Looking for a coffee kiosk business plan? You're in the right place.
A kiosk looks cheap to open, and that is where plans go wrong. How much cash does it take to get through two months with no sales? How many cars a day must stop at the window before the lease and the crew are paid for? When does a second site make sense, and who pays for it? A one-page template will not answer any of those.
In this article we'll walk through a complete sample plan for a drive-thru and walk-up coffee kiosk in Richmond, Virginia, section by section. We'll cover the executive summary, the SWOT analysis and, above all, the financials, right through to the downside case.
Here's what you'll take away:
- The summary: see how to state the site, the ask and the payback on one page, so a landlord or lender knows what the kiosk is for within a minute
- The kiosk economics: learn why a tiny footprint with very low rent can carry a plan that a full cafe could not, and where the margin still gets thin
- Leased equipment: find out how an espresso machine on a 60-month lease moves out of the start-up budget and into the monthly costs
- The pre-opening months and the first summer: spot when cash is at its lowest and size a reserve that covers it
- The second kiosk: see how a small bank loan and Year 3 cash flow pay for a second site, and what that does to profit that year
- The downside case: have an answer ready for the "what if sales run 20% short?" question, with the specific steps the owner takes
If you are planning a drive-thru or walk-up coffee business, read this before you write your own. Copper Fell is fictional, so take what fits your site and change the rest.
In this plan
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The Short Version
Copper Fell is a Richmond, Virginia coffee business built on a drive-thru and walk-up kiosk of about 290 square feet. It opens on April 1, 2027, on a ground-leased pad site beside a commuter route into the city. It sells coffee, tea and iced drinks, plus pastries bought in from a wholesale baker. Nadia Brandt owns 100% of Copper Fell, LLC.
The kiosk needs $225,000 to open: $135,000 of Nadia's savings and a $90,000 bank term loan. The unit, site work, fit-out and a 10% contingency take $123,500. The espresso machine and grinders are on a lease. A $87,700 reserve carries three months of build-out and training before the first sale, and the ramp that follows.
A second kiosk opens in April 2029. A $95,000 bank loan pays for the unit, site work and equipment, and $24,000 of opening costs comes from Year 3 cash flow.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $231,850 | $413,150 | $642,200 |
| Net income after start-up costs | ($68,114) | $43,519 | $13,807 |
| Closing cash | $38,136 | $82,725 | $91,328 |
Year 1 is a loss because 2027 starts with three months of cost and no sales, and the kiosk reaches 146 transactions a day only in December. Year 2 is the first profitable year. Year 3 profit falls back to a thin $13,807 because the second site's opening costs, a new loan and nine months of a new kiosk land in the same year.
If sales run 20% below plan, Nadia does not build the second kiosk, trims part-time hours and marketing, and takes a pay cut. On those terms cash stays above zero in every year and the business is profitable from Year 2.
About Copper Fell
Legal name: Copper Fell, LLC, a Virginia limited liability company. Owner: Nadia Brandt, 100%. Premises: a prefab kiosk of about 290 square feet with a drive-thru lane and a walk-up window, on a ground-leased pad. Opening date: April 1, 2027. The lease is signed in January, the unit arrives in March and the build-out runs alongside permits and hiring. Stage: pre-launch. A site is identified and the lease is in draft.
What the kiosk sells
| Product | Average price | Share of Year 1 sales |
|---|---|---|
| Hot and espresso drinks | $5.10 | 41% |
| Iced, cold-brew and blended drinks | $5.85 | 45% |
| Pastries and packaged snacks, bought in | $3.60 | 14% |
Drinks are the whole kitchen. There is no seating, no food prep beyond warming a pastry, and no roasting. Whole beans come from a regional roaster on a standing order and pastries from a wholesale baker. Seasonal specials rotate a few times a year.
Two sites, in order
The first kiosk has to earn its keep before the second is built. The plan's own rule is a second site only after the first has traded at plan for four quarters in a row. In the base case that happens in April 2029, month 28.
