The Peace Coffee Parlor Business Plan

Executive Summary

Since Ugandans have traditionally not been ardent coffee drinkers, the coffee business sector has been a dormant for many years for many years. Coffee remained an impressive cash crop amongst Ugandans and encouraged by the government only for its impressive revenue generation figures for the government and coffee farmers. This growth of the domestic coffee sector would always be delayed given the many mythologies and past experiences the population always attached to it. For example, many people were told and believed coffee was a product for the rich people and whites; coupled with the experiences of British Coffee Uganda, the folklore indeed seemed true. However, the current good news is that the population is severing ties with the past traditional mythologies. There is a growing trend amongst the modern generation and healthy-conscious consumers found in the coffee cup-filled aromas of Espresso, lattes, macchiatos, and cappuccinos. With as many scientific studies confirming coffee as a healthy drink, it is only a matter of time before coffee will replace traditional tea and Alcoholic drinks on the market. Thankfully, local entrepreneurs have begun understanding this trend, and local businesses like Endiro Coffee, Uganda Coffee Crane, Café Java, and more have already ventured to serve this market niche. This summative assessment presents a business plan for the Peace Coffee Yard, a new business venture that will join Uganda’s retail coffee sector. The business plan describes the business, the background of the coffee industry with a specific focus on Uganda, market analysis, and the company’s mission. The plan also offers internal and external business analysis, the long-term, grand/generic, and short-term strategy analysis for the Peace Coffee Yard. The plan includes the functional tactics, strategic control, and continuous improvement plans that the Peace Coffee Yard will use to gain a competitive edge over its competitors and sustain its operations. It ends with a management summary of the business’s authority charge and responsibilities and an overall conclusion of the document.

Business Description

The new business venture is called ‘The Peace Coffee Yard.’ As chronic illnesses such as cardiovascular diseases, and diabetes continue to plague the global population, I have envisioned the idea of establishing a coffee shop in the city center of Kampala with the aim of serving quality coffee products for example Espresso-based drinks such as cappuccinos, lattes, and macchiatos, iced coffee, drip coffee, cold brew coffee, and roasted coffee which will not all quench thirst and hunger of the city residents but serve as an alternative to the sugary beverage drinks and teas which are health peril. The Peace Coffee Parlor will also make provisions for retail distribution and online order placements in a bid to serve the greater Kampala population. I have envisioned this business idea against the backdrop of the increasing consumer consciousness in the country. As more and more people are being health conscious, the coffee culture will soon take precedence in the country and more people will embrace coffee as a breakfast meal. Without a doubt, there is a significant long-term market for coffee not only in Uganda but in the world at large and as such; the Peace Coffee Parlor is aspiring to become an early mover in this sector. The market focus for this business venture is the healthy conscious consumers, and the young outgoing generation who need serene areas to unwind from as they sip a drink. This business plan explains the concept details, industry background, Company mission, and Implementation plan for the business idea.

Industry Background

The Coffee sector in Uganda has come a long way since the 15^th century. The industry has faced many slumps and booms influenced by political, economic, and climatic factors. The Uganda Coffee Development Authority commonly abbreviated as UCDA is the nation’s umbrella body that oversees and promotes coffee growing, processing, brewing and marketing in the country. The Uganda Coffee Development Authority has witnessed an exponential growth in the years past. For example, the anticipated export value for Uganda’s coffee was US$812.9 million F.O.B in 2005, US$962.2 million in 2006 and US$1.34 billion in 2007 (Byanyima, 2011). Going forward, in a report given by the Managing Director Uganda Coffee Development Authority at the end of the 2021/22 financial year, the executive reported that UCDA had posted US$559.16 million in coffee exports in the space of 12 months. The figures represented an increase in 54% and 4% both in terms of value and quantity (Uganda Coffee Development Authority, n.d). The agency is a government entity that was established under the Parliament Act, UCDA Act 1991 which was later amended in 1994 Cap, 325, repealed and replaced by the National Coffee Act No. 17 of 2021. The institution’s founding mission is ‘to increase quality coffee production, productivity, value addition, marketing, and consumption.’ UCDA works by providing an enabling environment upon which the various stakeholders in the coffee value chain can thrive in the coffee sector. For example, the agency provides advisory services to coffee farmers on the proper coffee growing and cultivation practices such as irrigation, mulch coffee gardens, and to plant shade trees to ward off the adverse effects of climate change which often affects coffee production in the country.

