EXECUTIVE SUMMARY:
Tonic Coffee is located in the heart of San Francisco’s Financial District. We strive to create a unique tasting experience by bringing joy through unique flavors, quality products, and freshly baked goods. Our business model goes beyond profits, we create a positive impact in local communities by paying producers the highest value for their product, as well as supporting Save the Children in Ethiopia. By donating two percent of our profits to the Child Hunger Crisis and Famine Relief Fund in Ethiopia, we are all able to benefit. Each of our staff members maintains a sense of enthusiasm as they provide clients exceptional and friendly customer service. Through Social Media platforms, Tonic Coffee is able to keep up with coffee trends, and customer satisfaction.
Coffee consumption statistics in recent years display a steady growth rate in the gourmet coffee market. This growth is an opportunity for our brand to obtain a share of the market, despite fierce competition in our area with others local coffee shops such as Blue Bottle, Sightglass Coffee, and Philz Coffee. Tonic Coffee target population located in Financial District is the segment consuming 83% of the coffee, and their income is above the $100k.
The business model implemented in our coffee shop provides us with a competitive advantage over other coffee brands. Sharing an existing space with a local bar reduces our operating costs by eleven percent; In addition, we reduce the cost of trading coffee by buying directly from our producers in Ethiopia. Under these circumstances, our profits will grow from 15% during the first year of operation to 30% percent after three years of operation, all while offering to our customers the high-quality coffee and lower prices.
● GENERAL COMPANY DESCRIPTION
Tonic Coffee is the vision and the dream of a group of coffee enthusiasts from San Francisco, California. Our logo is a symbol of energy which mean that people drink our coffee can absorb new energy to start new things in new day. Our goal is to be one of admired company in the coffee shop industry.
Mission statement:
Building this distinctive coffee shop brand, involves a complex strategy that employee training, quality control and customers’ satisfaction. In addition, when the service is delivered or correlated with the customers over a long period, we become even more difficult to define and describe our brand. By adding the special latte art to our coffee, we can differentiate ourselves from our competitors. To effectively deliver service quality, we need to be conscientious in interviewing and screening to identify the best people from the pool of candidates. To operate a barista, they must possess basic skills and potential such as the skill of prepare coffee and latte art. At the same time, we decided to give back to society, so we donate two percent of our profits to the Save the Children in Ethiopia where we purchase the coffee beans. Because sustainability and related issues such as climate change, and pollution are so pervasive, we pay more attention to environmental issues, we will deduct 15 cent for the customers if they use their own cup when they order the coffee in our store.
Logo/ Slogan:
- Tonic Coffee
The small symbol in the coffee bean is the energy symbol which mean when we drink our coffee you are going to have new energy to start new things in new day.
- Our Slogan — “You miss all the shots you don’t take”: Incorporating our espresso shots to your daily life, live a little.
Highlight:
Tonic Coffee provides raw and organic coffee beans to coffee lovers. Tonic Coffee’s main goal is to provide healthy and innovation to one’s drinking experience. They pride themselves to produce organic coffee, and reduce industry coffee production, as well as to provide customers aromatic coffee that also reduces carbon footprints by corporate coffee plantations. The new innovation in drinking style of coffee means they do not serve as other traditional espresso. As with trends coming and going, Tonic Coffee stays innovative and up to date with trends, such as: drinks with cake or cotton candy and or even with whipping cream at top. In projected years, profit increases are expected to change the gourmet coffee world.
Product & Service Description:
Tonic coffee driven drinks menu includes ethiopian organic coffee beans which are carefully selected. We roast and control the coffee beans before they go into the world. We offer different kinds of coffee products and baked products in our store. Our talented baristas have mastered latte art, which can be expected to impress those around. Our employees are passionate coffee lovers, and can be seen when welcomed into Tonic Coffee. Lastly, if Tonic Coffee were to receive a complaint from customer, employees will be prepared to act on them quickly with understandment, and no questions asked.
