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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 espressobased 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 and Caribou serve average quality drinks in establishments that have the
same generic design appearance. Indeed, Starbucks and Caribou 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. Dunn Brothers meets this need and fills this
niche. We’ll offer high-quality products in an upscale environment. Furthermore, our highprofile location in downtown Saint Cloud will provide 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.
Financial
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1.1 Mission Statement
Dunn Brothers is really quite simple. They been roasting and brewing some of the
world’s finest coffees since 1987 when Ed Dunn opened the first Dunn Bros Coffee shop in St.
Paul, MN. Over 23 years and over 80 shops later, they are known around the nation as one of
the only coffee franchise companies who roasts all of their coffee in small batches in every
traditional shop (the only stores that don’t roast on site are our Express locations that you’ll
see in places like airports, libraries, or college campuses where coffee roasting is not an
option). Dunn Bros Coffee has created a meaningful brand that exemplifies quality and they
are known for their commitment to the neighborhoods they serve. More and more consumers
appreciate, and expect, a good quality cup of coffee. The coffees offered by Dunn Bros Coffee
have been hand-selected for our franchisees to ensure that they leave a lasting impression
with even their most discerning guests. What you’ll soon discover is that they source beans
from the best farmers in the world. They care deeply about the sustainability of the farming
partners and the environmental practices under which the coffee is grown. This allows them
the opportunity to meet the ever increasing demand from consumers for coffees that are Fair
Trade Certified or directly traded.
In addition this Dunn Brothers will make its best effort to create a unique place for
SCSU students, local business clients, and out of town travelers where customers can socialize
with each other a comfortable and relaxing environment while enjoying the best fresh roasted
coffee or lattés and a health choice of snacks. We will be in the business of helping our
customers to relieve their daily stresses by providing a piece of mind through late night hours,
great climate, convenient location, friendly customer service, and products of consistently
high quality. Dunn Brothers will invest its profits to increase the local employee welfare while
providing stable return to its stakeholders.
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1.2 Objectives

Turn in profits from the first month of operations.

Become the best know coffee bar in St. Cloud MN by the surrounding community.

Maintain a 60% gross margin.

Net After-tax Profit above 15% of Sales.

Provide an excellent service experience, anticipating the needs of the customers and
delivering the best service
1.3 Success

Marketing strategies aimed to build a solid base of loyal customers, as well as
accomplishing a comfortable atmosphere for SCSU students.

Maximizing the sales of high margin products, such as 1lb bags coffee beans.

Provide outstanding employee training to insure the best coffee preparation
techniques.

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
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2.0 Company Summary
Dunn Brothers will launch a coffeehouse located in downtown St. Cloud. Dunn Brothers
will offer residents and visitors a totally new style of coffeehouse – one offering freshly
roasted coffee drink and a comfortable, upscale environment at which to socialize.

Variety: No other coffeehouse in the area will provide the range of coffee drinks, tea,
juice, and Provisions Bakery products Dunn Bothers does.

Location: Dunn Brothers will be located in the prime section of downtown St. Cloud in
the heart of the night light and entertainment district. Dunn Brothers location will be
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 Dunn
Brothers coffeehouses located in markets that have similar demographic profiles,
significant traffic by the store, year-round tourist activity and a sizeable student
population.
2.1 Ownership
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2.2 Start-up Summary
The cost of a franchise for a traditional Dunn Bros Coffee shop ranges between $210,000 and
$429,400. This cost includes construction, equipment, other start-up costs and the initial
license fee of $32,000.
Long Term assets:
Undercounter Refrigerators
$0
Service/Prep Counter
$0
Ice Machine
$0
Large Refrigerator
$0
Milk Coolers
$0
Cash registers Point of Sale System
$0
Espresso Machine
$0
Fetco Coffee Brewer
$0
Counters/Condiment bar/shelving
$0
Short-Term assets:
Tables, Chairs, Furnishings
$0
Persian Carpet
$0
Lighting Fixtures
$0
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
City permits/licenses/fees
Inserted Row
LEGAL
Accounting
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
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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
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Food display case
Storage room shelving
Bulk bean grinder
Sinks (2), prep counters
Menu board construction
Cups/Lids (50,000)
Total Start-up Expenses
$0
$0
$0
$0
$0
$0
$0
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
$0
$0
$0
$0
$0
Total Requirements
$0
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
$0
$0
$0
Assets
Non-cash Assets from Start-up
$0
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Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets
$0
$0
$0
$0
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
$0
$0
$0
$0
Loss at Start-up (Start-up Expenses)
Total Capital
$0
Total Capital and Liabilities
$0
Total Funding
$0
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3.0 Products
Dunn Brothers provides its customers, whether at Drive-thru or at the counter, the
ability to custom order a coffee beverage that will be blended to their exact specifications.
Each of Dunn Brother’s Baristas will be trained in the fine art of brewing, blending, and
serving the highest quality hot and cold beverages, with exceptional attention to detail.
Besides coffees, we will offer teas, frozen coffee beverages, seasonal specialty drinks,
pastries, and other health baked goods. Throughout the location, we will market premium
items such as coffee mugs, 1lb bean bag coffee, the famous Infinite Black Cold Press Coffee,
and more.
3.1 Vendors
Coffee roasting and teas will be provided by Dunn Brothers Company.
All other beverages will be provided by Viking Coca-Cola and Bernick's Pepsi locate in
St. Cloud.
Pastries and other healthily food choices will come from Provisions Bakery Café.
Gift items and premium items will also come from Dunn Brothers Company.
3.2 Dunn Brothers Menu
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4.0 Market Analysis Summary
Dunn Brothers will launch with an exciting new coffeehouse concept in a receptive and
steadily growing market segment—the 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