Permits and rules
The Virginia Department of Health publishes food-safety guidance for food establishments, and a kiosk like this needs a permit and plan review before it opens. Zoning for a drive-thru lane and signage rules are set by the city and the property owner. Curb-cut approval sits with the city, or with the state transportation department on a state-maintained road. The plan budgets $1,800 for plan review, the health permit and business licenses and treats every permit detail as something to confirm with the Richmond City Health District and the planning office before the lease is signed. The three-month pre-opening window is a plan figure, and permit timelines are the first thing that can stretch it.
The Richmond Coffee Market
Who else sells a morning coffee
| Alternative | What it offers | Why a driver picks it | How Copper Fell differs by design |
|---|---|---|---|
| National drive-thru coffee chains | Many locations, mobile apps, standard menus | Familiar order and a loyalty program | One named owner, the same faces at the window and a smaller menu made faster |
| Independent cafes | Seating, food and atmosphere | A place to sit and a fuller menu | No seat to find and no wait for a table; cars never park |
| Gas stations and convenience stores | Cheap brewed coffee on the way | Lowest price and a pump stop | Espresso drinks made to order at a comparable stop |
| Other drive-thru and walk-up kiosks | The same format | A closer site for some drivers | Placement on the inbound side of the commute |
| Brewing at home or at the office | Near-zero cost per cup | Free | Treated as the real alternative for the cheapest cups |
The table describes categories and how this kiosk positions itself. It is not a ranking. No named competitor, market-size figure or local traffic count is quoted here, since the plan rests on the site test described below.
Reading the site
The model needs 157 cars or walkers a day to stop at the window in Year 2. The test is a two-week count of vehicles passing the pad between 6:00 and 9:30, on the side of the road that heads toward downtown in the morning. Copper Fell treats that count as the deciding fact. A site that cannot show its morning side carries several times the plan's daily transactions is passed over.
SWOT
| Strengths | Weaknesses |
|---|---|
| Very low occupancy: $25,200 of rent in Year 1, 11% of sales and about 6% from Year 2 | One site and one product family, so one bad intersection hurts |
| Drinks-only menu that keeps ticket times short | Founder works about 40 hours a week at the window, so her cover rests on one lead barista |
| Leased machines put $740 a month of cost on the books and keep start-up cash low | No brand yet; the first regulars are built from zero |
| Opportunities | Threats |
|---|---|
| Loyalty and pre-order apps that may lift repeat visits, which this plan does not measure | A national chain opening a drive-thru within sight of the pad |
| Office parks and clinics nearby with no coffee within a short walk | Road work or a lane change that cuts the commute traffic |
| A second kiosk reusing the same crew training and supplier terms | Milk, coffee and cup prices rising faster than menu prices |
Who Pulls Up to the Window
The commuter, 6:15 to 9:00
A driver heading to an office, a hospital shift or a job site who wants the same order in under three minutes and will not park. This customer is the reason the kiosk exists, and about half of daily transactions fall between 6:30 and 9:30.
The walk-up regular
People from nearby offices and a clinic who walk to the window mid-morning and again after lunch. They order smaller, pay by card and come four or five times a week. They are the first to use the loyalty app.
The weekend and midday visitor
Families and cyclists on weekend mornings, errand drivers at midday. Their orders include more pastries and iced drinks, and weekend days are open only six hours.
What they weigh
Speed first, then the drink itself, then price. A tall specialty drink at a premium is acceptable; a ten-minute line is not. That is why the menu is short and why the crew is scheduled around the window instead of a counter.
Getting People to Stop
From a car on the road to a daily habit
The kiosk is seen before it is chosen, so the sign and the lane do most of the work in the first weeks. After that, a stamp card and then the app turn a first visit into a routine. The plan counts on regulars, people who come at least four times a week, for roughly half of transactions by the end of Year 1.
