Looking for a coffeehouse business plan? You're in the right place.
A coffeehouse that runs evenings and weekends has to answer questions a daytime cafe never faces. Who comes after 7 pm if there is no bar? Does a show night pay for the sound system and the artist? How much cash does a room need before the calendar fills? A blank template won't show you what a sensible answer looks like.
In this article we'll walk through a complete sample business plan for an alcohol-free community coffeehouse in Louisville, Kentucky, section by section, so you can see what good looks like and write your own with confidence. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials.
Here's what you'll take away:
- The executive summary: see how to put a coffeehouse, a stage and a rental calendar on one page, so a reader knows what you're asking for within a minute
- The SWOT analysis: learn how to name a thin first year and a landlord's hold on a historic building without overselling it
- The start-up budget: find out what a coffee bar, a sound system and a modest build-out cost, and how much reserve a room needs before its first full season
- The first year, month by month: spot the quiet months before you reach them, and plan staffing and cash around them
- The revenue mix: see how counter sales, ticketed shows, room rentals and memberships each earn their place, and where the venue's costs sit
- The five-year profit, cash flow and balance sheet: understand how each hire and price change shows up in the numbers
- The downside case: have an answer ready for the "what if visits are 20% short?" question, along with the steps the owner takes in response
If you're setting up a coffeehouse with a stage, read this before you write your own. The business is fictional, so take what fits your room and change the rest.
In this plan
Looking for a coffeehouse business plan template? The Toolkit builds yours with your own numbers.
The Plan in Brief
Grove Cliff is an alcohol-free community coffeehouse that opens on Tuesday, March 2, 2027 in a leased, 1,800-square-foot historic brick storefront in Louisville's Germantown neighborhood. It runs afternoons, evenings and weekends: ticketed acoustic nights on Thursday to Saturday, an open mic on Tuesdays, a monthly book club on Sundays, and private rentals on Mondays and weekday mornings. Tessa Marlow founded it and manages the room day to day.
The business needs $415,000: $140,000 of Tessa's savings, $200,000 from two private investors and a $75,000 bank term loan. Of that, $189,500 is held as cash, $169,000 pays for the coffee bar, sound system, furniture and build-out, and $56,500 covers permits, legal work, the lease deposit, a contingency and the launch.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $261,440 | $468,000 | $594,000 |
| Net income after start-up costs | ($184,944) | ($32,296) | $37,248 |
| Closing cash | $84,931 | $76,770 | $126,498 |
The room earns from four lines. The coffee, tea, soda and pastry counter is the base. Ticketed music nights fill the evenings, room rentals sell the one day a week the doors are closed to the public, and a $12-a-month membership adds a small, steady line. Year 1 is a loss because two months of rent and wages come before the first sale and shows take months to fill. Profit arrives in Year 3.
The plan also tests itself. If visits and bookings run 20% under plan and Tessa slows hiring from month 7, cuts marketing and her own pay and halves the one distribution, the business stays cash-positive in every year of the model, with the lowest year-end balance at $34,873. Year 3 still loses $12,604 in that case and debt service cover is 1.0x, so the first covenant test would need to fall at the end of Year 4. Payroll responses start in month 7; marketing, upkeep and equipment cuts start in Year 2.
What a lender would still ask
- The lease. A draft is under review: five years with an option to renew, 3% annual rent steps and a landlord say over assignment. No tenant allowance is counted, and the lender will want the renewal option in writing because the loan runs seven years.
- Contractor bids. Two are in hand for the $92,000 build-out. The $20,000 contingency is the only cover, and an overrun beyond it falls to the reserve, as the sensitivity table shows.
- Evidence of demand. Tessa's email list holds about 300 people and eight artists have held spring dates. Ticket sales, attendance counts from her volunteer series and written artist commitments are the figures to bring.
- Occupant load. The 70-person capacity with standing room depends on the fire review; a lower number cuts show revenue and the counter sales attached to it.
- Sales tax. Whether drinks, pastries and admissions are taxed alike, and who remits ticket tax, goes to the Kentucky Department of Revenue before launch.
- Collateral and personal runway. The equipment is the only security with resale value, so the bank leans on Tessa's guarantee. She draws $48,000 from month 1, and her personal obligations outside the business are not in the plan.
- Debt cover. Year 2 cover is 0.1x because EBITDA of $694 sits against $7,875 of interest; the loan is interest-only, so no principal is due. A 24-month interest-only period is longer than lenders usually offer, and the plan asks for a first covenant test at the end of Year 3. The ratio can be put to a lender only because equity is 82% of the raise and the reserve is large.
- Distributions and investor return. The only distribution is $30,000 in Year 5; retained earnings are still negative at that point and $34,760 of the loan remains. The two investors receive $14,400 of it on $200,000 invested, so their return rests on the value of the business.
- Zoning and sound. Amplified music until midnight in a historic district raises noise and zoning questions that Louisville Metro answers; no conditional-use approval or sound limit is in hand.
- Fire protection. Assembly occupancy may require sprinkler and alarm work; none is priced beyond the contingency.
- Signage. Historic-district review may apply to the sign, and the $3,500 signage line counts on it clearing.
- Minors. An all-ages room carries liability for children at evening shows, and the insurer's view of it is not yet known.
