If you’re thinking of starting a cafe or coffee shop, your first step is drafting a business plan. This may sound intimidating, but it doesn’t have to be. When you’re armed with the know-how you need, writing a business plan is actually pretty straightforward.
This article and detailed examples will show you how to create a cafe business plan step by step. We’ll also show you how Lark can help as you draft your business plan and optimize your cafe’s operations.
What is a cafe business plan?
There are more than 38,400 coffee shops in the US, with a total market value of over $48 billion. But there’s room for even more — and each new one will need a business plan.
A cafe business plan is a strategic document that outlines your vision, goals, and roadmap for establishing and running a successful cafe. Its main purpose is to give you a structured approach to planning and decision-making.
Additionally, it serves as a guide for the business’s day-to-day operations and a reference point for measuring progress and making adjustments once you’re up and running.
Typically, a cafe business plan includes an executive summary, a market analysis, and detailed financial projections.
The executive summary offers a concise overview of your cafe concept, target market, and unique selling points (USPs).
The market analysis delves into industry trends, your competition, and customer demographics.
The financial projections include startup costs, revenue forecasts, and a break-even analysis.
If you’re seeking financing from investors or lenders, your business plan maps out the viability and potential profitability of your cafe business.
What should you include in your cafe business plan?
In this section, we’ll discuss the framework of a solid business plan.
Lark Docs is useful for creating your plan as well as any other important documents your restaurant will need to function. It gives you a central location to store everything securely. You can also easily share docs with stakeholders and collaborators.
Executive summary
Your plan document should start with an executive summary. Consider writing this last, when you’ve put all the other pieces in place.
In the executive summary, you’ll present a concise overview of your cafe business plan. It should provide key highlights and a snapshot of the business. Also, include the cafe's name, location, and mission statement.
Next, summarize your business concept, including its USPs and target market. Highlight important financial projections, such as expected revenue and profitability.
Briefly mention the cafe’s management team and their expertise, and outline the competition and your strategic advantages.
Conclude this section with a summary of your funding requirements and the purpose of the plan. This section should be informative and inspiring so that it encourages readers to delve deeper into the plan’s details.
Business description
Your business description should give readers a detailed overview of your business concept, mission, and USPs. This information is summarized in the executive summary, but it's laid out in detail in the business description.
To create an effective business description, start with a clear and concise mission statement that captures the essence of your cafe. Describe the type of cafe it’ll be, including the food and beverages you want to serve, the atmosphere you’re aiming for, and the target market.
Highlight what sets your cafe apart from its competitors, such as a unique menu, specialty coffees, exceptional customer service, or sustainable practices.
Here’s a helpful sequence for laying out your business description:
1. Mission statement: A brief and impactful statement that defines your cafe's purpose and values.
Example: “Our mission is to create a warm and inviting cafe space where customers can enjoy high-quality, ethically sourced coffee and freshly baked pastries while experiencing a sense of community and connection.”
2. Business concept: Describe the overall concept, including the cafe’s theme, design, and ambiance.
Example: “Urban Elegance Café offers a sophisticated yet cozy environment with a modern design, perfect for both business meetings and casual get-togethers.”
3. USPs: Highlight what makes your cafe unique, such as a focus on organic ingredients, locally sourced products, or innovative menu items.
Example: “We pride ourselves on using only organic, fair-trade coffee beans and locally sourced ingredients.”
4. Target market: Identify your primary customer base and explain why your cafe will appeal to them.
Example: “Our primary customers are young professionals and students who appreciate premium coffee and a comfortable space for working or socializing.”
5. Location: Mention the planned location and why you’ve chosen it to attract your target market.
Example: “Located in the heart of downtown, our cafe benefits from high foot traffic and accessibility. We’ll attract both office workers and local residents.”
6. Business objectives: Outline your short- and long-term business goals.
Example: “Our short-term goal is to establish a loyal customer base within the first six months, and our long-term goal is to expand to multiple locations within five years.”
A detailed business description like this provides a snapshot of your cafe's identity and strategic direction. It helps stakeholders quickly grasp what your business is about and why it’s worth investing in or supporting. Plus, it sets the stage for a logical and compelling narrative in the remainder of your business plan.
Demographics
The demographics section of a business plan includes an in-depth analysis of the target market or customer base.
In this section, include detailed information on the ages, genders, income levels, occupations, education, and lifestyle preferences of your potential customers.
Keeping these demographic factors in mind is important for tailoring your offerings, marketing strategies, and overall business approach to the needs and preferences of your target market.