What the marketing budget buys
The first-year budget is $16,500: $7,500 of launch spending paid from start-up capital and $9,000 of operating spend. That is 7.1% of Year 1 revenue and about $0.51 for each of the 32,548 transactions. The share falls to 2.3% of revenue in Year 2 and 1.8% by Year 5 as regulars carry the volume.
| Item | Year 1 spend | What it is meant to do |
|---|---|---|
| Grand-opening sampling and cup coupons (launch) | $1,800 | Put a first drink in the hands of people on the route |
| Loyalty app and POS integration (launch) | $900 | Start collecting repeat visits from the first day |
| Local map listing and social ads (launch) | $1,500 | Get the kiosk found by drivers searching for coffee near the route |
| Office-park sample trays and punch cards (launch) | $1,500 | Reach the nearest workplaces in the first month |
| Banners and an A-frame (launch) | $1,200 | Tell the morning traffic the kiosk is open |
| Cup, sleeve and menu design (launch) | $600 | Make the order recognizable on a desk |
| Search, map and social ads | $3,600 | Steady visibility, about $300 a month |
| Loyalty rewards, every tenth drink free | $2,400 | Reward the regulars the plan depends on |
| Employer and office-park partnerships | $1,200 | Standing deals with nearby workplaces |
| Community events and school fundraisers | $1,200 | Name recognition away from the road |
| Printed menus and boards | $600 | Replace worn boards and seasonal menus |
Milestones
- April 2027: open at about 70 transactions a day.
- June 2027: 108 a day and the first month of positive EBITDA.
- December 2027: 146 a day and $30,450 of monthly sales.
- Year 2: 157 a day on average, the first full year.
- April 2029: second kiosk opens, 58 transactions a day on day one.
Running the Kiosk
The pad and the unit
A ground lease on a pad site at $2,100 a month, including common-area charges, which is $25,200 in Year 1. The unit is a prefab kiosk, delivered and set on a concrete pad with engineered site work, utility connections, a drive lane and a curb cut. The build budget carries a 10% contingency. The initial lease term is five years with two five-year renewal options, a plan term to confirm, because the 84-month first loan outlasts the initial term and the bank's offer depends on the renewal right. The lease carries a personal guarantee. The second site is budgeted at $2,000 a month.
A day at the window
Opening prep starts about 5:30. The window is open 52 hours a week, 6:00 to 14:00 on weekdays and 7:00 to 13:00 on weekends. Two people work the window from 6:30 to 9:30 and again for the weekday lunch hour and a half. In the model the busiest three hours carry about half of the day's volume, roughly 26 an hour at 157 transactions a day. That sits well below what a two-person line can handle, so capacity does not limit revenue in any year.
Machines on lease
A two-group espresso machine, two grinders and a water filtration unit are on a 60-month lease at $740 a month, and the same package is leased again for the second kiosk. The plan keeps a back-up grinder and a service contract, because a dead machine is the one fault that stops sales outright. The model does not include a buyout at the end of the lease.
Suppliers
Whole beans from a regional roaster on a standing weekly order, dairy from a distributor, and pastries from a wholesale baker. Suppliers are paid in 12 days in the model. Unsold pastries are written off at close, which is why pastry direct costs are set at 50% of sales.
Insurance, permits and cash
Insurance is $4,900 in Year 1, covering general liability, product liability, contents and the kiosk itself. Workers' compensation is carried inside the payroll on-cost. The kiosk is card-first and cash is dropped to a safe twice a day. Health permit renewals, licenses and food-handler training are $600 in Year 1. Local business license and meals-tax rules vary by locality and are not modeled.
Who Runs It
Nadia Brandt, founder and owner-operator
Nadia has eight years in coffee, five of them as a store manager for a multi-site operator in central Virginia, where she ran a drive-thru unit and trained new baristas. She puts $135,000 of her own savings into the kiosk and works about 40 hours a week at the window in Year 1.