- Build-out. $92,000 ($51 a square foot) is thin for an assembly-use historic conversion, and the contractor bids are the test.
- Opening delay. Each month the doors stay shut costs about $22,100 in rent, wages and fixed costs on the engine's even spread. A three-month slip uses roughly $66,000 of the reserve and would leave the lowest year-end balance near $10,000.
Sensitivity cases
Each case changes one input from the base case and leaves everything else alone. The last case combines two.
| Case | Year 3 net income | Lowest year-end cash |
|---|---|---|
| Base case | $37,248 | $76,770 |
| Counter direct costs up 3 points (34% of counter sales) | $23,635 | $60,406 |
| All wages up 10% | $17,213 | $40,588 |
| Door revenue 20% under plan (door only; counter sales not reduced) | $30,453 | $69,159 |
| Rent up 10% | $33,048 | $68,730 |
| Artists paid 70% of the door | $27,769 | $65,376 |
| Build-out 25% over budget, contingency spent (depreciation on the overrun, about $3,300 a year, not included) | $37,248 | $53,770 |
| Counter costs up 3 points and wages up 10% | $3,600 | $24,223 |
Net income stays positive in Year 3 in every case and cash stays positive in every year, but the combined case leaves almost no profit and the lowest balance below one month of costs.
About Grove Cliff
Legal name: Grove Cliff LLC, a Kentucky limited liability company. Owners: Tessa Marlow 52%, two private investors 24% each. Premises: 1,800 square feet in a historic brick storefront, Germantown, Louisville, on a five-year lease with an option to renew. Opens: Tuesday, March 2, 2027, after two months of build-out and training. Hours: Tuesday to Thursday 2 pm to 10 pm, Friday 2 pm to midnight, Saturday 10 am to midnight, Sunday 10 am to 6 pm. Closed to the public on Monday. Stage: pre-opening. A draft lease is under review, two contractor bids are in hand and eight artists have held spring dates.
Why the room exists
Give people of every age a place to hear live music and meet on an evening or weekend without a bar. Music, a book club and an open mic share the room, and the same drinks and pastries serve all of them.
What the first two years should show
- 2,980 paid entries to ticketed shows in 2027, rising to about 4,850 in 2028 as the calendar fills.
- $468,000 of revenue in 2028, the second year, with the loss narrowed to about $32,000.
- A profit in 2029, the third year, and the only owner distribution of the plan period in 2031.
- A team of eight on the payroll, most of them part time, by the end of 2030.
How the room earns
| Line | How it is priced | Year 1 share of revenue |
|---|---|---|
| Coffee, tea, soda and pastry counter | $11.00 average ticket | 76% |
| Ticketed music nights | $14 at the door, artist receives 60% | 16% |
| Room rental and private events | $380 average booking | 5% |
| Friends memberships | $12 a month | 3% |
Permits, music rights and what the room does not sell
The room serves no beer, wine or spirits, so it carries no alcohol license. A venue that serves food and drink and holds public gatherings is still expected to need health, occupancy and fire approvals and a sign permit. Louisville Metro and the state decide which apply and what they cost, and the $4,500 start-up figure for them is an allowance. Live and recorded music in a public room usually calls for public-performance licenses from the performing-rights organizations, and the model carries $2,400 a year for them covering ASCAP, BMI and, where needed, SESAC and GMR. Each organization sets its own fee and the quotes come before the first show.
Louisville After 7 pm
The nighttime gap
Many live-music rooms in a city of this size are bars or restaurants with a bar, and some restrict entry to guests 21 and over or expect a drink minimum. An alcohol-free room is a different offer, and the plan does not rest on a count of venues. People who do not drink, parents with teenagers, older adults and students under 21 are the groups the room is built for.
Daytime cafes close at the wrong time
Many independent cafes and chain stores trade on the morning commute and close in the early evening. The room keeps its hours to afternoons, evenings and weekends, so it meets them head-on only on weekend afternoons.
Who the room is up against
| Alternative | What it offers | Why a visitor picks it | How Grove Cliff differs by design |
|---|---|---|---|
| National coffee chains | Fast drinks, long hours, mobile ordering | Speed and habit | Seating that stays open past 7 pm and a program on stage |
| Independent daytime cafes | Single-origin coffee, pastries, a quiet space to work | Quality and neighborhood loyalty | Evening hours and ticketed music |
| Bars and taverns with live music | Alcohol, a stage, a late crowd | A drink with the band | No bar, all ages, no minimum |
| Theaters, arts centers and libraries | Programmed events and rooms to hire | Established audiences and low cost | A cafe counter and a weekly calendar |
| Church halls and community rooms | Cheap space for gatherings | Price | A fitted stage, sound and coffee service |
Plans, hours and prices change often and are not quoted here; each business publishes its own.
SWOT
| Strengths | Weaknesses |
|---|---|
| A stage, a counter and a rental calendar in one room | A new venue with no audience yet |
| No alcohol license cost, no liquor liability and a room open to all ages | One manager, so a show night leans on Tessa |
| Four income lines that peak at different times | Year 1 loses money and draws on the reserve |
| Opportunities | Threats |
|---|---|
| Artists who want an all-ages stage and a clear door split | Bars and larger venues outbid the room for the best acts |
| Clubs, tutors and families who need a rental room | A landlord's rent step at lease renewal |
| Memberships that turn first visits into regulars | A rise in dairy and coffee prices that outpaces menu prices |
Who Fills the Room
Students and young adults
Under-21 listeners, college students and early-career workers who want something to do on a Thursday that is not a bar. They arrive by bus, car or on foot, stay two hours and order two drinks. They are the core of Thursday to Saturday.
