Looking for a convenience store cafe business plan? You're in the right place.
A store that sells both a carton of milk and a latte has to answer questions a lender will ask twice. How much does the build-out cost, and who pays for it? How much of the sales come from the coffee counter, and how much of the profit? What happens if traffic comes in 20% light? A blank template will not show what a sensible answer looks like.
In this article we'll walk through a complete sample business plan for a convenience store with an espresso bar and breakfast counter in Indianapolis, Indiana, section by section. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials.
Here's what you'll take away:
- The summary page: see how to put a hybrid store on one page, so a lender knows what the money is for within a minute
- The six revenue lines: learn why the coffee and food counter carries the profit while the shelves carry the traffic
- The funding mix: find out how an SBA loan, owner savings and a landlord allowance fit together, and how much each pays for
- The first year, month by month: spot the months before the store turns profitable and size a reserve around them
- The staffing plan: see when a barista, a shift lead and part-time cashiers are added, and what each costs
- The five-year profit, cash flow and balance sheet: understand how stock, supplier credit and debt show up in the numbers
- The downside case: have an answer ready for "what if sales are 20% short?" with the steps the owners take in response
If you're planning a store with a coffee counter, read this before you write your own. The store is fictional, so take what fits and change the rest.
In this plan
Want a convenience store cafe business plan you can edit for your own business? Get the convenience store cafe business plan template and build it in the Toolkit.
Summary: Luna's Corner Market
Luna's is a neighborhood convenience store in Indianapolis with an espresso bar and a breakfast counter built into the same 2,200 square feet. It opens on January 1, 2027 on a commercial corner beside single-family homes and apartments. Heidi Renner runs the store as owner-manager. Her husband Thomas, a CPA with a separate job, is a co-investor and reviews the monthly accounts.
The store needs $465,000: $195,000 of the Renners' savings, a $225,000 SBA 7(a) term loan and a $45,000 tenant-improvement allowance from the landlord. Build-out and equipment take $269,000, opening stock $41,000, pre-opening costs $63,000 and a cash reserve of $92,000.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $811,200 | $1,046,274 | $1,228,628 |
| Net income after start-up costs | ($119,022) | $5,337 | $42,280 |
| Closing cash | $60,950 | $82,022 | $123,896 |
The store earns its margin at the counter. Espresso, breakfast food and office trays are 44% of Year 1 revenue and about 66% of gross profit, while packaged goods, cold drinks, beer, wine and tobacco bring the traffic. The first full-time hire after the owner is a lead barista, in month 1, because a coffee line that is slow in the first weeks does not recover.
Year 1 loses money, mostly because $63,000 of start-up costs are expensed at opening. Net income turns positive in Year 2, barely, and reaches 4.6% of revenue by Year 5, a thin margin for a store this size. A revenue shortfall of 20% is tested in the financial section, with the management response written out.
The Store and the Counter
Legal name: Luna's Corner Market, LLC, an Indiana limited liability company. Owners: Heidi Renner (operator) and Thomas Renner (investor). Premises: 2,200 square feet in a small commercial building, with a shared lot of about 14 spaces. Hours: 6 a.m. to 10 p.m., seven days. Stage: the lease is in draft, the SBA lender has discussed terms but made no commitment, and the equipment quotes are in.
What the store is for
Give people near the building a place to buy a latte, a hot breakfast sandwich and the things they ran out of, in one stop, before eight in the morning or after nine at night.
Six revenue lines
| Line | Year 1 revenue | Share | Cost of goods |
|---|---|---|---|
| Espresso bar and coffee | $174,600 | 21.5% | 27% |
| Breakfast and grab-and-go food | $163,200 | 20.1% | 40% |
| Office coffee and pastry trays | $18,400 | 2.3% | 45% |
| Packaged goods, snacks and grocery staples | $215,000 | 26.5% | 68% |
| Cold drinks, beer and wine | $160,000 | 19.7% | 72% |
| Tobacco and nicotine products | $80,000 | 9.9% | 88% |
Tobacco is the thinnest line and stays the smallest share, because it earns about 12 cents on the dollar and carries its own regulation. It stays because the people who buy it also buy coffee.
