Do you want to start a coffee roasting business?

Starting a coffee roasting business is one of the best decisions you can ever make given the increasing popularity of coffee uptake. According to statistics from the National Coffee Association, the number of Americans consuming coffee has reached the peak since 2012. Figures indicate over 64% of Americans aged 18 and above have a cup of coffee on a daily basis with a further increase expected which is attributed to the popularity of gourmet drinks. Coffee roasting business is a superb business idea that is poised for success so long you plan adequately. Coffee roasting is more than just a business, it’s an art. Being passionate about your craft and having a good business plan is the secret to succeeding in this business.

Executive Summary

2.1 The Business

The coffee roasting business will be registered as Blonch Coffee and will be located in Harlem neighborhood of New York City. The business will be managed by Maria Rodriguez who is a professional and licensed Q Grader.

2.2 Management Team

Maria Rodriguez, Owner and Proprietor of Blonch Coffee is a licensed and experienced Q Grader with extensive experience in the U.S coffee industry. Prior to starting coffee roasting business, Maria worked for high profile coffee brands across the United States and participated in numerous local, regional and international coffee tasting events.

2.3 Customer Focus

In order for the coffee roasting business to succeed, Maria has carefully studied the market and relied on her vast industry experience to come up with an appropriate approach that Blonch Coffee will use to reach out to the target market.

2.4 Business Target

Before starting her own coffee roasting business, Rodriguez did an extensive market research coupled with her intricate knowledge of the business to identify the right business target. The key is to find creative marketing approaches to effectively reach out to the customer target.

Coffee Roasting Business Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

Maria Rodriguez is an experienced Q Grader whose successful career in the coffee making and tasting industry spans over two decades. Having worked for various top brands across the U.S. and participated in high profile events, Maria definitely has what it takes and hands-on skills of how to start a coffee roasting business.

3.2 Aim of Starting the Business

The coffee culture is constantly evolving for this reason, the demand for roasted coffee has increased significantly. Not only is coffee taken as a daily beverage, specialty coffees have now become the norm. Discerning coffee lovers are keen on quality coffee which lays a huge emphasis on how people drink and perceive coffee. To be part of this new exciting culture change, Maria Rodriguez thought of starting a coffee bean business that adopts a unique and transformational approach of coffee roasting.

3.3 How the Business will be Started

With over 20 years of experience in the coffee industry, Maria Rodriguez has a deep understanding of emerging coffee roasting trends and customer expectations. Given her involvement in the industry on a day-to-day basis, she knows what is required to start a successful coffee roasting business. To actualize her plan, Maria has worked closely with a team of experienced financial experts to formulate a comprehensive financial analysis and business plan that will guide the entire setup and operation of the business.

Coffee Roasting Business Plan - Startup Cost

Start-up Expenses 
Legal$5,000
Consultants$7,000
Insurance$10,000
Rent$5,000
Research and Development$20,000
Expensed Equipment$7,000
Signs$6,000
TOTAL START-UP EXPENSES$60,000
Start-up Assets$0
Cash Required$30,000
Start-up Inventory$20,000
Other Current Assets$160,000
Long-term Assets$10,000
TOTAL ASSETS$8,000
Total Requirements$12,000
START-UP FUNDING$0
START-UP FUNDING$30,000
Start-up Expenses to Fund$15,000
Start-up Assets to Fund$10,000
TOTAL FUNDING REQUIRED$55,000
Assets$5,000
Non-cash Assets from Start-up$8,000
Cash Requirements from Start-up$0
Additional Cash Raised$20,000
Cash Balance on Starting Date$25,000
TOTAL ASSETS$0
Liabilities and Capital$0
Liabilities$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
TOTAL LIABILITIES$0
Capital$0
Planned Investment$0
Investor 1$15,000
Investor 2$18,000
Other$0
Additional Investment Requirement$0
TOTAL PLANNED INVESTMENT$9,000
Loss at Start-up (Start-up Expenses)$28,000
TOTAL CAPITAL$35,000
TOTAL CAPITAL AND LIABILITIES$25,000
Total Funding$150,000

Services for Customers

Blonch Coffee has specialized in sourcing, roasting, packaging and organizing delivery for uniquely customized and specialized coffee products. The business offers a wide array of blended and roasted coffees which have been prepared from different kinds of coffee beans. Starting a coffee roasting company poised for success depends on how well blending is done for various kinds of beans.