St. Cloud: The Perfect Launch Market
By launching Dunn Bothers in the St. Cloud market we’ll maximize our potential for
success due to several factors:
The highly 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
Dunn Bother will be located at what is arguably one of the best locations for a coffeehouse in
St. Cloud—in the heart of the tourist and business district, adjacent to dining and shopping,
just a few blocks the historic Paramount Theatre and just steps from the busiest part of SCSU
campus.
4.1 Market Segmentation
Dunn Brothers customer base in Saint Cloud is comprised of five target groups.
1.
local residents
2.
Tourists
3.
Local business people
4.
Students
5.
Travelers passing through
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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 Saint Cloud, 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 highway 23) provide a consistent foundation all year
long.
Locally
Population of St. Cloud is 66,169, not including 12,908 full-time enrollment students
at SCSU which is three blocks from the site of this Dunn Brothers. Homes in St. Cloud sell for an
average $156,600 with estimated median of $35,686 per household income.
Tourists
More than 30,000 tourists visit St. Cloud every year. Most will pass by the Dunn Brothers
location. Tourist comes to St. Cloud for conventions, events, shopping and tournaments. In just
in the first half of 2011, the Chamber’s of CVB: Booked 74 conventions , events and tournaments
for future years, drawing 17,450 attendees who will spend an estimated $1.7 million and all the
events in the future are planned within 5 miles of the coffee shop.
Local business people
Dunn Brothers is located on the 5th Ave and highway 23 in the heart of the prime
downtown business district. It's across from Wells Fargo Corporation building, handful of law
firms, and 3 miles from shopping destination in St. Cloud.
Students
St. Cloud is home of SCSU as well as dozens of other schools, including Apollo High School
and St. Cloud Technical College. Technical High School is less than a mile from this location.
Travelers on Highway 23
One of the state’s two major East/West routes passes through St. Cloud. According to Dept of
Transportation, more than 50 thousand auto trips will pass through the city. Many of these
travelers will stop for a meal, to refuel and have a cup of coffee. Highway 23 is also a heavily
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Market Analysis
Potential
Customers
Local residents
Tourists
Travelers on
Hwy 23
Students
Local
businesses
Total
Year 1
Year 2
Year 3
Year 4
Year 5
2%
3%
66,169
30,000
67,492
30,900
70,219
31,827
71,623
33,765
73,055
34,778
3%
50,000
51,500
53,045
54,363
56,275
1%
20,000
20,200
20,402
20,606
21,020
1%
10,000
10,100
10,201
10,303
10,510
Growth
176,169 180,192 185,694 190,660 195,638
traveled commuter route to east and west sides of the town.
Chart: Market Analysis (Pie)
Page 12 of 28
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 20,000 people live within five miles of our Dunn Brothers location. The
most affluent of these live even closer, within three miles. It is a short 5 minute drive to Dunn
Bothers 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
St. Cloud has excellent year-round tourist activity. About 30 thousand people will visit
the area during the next year. While hotels are virtually sold out during the summer months,
this is due in large part to the temperate climate, weekend or day-trip visitors from the
Page 13 of 28
greater Minneapolis area and an unusually large number of special events (e.g. film festivals,
concerts, art shows) scheduled throughout the year.
With a troubled economy, more people are opting for the relatively inexpensive, easy
and safe short trip to St. Cloud for recreation. And, according to the Chamber of Commerce,
60% of all tourists visiting St. Cloud will pass by the Dunn Brothers 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 Dunn
Brothers. The Crossroads Mall, the prime shopping center of St. Cloud, is three miles away.
The county courthouse is two blocks away. Dunn Brothers is in the heart of the night life and
dining area.
Because much of the employee parking is limited in the immediate downtown area, most