Where the team is thin
Nadia has not negotiated a ground lease, run a profit and loss on her own, or opened a second site. The plan covers the first with a lawyer's review of the lease, the second with an outside accountant who reviews the numbers every quarter, and the third with the four-quarter rule and a full-time manager hired in month 26 to train before the second kiosk opens.
If Nadia is out
The lead barista can open and close the kiosk from month 3. From month 26 a second manager means one site can run while Nadia is at the other, and from month 32 a relief barista covers sickness at both.
Ownership and the bank
Nadia owns 100% of Copper Fell, LLC and gives the bank a personal guarantee on both term loans. The loans carry a covenant to deliver quarterly accounts. The unit sits on leased land and can be moved, so collateral for the first loan is the unit and equipment plus the guarantee.
The Numbers: Two Kiosks, Five Years
The model covers five years: monthly through 2027, which opens with three pre-opening months, then annual. The inputs come first so a reader can trace any total back to a car count, a ticket price or a lease term.
Build-out, leases and loans
| Use of funds | Amount |
|---|---|
| Prefab drive-thru kiosk, delivered and set | $62,000 |
| Site work: engineering, pad, utility connections, drive lane and curb cut | $26,000 |
| Signage, menu boards and window fit-out | $6,500 |
| Under-counter refrigeration, ice machine, brewers, POS and smallwares | $17,500 |
| Build contingency (about 10%) | $11,500 |
| Plan review, health permit and business licenses | $1,800 |
| Legal: entity, ground lease review, equipment lease review | $4,500 |
| Opening campaign, loyalty app set-up and sampling | $7,500 |
| Cash reserve for three pre-opening months and the ramp | $87,700 |
| Second kiosk: prefab unit, site work, refrigeration, POS and smallwares | $95,000 |
| Total uses | $320,000 |
| Source of funds | Amount |
|---|---|
| Nadia Brandt's savings | $135,000 |
| Bank term loan for the first kiosk | $90,000 |
| Bank term loan for the second kiosk | $95,000 |
| Total sources | $320,000 |
Nadia puts in $135,000 of savings, 60% of the $225,000 it takes to open, and borrows $90,000 from a bank on an 84-month term at 10.0%, interest-only for the first four months. The unit, site work, fit-out and a 10% contingency take $123,500. A further $87,700 stays in the account to carry three months with no sales and a spring ramp, sized so the lowest month-end balance stays above one month of operating cost. The espresso machine, two grinders and water filtration are on a 60-month lease at $740 a month, which shows up in operating costs. The second kiosk, at about $119,000, is paid from two places: a $95,000 bank loan at 9.5% over 60 months in month 26 for the unit, site work and equipment, and $24,000 of signage, training and opening costs from Year 3 cash flow. The model expenses that $24,000 instead of capitalizing it, which lowers Year 3 profit. Loan rates and lease payments are plan figures and quotes will differ.
The figures behind the forecast
- Trading starts on April 1, 2027, after three pre-opening months for the lease, plan review, delivery of the unit and training. Daily transactions climb from 70 in April to 146 in December, which is 32,548 transactions across nine trading months at an average ticket of about $7.12. From Year 2 the first kiosk averages 157 a day, rising to 164 by Year 5.
- The ticket is built from hot drinks at $5.10, iced and cold-brew drinks at $5.85, 1.12 drinks per order, and a bought-in pastry or snack at $3.60 on 28% of orders. Prices rise about 3% a year from Year 2, so the average ticket reaches about $7.31 in Year 2 and $7.74 at the second kiosk in its first year.
- Iced drinks are 28% of drinks served in December through February and 68% in July. Hot drinks lead from October through April. July also sees a dip in commuter traffic, 104 transactions a day against 108 in June, as offices thin out for vacations. Monthly seasonality is shown for Year 1 only; later years are spread evenly.