Following the above, industrial reports signals ‘The Peace Coffee Yard’ could be tapping into a gradually growing coffee drinking culture that will see the business make abnormal profits. A survey carried out by Asala (2020) shows that there has been a growing trend in coffee consumption in Uganda especially among the young generation that can be found in Espresso, and the cappuccino aromas. Whereas Uganda is considered to be the second-largest producer of coffee on the African continent, Ugandans have for long been tea drinkers. With a change in culture, the need for uniqueness amongst the young generation and the increasing health consciousness levels in the population, the modern cultural times are showing a rapid raise in the number of coffee restaurants around the country. The Uganda Coffee Development Authority also reported that coffee exports between 2015 to 2018 raised by 17% to 4.17 million (60kg bags). Notable coffee selling shops in Uganda include Olam Uganda Limited, Uganda Crane Coffee, Endiro Coffee, Volcano Coffee, Zigoti coffee, Busingye Company limited, Ibero Uganda Limited and more. Lastly, despite the known economic benefits of the coffee sector, stakeholders along the coffee value chain (CVC) in Uganda still face a number of insurmountable challenges; issues regarding access to finance, modern technology and trade policy issues remain Uganda’s long-standing obstacle to many stakeholders to add value and meet the quality standards for coffee processing in Uganda and it further stifles the ability of SMEs to exceed their coffee marketing ventures beyond the Ugandan boarders.

Market Analysis

As aforementioned, Uganda’s coffee consumption is on the raise first because of the growing consumer health awareness, a young outgoing generation needing to be unique and because of a random shift in culture from tea to coffee consumption. The growth of the coffee consumption in Uganda was delayed simply because of the inexplicable past experiences like the British Uganda Coffee and its associated myths that coffee is a white man’s and rich man’s drink. Little wonder the rate of coffee consumption has been minimum amongst Ugandans in the past. These sentiments were orchestrated and long stood because of the public’s illiteracy levels, negativity and the dearth of knowledge regarding the healthy benefits of coffee. However, with the growing literacy levels in the public, changing culture, and the growing market of Baristas, many Ugandans are becoming avid consumers of coffee and more outgoes who do not drink Alcoholic drinks love to breathe life in their time off time by sipping a cup of coffee locally brewed from our Ugandan coffee beans.

Company Mission

The mission of Peace Coffee Yard is to serve Ugandan customers high-quality and freshly brewed coffee using Espresso machines and Moka Pot and roasted coffees with exceptional services at reasonable prices.

Internal Analysis

Although the coffee brewing sector in Uganda is yet to be swamped, previous analysis’s show the sector is slowly growing which is visibly true seeing by the rising number of coffee bars around the different corners of Kampala. Major players like Endiro Coffee, Uganda Crane Coffee, Ibero Coffee, and Volcano Coffee have numerous sub-sections across the country. To compete and usurp the current players in the market, the Peace Coffee Yard has conducted an internal analysis for its business venture using the SWOT strategic management and planning tool to identify its strength and opportunities to embrace and exploit as well as its weaknesses and threats that will inform its marketing strategy to survive, and compete in the market.

External Environment

Uganda’s coffee industry is growing through waves influenced by both internal and external factors which impact its raise and dip equally and as a player in this sector; the Peace Coffee Yard will not be immune to these factors. This section of the business plan employs the PESTEL strategy framework tool to highlight some of the external factors that will likely influence the operations of the business.

Political

Coffee production in Uganda has largely been for exports with a small proportion of the coffee used for domestic and commercial purposes in the local market. As such, this has always underscored the importance of establishing and maintaining positive international relations with foreign countries as it is the dink is more popular in North America and Europe. The US remains a popular destination of Uganda’s Arabica coffee while most of the Robusta coffee is exported to Europe. Uganda has also continued to enhance its trade relations with the North America counties and European countries as a strategy to increase coffee production to 20 million bags by 2030 and increase its coffee export revenue to $2.2 billion in the same year (Mitchell, 2023). To the Peace Coffee Yard, this coffee exportation culture is likely to pose breaking competition to its supply chain as farmers prefer to export their coffee for higher gains, and the government itself identifies to be involved in the trade.

Economic

Despite the public’s objections that Uganda’s economy is shrinking, the county’s Gross Domestic Product (GDP) is inarguably growing which is representative of the growing income levels of the people in the economy. The GDP is projected to increase to $48.53 billion by 2024 from $45.57 billion recorded in 2022 (Trading Economics, n.d). The Trading Economics adds estimates Uganda’s Gross Domestic Product will trade at $51.93 billion by 2025. These statistics imply consumers have more income to spend and with more money, consumers will be willing to splurge on quality products for example high quality coffee.