Families and teenagers
Weekend afternoons draw parents with school-age children, teenagers meeting friends and homeschool groups. Saturday-morning and Sunday-afternoon hours are priced and scheduled for them.
Musicians and open-mic regulars
Local songwriters and small bands. The room pays them 60% of the door and gives them a recording of the set. They bring friends who would not otherwise visit.
Book clubs, writers and meeting groups
Older and mid-career readers fill Sunday afternoons and weekday mornings. They come early, stay long and are the most likely members.
Renters
Small groups with a one-off or recurring need: a birthday, a baby shower, a retirement party, a poetry workshop, a tutor, a band practice, a nonprofit board meeting. They book online and pay in advance.
What visitors ask of the room
A seat, a drink they can taste, an evening that starts and ends on time, and a stage they can see from the back.
Filling the Calendar
How a show gets booked
Artists apply through the website or are invited. A show is booked six to eight weeks ahead, on a Thursday, Friday or Saturday, with a door split of 60% to the artist, 5% to ticketing and card fees and 35% to the room, set out in a one-page agreement. Local acts open for touring acts so the room holds an audience on the night. Tickets go on sale four weeks ahead through the ticket platform. Tessa has an email list of about 300 people from her volunteer acoustic series, and eight artists have held spring dates.
What a show night earns
| Year 1 | Year 3 | Year 5 | |
|---|---|---|---|
| Shows a year | 81 | about 145 | about 150 |
| Average paid entries per show | about 37 | about 45 | about 50 |
| Share of the room's 70-person capacity filled on average | 53% | 64% | 71% |
| Ticket revenue per show | about $515 | about $662 | about $780 |
| Kept by the room after artist share and fees (35%) | about $180 | about $232 | about $273 |
The paid-entry figure is the year's entries divided by the year's shows, and Year 1's 2,980 entries include the slow spring. The room seats about 55 and holds about 70 with standing room, subject to the occupant load the fire review sets. The room's 35% of the door does not cover a show night by itself: the counter sales those entries bring do most of the work, and the 35% pays for the sound technician and the extra barista.
Room rental
Monday is the rental day, when the room is closed to the public, and weekday mornings before 2 pm are the second window. A standard booking is a four-hour evening block with setup, or a weekday-morning meeting, with coffee service quoted on top. The calendar has about 52 Mondays and about 208 Tuesday-to-Friday mornings a year, 260 slots in all. The events, rentals and floor host starts in March and runs the weekday-morning bookings. Year 3's 129 bookings fill about half of the slots, so rentals have room to grow without bumping a show.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Rental bookings | 33 | about 92 | about 129 | about 145 | about 154 |
How the counter earns
An average ticket of $11.00 is two drinks, or a drink and a pastry, shared by a pair or a small group. Show nights add the largest tickets because audience members order before and during the show.
Memberships
For $12 a month, a member gets 10% off drinks and a booking window on shows. Month-end members reach 118 in December 2027 and average about 215 in Year 3. The price stays flat, so the line grows by headcount.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Average members while open | 62 | about 153 | about 215 | about 250 | about 278 |
Getting the Word Out
Marketing spend and what it buys
The first-year budget is $24,500: $12,000 of launch spend paid from start-up capital plus $12,500 of running costs. That is 9% of Year 1 revenue; the share falls to about 2% by Year 3 as members and regular artists carry word of mouth. Spread over 18,156 counter tickets, Year 1 costs about $1.35 per ticket, and the 2,980 show entries come on top of those tickets. Show nights and the Saturday family hours do most of the pulling.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Signage and exterior lighting (launch) | $3,500 | Make a historic storefront readable from the street at night |
| Website with ticketing and rental booking (launch) | $4,500 | One page for the calendar, tickets and room rentals |
| Opening weekend of free-entry sets (launch) | $2,500 | Flat fees to the first artists and sound for an opening weekend that fills the first seats |
| Photography and video of the room (launch) | $1,500 | Material for the website, artists and local press |
| Local event listings and calendars | $1,500 | Free and low-cost listings in local calendars |
| Social ads and boosted posts | $3,600 | Show announcements to a small radius around the room |
| Posters and campus boards | $1,400 | Flyers at colleges, libraries and music shops |
| Email newsletter tool | $1,200 | A weekly calendar to past visitors and members |
| Partnerships with bookstores, libraries and churches | $1,800 | Joint events and cross-promotion |
| Community sponsorships | $1,500 | Table sponsorships at neighborhood events |
| Ongoing show photography and video | $1,500 | Content for artists to share with their followings |
Marketing milestones
- March 2027: opening weekend, 52 counter tickets a day and 4 shows in the month.
- June 2027: 12 members at opening grow to 46, and the first repeat artists book dates.
- September 2027: 74 tickets a day and 10 shows as colleges return.
- December 2027: 98 tickets a day, 118 members and $38,164 of revenue in the month.
