
$279,256

$250,500
($26,579)
$265,975
$489,896
$523,683

$185,477

$250,321

$489,896

Assets

Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

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Dark Roast Java

8.6 Business Ratios

We expect our net profit margin, gross margin, and Return on Assets to increase steadily over
the three-year period. Return on Equity will decrease due to lower equity needs and higher cash
inflow. Net working capital generated by the business will increase steadily each year, proving
that we have the cash flows to remain a going concern independent of outside capital infusion.
While our ratios are not all in sync with those of the industry, due to the unique nature of our
business, it's important to point out that in key areas the numbers are excellent. The only
industry ratio category currently available, SIC Code 5812.0304, includes cafes, restaurants
and other businesses serving coffee. These businesses are significantly different from the Dark
Roast Java coffeehouse concept.
Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

29.68%

29.71%

5.24%

Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

7.59%
6.86%
74.40%
25.60%
100.00%

5.11%
5.37%
81.38%
18.62%
100.00%

2.75%
2.86%
90.83%
9.17%
100.00%

4.34%
35.11%
43.74%
56.26%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

15.20%
0.00%
15.20%
84.80%

10.36%
0.00%
10.36%
89.64%

6.45%
0.00%
6.45%
93.55%

18.93%
25.48%
44.41%
55.59%

100.00%
72.77%
56.32%
0.00%
20.52%

100.00%
78.31%
66.62%
0.00%
14.50%

100.00%
82.75%
56.54%
0.00%
32.58%

100.00%
61.91%
39.08%
2.55%
1.38%

4.89
4.39
15.20%
67.11%
56.91%

7.85
7.36
10.36%
45.56%
40.84%

14.08
13.65
6.45%
67.87%
63.49%

1.14
0.79
49.97%
3.97%
7.93%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

16.42%
53.69%

11.60%
36.45%

26.07%
54.29%

n.a
n.a

10.10
9.30
27
2.77

9.24
12.17
32
2.82

10.05
12.17
28
1.95

n.a
n.a
n.a
n.a

Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover

Page 45

Dark Roast Java

Debt Ratios
Debt to Net Worth
Current Liab. to Liab.

0.18
1.00

0.12
1.00

0.07
1.00

n.a
n.a

$129,477
0.00

$198,321
0.00

$441,896
0.00

n.a
n.a

0.36
15%
4.39
3.27
0.18

0.36
10%
7.36
3.14
0.29

0.51
6%
13.65
2.08
0.10

n.a
n.a
n.a
n.a
n.a

Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 46

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$11,915
$4,290
$4,867
$50
$0
$0
$0
$1,958

$20,086
$7,778
$9,909
$25
$0
$0
$0
$282

$14,600
$10,899
$12,600
$50
$0
$500
$0
$300

$18,000
$11,000
$12,000
$80
$0
$0
$0
$300

$18,500
$11,340
$12,500
$100
$0
$100
$0
$300

$18,500
$13,000
$12,750
$100
$0
$100
$0
$300

$24,500
$15,700
$13,000
$100
$0
$300
$500
$500

$25,500
$19,500
$14,000
$300
$0
$300
$1,000
$500

$27,500
$19,500
$15,500
$300
$0
$500
$1,000
$500

$28,000
$19,000
$15,000
$300
$0
$500
$2,000
$500

$28,500
$17,000
$15,000
$300
$0
$500
$2,000
$500

$29,500
$18,000
$17,000
$400
$0
$500
$2,000
$500

Total Sales

$23,080

$38,080

$38,949

$41,380

$42,840

$44,750

$54,600

$61,100

$64,800

$65,300

$63,800

$67,900

Direct Cost of Sales

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Coffee drinks

$2,980

$5,022

$3,650

$2,700

$2,700

$2,776

$3,450

$3,825

$4,125

$4,200

$3,975

$4,425

Sales
Coffee drinks
Tea, soft drinks, water, juice
Pastries, food items
Coffee beans
Events/mobile kiosk
Coffee service to businesses
Internet sales
Gift items

Tea, soft drinks, water, juice

Pastries, food items
Coffee beans

0%
0%
0%
0%
0%
0%
0%
0%

$645

$1,168

$1,635

$1,650

$1,701

$2,950

$2,355

$2,925

$2,925

$2,850

$2,550

$2,700

$1,500

$3,500

$4,542

$4,132

$4,525

$4,620

$4,916

$5,114

$5,530

$5,217

$5,217

$6,428

$35

$15

$25

$50

$65

$65

$65

$185

$185

$185

$185

$220

Events, mobile kiosk

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

coffee service to businesses

$0

$0

$25

$0

$25

$25

$75

$75

$125

$125

$125

$160

Internet sales

$0

$100

$0

$0

$0

$0

$225

$450

$450

$900

$900

$900

$800

$1,350

$1,400

$2,500

$1,200

$1,350

$250

$259

$250

$250

$250

$250

$5,960

$11,155

$11,277

$11,032

$10,216

$11,786

$11,336

$12,833

$13,590

$13,727

$13,202

$15,083

Gift items
Subtotal Direct Cost of Sales

Page 1

Appendix
Table: Personnel

Personnel Plan

Ned Powers-Sebastiane
Victor Lubitsch
Manager
Manager
Barista #1
Barista #2
Barista #3
Barista #4
Barista #5
Barista #6
Barista #7
Barista #8
Bookkeeper
Website Supervisor
Total People