Social

According to a report published by UNICEF, Uganda ranks number two for the second biggest youth population in the world. UNICEF further projects this population is likely to double in the next 25 years (UNICEF Uganda, n.d). Naturally, this demographic group has a high socialization culture; Ugandan youth are wild outgoes and spendthrifts in bars, respite centers and entertainment areas. They will certainly be a potential target market for the Peace Coffee Yard products. On the other hand, the 21^st century period is experiencing a shift in the population’s view of health. Making conscious food health choices is today fashionable than before, and people today spend more time involving in healthy eating habits and avoiding unhealthy eating behaviors. Since many studies confirm coffee is healthy as it does not contain a lot of caffeine, the Peace Coffee Yard will be surely be served a ready market waiting for their coffee healthy products.

Technology

It is without a doubt the coffee processing industry is evolving under the influence of technology and the growing number of local-retail coffee shops in and around Kampala is testament to the claim. Coffee machines like the Espresso machine, Moka Pot, drip machines and grinders can now be found in most electronic shops around Kampala. The Peace Coffee Yard will be using the Espresso machine, Moka Pot, drip machines and grinders to ease the coffee brewing process thus making it easy for the business to meet its customer needs 24/7.

Environmental Factors

Uganda’s eighth global ranking as one of the leading coffee producers and exporters is by no means a coincidence. The country’s large-scale coffee growing performance is aided by a number of factors, the climate inclusive. &Bloss (2022) comments that Uganda naturally has conducive climate that favors coffee growing in the country. No wonder, Uganda has managed to maintain its global status as one of the world’s leading coffee producing nations. Nevertheless, issues relating to drought and rainfalls are identified as some of the primary ecological factors affecting coffee growth in Uganda. Since the industrial era began sweeping across the country, large amounts of fossil fuels and other greenhouse gases have been emitted into the atmosphere. Consequently, this is causing unstable changes in the country’s weather patterns and today natural incidents like earth quakes, droughts, global warming and more are common than before. These factors are responsible for the coffee production fluctuations that the country sometimes experiences. In due course, this affects the country’s coffee supply chain causing sudden price hikes which ultimately hurts consumers.

Legal Factor

Since coffee is a product meant for human consumption, it falls under the drinks and food regulations. In Uganda, Uganda Coffee regulates the storage, transportation, and brewing process of coffee in the country. With the growing trend of health consciousness, these standards are becoming tighter lately. However, the advent of coffee processing, handling, and storage machines is making this a no problem in the coffee industry, and this ought not to be a problem for the Peace Coffee Yard.

Strategic Analysis and Choices

Peace Coffee Yard stands for a striving mission: to serve Ugandan customers with the best freshly brewed and roasted coffees with exceptional services at reasonable prices to its customers and suppliers. The company bears an unpacked ambitious mission that will see the business open up more other service points across the Capital Kampala and key cities across Uganda. The Peace Coffee Yard’s dedication to the best practices to improve the coffee drinking culture in Uganda through our first rate services to the customers, suppliers, employees, the community and environment is what will define the Peace Coffee Yard. Therefore, we will be practicing with a number of grand strategies to enable us achieve and sustain our long-term objective.

Long-Term Objectives

The Peace Coffee Yard long-term objective is to promote and sustain the coffee drinking culture in Uganda. En route to this, the business aspires to become the leading domestic player in the coffee sector in Uganda. Although the coffee drinking sector is rising in the country, this trend is more common in Uganda’s major city centers and it’s yet to permeate to the upcountry areas of the country. By establishing different service points selling brewed and roasted coffee across the nation in the long-term, the business will be able to prompt Ugandans to embrace the coffee drinking culture, increase its revenue earnings, and thus achieve this long-term objective.

Generic Grand Strategies

As a business scholar, I am alert of the marketing challenges that lay ahead of this new venture. I have thus set out some competitive gaining strategies that will endear customers towards our band, enable us compete with the legendary coffee manufacturing firms in the country and even usurp the market share in the long-term. They include the following;

A Low-cost Supplier

As mentioned under the SWOT analysis of the company, the Peace Coffee Yard will be using the value-based pricing method. Prices for our coffee products will be set after a pretest survey; just above our production costs to match with our customers incomes. Also, the business will establish strong relations with its farm suppliers to remove middlemen who would otherwise increase its production costs. Eventually, this will allow the business set prices that will favor its business function as well as side with the customers.

