Reference no: EM131544732

Campus Coffee Shop

A recent college graduate with a retail management degree has been pondering several new business ventures to pursue upon graduation. She wants to remain in the college town where she earned her degree due to its low cost of living, the large number of friendships with local community members, and her love for college sports. She not only does not have a lot of capital, but also is very reluctant to borrow from her friends and family. This rules out buying an existing business, becoming a franchisee, or starting a business with high capital requirements (such as a clothing shop, DVD rental store, or a restaurant). One alternative she is seriously considering is a coffee shop located on a side street nearby the college campus.

These are some of the preliminary plans for the Campus Coffee Shop:

• Currently, coffee is available within a 5-mile radius at a local Starbucks, McDonald's, and Dunkin' Donuts. Many students would favor purchasing coffee at a local store owned by a recent graduate than at any of these commercial outlets.
• Of the three food stores, only Starbucks offers fair trade coffee. Fair trade coffee provides higher prices to coffee growers, helps poor coffee growers get financing, and offers assistance in transitioning to organic farming. Campus Coffee will only sell fair trade coffee. The fair trade logo will be prominently illustrated within the store, on all coffee cups, and on all napkins.
• To reduce its environmental impact, Campus Coffee will use china cups and saucers and stainless flatware for all coffee and food products consumed in the store. Take-out coffee and foods will utilize recycled paper (never Styrofoam).
• Campus Coffee will have comfortable chairs for customers to lounge in, as well as free Wi-Fi service. Poetry readings, musicians, palm readings, and meet-the-local politicians forums will be presented in the evenings. Recognizing that each of these events draws a different audience, they will be rotated throughout the month.
• In addition to coffee, high-quality Italian and French pastries will be served. This will be supplemented by Italian ice cream and ices during the summer.

In computing capital requirements, the prospective owner has made several assumptions. One, it will take four months for the coffee shop to break even. She will need working capital for rent, utilities, payroll, and personal expenses during this time period. Two, to lower investment, she plans on purchasing used commercial espresso equipment, as well as restaurant fixtures (refrigerators, tables, utensils, etc.). And three, she plans to get some trade credit from the coffee, ice cream, and pastry suppliers to cover the cost of some of this equipment.