Total Payroll

0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$0
$0
$1,000
$0
$800
$800
$800
$800
$800
$800
$0
$0
$1,000
$0

$0
$0
$3,000
$0
$800
$800
$800
$800
$800
$800
$0
$0
$1,000
$0

$0
$0
$3,000
$0
$800
$800
$800
$800
$800
$800
$0
$0
$1,000
$0

$0
$0
$3,000
$0
$800
$800
$800
$800
$800
$800
$0
$0
$1,000
$0

$4,000
$4,000
$3,000
$0
$800
$800
$800
$800
$800
$800
$0
$0
$500
$0

$5,000
$5,000
$3,000
$0
$800
$800
$800
$800
$800
$800
$400
$0
$500
$0

$5,000
$5,000
$3,000
$0
$800
$800
$800
$800
$800
$800
$400
$500
$500
$0

$5,000
$5,000
$3,000
$0
$800
$800
$800
$800
$800
$800
$400
$500
$500
$0

$5,000
$5,000
$3,000
$0
$800
$800
$800
$800
$800
$800
$400
$500
$500
$0

$5,000
$5,000
$3,000
$0
$800
$800
$800
$800
$800
$800
$400
$500
$500
$0

$5,000
$5,000
$3,000
$0
$800
$800
$800
$800
$800
$800
$400
$500
$500
$0

$5,000
$5,000
$3,000
$0
$800
$800
$800
$800
$800
$800
$400
$500
$500
$0

10

10

10

10

10

10

10

$6,800

$8,800

$8,800

$8,800

$16,300

$18,700

$19,200

$19,200

$19,200

$19,200

$19,200

$19,200

Page 2

Appendix
Table: General Assumptions

General Assumptions
Month 1
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

10

11

12

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

3.00%

20.00%

20.00%

20.00%

20.00%

20.00%

20.00%

20.00%

20.00%

20.00%

20.00%

20.00%

20.00%

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Sales

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$23,080

$38,080

$38,949

$41,380

$42,840

$44,750

$54,600

$61,100

$64,800

$65,300

$63,800

$67,900

Direct Cost of Sales

$5,960

$11,155

$11,277

$11,032

$10,216

$11,786

$11,336

$12,833

$13,590

$13,727

$13,202

$15,083

Other Costs of Goods

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

Total Cost of Sales

$7,960

$13,155

$13,277

$13,032

$12,216

$13,786

$13,336

$14,833

$15,590

$15,727

$15,202

$17,083

Gross Margin

$15,120

$24,925

$25,672

$28,348

$30,624

$30,964

$41,264

$46,267

$49,210

$49,573

$48,598

$50,817

Gross Margin %

65.51%

65.45%

65.91%

68.51%

71.48%

69.19%

75.58%

75.72%

75.94%

75.92%

76.17%

74.84%

Payroll

$6,800

$8,800

$8,800

$8,800

$16,300

$18,700

$19,200

$19,200

$19,200

$19,200

$19,200

$19,200

Sales and Marketing

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,500

$1,000

$1,000

$1,000

$1,000

Expenses

Depreciation

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$3,800

$3,800

$3,800

$3,800

$3,800

$3,800

$3,800

$3,800

$3,800

$3,900

$3,900

$3,900

Utilities

$400

$800

$800

$800

$800

$800

$800

$800

$800

$800

$800

$800

Insurance

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

Legal/accounting

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$1,020
$0

$1,320
$0

$1,320
$0

$1,320
$0

$2,445
$0

$2,805
$0

$2,880
$0

$2,880
$0

$2,880
$0

$2,880
$0

$2,880
$0

$2,880
$0

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

Total Operating Expenses

$16,220

$18,920

$18,920

$18,920

$27,545

$30,305

$30,880

$31,380

$30,880

$30,980

$30,980

$30,980

Profit Before Interest and Taxes

($1,100)

$6,005

$6,752

$9,428

$3,079

$659

$10,384

$14,887

$18,330

$18,593

$17,618

$19,837

($600)

$6,505

$7,252

$9,928

$3,579

$1,159

$10,884

$15,387

$18,830

$19,093

$18,118

$20,337

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

($220)

$1,201

$1,350

$1,886

$616

$132

$2,077

$2,977

$3,666

$3,719

$3,524

$3,967

($880)

$4,804

$5,402

$7,542

$2,463

$527

$8,307

$11,910

$14,664

$14,874

$14,094

$15,870

-3.81%

12.62%

13.87%

18.23%

5.75%

1.18%

15.21%

19.49%

22.63%

22.78%

22.09%

23.37%

Rent

Payroll Taxes
Mobile Kiosk
Misc - maintenance, cleaning, training,
fees

EBITDA
Interest Expense
Taxes Incurred

Net Profit
Net Profit/Sales

15%
15%

Page 4

Appendix

Page 5

Appendix
Table: Cash Flow

Pro Forma Cash Flow

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Sales

$23,080

$38,080

$38,949

$41,380

$42,840

$44,750

$54,600

$61,100

$64,800

$65,300

$63,800

$67,900

Subtotal Cash from Operations

$23,080

$38,080

$38,949

$41,380

$42,840

$44,750

$54,600

$61,100

$64,800

$65,300

$63,800

$67,900

Cash Received

Cash from Operations

Additional Cash Received

Sales Tax, VAT, HST/GST Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Current Borrowing