How a Night Runs
The storefront
About 1,800 square feet on one level, with a counter, seating for about 55, a stage at the back and a small back-of-house for dish, storage and one office. Rent is set at about $22 a square foot a year, covering base rent, common-area charges and property taxes, $39,600 in Year 1. The lease runs five years with an option to renew, and the draft gives the landlord a say over assignment.
Hours and shifts
Two people are on the floor from 4 pm on a weekday, all day at weekends, and three on a show night. The head barista opens at 2 pm Tuesday to Friday with Tessa or the host alongside, a part-time barista joins at 4 pm, and the sound technician arrives at 6 pm on show nights. Saturday and Sunday are staffed from 10 am.
The menu and the supply
Espresso drinks, batch and cold brew, tea, house-made syrups, sodas and a short pastry case supplied by one or two local bakers. There is no kitchen and no fryer. Pastries arrive each morning and are held to a one-day shelf life. Non-alcoholic craft sodas and shrubs fill the place a cocktail menu would hold in a bar. Direct costs are 31% of counter sales, covering milk, beans, syrups, pastries, paper and card fees. Counted line by line, with artist shares left out, direct costs plus payroll with pay raises come to about 57% of Year 3 revenue.
Sound, stage and safety
A small PA, monitors and a stage light rig. An occupant-load limit applies to the room, and the plan relies on the occupancy and fire review to confirm the number and the exits. Ticket scanners at the door count entries against that limit.
Accessibility and the historic building
A historic building may need an accessible restroom, a ramp and path-of-travel work. The build-out budget is $92,000, with a further $20,000 contingency, and a consultant reviews the layout before the lease is signed. The scope of required work depends on the building and local code.
Insurance and risk
General liability for an event venue, property, and cyber cover, budgeted at $7,800 in Year 1; workers' compensation is carried in the payroll on-costs. A liquor liability policy is not needed because the room serves no alcohol, and rental contracts bar alcohol on site. A key-person policy on Tessa is reviewed with the lender.
Software and ticketing
Point-of-sale with online ordering, a ticket platform that handles door scanning and refunds, a booking page for rentals and an email tool. Software costs $5,000 in Year 1 and $6,200 in Year 5.
Sales tax and ticket handling
Drinks, pastries and admissions may be taxed differently, and the prices in the plan are treated as before tax. The accountant asks the Kentucky Department of Revenue how the room collects and remits before launch.
Who does the work
Tessa on payroll from month 1, the head barista and a part-time barista from month 2, a second part-time barista and the events, rentals and floor host in March, a sound technician from month 4, a weekend barista from month 7 and a fourth barista in month 42. Hires follow revenue, and the downside case shows which are delayed or dropped.
Who Runs the Room
Tessa Marlow, founder and general manager
Tessa has worked in coffee service and live-event production for nine years, most recently as a cafe manager in Louisville. She has run open mics and a small monthly series of acoustic nights as a volunteer. Her $140,000 investment is her savings. She runs the room day to day and draws a $48,000 salary.
Where the team is thin
Tessa has not owned a venue before, has not negotiated with a performing-rights organization and has not run a rental business. A weekly review of the calendar and cash, a written rental contract reviewed by a lawyer before launch and a call to each performing-rights organization before the first show cover those gaps.
If Tessa is out
The head barista holds a key and is trained to open and close. A show night can run with the sound technician and a part-time barista, but only for short absences. A salaried second manager is the first hire if the room outgrows this, and would add roughly $45,000 a year with on-costs.
Investors and ownership
Two private investors put in $100,000 each for 24% of the LLC each, with Tessa holding 52%. The investors have no role in operations and receive a quarterly report. The only distribution in the plan period is $30,000 in Year 5, so their return rests mainly on the value of the business and a later buyout, which is agreed with them before they invest.
The bank loan
The $75,000 term loan runs seven years at a rate set by the lender, interest-only for the first 24 months, with a personal guarantee from Tessa and a lien on equipment. The lease runs five years with an option, so the lender will want the renewal in writing.
Outside help
A part-time bookkeeper reconciles accounts monthly and a local accountant prepares the year-end return. Tessa uses a nonprofit small-business center for questions on licensing and permits.
The Financial Forecast, 2027 to 2031
The forecast runs five years, 2027 to 2031. The storefront is built out and staffed in January and February 2027 and opens on Tuesday, March 2, so the first year carries two months of rent and wages with no sales. Funding comes first, then the operating figures behind each revenue line, then the statements and a stress test.