Targets
- Positive operating profit (EBITDA) in every month from June through December 2027.
- 99 espresso drinks a day in Year 1 and 164 in Year 3.
- Repay the SBA loan on its 10-year schedule, with no early repayment.
- Owner distributions of $15,000 in Year 3, rising after that, paid only while closing cash stays above $60,000.
Permits
Beer and wine sales need a state permit, tobacco sales need a retail certificate, and food service needs a county health permit. The plan budgets $5,500 for these. Current requirements, fees and timing are to be confirmed with the Indiana Alcohol and Tobacco Commission and the Marion County Public Health Department before opening, and permit availability and cost can run above the budget.
Indianapolis Trade Area and the Loan
The corner and its neighbors
The site is a corner unit on a collector street with apartments and single-family homes within about a mile. A traffic count from the city or the state transportation department is to be obtained before the lease is signed, along with a count of competing stores and coffee outlets within a mile. The plan's figures do not rest on any published count.
The loan's scale
The SBA's 7(a) page states that a loan can run up to $5 million and that repayment terms vary with the loan, so $225,000 sits well inside the program. The 10-year term, the 10.5% rate and the twelve-month interest-only period are figures for this example, not a quoted offer.
Where a store like this earns its money
Packaged goods and cold drinks fill the shelves and the beer cooler, and they bring the repeat visits. Espresso and food carry most of the margin. No national average is quoted here, because published averages are dominated by fuel sales, which Luna's does not have, and a lender would compare the store with local operators.
What else the customer could do
| Alternative | What it offers | Why a customer picks it | Where Luna's differs by design |
|---|---|---|---|
| Fuel-station convenience stores | Long hours, the pumps, packaged goods | One stop on the commute | Espresso made by a trained barista and a breakfast counter |
| Drive-through coffee chains | Fast espresso | Speed and a known brand | A walk-in store with groceries, and a drip coffee priced to bring the first visit |
| Quick-service breakfast restaurants | Hot breakfast | Familiar menu | One checkout for breakfast and the carton of milk |
| Supermarkets | Full grocery range | Price | A small basket and a coffee in a few minutes, with the hours the plan sets |
| Other independent stores | Tobacco, lottery, snacks | Proximity | A fuller counter and a hot-food offer |
The table says what each type of competitor offers and how this store positions itself. It is not a ranking, and no competitor's prices are quoted.
SWOT
| Strengths | Weaknesses |
|---|---|
| A lead barista hired in month 1 | Year 1 loses money and uses reserve cash |
| Food and espresso margin on a convenience-store footprint | No brand yet; every regular starts from zero |
| Landlord contribution of $45,000 to the build-out | Thin net margin even at maturity |
| Opportunities | Threats |
|---|---|
| Morning commuters leaving a drive-through line | A chain opening a drive-through within a mile |
| Coffee and pastry trays for small offices | Tobacco and alcohol rules changing |
| More food sold as the second barista settles in | Refrigeration failing in summer |
The Regulars
The 6 a.m. commuter
A worker from the neighborhood or driving through, between 6 and 9 a.m. One transaction: a drink and something hot to eat. About two-thirds of the day's espresso drinks are sold before 10 a.m.
The household top-up
A parent or a retired resident buying milk, bread, a frozen pizza, a bag of ice or a gift card when the supermarket is a trip too far.
The evening and weekend regular
Cold drinks, beer and snacks after 5 p.m., and a late breakfast on weekends.
What brings the regular back
A short line, the same cup every day, a clean floor, and a cashier who knows the order.
How the day splits
The 99 drinks a day in Year 1 are about 66 before 10 a.m., 20 in the afternoon and 13 after 5 p.m. One barista can make the Year 1 morning rush, an average of about 16 drinks an hour from 6 to 10 a.m. with busier peak hours inside it, with a cashier on the register. By Year 3 the 164 drinks a day put about 110 drinks into the same four hours, near 27 an hour, which takes two baristas on the floor. The second barista, part time from month 4, covers the morning and evening peaks, and a third part-time barista from month 25 covers the Year 3 morning rush. Evening shifts run with a shift lead and one cashier, and the rules on staff age and supervision for alcohol and tobacco sales are to be confirmed with the Commission.