Blonch Roasters intends to offer a wide range of coffee specialties which include:

  • Bistro Blend
  • Espresso and Decaf Espresso
  • African Roast
  • French Roast

Marketing Analysis of Coffee Roasting Business

Coffee is the second most popular traded commodity in the world after oil. The worldwide coffee retail market is a whopping $56 billion industry. Nowadays, coffee consumers prefer taking high-grade coffees with increased focus on quality and unique blending of beans. In the U.S. the coffee market industry has reached unprecedented levels of growth and for this reason, Blonch Coffee plans to rely on an objective coffee roasting business plan to set up its operations. To succeed in this business, an extensive market analysis has been carried out to identify opportunities available to support business growth. Studying local trends and having a deep understanding of the local coffee roasting market will help Blonch to strategically position its brand.

5.1 Market Segment

In order for Blonch Coffee to achieve its targets, the coffee roasting business will focus on offering various kinds of products and services. Identifying the targeted customer segments is an important step Blonch Coffee has to deal with before as part of the plans to start coffee roasting business. After identifying the right market segment, the coffee roasting business can then come up with creative marketing strategies in order to woo customers.

Coffee Roasting Business Plan - Market Segmentation

5.1.1 Coffee Brewing Premises

One of the largest potential customers for Blonch Coffee is coffee brewing facilities which heavily rely on coffee products on a daily basis to serve their customers. These customers buy roasted coffee beans for the purposes of preparing and selling coffee and espresso drinks. This category includes Coffee Shops, Restaurants, drive-through and Bakeries. With the increasing uptake of coffee, selling directly to various coffee businesses is a sure way of boosting revenues for the coffee roasting business. Because these businesses require coffee products on a daily basis, this is a lucrative market Blonch Coffee must make an effort to reach out to.

5.1.2 Corporates

To start a successful coffee roasting business, you cannot afford to ignore the corporate market which is one of the biggest consumers of coffee products. New York City is a corporate and financial hub with thousands of organizations plying their trade in the city. Office coffee is a popular trend in offices and Blonch Coffee is positioned in a strategic New York neighborhood with easy connections to New York’s Financial District whether a majority of corporates have their offices. Aside from catering for offices, other institutions include schools, hospitals and factories among others.

5.1.3 Retail Specialty Shops

Coffee is a popular item that is stocked in various gourmet and gift shops. People nowadays love and appreciate coffee products as gifts which creates a great opportunity for Blonch Coffee to make unique products that are attractive to retailers focusing on selling specialty and gourmet coffee.

5.1.4 Mail Order

Mail Order coffee is increasing in popularity as many people now order for coffee online. This is an incredible way of boosting revenue for Blonch Coffee as the business can produce coffee for shipping to various places across the U.S. and worldwide. When you start your own coffee roasting business, you must be willing to go beyond the traditional market.

5.1.5 Grocery Stores

Grocery stores buy beans from coffee roasters in bulk for the purposes of resale or prepackaging to their customers. Unlike coffee shops, grocery stores don’t prepare coffee drinks for their customers.

Market Analysis
Potential CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
Coffee brewing premises28%12,00014,00016,00018,00020,0005.00%
Corporates20%10,00012,00014,00016,00018,0008.00%
Retail specialty shops25%8,00010,00012,00014,00016,00010.00%
Grocery Stores17%6,0008,00010,00012,00014,00014.00%
Mail Order10%4,0006,0008,00010,00012,0009.00%
Total100%40,00050,000               60,00070,00080,0004.00%

5.2 Business Target

Blonch Coffee has an excellent opportunity to offer its services in the greater New York area thanks to the changing perceptions about coffee. New York is a large city with many coffee bean roasting business establishments, but that doesn’t prevent Blonch Coffee from making an impact.  Using a diversified product range and a good business plan, the business hopes to realize an annual sales increase of 20-30% per annum.