- Direct costs are 24% of hot-drink sales, 26% of iced-drink sales and 50% of pastry sales, which allows for unsold items written off at close. With one kiosk they come to 28.6% of revenue, a gross margin of 71.4%. The second kiosk runs at 31% while it learns its volumes, and the extra shows as its own line, $5,100 in Year 3 rising to $9,400 in Year 5.
- The kiosk is open 52 hours a week: 6:00 to 14:00 on weekdays and 7:00 to 13:00 on weekends. Rostered hours are about 111 a week in Year 1 (Nadia 40, the lead barista 36, a part-timer 20 and a weekend and peak barista 15) against about 88 hours of window cover the schedule needs. The gap is ordering, payroll, training and sickness cover. Wages are not trimmed to fit.
- Wages are $55,000 for Nadia, $33,000 for the lead barista and $11,500 to $18,500 for part-timers, which is about $14.70 to $14.90 an hour for the part-time posts. The state minimum wage changes each January and is not quoted here. Payroll adds 27% for full-time staff and 15% for part-time staff, covering payroll taxes, workers' compensation and paid leave. Annual pay raises of 3% are a separate line from Year 2.
- Rent is a ground lease on a pad site at $2,100 a month including common-area charges ($25,200 in Year 1), then $2,000 a month for the second site from month 26. Utilities are about $520 a month per kiosk for power, water and internet. These are plan figures; pad rents on a given Richmond corridor vary and should be confirmed against a quote.
- Card processing is 2.9% of revenue, charged at the point of sale. Cards settle in two days and suppliers are paid in 12 days. Inventory is held at about 16 days of direct cost, which is $2,980 at the end of Year 1.
- The second kiosk opens in April 2029 (month 28) at 58 transactions a day and builds to 124 by December. It then averages 128 a day in Year 4 and 131 in Year 5, below the first kiosk because it starts without a regular base. The model spreads its Year 3 revenue evenly across the year and does not show it by month.
- Tax is charged at the 21% federal corporate rate and Virginia's 6% corporate rate, with the Year 1 loss carried forward. An LLC that passes profit through to its owner would show this tax on a personal return, so the corporate treatment is cautious. Local business license and meals-tax rules vary by locality and are not modeled; menu prices are treated as pre-tax. Confirm all of these with an accountant.
- Owner distributions of $40,000 in Year 4 and $60,000 in Year 5 are paid only from cash left after loan payments. None are paid in the downside case.
Sales by product and site
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Hot and espresso drinks | $95,650 | $183,450 | $192,400 | $200,300 | $208,350 |
| Iced, cold-brew and blended drinks | $103,500 | $171,000 | $179,350 | $186,750 | $194,250 |
| Pastries and packaged snacks (bought in) | $32,700 | $58,700 | $61,550 | $64,100 | $66,650 |
| Second kiosk, all products (opens April 2029) | $0 | $0 | $208,900 | $366,300 | $384,950 |
| Total revenue | $231,850 | $413,150 | $642,200 | $817,450 | $854,200 |
| Growth on prior year | – | 78% | 55% | 27% | 5% |
Hot and iced drinks each carry about 41% to 45% of first-kiosk sales, and pastries about 14%. Pastries have the lowest margin at 50% direct cost, but they lift the ticket by about a dollar. The second kiosk is about a third of Year 3 revenue and 45% of Year 4 and Year 5. Growth after Year 3 comes from that site reaching its full year and from price rises, with only about 1% to 2% a year more cars at the first window.