Pricing and Volume
Prices
An average espresso drink sells at $4.85 and an average breakfast or grab-and-go item at $6.80, in Year 1 prices. Prices rise 3% a year from Year 2. Drip coffee is priced below the drive-through chains to bring the first visit.
The counts
| Year 1 | Year 3 | Year 5 | |
|---|---|---|---|
| Espresso drinks | 36,000 | 60,000 | 69,000 |
| Drinks a day | 99 | 164 | 189 |
| Breakfast and food items | 24,000 | 40,000 | 46,000 |
| Items a day | 66 | 110 | 126 |
| Office trays | 400 | 850 | 1,100 |
Ticket and traffic
Year 1 revenue averages about $2,220 a day. At an average ticket of about $8.50 that is roughly 260 transactions a day, rising to about 375 in Year 3 and 405 in Year 5 once the 3% annual price rises are counted in the ticket. These are plan figures, not a measured count.
Growth
Revenue grows 29% in Year 2, partly because Year 1 includes a seven-month climb to a normal level, then 17%, 10% and 8%. Espresso, food and trays grow faster than the shelf lines, from 44% of revenue in Year 1 to 52% in Year 3. The drink and food volumes are the plan's main stretch: 164 drinks a day by Year 3 depends on a morning habit forming in the first year.
Winning the First Ninety Days
Marketing spend
Year 1 marketing is $23,000: $11,000 of launch spend paid from start-up capital and $12,000 of running costs. That is 2.8% of Year 1 revenue, falling below 1% by Year 5. A convenience store wins on location and habit, so the money goes to the first 90 days.
| Item | Year 1 spend | What it is expected to do |
|---|---|---|
| Signage and window graphics (launch) | $5,500 | Make the espresso bar visible from the road |
| Neighborhood mailer and door cards (launch) | $3,000 | Reach the addresses within about a mile |
| Opening-week coffee offers (launch) | $2,500 | Fill the first mornings |
| Loyalty card and text offers | $4,500 | Turn the first visit into a second and third |
| Local social media and map listings | $3,000 | Appear in "coffee near me" searches |
| Office coffee and pastry trays | $2,500 | Win small-office orders nearby |
| Community sponsorships | $2,000 | A school and a youth team |
Milestones
- January 2027: doors open with 6 a.m. service from day one.
- June 2027: first month of positive EBITDA.
- December 2027: $73,863 of monthly revenue and $2,929 of EBITDA.
Open at 6 a.m.
The building
2,200 square feet at about $21.80 a square foot a year, covering rent, common-area charges and property taxes ($48,000 in Year 1), on a ten-year lease. The landlord contributes $45,000 toward the build-out, paid after the work is complete. The lease carries a personal guarantee.
The morning shift
The lead barista opens at 5:30 a.m. with the owner. Breakfast sandwiches are assembled from pre-cooked components and held in a heated case, and pastries come from a local bakery on a daily order. Food is limited to what a two-person shift can make without a full kitchen, so the plan has no fryer. Whether the heating equipment needs a ventilation hood is a question for the health department and the landlord before the build-out is priced.
Stock and ordering
Opening stock is $41,000, of which $5,000 is coffee, milk, syrups, cups and breakfast items. Stock turns about 8 times a year against cost of goods in Year 1 and 12 times by Year 5; the Year 1 figure is the soft one, because a new store carries a full range before its regulars form. A distributor delivers packaged goods weekly, and beer and wine come from licensed wholesalers on their own schedule. Shrink and spoilage are budgeted at 1.6% of sales.
Equipment
| Item | Cost |
|---|---|
| Reach-in coolers, beer cave doors, ice and freezer | $62,000 |
| Espresso machine, grinders, brewers, ovens, prep and display cases | $34,000 |
| Point of sale, cameras, signage, shelving and gondolas | $33,000 |
Replacement of grinders, ovens and coolers is budgeted from Year 2 at $3,000 and rises to $7,500 by Year 5.