To gather the right demographic information, start with market research. Use data from local government databases, industry reports, and market research firms. Websites like the US Census Bureau, Pew Research Center, and your local chamber of commerce can provide valuable insights.
Another way to collect demographic information is to conduct surveys, focus groups, and interviews with local residents. This will give you firsthand information about the location you’re looking at.
Here are some examples of how to use the information you collected:
1. Age and gender: If your target market is young professionals aged 25–35, you might find that this group frequents coffee shops for both work and socializing.
Fine-tune your menu to include trendy coffee drinks and offer amenities like free Wi-Fi and comfortable seating.
2. Income levels: Analyze the income levels of professionals at your planned location to set appropriate pricing. In a higher-income area, you might offer premium coffee blends and gourmet pastries. In a middle-income area, focus on affordability and value for money.
3. Occupation and lifestyle: If your cafe is near a business district, cater to office workers with quick-service options, lunch specials, and grab-and-go items.
If located near a university, offer student discounts, extended hours, and a study-friendly environment.
If your research shows a high percentage of health-conscious individuals in the area, incorporate healthier menu options, like vegan pastries and sugar-free creams and syrups.
4. Education: Higher education levels often correlate with a preference for specialty coffee and artisanal products. Use this information to create a menu that includes organic, fair-trade coffee and unique, high-quality baked goods.
If you thoroughly understand the demographics of your target market, you can make informed decisions that help you achieve customer satisfaction and drive business success.
SWOT analysis
A key element of any business plan is a SWOT analysis. This is a strategic planning tool for identifying and evaluating the strengths, weaknesses, opportunities, and threats related to a business. It’s used to assess the current situation of the business and develop strategies for growth and improvement.
More specifically, a SWOT analysis gives a comprehensive overview of the internal and external factors that can impact the business, which helps owners and managers make informed decisions.
A strength could be a particularly unique menu, and a weakness could be limited seating capacity.
Opportunities and threats are external factors, like market trends that favor a particular specialty coffee (an opportunity) or new competitors entering the market (a threat).
For example, a cafe might identify its prime downtown location as a strength but its limited parking as a weakness.
An opportunity could be changes in the coffee business, such as an increasing demand for organic coffee, while a threat might be the opening of a new coffee chain nearby.
By analyzing these factors, you’ll be prepared to play to the strengths of your cafe enterprise, address weaknesses, capitalize on opportunities, and find ways to lessen the impact of potential threats.
To visualize what a SWOT analysis looks like, here's a simple diagram of one for a cafe that caters to health-conscious customers:
Competition analysis
One of the most important considerations in opening a new business is whether it can hold its own against its competition and potentially outperform it. To figure this out, you need to do a competition analysis.
A competition analysis involves identifying and evaluating your potential competitors to understand their strengths, weaknesses, strategies, and market positioning. It’s critical if you plan to open a cafe since it provides insights into the competitive landscape and helps you develop strategies to differentiate your business and capture the market share you’re hoping for.
Specifically, conducting a competition analysis helps you:
Identify market gaps: Discover unmet needs or underserved niches that your cafe can target.
Benchmark performance: Understand industry standards and set realistic benchmarks for your business.
Refine your USPs: Clearly define what makes your cafe stand out from the competition.
Develop effective strategies: Craft marketing, pricing, and operational strategies that capitalize on your competitors' weaknesses and leverage your strengths.
How to conduct a competition analysis
Follow these steps for a solid competition analysis:
Identify your competitors: Start by pinpointing both direct competitors (other cafes) and indirect competitors (bakeries, food trucks) near your intended location. Use online searches, local directories, and social media to compile a comprehensive list.
Analyze key competitors: Visit your competitors’ locations, review their menus, and observe their customer service. Take note of their pricing info, promotional strategies, and customer reviews. Analyze their online presence, including their websites and social media profiles, to understand their brand positioning and customer engagement.
Do a SWOT analysis: Perform a SWOT analysis for each key competitor. Identify their strengths (e.g., strong brand loyalty or a prime location), weaknesses (e.g., a limited menu or poor customer service), opportunities (e.g., a growing demand for specialty coffee), and threats (e.g., new entrants or changing consumer preferences).
Evaluate market positioning: Determine where your competitors stand in terms of market positioning. Are they targeting budget-conscious customers or premium coffee lovers? Knowing this information will help you position your cafe appropriately.
Example
Suppose you plan to open a cafe in a busy downtown area. Your primary competitors include a well-established chain with a strong brand presence and a local boutique cafe known for its artisan pastries.
Upon analyzing these competitors, you find that the chain offers quick service but lacks a cozy atmosphere, while the boutique cafe has a loyal following but higher prices.