Focus Strategy

The Peace Coffee Yard is focused on the local domestic market of Uganda to which it will sale coffee products such as iced coffee, cold brew coffee, drip coffee, warm brew coffee, Espresso-based drinks like cappuccinos, lattes, and macchiatos, and roasted coffee. The business’s alludes to the young outgoing generation, non-alcoholic individuals, and healthy conscious consumers as its target audience. Therefore, the Peace Coffee Yard advertising content will be designed in line with the business’s niche market.

Differentiation

Following the present purchase behaviours of Ugandan consumers in which buyers prefer comfort and convenience instead of queuing in grocery stores and service points, the Peace Coffee Yard will be offering online ordering and delivery services for customers within the city Kampala. The Peace Coffee Yard will create a business website through which its customers can place their coffee orders, make payments for the product plus an additional transport fee if one wishes their coffee to be delivered on their doorsteps. To ensure efficiency, the business will hire a permanent team of motor vehicle field sales team whose role will be delivering customers online orders. Ultimately, this will show up the Peace Coffee Yard as an innovative brand that can uniquely solve the coffee needs of customers at their comfort.

Short-term Objectives

The Peace Coffee Yard’s short-term objective is capture 70% of the market share in the first year of the business’s establishment. As a Private Limited Company, the business will base on its revenue generation to expand its reach to the market. Therefore, the need to attract customers, increase its sales proceeds is key to achieving its long-term strategy. Thus, the Peace Coffee Yard will ensure constant pivoting of its marketing strategies to realise its grand strategies aimed at establishing a competitive advantage for the business in the industry.

Functional Tactics

The Administrative Function

The Peace Coffee Yard seeks to operate as a formal and standard organisation with an authority source. The administration function of the business will be headed by the business direct Ms. Peace Bakama in support with the company’s general manager, procurement manager, operations manager, and the sales and marketing director. The administrators will provide a charge of authority and they will support and direct the operations staff though inspiring them and enabling them to efficiently use the business’s resources to improve their role functions in favour of the company’s objectives.

The Procurement Function

As it is the coffee sector is budding in the country with major players like the government actively involved, competition for coffee is tight. Even though, the Peace Coffee Yard will need a reliable supply of coffee to operationalise its long-term objective. This is where the business’s procurement department will need to be even more vibrant lest the company is to operate on a large scale. The procurement department will help the company establish strong supply relations, procure high quality coffee products and negotiate the best supply terms and prices aligned with the company’s strategy.

The Sales Function

For a company that is prioritizing short-term market growth, the business’s sales department will be key to achieving the Peace Coffee Yard’s short term goal. Like in any other commercial organisation, the sales department exists to drive a company’s growth and development. The business’s sales department will be trained to exhibit strong commitment in giving the business’s customers exceptional experiences to support repeat customers, encourage referrals, and public positive ratings as it is this that will enable the business rapidly grow its market share. Moreover, everyone in the business will be a sales agent of the company tasked with spreading the word of mouth about the business and handling the company’s customers with utmost care.

Strategic Control and Continuous Improvement

Forecasting

Understanding the dynamics of Uganda’s coffee industry will be primary to ensuring our continuous improvement in the market. Our sales team will make certain to foresee shifts in consumer behaviours, coffee growing trends and effects to help the business develop a strong plan to ease risks while at the same time contribute towards the continued improvement of the customer needs.

Establish Strong Relations with Suppliers

One of the key elements in the coffee industry is knowing the coffee supply chain. In Uganda, coffee is usually grown in the highland areas such as on the slopes of Mount Elgon (Bigsu region), in Kasese, and Ibanda. In central Buganda, coffee is mostly grown in Masaka, the South-West areas of Moon Mountains, Bwindi Forests, and Mountain Rwenzori. Lately, the regions of Bukedi, Acholi, Lango, and West Nile have commenced a serious coffee growing trend after identifying the cash crop as economically beneficial (Senyonyi, 2022). Therefore, to avoid supply breaks and supplier exploitations in times of coffee scarcity, the Peace Coffee Yard will seek to establish strong relationships with its suppliers to guarantee steady and quality sourcing of coffee beans for the business’s continued operations.

Market Research

The Peace Coffee Yard needs to ensure it keeps up-to-date with the prevailing trends ranging innovative marketing strategies, new coffee brewing trends, flavor profiles and sustainability methods in the coffee sector. This way, the Peace Coffee Yard will be able to position itself at the front of its market niche to meet its new customer tastes and preferences.