Insurance and safeguards
General liability, property and liquor liability cover is budgeted at $9,500 in Year 1. Workers' compensation sits inside payroll on-costs. Staff complete food-handler and alcohol- and tobacco-sale training before opening, paid from the $15,000 pre-opening training and wages budget.
Software
A point-of-sale system with inventory tracking, a scheduling app and cloud bookkeeping, at $4,800 in Year 1.
The Renners
Heidi Renner, owner and store manager
Heidi has fifteen years in food retail, the last six as a store manager for a regional grocer, and a deli counter before that. She draws a $52,000 salary from month 1 and works the opening shift four days a week.
Thomas Renner, investor
Thomas is a CPA with a full-time job elsewhere. He reviews the monthly accounts and the loan covenants without pay. Day-to-day bookkeeping and the tax return are bought from an outside bookkeeper and preparer, inside the $7,000 professional-fees line.
Gaps in the owners' experience
Neither owner has built a coffee program from scratch. The plan covers that by hiring the lead barista in month 1 at a rate above the shift lead's, and by sending Heidi and the barista on an equipment supplier's espresso training before opening.
Staffing
| Role | Starts | Pay |
|---|---|---|
| Owner and store manager | Month 1 | $52,000 |
| Lead barista (full time) | Month 1 | $35,500 |
| Shift lead (full time, evenings and weekends) | Month 1 | $34,000 |
| Cashier and food prep (part time) | Month 1 | $18,000 |
| Cashier (part time) | Month 1 | $15,500 |
| Second barista (part time) | Month 4 | $21,500 |
| Weekend cashier (part time) | Month 14 | $12,500 |
| Third barista (part time) | Month 25 | $19,500 |
| Added cashier and prep (part time) | Month 37 | $16,500 |
Ownership and the lender
The Renners own 100% of the LLC, which is taxed as a corporation by election in this plan, and give the SBA lender personal guarantees. The loan is expected to carry reporting covenants and a minimum debt service cover; the lender sets the exact terms. Debt service cover is 0.1x in Year 1, while the loan is interest-only and the store ramps, and 1.6x in Year 2. The Year 1 figure, and how the lender treats the interest-only period, are the first things to settle with the lender.
The Money
One five-year model sits behind the tables below, monthly for Year 1 and annual afterward. The operating figures come first so each line in the statements can be traced to a reason.
Fitting out the store and funding it
| Use of funds | Amount |
|---|---|
| Build-out: floors, electrical, plumbing, counter, restroom, storefront | $140,000 |
| Refrigeration: reach-in coolers, beer cave doors, ice and freezer | $62,000 |
| Espresso machine, grinders, brewers, ovens, prep and display cases | $34,000 |
| Point of sale, cameras, signage, shelving and gondolas | $33,000 |
| Opening inventory: packaged goods, drinks, tobacco, beer and wine | $36,000 |
| Opening inventory: coffee, milk, syrups, cups and breakfast stock | $5,000 |
| Beer and wine permit, tobacco and food-retail registrations | $5,500 |
| Legal and accounting: entity, lease review, SBA closing | $10,000 |
| SBA guarantee fee and lender closing costs (confirm with lender) | $9,500 |
| Pre-opening rent ($12,000 for three months) and training and pre-opening wages ($15,000) | $27,000 |
| Launch: signage, neighborhood mailer, opening-week coffee offers | $11,000 |
| Cash reserve for the first-year loss, the stock build and the winter dip | $92,000 |
| Total uses | $465,000 |
| Source of funds | Amount |
|---|---|
| Heidi and Thomas Renner's savings | $195,000 |
| SBA 7(a) term loan | $225,000 |
| Landlord tenant-improvement allowance | $45,000 |
| Total sources | $465,000 |
The Renners put in $195,000, 42% of the $465,000 total. An SBA 7(a) lender provides $225,000 (48%) over ten years at 10.5%, interest-only for the first twelve months, and the landlord pays $45,000 (10%) toward the build-out once the work is done. The rate and term are example figures, not a quoted offer, and the SBA guarantee fee and closing costs of $9,500 should be confirmed with the lender. The loan is sized to what the store can service: a larger loan adds debt service to a store whose Year 1 cover is already below 1x, and a larger reserve would sit idle once the store ramps. The $92,000 reserve is sized by the downside case: it keeps the 20% shortfall case above $8,000 at every year end, and it is a thin cushion, not a generous one. The plan also depends on the landlord paying the $45,000 allowance in month 2; if it arrives later, cash would fall to under $15,000 by spring, so the owners would ask for payment on completion of the work or arrange a short bridge.