● MARKET and COMPETITION
Industry Analysis:
Type of Coffee: Gourmet coffee had been the strongest growing part of the market, but recent studies have shown that that the trend toward occasional drinkers is continuing while espresso drinks continue to rise in popularity. Specialty coffees seem to be most appealing to younger adults. The 25 – 34 age group accounted for one-quarter of specialty coffee orders in 2000 and only 10 percent of the regular coffee orders. Those 18 – 34 years old have increased their specialty coffee purchases at table service restaurants in the last two years. One-third of regular coffee orders are placed by consumers 65 and older, while that group accounts for less than 10 percent of specialty coffee orders.
Market Analysis
- Demographic of coffee drinkers
83% US adult drinking coffee. According to the National Coffee Association’s (NCA), the coffee consumption in San Francisco rose 5% this year and daily consumption remained steady at 63% and those who drink coffee at least once per week was up slightly to 75%.
Scarborough Local Market Ranking
Rank Local Market (DMA®**) % of Adults
1 San Francisco/Oakland/San Jose 26%
2 Seattle/Tacoma 23%
3 Portland 21%
4 San Diego 20%
5 Sacramento/Stockton/Modesto 20%
38 Des Moines/Ames 11%
+ Bay Area is one of the most coffee consumption in the US.
+ Seventy-six percent of adult Hispanic-Americans said they drank coffee yesterday, 13 percentage points ahead of the total population. By comparison, 47% of African-Americans and 64% of Caucasian-Americans said they drank coffee yesterday.
- Coffee customers:
Because our location is in financial district, our coffee shop patrons are younger, more affluent, and educated. They are also 65 percent more likely to have an annual household income of $100K+. Coffee shop patrons are 28 percent more likely than the average American adult to be single and 70 percent more likely to have a post graduate degree. The average age of specialty coffee drinkers is 43. Occasional latte devotees are in the higher average income of $76,000, and similarly, cappuccino and espresso drinkers reflect an average income of $60,000.
Competitive Analysis:
Tonic Coffee’s largest competitors are Blue bottle coffee, Sightglass Coffee, Philz Coffee. We understand that their competitors have the advantage of long business hours. However, with the new limited hours of operations, we meet new customers on a regular basis, interacting closer with customers to return with great feedback. As a daily operator, Tonic Coffee has plenty loyalty rewards program to provide reward based on how much you purchase.
Target market:
Our target is focus on office people, students, and also tourism. Tonic Coffee encourage all coffee lovers to explore their new tasty combination. Since San Francisco tourism is hard to ignore, this creates the ideal coffee experience for foreigners wanted something trip worthy. Welcoming all age groups, Tonic Coffee offers a comfortable setting for all coffee lovers alike.
● MARKETING PLAN
Marketing Goals
Tonic Coffee prides itself of being a popular coffee shop in the day, and strives to transform into a hip bar at night, thus suiting everyone’s need, before and after office hours. The plan is to reach a wide and diverse group of people, who appreciate taking the time for extravagant espresso creations. Though focusing its attentions towards northern California, Tonic Coffee is expected to expand it’s market to southern California. Wanting to stay small, Tonic Coffee will remain on the west coast. Overexpansion of it’s brands will degrade from it’s rare Tonic Coffee experience, bring it closer to brands such as Pete’s and Starbucks. By it’s social media platforms, Tonic Coffee is able communicate with our customers through Yelp, Facebook and other social media sites, with emphasis on Instagram to show the wonderful art we do for the coffee. Exposing our Organic marketing to potential customers, will show the quality in which they pride themselves on. Billboards and newspapers will be also used to market our brand, but we will focus more online which is Inorganic marketing
Marketing Strategy:
Advertising:
(1) Location Appealing
- Free Sample
As our location is on the financial district, there are lot of people walking on the street. We are going to give them a small free sample. It’s a great introduce a new product to others.