0.00%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Other Liabilities (interest-free)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Received

$23,080

$38,080

$38,949

$41,380

$42,840

$44,750

$54,600

$61,100

$64,800

$65,300

$63,800

$67,900

Expenditures

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Expenditures from Operations

Cash Spending

$6,800

$8,800

$8,800

$8,800

$16,300

$18,700

$19,200

$19,200

$19,200

$19,200

$19,200

$19,200

$357

$10,917

$17,446

$24,378

$24,215

$22,815

$26,728

$26,266

$31,141

$31,256

$30,828

$29,594

$7,157

$19,717

$26,246

$33,178

$40,515

$41,515

$45,928

$45,466

$50,341

$50,456

$50,028

$48,794

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Long-term Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$2,200

$2,200

$2,200

$2,200

$2,200

$2,200

$2,200

$2,200

Bill Payments
Subtotal Spent on Operations

Additional Cash Spent

Page 6

Appendix
Subtotal Cash Spent

$7,157

$19,717

$26,246

$33,178

$42,715

Net Cash Flow

$15,923

$18,363

$12,704

$8,202

$124

Cash Balance

$17,423

$35,786

$48,490

$56,692

$56,817

$43,715

$48,128

$47,666

$52,541

$52,656

$52,228

$50,994

$1,035

$6,472

$13,434

$12,259

$12,644

$11,572

$16,906

$57,852

$64,324

$77,758

$90,016

$102,661

$114,233

$131,139

Page 7

Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$1,500
$25,000
$15,000
$41,500

$17,423
$19,040
$15,000
$51,463

$35,786
$12,271
$15,000
$63,057

$48,490
$12,405
$15,000
$75,895

$56,692
$12,135
$15,000
$83,827

$56,817
$11,238
$15,000
$83,054

$57,852
$12,965
$15,000
$85,816

$64,324
$12,470
$15,000
$91,793

$77,758
$14,116
$15,000
$106,874

$90,016
$14,949
$15,000
$119,965

$102,661
$15,100
$15,000
$132,761

$114,233
$14,522
$15,000
$143,755

$131,139
$16,591
$15,000
$162,730

$62,000
$0
$62,000
$103,500

$62,000
$500
$61,500
$112,963

$62,000
$1,000
$61,000
$124,057

$62,000
$1,500
$60,500
$136,395

$62,000
$2,000
$60,000
$143,827

$62,000
$2,500
$59,500
$142,554

$62,000
$3,000
$59,000
$144,816

$62,000
$3,500
$58,500
$150,293

$62,000
$4,000
$58,000
$164,874

$62,000
$4,500
$57,500
$177,465

$62,000
$5,000
$57,000
$189,761

$62,000
$5,500
$56,500
$200,255

$62,000
$6,000
$56,000
$218,730

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting Balances

Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$0
$0
$0
$0

$10,343
$0
$0
$10,343

$16,633
$0
$0
$16,633

$23,569
$0
$0
$23,569

$23,459
$0
$0
$23,459

$21,923
$0
$0
$21,923

$25,858
$0
$0
$25,858

$25,228
$0
$0
$25,228

$30,099
$0
$0
$30,099

$30,226
$0
$0
$30,226

$29,847
$0
$0
$29,847

$28,447
$0
$0
$28,447

$33,253
$0
$0
$33,253

Long-term Liabilities
Total Liabilities

$0
$0

$0
$10,343

$0
$16,633

$0
$23,569

$0
$23,459

$0
$21,923

$0
$25,858

$0
$25,228

$0
$30,099

$0
$30,226

$0
$29,847

$0
$28,447

$0
$33,253

$250,500
($147,000)
$0
$103,500
$103,500

$250,500
($147,000)
($880)
$102,620
$112,963

$250,500
($147,000)
$3,924
$107,424
$124,057

$250,500
($147,000)
$9,326
$112,826
$136,395

$250,500
($147,000)
$16,868
$120,368
$143,827

$250,500
($149,200)
$19,331
$120,631
$142,554

$250,500
($151,400)
$19,858
$118,958
$144,816

$250,500
($153,600)
$28,165
$125,065
$150,293

$250,500
($155,800)
$40,075
$134,775
$164,874

$250,500
($158,000)
$54,739
$147,239
$177,465

$250,500
($160,200)
$69,613
$159,913
$189,761

$250,500
($162,400)
$83,708
$171,808
$200,255

$250,500
($164,600)
$99,577
$185,477
$218,730

$103,500

$102,620

$107,424

$112,826

$120,368

$120,631

$118,958

$125,065

$134,775

$147,239

$159,913

$171,808

$185,477

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

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