Operating figures behind the forecast
- The espresso bar sells 36,000 drinks in Year 1 at an average of $4.85, which is 99 a day, and 60,000 by Year 3 at 164 a day. The breakfast counter sells 24,000 items at $6.80 in Year 1 and 40,000 by Year 3. Office coffee and pastry trays sell 400 at $46 in Year 1 (about 1.5 a working day) and 850 by Year 3, at a 45% cost of goods. Prices rise 3% a year from Year 2. The counter grows faster than the shelves because it is the part of the store that earns the margin; the shelf lines grow 5% to 8% a year in units, and tobacco volume is held nearly flat.
- Packaged goods, cold drinks and beer and wine, and tobacco bring in $215,000, $160,000 and $80,000 in Year 1. Cost of goods runs 68%, 72% and 88% on those lines, against 27% for espresso, 40% for food and 45% for trays, which gives a 44% blended gross margin in every year.
- Year 1 sales build over seven months, with the espresso bar and food counter slowest to reach their normal level. Espresso peaks from November to February, cold drinks and beer from June to August.
- Payroll runs 26% of Year 1 revenue and 22% by Year 3. It adds 27% to wages for payroll taxes, workers' compensation and benefits (15% for part-time staff). Wages in the personnel table are launch rates, and 3% annual pay raises are a separate line from Year 2.
- Rent is 2,200 square feet at about $21.80 a square foot, covering common-area charges and property taxes. Utilities are $19,000 in Year 1, which covers refrigeration and espresso equipment running all day.
- About 85% of sales go through a card at 2.6%, which gives $17,928 of processing fees in Year 1. Shrink and spoilage are 1.6% of sales.
- Stock is about $55,000 at cost at the end of Year 1 and $65,000 at the end of Year 5, which is about 8 turns on cost of goods in Year 1 and 12 by Year 5; the Year 1 figure is the soft one, because a new store carries a full range before its regulars form. Suppliers are paid in about seven days, because tobacco and beer wholesalers often want payment at or soon after delivery, and receivables are card settlements of about two days. The landlord allowance appears within paid-in capital for simplicity; in the accounts it would be a lease incentive spread against rent.
- The LLC is taxed as a corporation by election, so tax is charged at the 21% federal rate and a 4.9% Indiana rate, a planning figure to confirm, with the Year 1 loss carried forward; federal rules limit the later offset to a share of taxable income, so tax would be somewhat higher in Years 3 and 4. An S corporation election would move this tax to the owners' personal returns.
- Owner distributions of $15,000, $35,000 and $55,000 are paid in Years 3 to 5, only while closing cash stays above $60,000.
Revenue by counter and shelf
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Espresso bar and coffee | $174,600 | $249,775 | $308,722 | $344,482 | $376,652 |
| Breakfast and grab-and-go food | $163,200 | $231,132 | $288,565 | $323,229 | $352,059 |
| Office coffee and pastry trays | $18,400 | $30,797 | $41,481 | $50,265 | $56,951 |
| Packaged goods, snacks and grocery staples | $215,000 | $257,500 | $286,443 | $309,242 | $330,900 |
| Cold drinks, beer and wine | $160,000 | $190,550 | $212,180 | $229,473 | $245,361 |
| Tobacco and nicotine products | $80,000 | $86,520 | $91,237 | $95,067 | $99,045 |
| Total revenue | $811,200 | $1,046,274 | $1,228,628 | $1,351,758 | $1,460,968 |
| Growth on prior year | – | 29% | 17% | 10% | 8% |
Espresso, food and trays make up 44% of Year 1 revenue and 52% of Year 3, and about 66% of Year 1 gross profit. The blended 44% margin is held at the Year 1 rate in every year, a cautious choice, because the model does not count on the shift toward the counter earning more. Packaged goods are the largest single line at 27% of Year 1 revenue and are the reason a customer walks in a second time in the day. Tobacco is about 10% of Year 1 revenue and falls to 7% by Year 5.