Month by month in 2027, from closed doors to the first summer
| Month | Hot and espresso drinks | Iced, cold-brew and blended drinks | Pastries and packaged snacks (bought in) | Second kiosk, all products (opens April 2029) | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $0 | $0 | $0 | $0 | $0 | ($16,480) |
| Feb 2027 | $0 | $0 | $0 | $0 | $0 | ($16,480) |
| Mar 2027 | $0 | $0 | $0 | $0 | $0 | ($16,480) |
| Apr 2027 | $6,950 | $5,800 | $2,100 | $0 | $14,850 | ($5,871) |
| May 2027 | $7,800 | $9,700 | $2,850 | $0 | $20,350 | ($1,942) |
| Jun 2027 | $7,050 | $13,150 | $3,250 | $0 | $23,450 | $273 |
| Jul 2027 | $5,700 | $13,900 | $3,150 | $0 | $22,750 | ($227) |
| Aug 2027 | $7,200 | $16,100 | $3,750 | $0 | $27,050 | $2,845 |
| Sep 2027 | $10,650 | $14,900 | $4,150 | $0 | $29,700 | $4,738 |
| Oct 2027 | $15,200 | $12,650 | $4,600 | $0 | $32,450 | $6,702 |
| Nov 2027 | $17,100 | $9,250 | $4,450 | $0 | $30,800 | $5,524 |
| Dec 2027 | $18,000 | $8,050 | $4,400 | $0 | $30,450 | $5,274 |
January to March have no sales. The model spreads a year of operating costs evenly across the months, so each of the three shows an EBITDA loss of $16,480, which overstates the true pre-opening burn because the lead barista and part-timers have not yet started. Sales begin at $14,850 in April. EBITDA is $273 in June, slips to a $227 loss in July as commuter traffic thins, and stays positive from August. Iced drinks outsell hot from May through September and hot drinks retake the lead in October, the best month at $32,450. The lowest month-end cash balance is Jul, at about $21,000.
Who works the window
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and owner-operator | $55,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Lead barista (full time) | $33,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Barista (part time, about 20 hours a week) | $15,500 | Month 4 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Weekend and peak barista (part time, about 15 hours) | $11,500 | Month 6 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Second-kiosk manager (full time) | $42,000 | Month 26 | – | – | 1 | 1 | 1 |
| Second-kiosk barista (part time, about 24 hours a week) | $18,500 | Month 27 | – | – | 0.5 | 0.5 | 0.5 |
| Second-kiosk weekend and peak barista (part time) | $11,500 | Month 29 | – | – | 0.5 | 0.5 | 0.5 |
| Relief barista for both kiosks (part time) | $12,500 | Month 32 | – | – | 0.5 | 0.5 | 0.5 |
| Total payroll incl. on-costs | $125,858 | $142,810 | $224,240 | $245,025 | $245,025 |
Nadia is on payroll from month 1 and runs the build-out. The lead barista starts in month 3 for training before the April opening, a part-time barista in month 4 and a weekend and peak barista in month 6. Year 1 ends with four people, 3.0 full-time equivalents. The second kiosk adds a full-time manager in month 26, so training finishes before the April 2029 opening, a part-time barista in month 27 and a weekend and peak barista in month 29. A relief barista covering both kiosks joins in month 32, which lets Nadia move between the two sites. The part-time rows show 0.5 in the headcount and their actual annual pay in the wage column. Nadia's $55,000 starts in month one and is already in the costs, so profit here is what is left after she is paid.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $231,850 | $413,150 | $642,200 | $817,450 | $854,200 |
| Direct costs (coffee, milk and syrups, cups and lids, bought-in pastries) | ($66,216) | ($117,995) | ($183,411) | ($233,462) | ($243,958) |
| Gross profit | $165,634 | $295,155 | $458,789 | $583,988 | $610,242 |
| Payroll incl. on-costs | ($125,858) | ($142,810) | ($224,240) | ($245,025) | ($245,025) |
| Rent | ($25,200) | ($26,000) | ($48,800) | ($52,300) | ($53,800) |