Build-out, sound and a reserve
| Use of funds | Amount |
|---|---|
| Espresso machine, grinders, batch and cold brew, refrigeration, ice machine, dish station | $38,000 |
| Sound system, stage lighting, monitors, microphones and a small portable stage | $17,000 |
| Furniture, soft seating, point-of-sale and ticket scanners | $22,000 |
| Build-out: accessible restroom, plumbing for the dish station, electrical and lighting upgrades, acoustic treatment, counter, flooring repair | $92,000 |
| Health permit, occupancy and fire inspections, sign permit, business registration | $4,500 |
| Legal: lease review and entity set-up; accessibility and fire-code consultant | $9,500 |
| Lease deposit (two months) and opening stock of coffee, milk and paper goods | $10,500 |
| Contingency for historic-building surprises (about 12% of build-out and equipment) | $20,000 |
| Launch: signage, website with ticketing, opening-month shows, photography | $12,000 |
| Cash reserve for two pre-opening months and the first year of losses | $189,500 |
| Total uses | $415,000 |
| Source of funds | Amount |
|---|---|
| Tessa Marlow's savings | $140,000 |
| Two private investors ($100,000 each) | $200,000 |
| Bank term loan | $75,000 |
| Total sources | $415,000 |
Tessa Marlow puts in $140,000 of her own savings and two private investors put in $100,000 each, so equity is $340,000, 82% of the $415,000 total. A bank lends $75,000 over seven years at 10.5%, interest-only for the first 24 months, backed by her personal guarantee. A lender sets the real rate and terms, and 24 months interest-only is longer than lenders usually offer, so it is a request. Coffee bar, sound system, furniture and build-out take $169,000, and opening costs including a $20,000 contingency take $56,500. The remaining $189,500, 46% of the raise, stays in the bank. It pays two months of rent and wages before the doors open and a first year that loses money while the Thursday to Saturday shows fill, and at the lowest year-end balance it still covers about two months of Year 2 costs. The $92,000 build-out is about $51 a square foot, which is thin for an assembly-use historic conversion with a restroom and dish plumbing, and no landlord allowance is counted. If the build-out runs 25% over and the contingency is already spent, the extra $23,000 comes out of the reserve and the lowest year-end balance falls to $53,770. A 0.1x cover in Year 2 can be put to a lender only because equity is 82% of the raise and the reserve is large. The storefront is leased, so the build-out has almost no resale value and the bank relies on the guarantee more than on the equipment.
Operating figures behind the forecast
- Counter sales are tickets times an average ticket of $11.00 in Year 1, rising about 3% a year to $12.40 by Year 5 on price rises and a slightly larger basket. Year 1 has 259 open days, Tuesday to Sunday from March 2, and about 18,200 tickets, from 52 a day in March to 98 a day in December. Year 3 is about 114 tickets a day over 312 open days and Year 5 about 124. Direct costs on the counter are 31% of sales: milk, beans, syrups, paper goods and pastries bought from local bakers.
- Ticketed music nights sell at $14 at the door in Year 1, rising about 3% a year to $15.75 by Year 5. Year 1 holds 81 shows, with average paid attendance of 24 in March climbing to 46 in December, against a room that seats about 55 and holds about 70 with standing room. That is 2,980 paid entries in the year. Artists receive 60% of ticket revenue and ticketing and card fees take about 5%. Year 3 has about 145 shows at an average of 45 paid entries, close to three a week, and Year 5 about 150 at 50. If artists were paid 70% of the door, Year 3 net income would fall from $37,248 to $27,769.
- Open-mic nights on Tuesdays, a book club on the first Sunday of each month and a weekly writing hour carry no door charge. They are in the plan for the counter sales they bring on otherwise quiet nights and are not a revenue line of their own.
- Room rental averages $380 a booking in Year 1: an evening block with setup, with coffee service quoted on top, or a weekday-morning meeting or workshop. The price rises about 3% a year. Monday is closed to the public and sold as the rental day. Year 1 has 33 bookings and Year 3 about 129, out of roughly 260 Monday and weekday-morning slots. A rental never displaces a ticketed show.
- Memberships cost $12 a month, held flat, and give 10% off drinks and an early-booking window on shows. Month-end members climb from 12 in March to 118 in December, and average about 215 in Year 3 and 278 in Year 5. The 20% direct-cost figure on this line stands for the cost of the discount. Members come on top of counter tickets, not instead of them.
- The engine applies one blended direct-cost rate, 34.9% of revenue, taken from the Year 1 mix, to every year. A line's own cost percentage therefore holds only in Year 1, and later-year direct costs run about $6,000 to $9,000 a year above the line-by-line rates.
- Hours are covered as follows. The room is open 56 hours a week. Two people on the floor for every open hour is 112 staff hours (the head barista opens at 2 pm and Tessa or the host works alongside until the second barista arrives at 4 pm), a third person on show nights adds about 14, the technician about 10, and opening and closing about 12, so roughly 148 paid hours a week. The roster supplies about 175: Tessa 40, the head barista 40, two part-time baristas 24 each, the host 20, the technician 10 and the weekend barista about 17. The extra 27 hours cover Tessa's booking, payroll and marketing work and leave and sickness. Part-time pay is budgeted near $14 an hour, against a $7.25 federal and Kentucky minimum wage (U.S. Department of Labor). The head barista is paid hourly because a shift lead may not meet the overtime-exemption tests, which turn on duties and salary level; counsel checks this. Workers' compensation sits in the 27% and 12% on-costs, not in the insurance line.
- The room holds no alcohol license, so the model carries no license application and no liquor liability premium, and shows are open to all ages. Rental contracts bar alcohol on site. Health, occupancy, fire and sign permits and the related filings are budgeted together at $4,500. Louisville Metro publishes its food-service permit fees by seating capacity; plan review, inspections, the sign permit and state filings come on top, and the final list depends on Louisville Metro and Kentucky agencies, each of which is asked before the lease is signed.
- Live music brings public-performance licensing. The model carries $2,400 in Year 1, rising to $3,300, for annual licenses from the performing-rights organizations a live-music room usually deals with: ASCAP, BMI and often SESAC and GMR. Each sets its own fee by license category, which for a room like this turns on capacity and how often live music is played. BMI states that its fee calculations are published on its website by business type and can be adjusted on 30 days' notice. The quotes are in hand before the first show.