Twelve months from opening day
| Month | Espresso bar and coffee | Breakfast and grab-and-go food | Office coffee and pastry trays | Packaged goods, snacks and grocery staples | Cold drinks, beer and wine | Tobacco and nicotine products | Total revenue | EBITDA |
|---|---|---|---|---|---|---|---|---|
| Jan 2027 | $9,907 | $8,104 | $914 | $11,579 | $7,338 | $4,542 | $42,384 | ($10,990) |
| Feb 2027 | $11,129 | $9,176 | $1,035 | $12,864 | $8,292 | $4,797 | $47,293 | ($8,820) |
| Mar 2027 | $12,389 | $10,824 | $1,220 | $14,718 | $10,085 | $5,622 | $54,858 | ($5,475) |
| Apr 2027 | $13,119 | $12,136 | $1,368 | $16,105 | $12,194 | $6,006 | $60,928 | ($2,790) |
| May 2027 | $13,340 | $13,448 | $1,516 | $17,730 | $14,342 | $6,612 | $66,988 | ($111) |
| Jun 2027 | $13,515 | $14,413 | $1,625 | $19,190 | $16,497 | $7,073 | $72,313 | $2,244 |
| Jul 2027 | $14,016 | $14,448 | $1,629 | $20,703 | $18,090 | $7,633 | $76,519 | $4,104 |
| Aug 2027 | $15,017 | $15,821 | $1,784 | $20,858 | $18,291 | $7,778 | $79,549 | $5,443 |
| Sep 2027 | $16,686 | $16,786 | $1,893 | $20,374 | $15,780 | $7,597 | $79,116 | $5,252 |
| Oct 2027 | $18,354 | $16,980 | $1,913 | $20,374 | $13,987 | $7,597 | $79,205 | $5,291 |
| Nov 2027 | $18,354 | $16,593 | $1,871 | $20,859 | $13,090 | $7,417 | $78,184 | $4,840 |
| Dec 2027 | $18,774 | $14,471 | $1,632 | $19,646 | $12,014 | $7,326 | $73,863 | $2,929 |
Revenue climbs from $42,384 in January to $79,549 in August as regulars form and summer cold drinks lift the shelves. EBITDA is negative from January to May, turns positive in June and stays positive for the rest of the year. The lowest month-end cash balance, about $31,000 before card settlements still to arrive, is the Jan figure, once the opening stock and the first payables are settled. That is thin for a first month, which is why the reserve is held as cash rather than spent.