5.3 Product Pricing

Before coming up with product prices, Blonch Coffee has carried out an extensive market research that takes into account the prices of competitors. In order to stay afloat, the business has carefully priced its products to compete favorably.

Strategy

With the right marketing strategies in place, Blonch Coffee has an exceptional chance to appeal to customers and consistently grow revenue margins. Each marketing strategy is aimed at reaching the target customers with awesome products that exceed client expectations. When planning how to start coffee roasting business, there must be an effective marketing strategy in place in order to remain relevant in a fast growing industry.

6.1 Competitive Analysis

Blonch Coffee plans to come up with a business model that will effectively guide its day-to-day operations and ensure customer expectations are fully met. Even though there are numerous coffee roasting businesses in New York, Maria Rodriguez knows how to start a coffee roasting business and put in place the right mechanisms to remain ahead of competitors.

6.2 Sales Strategy

For Blonch Coffee to meet its sales and revenue goals, the following strategies will be implemented to help advertise the business.

  • Print Advertising Campaigns is one of the most effective sales strategies that reaches out to a mass target audience. The business intends to print brochures and put advertisements in local dailies as well as local coffee trade publications and journals. By doing this, the local community is made aware about the coffee roasting business.
  • Get the word out and organize an opening party to introduce the business to customers and industry stakeholders. A cupping event is ideal as it allows guests to taste, compare and analyze different varieties of coffee. This is a perfect opportunity for prospective customers to sample what Blonch Coffee has to offer.
  • Digital advertising is the new kid on the block. Social media channels such as Facebook, Twitter and Instagram among others are excellent ways of sending out word about the coffee roasting business. Online advertising such as Google Ads allow for localized advertising which is aimed at the local target.
  • Attend industry related trade shows and exhibitions with an aim of marketing the coffee roasting business. This is an effective sales strategy that connects the business with right people who will be instrumental in growing revenue margins.

6.3 Sales Forecast

To achieve its goals, Blonch Coffee has come up with a sales forecast to show the coffee roasting business intends to meet its financial goals. Using a comprehensive business plan, the business knows which areas to focus on to achieve financial success.

Coffee Roasting Business Plan - Unit Sales

Personnel Plan

In order to realize its goals, Blonch Coffee intends to hire a team of qualified and experienced staff to manage day-to-day operations of the business. How to start a coffee roasting company and run it successfully depends on the caliber of staff hired. A good business plan should incorporate a personnel budget to enable the business know how much will be spent on salaries.

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Bistro blend70,00080,00090,000
Expresso and Decaf expresso50,00060,00070,000
African roast30,00040,00050,000
French roast20,00030,00040,000
TOTAL UNIT SALES170,000210,000250,000
Unit PricesYear 1Year 2Year 3
Bistro blend$50.00$55.00$60.00
Expresso and Decaf expresso$70.00$75.00$80.00
African roast$90.00$95.00$100.00
French roast$100.00$110.00$120.00
Sales
Bistro blend$80,000$90,000$100,000
Expresso and Decaf expresso$100,000$120,000$140,000
African roast$120,000$130,000$140,000
French roast$140,000$150,000$160,000
TOTAL SALES
Direct Unit CostsYear 1Year 2Year 3
Bistro blend$3.00$3.00$4.00
Expresso and Decaf expresso$2.00$2.50$3.50
African roast$1.40$2.00$2.70
French roast$1.00$3.50$4.00
Direct Cost of Sales
Bistro blend$70,000$80,000$90,000
Expresso and Decaf expresso$50,000$60,000$70,000
African roast$30,000$40,000$50,000
French roast$20,000$30,000$40,000
Subtotal Direct Cost of Sales$215,000$240,000$265,000

7.1 Personnel Plan

To effectively run business operations, Maria Rodriguez who is the Owner and Proprietor of Blonch Coffee will be in charge of running the coffee roasting business on a daily basis. To ensure smooth running of the business, the following staff will be employed in various departments.