- Visual Appeal: Base on customer’s demand, we create an outside drinking coffee place in front of our coffee shop (about 2-3 table). Design with trees… We design the shop with a green and environment friendly look with lots of plants that creates an enjoyable experience for all customers.
(2) Internet/ Social Media
– We going to create a page on Facebook, and Instagram and upload our art picture about our coffee products.
– Social media gives new coffee shops a chance to interact with future customers before they even open to the public.
– Frequently upload our activities such as charity foundation
(3) Community
– Doing a soft-opening before grand opening. To help the employees training and have more comments from customers.
– Do more events during soft-opening to get attracting from people.
Promotion
– Giving out free coffee at other’s event such at festival such as Cherry Blossom at Japan’s festival.
– Offering discounts on social media helps a shop build their online community while also attracting new customers. Offering on yelp discount or they are checking on their social media. 10% off
– Upload new discount (drink of a day/week).
– Give a stamp card to loyal customer.
● SWOT ANALYSIS
| STRENGTHS | WEAKNESS |
| Profit: Coffee is not only priced intentionally to reflect our quality of product, but for the affordability for our customers. First year’s profit will be increased to 15% if we share our place with a bar owner. Otherwise, our profit will be 4% at the first year.
Product quality: The Coffee that we offer is made from a variety of high quality Ethiopian coffee beans. Employees’ skills: employees possess basic skills and knowledge in order to do their jobs well. Our baristas will train in necessary technical before they start to work. They are not only knowing how to prepare the coffee, but they also have a skill to make latte art. Location: located in financial district, and there are scenic spots Customer service: The employees are expected to welcome their customers and respectively serve them cordially. Moreover, when they receive complaints from customers, employees will be prepared to act on them quickly, such as receive their money back or a free product. Free Wi-Fi |
Higher cost for the bakery cost: We do not hire any baker, we need to order the breads and the cakes from the other bakery stories.
Limited facilities: for lean servicescape, It may be impossible to accommodate demand during periods of peak demand. We need to reduce demand during peak time. Time: take about 3 years to break even Brand new cafe: we do not have less rally customers in the financial district because our business is brand new |
| OPPORTUNITIES | THREATS |
| Customer needs and wants revolution: no one needs coffees, and yet today, more people trend to buy high quality coffee. Consumers needs and wants around the world are converging today as never before. This creates an opportunity for marketing.
Information revolution: Facebook, Twitter, YouTube, and other social media, these communication tool created opportunities for company to boost consumers’ awareness of the products. Tax returns: Our tax be deducted for charitable donations, because we donate 2% of our profit to save the children in Ethiopia. |
Competitors:
● Blue Bottle Coffee: Large space: The service escape can have a profound effect on the customer experience. Blue Bottle Coffee has an elaborate environment with many elements and large space. However, our service environment are very simple and small that may frustrate customers. ● Sightglass Coffee: Delivered: Sightglass Coffee offer existing customers of the organization a service not previously available from the company which is the coffee can deliver to the customer’s’ house. Social weakness: customers develop a sense of familiarity and even a social relationship with their service providers. These ties make it less likely that they would consider switching. Sightglass Coffee began with a service-cart in San Francisco in 2009. ● Philz Coffee: Lower price: Price can be used as a competitive weapon to gain or maintain market position. For Philz Coffee, they setting price levels that are lower to build market share. As a new brand, we cannot use this pricing strategy because our products may be sold at loss for a certain length of time. We cannot absorb such losses. More products: If customers less tolerant of the store just has few products, they tend to be choosing the other stores which can provide the service. |
● STRATEGY and IMPLEMENTATION
Pricing Strategy
To make it simple and easy on the pricing strategy we do plan to be cheaper than our competitors and the reason why we can do that is we have our own coffee farm so we cut out the middleman and save a fortune on going through a middleman. We are able to cut cost to a low premium since we are paying for our own supply of coffee.