Who is on the schedule
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Owner and store manager | $52,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Lead barista (full time) | $35,500 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Shift lead (full time, evenings and weekends) | $34,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Cashier and food prep (part time, about 24 hours a week) | $18,000 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Cashier (part time, about 20 hours a week) | $15,500 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Second barista (part time, about 28 hours a week) | $21,500 | Month 4 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Third barista (part time, about 24 hours a week) | $19,500 | Month 25 | – | – | 0.5 | 0.5 | 0.5 |
| Added cashier and prep (part time, about 20 hours a week) | $16,500 | Month 37 | – | – | – | 0.5 | 0.5 |
| Weekend cashier (part time, about 16 hours a week) | $12,500 | Month 14 | – | 0.5 | 0.5 | 0.5 | 0.5 |
| Total payroll incl. on-costs | $211,374 | $230,732 | $254,355 | $273,330 | $273,330 |
The owner, the lead barista, the shift lead and two part-time cashiers are on the schedule from the first day. The second barista, part time, starts in month 4 to cover a 112-hour week with two people on the floor at the morning and evening peaks. A weekend cashier follows in month 14, a third part-time barista starts in month 25, when the 6 to 10 a.m. rush averages about 27 drinks an hour, and a part-time cashier and prep hand starts in month 37 as transactions pass 350 a day. There is no assistant manager: Heidi covers management hours herself. Part-time rows count as half an FTE.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $811,200 | $1,046,274 | $1,228,628 | $1,351,758 | $1,460,968 |
| Direct costs (coffee, food, grocery, drink and tobacco cost of goods) | ($452,502) | ($583,631) | ($685,351) | ($754,035) | ($814,954) |
| Gross profit | $358,698 | $462,643 | $543,277 | $597,723 | $646,014 |
| Payroll incl. on-costs | ($211,374) | ($230,732) | ($254,355) | ($273,330) | ($273,330) |
| Rent | ($48,000) | ($49,400) | ($50,900) | ($52,400) | ($54,000) |
| Utilities | ($19,000) | ($19,600) | ($20,200) | ($20,800) | ($21,400) |
| Marketing | ($12,000) | ($10,500) | ($10,500) | ($11,000) | ($11,000) |
| Insurance | ($9,500) | ($10,000) | ($10,500) | ($11,000) | ($11,500) |
| Professional fees | ($7,000) | ($7,200) | ($7,400) | ($7,600) | ($7,800) |
| Software subscriptions | ($4,800) | ($5,000) | ($5,200) | ($5,400) | ($5,600) |
| Card processing fees (about 2.6% of card sales) | ($17,928) | ($23,123) | ($27,153) | ($29,874) | ($32,287) |
| Shrink, spoilage and waste (1.6% of sales) | ($12,979) | ($16,740) | ($19,658) | ($21,628) | ($23,375) |
| Cups, packaging, cleaning and store supplies | ($9,000) | ($10,800) | ($11,700) | ($12,400) | ($12,900) |
| Repairs, pest control and refrigeration service | ($3,000) | ($4,800) | ($5,600) | ($6,500) | ($7,200) |
| Phone, internet, licenses and training | ($2,200) | ($2,300) | ($2,400) | ($2,500) | ($2,600) |
| Equipment replacement (grinders, ovens, coolers) | $0 | ($3,000) | ($4,500) | ($6,500) | ($7,500) |
| Annual pay raises (3% a year) | $0 | ($6,922) | ($15,490) | ($25,345) | ($34,305) |
| EBITDA | $1,917 | $62,526 | $97,721 | $111,446 | $141,217 |
| Depreciation | ($34,314) | ($34,314) | ($34,314) | ($34,314) | ($34,314) |
| Interest | ($23,625) | ($22,876) | ($21,126) | ($19,185) | ($17,029) |
| Income tax | $0 | $0 | $0 | ($12,322) | ($22,352) |
| Net income before start-up costs | ($56,022) | $5,337 | $42,280 | $45,626 | $67,521 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($63,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($119,022) | $5,337 | $42,280 | $45,626 | $67,521 |
Year 1 loses $56,022 before start-up costs and $119,022 after them. Year 2 is the first profitable year at $5,337, a 0.5% net margin: EBITDA of $62,526 covers depreciation of $34,314 and interest of $22,876 with little to spare. Year 3 earns $42,280, a 3.4% net margin and an 8.0% EBITDA margin. Net income reaches $67,521 in Year 5, a 4.6% net margin and a 9.7% EBITDA margin, after Heidi's $52,000 salary and every wage in the personnel table. Income tax first appears in Year 4 at $12,322, because the Year 1 loss is carried forward, and is $22,352 in Year 5. Net margin stays below 5% because rent, depreciation, interest and a staffed 112-hour week do not shrink with sales.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($135,050) | $36,944 | $74,495 | $78,522 | $100,578 |