  • Business Development and Sales Manager
  • 2 Support Staff
  • 1 Admin Assistant
  • 1 Shipping Executive
  • 1 Cleaner

Successful applicants will undergo training to familiarize themselves with coffee roasting business operations.

7.2 Average Salaries

Blonch Coffee plans to pay its staff the following salaries within the first three years of operation.

 Personnel Plan   
Year 1Year 2Year 3
Business development and sales manager$20,000$22,000$24,000
2 supoort staff$20,000$22,000$24,000
1 admin assistant$12,000$14,000$16,000
1 shipping executive$14,000$16,000$18,000
1 cleaner$10,000$12,000$14,000
Total Salaries$76,000$86,000$96,000

Financial Plan

Blonch Coffee has come up with a comprehensive financial plan that will be instrumental in driving success and business growth. In this business plan of how to start coffee roasting, Maria Rodriguez will use her savings to start the business but will be assisted by two investors. In addition, a bank loan will be secured to help finance the budget deficit to meet expenses. For a business to be successful, there must be a good plan to guide operations and finances. Below is key financial data for Blonch Coffee.

8.1 Important Assumptions

The financial forecast for Blonch Coffee is based on the assumptions below.

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%13.00%16.00%
Long-term Interest Rate5.00%7.00%9.00%
Tax Rate12.00%14.00%16.00%
Other000

8.2 Brake-even Analysis

Blonch Coffee Brake-even analysis is illustrated in the graph below.

Coffee Roasting Business Plan - Brake-even Analysis

 Brake-Even Analysis 
Monthly Units Break-even500
Monthly Revenue Break-even$80,000
Assumptions:
Average Per-Unit Revenue$100.00
Average Per-Unit Variable Cost$2.00
Estimated Monthly Fixed Cost$210,000

8.3 Projected Profit and Loss

Profit and Loss information for the coffee roasting business is calculated on a monthly and annual basis as shown below.

 Pro Forma Profit And Loss   
Year 1Year 2Year 3
Sales$170,000$190,000$210,000
Direct Cost of Sales$24,000$27,000$30,000
Other$0$0$0
TOTAL COST OF SALES$23,000 $26,000 $29,000
Gross Margin$50,000$70,000$100,000
Gross Margin %40.00%50.00%60.00%
Expenses
Payroll$120,000$140,000$160,000
Sales and Marketing and Other Expenses$2,000$5,000$8,000
Depreciation$2,000$4,000$6,000
Leased Equipment$0$0$0
Utilities$1,000$3,000$5,000
Insurance$15,000$3,000$4,500
Rent$4,000$6,000$8,000
Payroll Taxes$40,000$60,000$80,000
Other$0$0$0
Total Operating Expenses$20,000$25,000$30,000
Profit Before Interest and Taxes$35,000$40,000$50,000
EBITDA$3,000$5,000$8,000
Interest Expense$0$0$0
Taxes Incurred$12,000$15,000$18,000
Net Profit$40,000$46,000$50,000
Net Profit/Sales25.00%30.00%35.00%

8.3.1 Monthly Profit

Coffee Roasting Business Plan - Profit Monthly

8.3.2 Yearly Profit

Coffee Roasting Business Plan - Profit Yearly

8.3.3 Monthly Gross Margin

Coffee Roasting Business Plan - Gross Margin Monthly

8.3.4 Yearly Gross Margin

Coffee Roasting Business Plan - Gross Margin Yearly

8.4 Projected Cash Flow

Below is a summary of Pro forma cash flow, subtotal cash spent, subtotal cash received, subtotal cash spent on operations and subtotal cash from operations.