Operations/implementation: day-to-day
Day-to-day: Opened Monday-Friday
6:30 a.m. – 7:00 a.m. Opening. Setting up furniture and preparation for business hours.
7:00 a.m. – 2:00 p.m. Business hours.
2:00 p.m. – 2:30 p.m. Closing. Storing coffee shop furniture and cleaning.
- Who’s is making what?
Manager
- Administrative activities such as scheduling, basic bookkeeping, and payroll information.
- Barista duties.
- Other duties as required.
Barista
- Collaborate with opening, operating, and closing activities (depending on their shift).
- Other duties as required.
● FINANCIAL PLAN
Opening costs
Rent (First month $2500 + deposit $2500) $5,000
Equipment $14,390
1 Espresso machine $13,500
2 Pastry displays $140
1 Hot water tower $250
Glassware and cups $150
Refrigerator $300
Various equipment $50
Decoration $3,000
Advertising and social media $500
Initial inventory $2,560
Coffee beans $1000
Dairy and nondairy products $460
Tea $200
Cups, napkins, and others $300
Cleaning supplies $250
Other expenses $350
Total Opening Costs $25,450
Operating costs (shared space).
Rent $2,500
Labor (22 days) $5,984
Manager (40 hrs $19 per hour) * $760
Barista 1 (20 hrs $15 per hour) * $300
Barista 2 (20 hrs $15 per hour) * $300
*weekly
Raw materials and supplies $2,560
– Coffee beans $1000
– Dairy-nondairy products $460
– Tea $200
– Cups, napkins, and others $300
– Cleaning supplies $250
– Other expenses $350
Employer taxes (approx 14.3%) $855.71
Workers compensation premium $208.25 Social Media $150
Utilities $250
Total operating costs $12,357.96
Operating costs (non-shared space).
Rent $3,500
Labor (22 days) $5,984
Manager (40 hrs $19 per hour) * $760
Barista 1 (20 hrs $15 per hour) * $300
Barista 2 (20 hrs $15 per hour) * $300
*weekly
Raw materials and supplies $2,560
– Coffee beans $1000
– Dairy-nondairy products $460
– Tea $200
– Cups, napkins, and others $300
– Cleaning supplies $250
– Other expenses $350
Employer taxes (approx 14.3%) $855.71
Workers compensation premium $208.25 Social Media $150
Utilities $425
Total operating costs $13,682.96
Comparison between shared and non-shared space.
Shared space operating cost $12,357.96
Nonshared space operating cost $13,682.96
Operating costs difference between shared and nonshared space $1,325.00
Cost increases by 11% by operating our own space.
This Graph shows Coffee Tonics current profits of 2017 on a monthly scale, as well as calculated projections the following two years. Coffee Tonic expects to increase profits by 15% increase in 2018, and 20% increase by 2019. The current 2017 profit margin is $1,853 per month, which is expected to increase by $3,707.39 in 2019.
This graph shows Coffee Tonics current and projected profits on a yearly scale. Profits are expected to increase 15% by 2018, and 20% by 2019. The current 2017 profit margin is $22,244.40, which is expected to be $44,488.66 by 2019.
This graph shows the annual donations given back to support our charity. The donation of 2017 will be $444.88, and expected to be $889.77 by 2019.
COFFEE DRINKS
Espresso…………. 3.25
Macchiato…………. 3.50
Gibraltar…………. 3.75
Cappuccino…………. 4.00
Latte…………. 4.25
Mocha…………. 5.00
Hot Chocolate…………. 4.50
Maplewood Cold Brew…………. 4.00
Quick Drip Cup…………. 2.25/3.25
~ Regular: Wind & Sea
~ Decaf: El Barrial
+ Almond Milk…………. 0.50
Coffee roasted + Provided by our friends @ A – EthiopiaTown Coffee Roasters
Coffee by the bag available !!!
Business Writing 