Retail Management Project Report Final
Kevin Landers, LUTCF
BUSI 446 – Retailing and Category Management
Liberty University
August 28, 2020
Executive Summary
Moody’s Coffee will become a local hotspot for business professionals, students, and
locals providing the world’s coffee and treats, necessities in the daily lives of the target audience.
The business will boast a friendly atmosphere for socializing, studying, remote working, and
relaxation in the suburbs for customers, whether on the way out or on the way back in. Moody’s
will offer a variety of the best coffees in the world, as well as smoothies and complimented with
deli items and an internet café area. The company will maximize its exposure being in
convenient proximity to major interstates and the surrounding business and school districts.
The business will host its operations in a 2,200 square foot facility which has been
secured for a five-year lease with expansion options. Having an initial $210,000 start-up cost,
Moody’s has secured $170,000 of the funding, securing the remaining capital from BXS Bank
Services. Sales revenues are expected to be $500,000 in the first twelve months, growing to over
$750,000 by year three. It is expected for Moody’s Coffee to retain a sixty-percent gross profit
margin while managing a feasible group of required operating expenses, with projections of net
profits between $120,000 and $150,000 in the same time frame.
Execution of business of the independently owned coffee shop being in Moody, AL, the
intentions are to have sustainable profits through a mix of balanced variable and fixed costs.
Forecasted revenues will be projected based on sales and expenses that allow for viable
investment back into the business for improved results and profits. Margins on menu products
will be valued, consistently, such that they provide revenues to cover costs and expected profits
for expansion into phase two of the business plan. Forecasting is a vital component of starting a
company, though many start-ups face challenges, this seems to be one of the biggest challenges
most businesses face. It is important that a well-organized strategy is developed for each task
area of the operation. It will be important to be proactive in implementation of the planned
budget, marketing efforts, staffing, inventory, and the opportunities that are afforded.
Budgeting
The expenses of operating Moody’s Coffee budget and financial forecasting models must
be considered to accurately project for upcoming annualized budgets. We must look at fixed and
variable costs, where a loan may initially be necessary. Fixed costs will include, although not all-
inclusive, inventory, lease, insurance costs, some utilities, salaries, loans, property taxes, and
depreciation. Variable costs will include direct labor wages, materials, some utilities, and fees.
Requiring $210,000 in start-up expensing, and contemplated the revenues to repay the loans, the
business is expected to reach a stable profitable year by the third year, and at that time continue
growth by possible acquisition of a secondary location. The initial start-up fees also include a
higher quality suite of marketing campaigns, signage, quality products from around the world,
and promotional front-end blasts of rewards.
S.W.O.T.
Strengths
-The only independently owned coffee shop within miles providing world-renown coffee.
-Internet Café
-Consumer Rewards
-Top Quartile Customer Service
-Creativity and unique appeal
-Positive and Inspiring
Weaknesses
-Full-service sit-down restaurant services
-Limited seating
-In the suburbs
Opportunities
-Customer loyalty
-Personal customer experiences
-Secondary locations in corporate office complexes within 100 miles
-Franchising
Threats
-Competitors coming in nearby once success is accomplished
-Higher capitalized similar business coming in with cheaper product pricing
-Local government taxation
Location
The location of the coffee shop will be a stand-alone building adjacent to the popular
garden center on the North side of I-20, within five-hundred feet of the West-bound ramp. The
location will be convenient for traffic heading into the larger city of Birmingham and for nearby
residents and businessowners, away from heavier traffic yet convenient to main roads that are
within a few hundred feet of the location. The retail location will be aesthetically sound and
attractive for all types of consumers. Being prime real estate, in convenient proximity to major
interstates for customers and for employees, will provide a dynamic ability to attract the right
customer, the right employees, and the right vendors for all of the business requirements.
Employees
Our message and core values would align with our methods and ethics, the marketing
voice of our business would be public feedback we transparently provide and through local
social mediums, and certainly through employees who we treat with care and who we will
empower. The plan for hiring employees will consist of a variety of individuals. We will first
seek prominent centers of influence within the local community, such as the retired elementary
school teacher or a high school teacher, possibly the daughter of another local business owner,
and extrovert types of personalities who will have great sales skills. Teenagers will be a great
group of employees to train as they will be part-time workers and provide a flexibility in
scheduling. Among the training will be hands-on sessions where employees will serve
employees, during closed business hours initially. The training will consist of consultative sales
training from the owners and from qualified business consultants who are well known in the
consultative sales training space. Training will also consist of customer service skillsets, handling
financial responsibilities, managing time, culture specific values, conflict management, expected
service levels, and expectations during the course of employment to include evaluations annually
for those tenured at least one year in length and monthly reviews with the team as a whole to
review skills and where the business is at currently. Transparency with employees will be a major
value of the business operations and the ability for employees to be empowered and to be offered
substantial benefits, those of greater value to workers than the competition provides, will afford
great talent and longevity of the average employee tenure, ensuring customer loyalty is not only
to Moody’s Coffee, but to the employees that work at the company.