people stay near their place of employment during breakfast, lunch and for after-work
relaxing. A significant number of these local business people will find Dunn Brothers an
inviting and convenient destination.
We will also offer coffee service to bring in additional revenue and promotes Dunn
brothers 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 20,000 enrollment students in several schools this fall,
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 students—even high school students—as 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
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
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 Highway 23
The Dept of Transportation estimates that there will be 50 thousand auto trips through
St. Cloud this year, a number that is increasing every year. Highway 23 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 east and west
parts of the state.
Source: Dept of Transportation, Saint Cloud Chamber of Commerce, US Census Bureau.
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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.
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.
The National Coffee Association (NCA) annual coffee trends study further indicated that
consumption of coffee has held steady through the recession. In 2011, the study found 40
percent of those 18 to 24 years old said they drink coffee daily, up from 31 percent in 2010
and on par with 2009’s 40 percent. For those 25 to 39 years old, 54 percent said they drink
coffee daily, up from 44 percent in 2010 and ahead of 2009’s 53 percent.
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. And while sales of coffee and other
specialty drinks such as iced tea and smoothies have been on the rise, sales of carbonated
soft drinks at restaurants are down.
4.3.1 Competitive Comparison
Starbucks Corporation-is an international coffee company and coffeehouse chain based
in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with
19,763 stores in 59 countries, including 12,848 in the United States
Peet's Coffee & Tea, Inc. Company- The Company owns and operates about 195 coffee
shops in California and half a dozen other states offering java lovers about 25 types of whole
bean and fresh ground coffee, including about 15 blends of coffee.
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Caribou Coffee Company, Inc. Company Profile-This Company serves hot Joe to the java
herd. Caribou Coffee operates the second-largest non-franchised coffee chain in the US (based
on the number of locations) behind Starbucks with more than 410 stores in about 20 states,
mostly in Minnesota.
Local Competition
Surprisingly, the leading coffeehouse chain, Starbucks, has only one store in the St.
Cloud area. Its volume is about 450 customers daily is at an excellent location on 2nd St
S, on the main side of town, but the store is small and lacks outside seating.
The other high-volume coffeehouse chain is Caribou (six locations) two of them are
standard coffee shops and the four others are express shops placed in the mall, SCSU
campus and grocery stores.
The two Caribou shops locations in the St. Cloud area are very excellent location, for
the average customers but not walking distance for SCSU students that crave a late night
coffee drink. While both shops have great indoor atmosphere their outdoor seating is not
peaceful and enjoyable.
There is one independent coffeehouse, located three blocks from the Dunn Brothers
site but not on a busy street. This coffeehouse is also very small, and is aim towards the
surrounding law firms and courthouse employees, but still manages to average more
than 150 customers per day.
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4.3.2 Competition and Buying Patterns
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.
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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
400 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 $3 - $6 range. Dunn Brothers expects that guest
checks will average about $4.00.
5.0 Strategy and Implementation Summary
Dunn Brothers coffeehouse uses a strategy of total quality—in 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