Management Summary

The Peace Coffee Yard will be headed by Ms Peace Bakama who also doubles as the business’s director. Ms. Peace will be assisted by the company’s general manager. The General Manager will be tasked with improving the efficiency of the business’s operations and overseeing the operations of the general business by managing the business’s employees, working with the sales director to develop and implement marketing plans, overseeing the business budget, and more. The General Manager will report to the business director. Third in command is the operations manager. The operations manager will oversee the company’s operations involving the processing/brewing and servicing the company’s customers. Precisely, the operations manager will be in charge of the daily floor operations develop plans and strategies for the business’s routine task activity implementation and he will report to the General Manager. On the other hand, the procurement manager role is to help the Peace Coffee Yard in establishing strong supply relations, procure high quality coffee products and negotiate the best supply terms and prices aligned with the company’s strategy. Lastly, the business will comprise of a team of customer service agents on-site and the field sales team guided by the sales director. The sales director together with his team will be responsible for driving the company’s growth and development by developing marketing strategies that will thrust the company’s sales turnover in the short-term.

Conclusion

As it flows from the above, Uganda’s coffee sector is a fortunate with long-term opportunities that the Peace Coffee Yard will be tapping into to grow. The coffee market in Uganda is not yet saturated and there is a growing coffee culture in the domestic market with few players on the scene. A few of the retail coffee brewing businesses are mostly concentrated in Uganda’s capital of Kampala. If the Peace Coffee Yard successful achieves its long-term goal of expanding nationally, it will be going to tap into a lot of locally virgin markets where people are already health conscious and willing to spend on quality and health conscious products like Coffee. I believe our awareness of the coffee industry, internal and external sector analysis and our strategic control and continuous improvement plans will help us mitigate the customary risks and challenges that affect stakeholders in Uganda’s coffee industry. Therefore, I am sure our cautious plan and strive to provide the best customer experience will enable us achieve our long-term objectives.

References

BYANYIMA., B. F. (2011). DETERMINANTS OF EXPORT VOLUMES OF UGANDA‟S COFFEE, 1991-2007 [Doctoral dissertation]. http://makir.mak.ac.ug/bitstream/handle/10570/2400/Byanyima-COBAMS-Master.pdf?sequence=1&isAllowed=y

Trading Economics. (n.d.). Uganda GDP. TRADING ECONOMICS | 20 million INDICATORS FROM 196 COUNTRIES. https://tradingeconomics.com/uganda/gdp

UNICEF Uganda. (n.d.). U-report. UNICEF. https://www.unicef.org/uganda/what-we-do/u-report

Uganda Coffee Development Authority. (n.d.). Message from the managing director. https://ugandacoffee.go.ug/message-managing-director

BAFFES, J. (2006, October). Restructuring Uganda’s Coffee Industry: Why Going Back to the Basics Matters. The World Bank. https://documents1.worldbank.org/curated/en/138131468318017681/pdf/wps4020.pdf

Asala, K. (2020, November 13). Coffee-drinking trend in Uganda could boost economy. Africanews. https://www.africanews.com/2020/09/01/coffee-drinking-trend-brewing-in-uganda-could-spell-economy-boost//

Perfect Daily Grind. (2021, March 5). A brief history of marketing in the coffee sector. https://perfectdailygrind.com/2021/02/a-brief-history-of-marketing-in-the-coffee-sector/

Johns Hopkins Medicine. (2021, October 28). 9 reasons why (the right amount of) coffee is good for you. Johns Hopkins Medicine, based in Baltimore, Maryland. https://www.hopkinsmedicine.org/health/wellness-and-prevention/9-reasons-why-the-right-amount-of-coffee-is-good-for-you

Senyonyi, T. W. (2022, March 17). Uganda’s leading coffee producing regions revealed » business focus. Business Focus. https://businessfocus.co.ug/ugandas-leading-coffee-producing-regions-revealed/

&Bloss. (2022, November 16). Factors affecting coffee production in Uganda. Bloss. https://www.andbloss.com/blogs/blog/factors-affecting-coffee-production-in-uganda

Mitchell, J. (2023, January 11). Can Uganda become a coffee powerhouse? Investment Monitor. https://www.investmentmonitor.ai/features/can-uganda-become-a-coffee-powerhouse/?cf-view

Appendices

Appendix 1: A Graph Showing the GDP Earnings of Uganda from Coffee Exports from 2014 – 2022

Source: (Trading Economics, n.d)

Appendix 2: Coffee Production from the Different Coffee Regions of Uganda – Financial Year 2018/2019

Source: (Seyonyi, 2022)