Inventory
Forecasting for sales, expenses, and an overall progressive budgeting system for business
operations is tied to a vital component of operations for most companies, inventory control. It is
important to strategize for inventory security, control, display, and costs. An independently
owned coffee shop with a variety of local and worldwide coffees will draw customers who like
assortments; therefore, it is important to maintain a variety of product offered to maintain
customer satisfaction and have stabilized financial results. Appropriate inventory control will
display products that are demanded and set the base and custom assortments desired by local
customers within the store in fashions that speak to consumer’s routines and convenience, overall
where the customers making a purchase will feel comfortable selecting options and doing
business with the shop. Similar and supplemental items, such as coffee elements, mugs, and
special bags of coffee will be placed near each other for the opportunity of encouraging
customers to make additional purchases. For complete inventory control, a software will be
utilized to apply the strategy and principles and to effectually maintain reasonable expenses
related to controlling, securing, and maintaining the inventory; making an appeal to consumers
who buy coffee, smoothies, and supplemental items from the coffee shop. A POS system will be
used to assist in supplying various mixes and breadth of products and for proper inventory levels
inside the store.
Inventory and various supplies used in the business operations will be captured by
qualified and trusted vendors. Referrals are sought after from other local business owners and
through the local restaurant association that we will be an active member of. Through association
relationships we will gain trusted vendors, as well as through an assessment process of other
vendors to provide what our business needs. Delivery of supplies will be set up on a weekly, bi-
weekly, and monthly basis as shelf life of our products permits, food products, coffee, and paper
products, respectively. We will also have semi-annual stewardship review meetings to ensure we
are aligned and profitable between the entities.
Pricing Strategy
The independently owned coffee shop will host a menu of various items including
coffees, smoothies, and deli style items, as well as a mix of supplemental items such as coffee
additions, coffee cups and mugs. The menu will determine costs, and in response to the range of
the menu, have a large impact on pricing. Initially determining to break even based on what the
coffee shop will charge for each item, it is important to create a flexible and easily formatted
menu, so pricing can be adjusted as needed. Bundles of items, or combos as many restaurants
and delis have, will be promotional for customers who would like to combine various menu
items for a cheaper price than if they purchased the items separately. There will be some menu
items that are priced cheaper than local competitors, namely items that are more commonly
purchased, such as regular coffee or a more popular bag of coffee beans, and some items will be
priced higher, such as those items that are not purchased more frequently. An implementation of
customer rewards, or loyalty rewards, will be provided to consumers to encourage higher
average customer lifetime values. The rewards can be buying a certain number of specific items
or a specific dollar amount to obtain an item for free, or possibly refill cups or mugs that are sold
and the cost of coffee the next visit is not regular pricing. Since profitability if key to stay in
business, the pricing needs to be set right to contribute to success of the business. The location of
the shop will determine a variety of amenities or initiatives that might be launched where higher
or creative pricing can be implemented.
Promotion Strategy
The target market of the independently owned coffee shop will be business professionals
and locals who utilize the nearby interstates to get to work and school. Being located
conveniently to an travel interchange between the suburbs and the largest major city, the shop
will be the coffee option for professionals heading to work each morning, and locals, including
students and other business owners, who desire a friendly, convenient, and functional place to
grab their coffee, or smoothie. The targeted audience will be marketed to through local radio
stations consistently each quarter and through the internet using SEO key words and phrases,
including mobile device geo-targeting to capitalize on the business professionals and locals who
reside within a given radius from the coffee shop. Various promotions will be inserted in the geo-
targeting marketing campaigns as well as radio spots which will include specials for birthdays,
various combos of purchases, and college students. The promotion of the internet café section of
the shop will be advertised as well, offering a safe and effective work or study space.