| Utilities | ($6,200) | ($6,400) | ($11,300) | ($13,700) | ($14,100) |
| Marketing | ($9,000) | ($9,500) | ($14,000) | ($14,500) | ($15,000) |
| Insurance | ($4,900) | ($5,200) | ($8,200) | ($9,500) | ($9,900) |
| Professional fees | ($3,600) | ($3,800) | ($5,000) | ($5,300) | ($5,600) |
| Software subscriptions | ($3,000) | ($3,200) | ($4,700) | ($5,400) | ($5,600) |
| Espresso machine, grinder and water-filtration lease payments | ($7,400) | ($8,900) | ($16,300) | ($17,800) | ($17,800) |
| Second kiosk signage, training and opening costs (paid from cash flow) | $0 | $0 | ($24,000) | $0 | $0 |
| Card processing fees | ($6,700) | ($12,000) | ($18,600) | ($23,700) | ($24,800) |
| Second kiosk waste and shrink above the kiosk 1 rate | $0 | $0 | ($5,100) | ($8,900) | ($9,400) |
| Repairs, descaling and replacement smallwares | ($2,000) | ($3,200) | ($5,000) | ($5,500) | ($6,000) |
| Cleaning, paper goods, waste hauling and pest control | ($3,300) | ($4,200) | ($6,200) | ($7,000) | ($7,300) |
| Health permit renewals, licenses and food-handler training | ($600) | ($900) | ($1,500) | ($1,600) | ($1,700) |
| Annual pay raises (3% a year) | $0 | ($4,284) | ($13,656) | ($22,720) | ($30,753) |
| EBITDA | ($32,124) | $64,761 | $52,192 | $151,043 | $163,464 |
| Depreciation | ($13,379) | ($13,379) | ($22,879) | ($22,879) | ($22,879) |
| Interest | ($8,811) | ($7,863) | ($14,463) | ($12,454) | ($9,401) |
| Income tax | $0 | $0 | ($1,044) | ($29,784) | ($33,767) |
| Net income before start-up costs | ($54,314) | $43,519 | $13,807 | $85,926 | $97,417 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($13,800) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($68,114) | $43,519 | $13,807 | $85,926 | $97,417 |
Year 1 loses $54,314 before start-up costs and $68,114 after them. Year 2 is the first profitable year at $43,519, a net margin of 10.5%, helped by a full year of trading and no second-site costs. Year 3 falls to $13,807, a margin of 2.1%, because it carries $24,000 of second-kiosk opening costs, $5,100 of extra shrink, two months of rent and manager pay before the new kiosk sells, nine months of that kiosk below its stable volume and a second loan. Years 4 and 5 settle at $85,926 and $97,417, about 11% of revenue. Pay raises grow from $4,284 in Year 2 to $30,753 in Year 5. Income tax is nil in Year 2 and $1,044 in Year 3 because the Year 1 loss carries forward.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($56,809) | $55,276 | $34,637 | $107,238 | $119,967 |
| Kiosk units, site work, signage and equipment | ($123,500) | $0 | ($95,000) | $0 | $0 |
| Funding received | $225,000 | $0 | $95,000 | $0 | $0 |
| Loan principal repaid | ($6,556) | ($10,687) | ($26,035) | ($30,039) | ($33,091) |
| Owner distributions | $0 | $0 | $0 | ($40,000) | ($60,000) |
| Net change in cash | $38,136 | $44,589 | $8,603 | $37,199 | $26,876 |
| Closing cash | $38,136 | $82,725 | $91,328 | $128,527 | $155,403 |
Closing cash is above zero at every year end and never falls below $38,136. In Year 3 the second kiosk's $95,000 of capital spending is met by the $95,000 loan, and the $24,000 of opening costs comes out of operations. Distributions of $40,000 and $60,000 start in Year 4. The $155,403 at the end of Year 5 is held for equipment replacement and a possible third site, which the model does not include.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $38,136 | $82,725 | $91,328 | $128,527 | $155,403 |
| Accounts receivable | $1,270 | $2,264 | $3,519 | $4,479 | $4,681 |
| Beans, dairy, cups and pastries on hand | $2,980 | $5,310 | $8,254 | $10,506 | $10,978 |
| Kiosk units, site work, signage and equipment (net) | $110,121 | $96,743 | $168,864 | $145,986 | $123,107 |