Making use of these strengths and weaknesses, you could position your cafe to offer a comfortable, inviting space with competitive pricing and a focus on high-quality, locally sourced products to fill the gap between quick service and premium offerings.
So, by conducting a thorough competition analysis, you can strategically position your cafe to attract customers and thrive in a competitive market.
Costs and revenue forecasting
One of the first questions when opening a new business is: Will it generate a profit?
Cost and revenue forecasting involves predicting future expenses and income to determine the financial viability of your cafe. This process is essential for financial planning, securing outside financing, allocating resources wisely, and managing cash flow effectively.
This detailed analysis provides potential investors with a clear picture of your cafe’s financial potential. It also identifies potential financial challenges and helps you identify proactive countermeasures.
How to conduct cost and revenue forecasting
Build this section around the following three points:
Identify costs: List all startup costs (e.g., equipment, renovations, and licenses) and ongoing operational expenses (e.g., rent, utilities, salaries, ingredients, and supplies). Group them into fixed and variable costs.
Estimate revenue: Project your monthly sales based on expected customer volume, average transaction value, and menu pricing. Consider peak and off-peak periods, as well.
Create projections: Use the identified costs and estimated revenue to create monthly and annual financial projections. Include best-case, worst-case, and most likely scenarios to account for uncertainties.
Example
Suppose your estimated monthly costs are $15,000 (fixed costs: $11,000 for rent and salaries; variable costs: $4,000 for ingredients and utilities).
If you expect to serve 3,000 customers per month with an average transaction of $7, your projected monthly revenue would be $21,000.
Subtracting your costs from your revenue, you forecast a monthly profit of $6,000. This basic forecast helps you understand your break-even point and profitability.
By conducting cost and revenue forecasting, you ensure that your cafe is financially prepared for both challenges and growth opportunities.
To track inventory and sales details in your bookkeeping once your cafe is up and running, take a look at Lark Base. It easily connects with your POS system to give you insights into your cafe’s performance. You’ll see at a glance which drinks and foods sell and which don’t, helping you monitor the success of your menu.
If you’d like some help with staying on top of your inventory and revenue stream, also check out Lark’s helpful inventory and revenue tracking system.
If you’re selling online, too, software like Larksuite paired with a good POS like Shopify can help your ecommerce run very smoothly. Lark has a built-in Shopify integration, making it even easier to keep your data in sync.
Staff and management
Your cafe business plan should also detail the projected staffing structure and management roles in the organization.
Include a staffing plan that outlines the number of employees needed, their roles (e.g., baristas, kitchen staff, and waitstaff), and any required qualifications or experience.
Describe management structure and skills and highlight key positions such as general manager, head chef, and floor supervisor, as well as their responsibilities. Include recruitment and training plans for your future staff, too.
Finally, outline employee policies when it comes to compensation, benefits, and scheduling.
Legal information
Your cafe business plan should include a detailed overview of any necessary legal requirements as well. This includes business licenses and permits, such as a general business license, health department permits, food handler permits, and possibly a liquor license if you plan to serve alcohol.
Also, describe compliance with local zoning laws and building codes as needed.
Include information on any required inspections and safety regulations, as well as an overview of insurance coverage, such as liability and property insurance.
Clearly identifying these legal requirements ensures that your cafe operates within the law and you avoid potential legal issues.
Marketing plan
In addition to the above sections, you could add a summary of your marketing plan, which describes the avenues you will use to reach potential customers.
This could include a website, print ads, sidewalk advertising, online ads, social media, frequent visitor discounts or rewards, special promotions, or building a mailing list.
However, a marketing strategy is typically more comprehensive than what’s included in a business plan, so it's good practice to draft a detailed marketing plan as a supplement to your business plan.
Coffee shop business plan example: Green Elephant Cafe
Still not sure how to get started with your plan? Take a look at our cafe business plan example for a hypothetical establishment called the Green Elephant Cafe.
Green Elephant Cafe - Business Plan
Executive summary
The Green Elephant Cafe, located in a bustling downtown area, will provide a vibrant, eco-friendly space for locals, office workers, and tourists.
Our mission is to offer high-quality, ethically sourced coffee and organic pastries while promoting sustainability.
With a prime location and exceptional customer service, we project a monthly revenue of $20,000 with a profit margin of 10%.
Our experienced management team will guarantee operational excellence. We seek $100,000 in funding for startup costs and initial operations.
Business description
The Green Elephant Cafe is a modern, eco-conscious cafe that combines a cozy atmosphere with a focus on sustainability. We offer a diverse menu featuring organic, fair-trade coffees, teas, and freshly baked pastries.