Coffee Roasting Business Plan - Projected Cash Flow

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$70,000$120,000$150,000
Cash from Receivables$14,000$18,000$22,000
SUBTOTAL CASH FROM OPERATIONS$84,000 $138,000 $172,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$40,000 $60,000 $80,000
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$15,000$18,000$20,000
Bill Payments$14,000$16,000$18,000
SUBTOTAL SPENT ON OPERATIONS$29,000 $34,000 $38,000
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
Dividends$0$0$0
SUBTOTAL CASH SPENT$30,000 $35,000 $40,000
Net Cash Flow$10,000$12,000$14,000
Cash Balance$18,000$21,000$24,000

8.5 Projected Balance Sheet

Below is a Projected Balance Sheet for Blonch Coffee that shows capital, assets, liabilities, current liabilities and long term assets.

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Cash$200,000$220,000$240,000
Accounts Receivable$40,000$45,000$50,000
Inventory$4,000$6,000$8,000
Other Current Assets$3,000$4,000$5,000
TOTAL CURRENT ASSETS$247,000 $275,000 $303,000
Long-term Assets
Long-term Assets$10,000$12,000$15,000
Accumulated Depreciation$13,000$15,000$17,000
TOTAL LONG-TERM ASSETS$5,000 $3,000 $2,000
TOTAL ASSETS$275,000 $305,000 $337,000
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$10,000$13,000$16,000
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
SUBTOTAL CURRENT LIABILITIES$10,000 $15,000 $20,000
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$20,000 $25,000 $28,000
Paid-in Capital$23,000$23,000$23,000
Retained Earnings$20,000$23,000$26,000
Earnings$70,000$80,000$90,000
TOTAL CAPITAL$340,000 $350,000 $360,000
TOTAL LIABILITIES AND CAPITAL$150,000 $155,000 $160,000
Net Worth$130,000$150,000$180,000

8.6 Business Ratios

The following is the Ratio Analysis, Business Ratios and Business Net Worth for Blonch Coffee.

 Ratio Analysis    
Year 1Year 2Year 3INDUSTRY PROFILE
Sales Growth5.00%8.00%11.00%14.00%
Percent of Total Assets
Accounts Receivable7.00%9.00%11.00%14.00%
Inventory6.00%8.00%4.00%16.00%
Other Current Assets4.00%6.00%3.00%40.00%
Total Current Assets80.00%85.00%120.00%47.00%
Long-term Assets-20.00%-40.00%-60.00%40.00%
TOTAL ASSETS80.00%80.00%80.00%80.00%
Current Liabilities9.00%6.00%3.00%25.00%
Long-term Liabilities0.00%0.00%0.00%20.00%
Total Liabilities4.00%2.00%4.00%35.00%
NET WORTH90.00%95.00%120.00%30.00%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin75.00%80.00%87.00%0.00%
Selling, General & Administrative Expenses60.00%67.00%70.00%75.00%
Advertising Expenses4.00%5.00%3.00%9.00%
Profit Before Interest and Taxes20.00%28.00%34.00%6.00%
Main Ratios
Current2435403.3
Quick3540257
Total Debt to Total Assets6.00%4.00%2.00%60.00%
Pre-tax Return on Net Worth50.00%70.00%90.00%3.50%
Pre-tax Return on Assets60.00%65.00%70.00%10.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin25.00%28.00%32.00%N.A.
Return on Equity60.00%75.00%87.00%N.A.
Activity Ratios
Accounts Receivable Turnover3715N.A.
Collection Days150180200N.A.
Inventory Turnover202325N.A.
Accounts Payable Turnover151820N.A.
Payment Days242730N.A.
Total Asset Turnover6.567.3N.A.
Debt Ratios
Debt to Net Worth0-0.04-0.06N.A.
Current Liab. to Liab.000N.A.
Liquidity Ratios
Net Working Capital$170,000$180,000$200,000N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.50.70.6N.A.
Current Debt/Total Assets9%6%7%N.A.
Acid Test252830N.A.
Sales/Net Worth5.44.41.5N.A.
Dividend Payout000N.A.