CRM
Regarding customer relationship management, we will immediately implement a rewards
system for loyal customers. The rewards system will include a free coffee, breakfast, deli, or
smoothie menu item for every fifty dollars spent with us. We will gauge the success and
profitability in this venture over the course of one year and reevaluate from there. In addition to
the reward system, we will gather customer phone and email as much as possible in order to
communicate with customers about weekly specials, monthly specials, and birthday celebrations
(their own birthday treat). We will maintain customer information within an encrypted system
and implement and text messaging and email system to deploy messages for customer who have
not opted out of text messaging or emails. We will include an age category and stage of life
category to group customer into specific segments for marketing campaigns as well, and will
retain the information for marketing purposes to those who allow the knowledge of the
information. Loyalty is generally increased through positive customer experiences; ultimately,
customers of a business matter. For the independently owned coffee shop, needs of the customers
will be anticipated and addressed in marketing campaigns and directly experienced by each
customer as personal relationship with each consumer will be of great importance. A long-term
focus of each customer will be key in creating loyalty and new customers are hopeful from word-
of-mouth promotion. There will be an investment that includes creative efforts for customers,
personalizing experiences by capturing birthdays, anniversaries (marriages, work, etc.),
enjoyments, family dynamics, and recreational activities of consumers as they allow the
knowledge in the system, which will be a cloud-based system for managing the customer
relations. Capturing these items of information will allow a relatively inexpensive investment
into a customer’s life by sending cards through email, providing birthday trinkets or menu items,
and coupons for their special day. There will also be a focus on military veterans, police officers,
firefighters, and medical professionals to show support and appreciation of their dedication and
work. The coffee shop will be attentive, creative, attractive, and genuinely care of its customers,
and through each experience there will be personal touches that form a longer retention of each
customer.
Request for Action
It is Moody’s Coffee intention to gain BXS Bank Services’ financial support in
partnership for the remainder of the capital required to cover the initial start-up costs for opening
the company to serve the professionals, students, and locals of the area. It is also the intention of
Moody’s Coffee to maintain an open line of credit for unforeseen expenses and future expansion
plans. In partnership, the intended request now and requests in the future will be backed by
Moody’s intentional efforts to remain a loyal partner in business with BXS Bank Services and to
grow together utilizing the cohesive efforts, resources, systems, and campaigns. It is desired to
maintain a long-term partnership, thriving on a local relationship presence, where other business
professionals, locals, and upcoming students share the same needs of financial investment.
During the course of business operations, we would like to provide quarterly stewardship reports
to you for the purpose of tracking our efforts and progress, just as a partnership should provide.
As we track progress and provide updates to BXS, we would like to present to the board of
governors as needed, and if required, present accomplishments and future plans for the benefit of
substantiating the financial support you would provide to the company. Transparency is
paramount to the relationship opportunity we are presenting, and transparency is a required core
value of our business. We are requesting actionable support of our business and actionable
support of your business services and we wish to adhere to any and all communication required
of the partnership, including but not limited to timely reports, projections, servicing metrics,
profitability, and key employee introductions and meetings based on the requirements agreed to
in contract form.
Next Steps
As part of our commitment to the opportunity of partnership, we suggest a next step
being a meeting of key people and decision makers to present our plans for the business and
future projections and milestones over the course of the next thirty-six months. A perspective of
objectives and important key performance indicators follows. We would consider a buy-in of
Moody’s Coffee for 10% of annual profits, not exceeding the total original loan repayment
amount annually, in return for a line of credit to utilize for growth purposes, where any loan
taken is first contributed from the 10% provided to BXS.
Sales
-$500,000 annual sales projected year 1 and year 2 each, consecutively
-Indications present a $750,000 annual sales revenue stream in year 3
-Net profit projections indicate approximately $150,000 in year 3 of the operation, having
an approximate $120,000 net profit in year 1 and year 2 each, consecutively
-Beyond year 3, it is expected that annualized next profits will be north of $200,000 due to
new business customers and continued loyal customer participation
Exceeding Plan
If Moody’s Coffee exceeds plan, we will expand the business earlier than indicated into
corporate complexes and a secondary location in a similar location with 25 miles. With your
support we can continue the scale of the business long-term and provide investment of profits
back to the business while maintain our commitment to the terms and conditions BXS and
Moody’s Coffee agrees to.
Falling Short of Plan
If it is projected or recognized that Moody’s Coffee will fall short of projections, we will
inform BXS Bank Services immediately, requesting a meeting of key people and decision
makers to discover the options that are available for continued support and maintenance of the
terms and conditions agreed to initially. We would request that BXS name addendums to the
terms in lieu of mandates to our contract, where Moody’s Coffee can and certainly would
provide continued repayment and support of the program.
If an exit of projected plans are needed, Moody’s Coffee would ensure repayment of financial
support through the sale of assets of the business as well as repayment from capital earnings
since the inception of the business venture in partnership with BXS until the full financially
supported amount is paid in full to BXS, including a 10% contribution from the most recent
twelve months of profits. The exit strategy including the opportunity to utilize the Moody’s
Coffee name, if desired, for establishing a subsidiary of BXS Bank Services for an offering of
value to BXS employees internally in a safe or cafeteria style benefit to employees. Included in
the exit strategy will be an option to implement a key person life policy in the event a key owner
or managerial staff member passes, providing BXS a payout of owed financials with a structured
succession plan in place with approved attorney and accountant blessings