- Payroll adds 27% to full-time wages for payroll taxes, health contribution and workers' compensation, and 12% for part-time staff. Wages in the personnel table are launch rates, and annual pay raises of 3% are charged as a separate line from Year 2. Tips are not counted as company revenue.
- Rent is based on about 1,800 square feet at roughly $22 a square foot a year, covering base rent, common-area charges and property taxes, with 3% annual escalators; the figure is not a quoted Louisville rent. The lease runs five years with an option to renew, and the bank loan runs seven. The leasehold build-out is written off over seven years, on the basis that the option is exercised.
- Receivables average 3 days: most sales are paid at the counter, ticket-platform payout timing varies by platform and is planned at a few days, and rentals are paid in advance. Suppliers are paid in about 12 days, and stock held for sale averages 0.8% of sales, since milk, pastries and paper turn within the week.
- Tax is charged at the 21% federal corporate rate (26 U.S.C. 11(b)) and a 7% combined figure for Kentucky and Louisville Metro taxes. Louisville Metro's occupational license rate on net profits is 2.2% in the Revenue Commission's 2025 instructions; the Kentucky rate is not quoted here. Losses are carried forward and shelter all profit through Year 5, so no tax is shown. The engine's tax base ignores start-up costs and does not apply the federal limit on loss carryforwards (generally 80% of taxable income), so a filed return would show small payments from Year 3. An LLC would usually pass profit through to its owners, who would pay on personal returns; the corporate treatment here is a cautious planning figure.
- One owner distribution of $30,000 is paid in Year 5, when closing cash is $240,522 and $34,760 of the loan remains. Split 52%, 24% and 24%, it returns $14,400 to the two investors on $200,000 invested; their return rests mainly on the value of the business.
Revenue by line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Coffee, tea, soda and pastry counter | $199,716 | $340,000 | $415,000 | $450,000 | $480,000 |
| Ticketed music nights | $41,720 | $70,000 | $96,000 | $107,000 | $117,000 |
| Room rental and private events | $12,540 | $36,000 | $52,000 | $60,000 | $66,000 |
| Friends memberships | $7,464 | $22,000 | $31,000 | $36,000 | $40,000 |
| Total revenue | $261,440 | $468,000 | $594,000 | $653,000 | $703,000 |
| Growth on prior year | – | 79% | 27% | 10% | 8% |
The counter is the base, at 76% of Year 1 revenue and 68% of Year 5. Shows are smaller in dollars but set the traffic pattern, because a ticketed night fills seats that would otherwise sit empty after 7 pm. Rentals use the one day a week the room would otherwise be dark, plus weekday mornings. Memberships are the smallest line and the most predictable.
Month by month in 2027
| Month | Coffee, tea, soda and pastry counter | Ticketed music nights | Room rental and private events | Friends memberships | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $0 | $0 | $0 | $0 | $0 | ($22,135) |
| Feb 2027 | $0 | $0 | $0 | $0 | $0 | ($22,135) |
| Mar 2027 | $14,872 | $1,344 | $380 | $144 | $16,740 | ($11,239) |
| Apr 2027 | $17,160 | $2,352 | $760 | $288 | $20,560 | ($8,753) |
| May 2027 | $18,876 | $3,584 | $1,140 | $432 | $24,032 | ($6,493) |
| Jun 2027 | $17,732 | $3,808 | $1,140 | $552 | $23,232 | ($7,014) |
| Jul 2027 | $16,016 | $2,520 | $760 | $648 | $19,944 | ($9,154) |
| Aug 2027 | $17,160 | $3,136 | $1,140 | $744 | $22,180 | ($7,699) |
| Sep 2027 | $21,164 | $5,320 | $1,520 | $912 | $28,916 | ($3,314) |
| Oct 2027 | $24,948 | $7,056 | $1,520 | $1,080 | $34,604 | $388 |
| Nov 2027 | $23,760 | $6,160 | $1,900 | $1,248 | $33,068 | ($612) |
| Dec 2027 | $28,028 | $6,440 | $2,280 | $1,416 | $38,164 | $2,705 |
Revenue builds from the March opening, dips in June and July when students and regulars leave and iced drinks replace hot, and climbs from September through the holiday shows to a December peak. The monthly table spreads each annual cost evenly, so January and February both show about $22,100; in practice January costs less, because only Tessa is on payroll, and the difference stays in the reserve. EBITDA, which is profit before interest, depreciation and tax, is negative until October, positive in October and December and about break-even in November. The lowest month-end balance in 2027 is in November, at about $81,000. That figure is measured after setting aside three days of receivables, which is why it differs from the $84,931 year-end balance; the Year 2 year-end balance of $76,770 is lower still and is the plan's low point.