Dunn Brothers offers several unique advantages over all other coffeehouses
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5.1 Competitive Edge
Our competitive edge, compared to the other coffeehouses in the greater St. Cloud
area includes the following:

A significantly higher quality, better tasting coffee product.

Our location will arguably be considered the best in the market—in the heart of the
downtown where the River's Edge Convention Center is a block way, dining,
entertainment and cultural district in St. Cloud and three blocks from the
historic Paramount Theatre.


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.
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 by our self but also have the
backing from Dunn Brothers headquarters that will help us establish profitability quickly and
set the stage for continual growth.
Our strategy will be to position Dunn Brothes as the "home away from home" of
coffeehouses, offering a high quality product and superb service in a superior environment.
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5.2.1 Launch Marketing
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.
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-ofmouth. 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

Local print and broadcast media

Design and packaging

Community involvement

Sampling

Superior location

Desirable store ambiance
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Public Relations
A strong public relations/publicity program uses as its primary "hook" these three main
points:
1. Dunn Brothers is St. Cloud's first true gourmet coffeehouse
2. Our unique quality products
3. Our irreplaceable in store atmosphere
The goal of the PR 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.
Local Media

St. Cloud Times- Newspaper

KVSC 88.1 FM - Public Radio from St Cloud State University

KNSR 88.9 FM - MPR News

KSJR 90.1 FM - MPR Classical Music

KKJM 92.9 FM (Spirit 92.9) - Contemporary Christian

KMXK 94.9 FM (Mix 94.9) - True Variety

KKSR 96.7 FM (KISS 96) - Top 40 Hits

WWJO 98.1 FM (98 Country) - St Cloud's Country Music

KZPK 98.9 FM (Wild Country) - Today's Hot New Country

KCML 99.9 FM (Lite 99.9) - Today's Hits and All-Time Favorites

WHMH 101.7 FM (Rockin' 101) - Minnesota's Best Rock
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
KLZZ 103.7 FM (The Loon) - Classic Rock

WBHR AM 660 (The Bear) - ESPN Radio

WJON AM 1240 - News and Information

KXSS AM 1390 (The Fan St Cloud) - Sports Talk, KFAN Affiliate

KNSI AM 1450 - News and Talk

Charter Commutation –local TV retailer
Website
Dunn Brothers as a company provides a wonderful website for general information of
their company. Addition they provide local franchises with their own page showing; hours,
contact information, news, upcoming events and promotions.
Trend-setters
St. Cloud is home to thousands of individuals who can be important to the successful
positioning of Dunn Brothers. One mention on a local TV talk program or on the radio can (and
has) launched many successful careers and businesses.
With literally hundreds of students and business people as local residents, the word-ofmouth recommendations from these people can drive significant business to us as well as
generate favorable publicity.
Local business people in St. Cloud are also actively involved in the community,
many supporting several local charities. Our involvement in the community will enable us to
garner exposure for Dunn Brothers among an important group of local residents.
Key individuals will be targeted with gift baskets from Dunn Brothers containing
samples of our products to entice them to visit Dunn Brothers and talk about us with their
friends.
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Design style
The interior design of Dunn Brothers will be unlike any other coffeehouse chain. While
there are some upscale designs, there be a SCSU feel to it with a collection of memorabilia
from the campus. The most notable design will be a second floor catwalk where customers can
get away from the main floor traffic.
Gift Items
We carry a wide variety of quality gift items, including gift baskets. Gift basket
business could eventually grow to be substantial.
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

local sports teams
Location
We will build Dunn Brothers in the best locations possible, as this is the key element in
a successful operation.
Site selection criteria include:

High traffic location
Page 24 of 28

Small or mid-size affluent market

Year-round tourist activity

Nearby (within 5 miles) student population

Outside dining
Outside Dining
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 Dunn Brother’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)
Page 25 of 28
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.
5.3 Sales Strategies
Our sales strategy includes:

Staff salaries that are 10% above the industry average in order to attract the best
people

State-of-the-art sales/inventory system to (A) reduce customer waiting time, and (B)
create efficient product ordering
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
Create a mobile kiosk to take Dark Roast Java into the community at special events,
farmer's markets, art shows, etc.

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

We will have a strong "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.

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 changes—all while
projecting weekly, monthly, quarterly or annual labor costs. Schedules can be sent via
email to staff members.
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
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
5.3.1 Sales Forecast
Conservatively, we are forecasting an average of 250 customers per day during the
first year with average guest check expenditure for all items of $4.00. This figure was
arrived at by surveying the customer traffic at the nearest competing coffeehouses which
have a range of 100 - 150 customers per day and an average customer expenditure of
$4.00. 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.
We expect growth to occur across all categories at about 10% annually as the business
becomes more established and well-known, reaching 350+ 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 600-per-day customer count within three years.
6.0 Development Requirements
Dunn Brothers plans to employ the maintenance of the site by contracted
outside consultants.
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7.1 Personnel Plan
The personnel plan is included in the following table.
It shows a full-time manager's annual salary, part time assist manger salary, full time
supervisor salary, part time supervisor salary, and eight part-time salaries.
Table: Personnel
Personnel Plan
Store Manager
Manager
Barista #1
Barista #2
Barista #3
Barista #4
Barista #5
Barista #6
Barista #7
Barista #8
Shift Supervisor
Part Supervisor
Total People
Total Payroll
Year 1
$32,000
$20,000
$13,000
$13,000
$13,000
$13,000
$13,000
$13,000
$9,000
$7,000
$17,000
$15,000
Year 2
$33,000
$20,000
$13,000
$13,000
$13,000
$13,000
$13,000
$13,000
$9,000
$7,000
$17,000
$15,000
Year 3
$33,000
$22,000
$13,000
$13,000
$13,000
$13,000
$13,000
$13,000
$9,000
$7,000
$17,000
$15,000
12
$178,000
12
$179,000
12
$181,000
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.