Our cafe provides a welcoming environment with free Wi-Fi, comfortable seating, and a commitment to reducing our ecological footprint through sustainable practices.
Demographics
Our target market includes young professionals, office workers, and tourists.
The downtown location is home to numerous office buildings, so we will attract a steady flow of employees looking for quality coffee and a relaxing space.
The area is also a popular tourist destination, which will give us a diversified customer base.
Our focus on sustainability appeals to environmentally-conscious individuals and health-conscious consumers.
SWOT analysis
Strengths: Prime downtown location, unique eco-friendly concept, high-quality products, and experienced management team.
Weaknesses: Higher costs for sustainable products, reliance on foot traffic, and initial significant marketing expenses.
Opportunities: Growing demand for organic and fair-trade products, the potential to expand to new locations, and potential partnerships with local businesses.
Threats: Competition from established cafes, economic downturns that affect discretionary spending, and fluctuations in ingredient costs.
Competition analysis
The Green Elephant Cafe faces competition from both large coffee chains and local boutique cafes.
Our key competitors include a well-known national chain located nearby and a local artisan cafe famous for its pastries. The national chain offers convenience and brand recognition, while the local cafe excels in specialty baked goods.
The Green Elephant Cafe differentiates itself through its strong commitment to sustainability, organic offerings, and unique, relaxing atmosphere.
Cost and revenue forecasting
Initial startup costs, including leasehold improvements, equipment, initial inventory, and marketing, are an estimated $100,000.
Monthly operating expenses covering rent, utilities, salaries, and supplies are projected at $15,000.
With an anticipated monthly revenue of $20,000, we forecast a monthly profit of $5,000, breaking even within the first six months.
Staff and management
The Green Elephant Cafe will employ a dedicated team of baristas, kitchen staff, and servers.
Our management team includes a general manager with over 10 years of experience in the cafe industry and a head barista with a strong background in specialty coffee. For the first three years of operation, we’ll outsource accounting to a local firm.
Staff training will focus on exceptional customer service and sustainability practices.
Legal information
We will obtain all necessary business licenses and permits, including a general business license, a signage permit, health department permits, and food handler certifications.
Compliance with local zoning laws and health regulations will be strictly maintained. We will also secure comprehensive liability and property insurance to protect our business and our customers.
Marketing plan
In addition to our website, we will market with local print ads and engage in extensive email marketing.
Cafe business plan outline for your use
Now that you understand the key components of a cafe or coffee shop business plan, here’s a blank template you can use to compose your own:
Common cafe business plan FAQs
Let’s take a look at some common questions asked about cafe business plans:
How profitable is owning a cafe?
Owning a cafe can be profitable if you manage costs effectively and attract a steady stream of customers.
Profit margins in the cafe industry typically range from 5% to 15%, depending on factors such as location, menu pricing, and operational efficiency.
To maximize profitability, focus on high-margin items like specialty drinks and pastries, manage labor costs, and build a loyal customer base through excellent service and marketing.
What should be included in a business plan for a small cafe?
Your business plan should include an executive summary, a market analysis, and detailed financial projections.
Outline your cafe's concept, target market, and USPs.
Financial projections should include startup costs, revenue forecasts, and a break-even analysis.
Also, include an operational plan that details daily operations, staffing requirements, and supplier relationships.
What are some things I should know before opening a coffee shop?
Before opening a coffee shop:
Think about the importance of location since foot traffic and accessibility are crucial for success.
Familiarize yourself with local regulations and licensing requirements.
Develop a deep understanding of your target customers and their preferences.
Identify the USP that sets you apart from the competition.
Be prepared for the demanding nature of the business, including long hours and the need for consistent quality and customer service.
How do you calculate profits for a cafe business plan?
To calculate profits for your cafe business plan, subtract your total expenses from your total revenue.
Start by estimating your monthly revenue based on your expected sales volume and average transaction value. Then, calculate fixed costs, such as rent, utilities, and salaries, as well as variable costs, like ingredients and supplies.
Include other expenses, like marketing, maintenance, and equipment depreciation.
Your profit is the remaining amount after you’ve deducted all expenses from your total revenue.
Let Lark help you run a profitable cafe or coffee shop
We hope our detailed business plan descriptions and examples have given you everything you need to get going on your cafe business plan.
When you’re getting ready to launch your new cafe, Lark can help.
At Lark, we have extensive experience helping food and beverage businesses flourish. Our state-of-the-art project and workflow management solutions, intuitive form builder, attendance management software, built-in communication apps, and food and beverage templates will make managing your establishment a breeze.
To learn more, try Lark for free.