| Total assets | $152,507 | $187,041 | $271,964 | $289,497 | $294,168 |
| Owed to coffee, dairy and pastry suppliers | $2,177 | $3,879 | $6,030 | $7,675 | $8,021 |
| Bank loan | $83,444 | $72,757 | $141,723 | $111,684 | $78,593 |
| Paid-in capital | $135,000 | $135,000 | $135,000 | $135,000 | $135,000 |
| Retained earnings | ($68,114) | ($24,595) | ($10,788) | $35,138 | $72,555 |
| Total liabilities and equity | $152,507 | $187,041 | $271,964 | $289,497 | $294,168 |
Margins, break-even and debt cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -13.9% | 15.7% | 8.1% | 18.5% | 19.1% |
| Net margin (before start-up costs) | -23.4% | 10.5% | 2.1% | 10.5% | 11.4% |
| Payroll incl. pay raises as share of revenue | 54% | 36% | 37% | 33% | 32% |
| Revenue per full-time equivalent at year end | $77,283 | $137,717 | $116,764 | $148,627 | $155,309 |
| Average monthly revenue | $19,321 | $34,429 | $53,517 | $68,121 | $71,183 |
| Monthly revenue needed to cover operating costs | $23,068 | $26,875 | $47,429 | $50,502 | $52,116 |
| Debt service cover (EBITDA / interest + principal) | -2.1x | 3.5x | 1.3x | 3.6x | 3.8x |
Year 1 averages $19,321 a month against $23,068 needed, even though nine of twelve months trade. Year 2 averages $34,429 against $26,875, which at the Year 2 ticket of $7.31 is about 120 transactions a day against 157 planned. Year 3 is $53,517 against $47,429, the narrowest cushion after Year 1, and debt cover of 1.3x is the thinnest of the profitable years because the second loan starts before the new kiosk sells. From Year 4 cover is 3.6x. Prime cost, direct costs plus payroll including raises, is 64% of revenue in Year 2, 66% in Year 3 and 62% in Years 4 and 5. Year 3 is the only profitable year above the 65% rule of thumb, because the second kiosk pays its crew before it sells.
When sales run a fifth below plan
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $185,480 | $330,520 | $346,640 | $360,920 | $375,400 |
| Net income before start-up costs | ($66,154) | $9,573 | $7,319 | $10,954 | $15,344 |
| Net income after start-up costs | ($79,954) | $9,573 | $7,319 | $10,954 | $15,344 |
| Closing cash | $26,710 | $37,678 | $46,425 | $57,588 | $71,773 |
Sales are 20% below plan in every product and year. The response: the second kiosk is not built within the five years, so its loan, capital spending, opening costs and four hires drop out; part-time pay is cut by 20% through shorter shifts; marketing is cut by 20%; card fees fall with sales; Nadia takes a 20% pay cut, $11,000; and no distributions are paid. On those terms year-end cash never falls below $26,710 and the business is profitable from Year 2, at $9,573, then $7,319 to $15,344 a year. Profit in every downside year is below the base case. Year 1 equity ends at $55,046. The downside is a one-kiosk business with very little margin. The plan's own rule is that the second site waits until the first has traded at plan for four quarters in a row.
Sources
- Virginia Tax, Corporation income tax: the Virginia corporation income tax rate is 6% of Virginia taxable income. Rates change, so confirm before filing.
- Federal corporate income tax: the 21% rate is the statutory rate for C corporations. The IRS page was not opened for this plan, so confirm the current rate.
- Virginia Department of Health, Food safety: general food-establishment guidance. It does not set out the permit steps for a specific kiosk; confirm those with the local health district.
- Wages, rent, lease payments, loan rates, prices and daily transaction counts in this plan are the plan's own figures and not sourced benchmarks. Confirm each against local quotes before relying on it.
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