The house crew
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and general manager | $48,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Head barista and shift lead | $35,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Barista A (part time, about 24 hours a week) | $17,500 | Month 2 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Barista B (part time, about 24 hours a week) | $17,500 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Sound and stage technician (part time, about 10 hours a week, show nights) | $9,500 | Month 4 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Barista C (part time, weekends and show nights) | $12,500 | Month 7 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Events, rentals and floor host (part time, about 20 hours a week) | $17,500 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Barista D (part time, from month 42) | $14,000 | Month 42 | – | – | – | 0.5 | 0.5 |
| Total payroll incl. on-costs | $167,319 | $188,850 | $188,850 | $197,997 | $204,530 |
Tessa starts alone in January. The head barista and a first part-time barista join in February, a second part-time barista and the events, rentals and floor host in March. The four March shows run with Tessa on the sound board after a rehearsal week; a part-time sound technician starts in month 4, when shows climb to six a month, and a weekend barista in month 7. A fourth barista joins in month 42. The host takes weekday-morning rentals and covers breaks, so Tessa is not the only person who can open the room. Each hire follows the revenue that pays for it. Tessa's $48,000 starts in month one and is already in the costs, so profit here is what remains after she is paid. That pay is modest for a general manager, and a salaried second manager would add roughly $45,000 a year with on-costs. The table counts every part-timer as 0.5 of a full-time equivalent, although the stated hours run from about 10 to 24 a week.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $261,440 | $468,000 | $594,000 | $653,000 | $703,000 |
| Direct costs (coffee, milk, pastries, paper goods, card and ticketing fees, artist shares) | ($91,275) | ($163,390) | ($207,380) | ($227,978) | ($245,435) |
| Gross profit | $170,165 | $304,610 | $386,620 | $425,022 | $457,565 |
| Payroll incl. on-costs | ($167,319) | ($188,850) | ($188,850) | ($197,997) | ($204,530) |
| Rent | ($39,600) | ($40,800) | ($42,000) | ($43,300) | ($44,600) |
| Utilities | ($13,200) | ($13,600) | ($14,000) | ($14,400) | ($14,800) |
| Marketing | ($12,500) | ($13,000) | ($13,500) | ($14,000) | ($14,500) |
| Insurance | ($7,800) | ($8,300) | ($8,800) | ($9,300) | ($9,800) |
| Professional fees | ($5,500) | ($5,800) | ($6,100) | ($6,400) | ($6,700) |
| Software subscriptions | ($5,000) | ($5,300) | ($5,600) | ($5,900) | ($6,200) |
| Music licensing, public-performance fees | ($2,400) | ($2,700) | ($2,900) | ($3,100) | ($3,300) |
| Cleaning, supplies and smallwares | ($5,200) | ($6,400) | ($7,200) | ($7,800) | ($8,300) |
| Repairs, pest control and building upkeep | ($3,500) | ($4,800) | ($5,600) | ($6,400) | ($7,000) |
| Equipment and sound-system replacement | $0 | ($3,000) | ($4,000) | ($5,000) | ($6,000) |
| Artist travel stipends and hospitality | ($1,800) | ($3,200) | ($4,000) | ($4,500) | ($4,800) |
| Phones, internet and sundries | ($1,500) | ($1,700) | ($1,800) | ($1,900) | ($2,000) |
| Bad debt and event deposit refunds | ($300) | ($800) | ($1,100) | ($1,300) | ($1,500) |
| Annual pay raises (3% a year) | $0 | ($5,666) | ($11,501) | ($18,360) | ($25,670) |
| EBITDA | ($95,454) | $694 | $69,669 | $85,365 | $97,865 |
| Depreciation | ($25,114) | ($25,114) | ($25,114) | ($25,114) | ($25,114) |
| Interest | ($7,875) | ($7,875) | ($7,307) | ($5,980) | ($4,507) |
| Income tax | $0 | $0 | $0 | $0 | $0 |
| Net income before start-up costs | ($128,444) | ($32,296) | $37,248 | $54,271 | $68,244 |
| Start-up costs expensed at opening (legal, licensing, launch marketing, lease deposit, opening stock and contingency) | ($56,500) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($184,944) | ($32,296) | $37,248 | $54,271 | $68,244 |
Year 1 loses $128,444 before start-up costs and $184,944 after them, because two months of rent and wages arrive before the first sale and the room spends months filling. Year 2 narrows the loss to $32,296, with EBITDA at $694, level with zero. Year 3 is the first profitable year, at $37,248 after tax and 11.7% at EBITDA. The margin widens in Years 4 and 5 because rent rises 3% a year while counter tickets, shows and rentals each grow faster. No income tax is shown in any year because the carried-forward losses are not used up by Year 5.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($161,069) | ($8,161) | $61,765 | $79,105 | $93,121 |
| Coffee bar, sound system and build-out | ($169,000) | $0 | $0 | $0 | $0 |
| Funding received | $415,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | $0 | ($12,038) | ($13,365) | ($14,837) |
| Owner distributions | $0 | $0 | $0 | $0 | ($30,000) |
| Net change in cash | $84,931 | ($8,161) | $49,727 | $65,741 | $48,284 |
| Closing cash | $84,931 | $76,770 | $126,498 | $192,238 | $240,522 |