| Build-out, refrigeration and espresso equipment | ($269,000) | $0 | $0 | $0 | $0 |
| Funding received | $465,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($15,872) | ($17,621) | ($19,563) | ($21,719) |
| Owner distributions | $0 | $0 | ($15,000) | ($35,000) | ($55,000) |
| Net change in cash | $60,950 | $21,072 | $41,874 | $23,959 | $23,859 |
| Closing cash | $60,950 | $82,022 | $123,896 | $147,855 | $171,714 |
Closing cash is $60,950 at the end of Year 1, the lowest year-end figure, and rises to $82,022 in Year 2 and $171,714 by Year 5 after distributions of $105,000 over Years 3 to 5.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $60,950 | $82,022 | $123,896 | $147,855 | $171,714 |
| Accounts receivable | $4,445 | $5,733 | $6,732 | $7,407 | $8,005 |
| Packaged goods, drinks and cafe stock on hand, at cost | $54,575 | $58,509 | $61,561 | $63,621 | $65,449 |
| Build-out, refrigeration and espresso equipment (net) | $234,686 | $200,371 | $166,057 | $131,743 | $97,429 |
| Total assets | $354,656 | $346,636 | $358,246 | $350,626 | $342,597 |
| Owed to distributors and suppliers | $8,678 | $11,193 | $13,144 | $14,461 | $15,629 |
| Bank loan | $225,000 | $209,128 | $191,507 | $171,945 | $150,226 |
| Paid-in capital | $240,000 | $240,000 | $240,000 | $240,000 | $240,000 |
| Retained earnings | ($119,022) | ($113,686) | ($86,405) | ($75,780) | ($63,258) |
| Total liabilities and equity | $354,656 | $346,636 | $358,246 | $350,626 | $342,597 |
Margins, debt cover and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | 0.2% | 6.0% | 8.0% | 8.2% | 9.7% |
| Net margin (before start-up costs) | -6.9% | 0.5% | 3.4% | 3.4% | 4.6% |
| Payroll incl. pay raises as share of revenue | 26% | 23% | 22% | 22% | 21% |
| Revenue per full-time equivalent at year end | $180,267 | $209,255 | $223,387 | $225,293 | $243,495 |
| Average monthly revenue | $67,600 | $87,190 | $102,386 | $112,647 | $121,747 |
| Monthly revenue needed to cover operating costs | $67,239 | $75,406 | $83,969 | $91,643 | $95,134 |
| Debt service cover (EBITDA / interest + principal) | 0.1x | 1.6x | 2.5x | 2.9x | 3.6x |
Year 1 averages $67,600 of revenue a month against $67,239 needed to cover operating costs, so it clears break-even on an operating-cost basis, before interest and depreciation, by a hair, and only because of the later months of the ramp. Year 2 averages $87,190 against $75,406 needed. Debt service cover is 0.1x in Year 1, when the loan is interest-only and the store is still ramping, 1.6x in Year 2 and 2.5x in Year 3. A lender will look hard at Year 1.
A year 20% light
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $648,960 | $837,019 | $982,902 | $1,081,406 | $1,168,774 |
| Net income before start-up costs | ($93,038) | ($33,845) | $15,428 | $36,727 | $54,258 |
| Net income after start-up costs | ($156,038) | ($33,845) | $15,428 | $36,727 | $54,258 |
| Closing cash | $25,803 | $8,235 | $38,676 | $89,020 | $154,867 |
This case cuts every revenue line by 20% in every year. The response: the weekend cashier and the third barista are never hired, part-time pay is cut by 20% through shorter hours, marketing and Heidi's pay are cut by 20%, utilities fall 8% with shorter hours, equipment replacement is halved and no distributions are paid. On those terms cash stays positive at no less than $8,235 at a year end, but the store loses money through Year 2 and turns profitable in Year 3, and debt service cover stays below 1x in the first two years (about 0.6x in Year 2). Equity ends Year 1 at $83,962. The owners would ask the lender for a principal deferral or add family funds before cash fell below $5,000; neither is modeled here.
Sources
- U.S. Small Business Administration, 7(a) loans: maximum loan amount of $5 million, and repayment terms that vary by loan. The 10.5% rate, the guarantee fee and the equity share are example figures; confirm them with an SBA lender.
- Permits and tax rates are plan figures to confirm before opening: the Indiana Alcohol and Tobacco Commission for beer, wine and tobacco permits, the Marion County Public Health Department for the food permit, and the Indiana Department of Revenue for the state corporate tax rate, which may change.
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