Year-end cash is $84,931 at the end of Year 1 and $76,770 at the end of Year 2, the low point of the plan, before profit rebuilds it. It stays positive every year. Year 2 costs are spread evenly, so the lowest balance inside the year may sit below the year-end figure. The loan is interest-only for 24 months, which is atypical, and principal repayment starts in month 25. The only distribution is $30,000 in Year 5.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $84,931 | $76,770 | $126,498 | $192,238 | $240,522 |
| Accounts receivable | $2,149 | $3,847 | $4,882 | $5,367 | $5,778 |
| Coffee, milk and paper stock | $2,092 | $3,744 | $4,752 | $5,224 | $5,624 |
| Coffee bar, sound system and build-out (net) | $143,886 | $118,771 | $93,657 | $68,543 | $43,429 |
| Total assets | $233,057 | $203,132 | $229,789 | $271,372 | $295,353 |
| Accounts payable (suppliers) | $3,001 | $5,372 | $6,818 | $7,495 | $8,069 |
| Bank term loan | $75,000 | $75,000 | $62,962 | $49,598 | $34,760 |
| Paid-in capital | $340,000 | $340,000 | $340,000 | $340,000 | $340,000 |
| Retained earnings | ($184,944) | ($217,239) | ($179,991) | ($125,721) | ($87,477) |
| Total liabilities and equity | $233,057 | $203,132 | $229,789 | $271,372 | $295,353 |
Margins and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -36.5% | 0.1% | 11.7% | 13.1% | 13.9% |
| Net margin (before start-up costs) | -49.1% | -6.9% | 6.3% | 8.3% | 9.7% |
| Payroll incl. pay raises as share of revenue | 64% | 42% | 34% | 33% | 33% |
| Revenue per full-time equivalent at year end | $58,098 | $104,000 | $132,000 | $130,600 | $140,600 |
| Average monthly revenue | $21,787 | $39,000 | $49,500 | $54,417 | $58,583 |
| Monthly revenue needed to cover operating costs | $34,008 | $38,911 | $40,580 | $43,487 | $46,053 |
| Debt service cover (EBITDA / interest + principal) | -12.1x | 0.1x | 3.6x | 4.4x | 5.1x |
Year 1 averages $21,787 a month against the $34,008 a month the room needs to cover its costs, which is why it loses money. Year 2 averages $39,000 against $38,911, just over an EBITDA break-even; the $32,296 net loss that year comes from $25,114 of depreciation and $7,875 of interest below that line. Year 3 clears it at $49,500 against $40,580. Debt service cover is negative in Year 1, 0.1x in Year 2 (EBITDA of $694 against $7,875 of interest) and 3.6x in Year 3. A lender testing a 1.25x covenant would see it fail in Year 2, so the plan asks for a first test at the end of Year 3.
Visits and bookings 20% under plan, every year
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $209,152 | $374,400 | $475,200 | $522,400 | $562,400 |
| Net income before start-up costs | ($145,461) | ($57,615) | ($12,604) | $7,756 | $23,840 |
| Net income after start-up costs | ($201,961) | ($57,615) | ($12,604) | $7,756 | $23,840 |
| Closing cash | $68,162 | $34,878 | $34,873 | $54,155 | $73,082 |
This case cuts every revenue line by 20% in every year. The owner sees six months of trading before reacting. Payroll responses start in month 7: Tessa takes a 20% pay cut, the part-time baristas and the host work shorter shifts, the weekend barista is not hired until month 19, and the fourth barista is never hired. The roster still supplies about 166 paid hours a week against the 148 needed for coverage. Marketing, upkeep and equipment cuts start in Year 2, because the model spreads annual lines evenly across Year 1: marketing falls 20%, cleaning, repairs and artist stipends fall 15%, and equipment replacement slips a year. The Year 5 distribution is halved to $15,000. On those terms Year 1 loses $145,461 before start-up costs and $201,961 after them, and equity ends the year at $138,039 against a $75,000 loan. Year-end cash stays above zero and below the base case every year, with the lowest at $34,873 at the end of Year 3 and $34,878 at the end of Year 2. Years 2 and 3 lose $57,615 and $12,604, and profit returns in Year 4 at $7,756. Debt service cover is negative in Years 1 and 2, then 1.0x in Year 3, 2.0x in Year 4 and 2.8x in Year 5, so a 1.25x covenant would be missed through Year 3. In that case the owner takes the position to the bank early and asks for the first covenant test at the end of Year 4 and, if needed, a further six months of interest-only.
Sources
- U.S. Code, 26 U.S.C. 11(b), Legal Information Institute. Sets the corporate income tax at 21% of taxable income. The 7% state and local rate in the model is a rounded figure.
- Louisville Metro Revenue Commission, forms and publications. Its 2025 net-profits return instructions give the occupational license rate for resident businesses as 2.2%. Rates change.
- Kentucky Department of Revenue, revenue.ky.gov. Corporate income tax, and sales and use tax on prepared food and admissions, are taken up with the Department before launch.
- Louisville Metro Public Health and Wellness, Public Health Protection and Food Safety Fee Schedule. Food-service permit fees are published there by seating capacity. The $4,500 for all permits and filings in the budget is an allowance.
- BMI, Licensing Center FAQs. States that fee calculations for venues are published on its website by business type and can be adjusted on 30 days' notice. ASCAP, SESAC and GMR publish their own terms, and the model's $2,400 a year is a rounded allowance for all of them.
- U.S. Department of Labor, state minimum wage history. Kentucky's rate matches the federal $7.25 an hour as of its last revision in January 2025.
- U.S. Department of Justice, ADA information. Accessibility requirements for existing and historic buildings; the scope depends on the building and is reviewed by a consultant.
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