Vending Machine “Great Coffee”: Business Proposal


The project proposes a profitable business of installing coffee machines on university campuses. The company’s mission is to become a supplier of the most modern vending machines and provide students with a wide range of coffee at competitive prices. The firm will be entitled ‘Great Coffee’ and have the sole proprietorship’s legal form. The company will also employ an accountant, an executive director of customer service, a freight forwarder-technologist, and two operators for machine maintenance. It is relevant to remark that the firm will buy coffee wholesale and sell it in the first month at an average of 8 SAR per average cup. Accordingly, to the financial estimates, ‘Great coffee’ will obtain an income already from the first months of activity.

The Internal and External Environments

The company ‘Great Coffee’ will offer four types of coffee Espresso, Americano, Latte, and Cappuccino on University campuses. The key customers will be students, undergraduates, and professors, who will receive delicious and quick coffee within the campuses. Significantly, the coffee will be made with a Vending Machine. The technology operates from 115 volts at 10-12 amps, so a regular three-prong outlet and vending machine service are required (Chitra et al., 2016). The plan is to have one coffee machine installed in each building on campus. Thus, their total number will be thirty to satisfy the buyers’ demand.

The goal is to create an efficient business and introduce the opportunities of vending technology at the highest world level. The chief mission is to become a supplier of the most modern machines and provide students with a wide range of coffee at affordable prices. The intentions will be achieved through strategic growth, the immense level of service, and attention to market demands. The focus on quality, innovative ideas, and the latest technology available today is made, leading the industry forward into the new century.

Human resources are one of the main internal factors that affect the promotion of a company. The main responsibilities in this type of business and its service include refueling and collection (Ebert, 2011). That is why there is a need to hire an appropriate number of workers responsible for assistance. Their amount will be scanty, considering that one mechanic can serve up to 20 machines, and the project provides for the installation of 30 items. The warranty service center will carry out their repair when needed.

It is assumed that the core staff will consist of a director, a freight forwarder-technologist, and two operators. To perform the task of accounting, an outsourcing option has been chosen, in which the services of one competent employee will be used. Feedback is also particularly significant so that the company will have one executive of customer service. The position of managing director will be held by the founder of the business himself. His responsibilities include the overall organization of the firm and the supervision of the delivery schedule of consumables and products.

He will create, communicate, and implement the organization’s vision, mission, and overall direction and enforce the strategy. He is also responsible for setting prices and signing business deals, determining the company’s direction, and evaluating the organization’s success (Chitra et al., 2016). The owner will interact directly with state and municipal regulatory agencies as well. Such broad powers will save a considerable amount of financial resources and provide reliable control over the company’s operations.

Full-time position of expeditor-technologist will be responsible for the entire material supply of all vending machines with the necessary products, control of movement, and maintenance of operational accounting. His competence includes direct work with suppliers, wholesalers, and stores. He is also liable for the technical condition of the vending machines and their timely maintenance. Under technologist subordination, there are operators-freight forwarders who will fulfill the instructions to ensure the continuous work of vending machines (Easterby-Smith et al., 2021). The chief function of the operator is to replenish the coffee timely, or according to a pre-approved schedule, or as the goods are absorbed. His production will take place during the daytime work shift.

An accountant hired through outsourcing will prepare financial reports, budgets, forecasting, and risk analysis. He will manage cash, administer payroll and ensure tax laws. The Executive Director of Customer Service is also one of the most influential positions in the company, as this person will be accountable for performing service at the highest level. His activity is aimed at increasing clients’ interest in the products and services. To do this, he will conduct promotional campaigns and ensure that accurate information is presented to students when they inquire about it.

To provide financial incentives for the employees of the vending company, it is planned to implement a payment scheme which includes salary and bonuses. The director of the customer service and freight forwarder-technologist will be provided a system of rewards in the form of accrual of per cents of monthly sales (Easterby-Smith et al., 2021). Employees must maintain interaction, but corporate culture is not decisive for vending business. The main thing is to satisfy customers by providing them with fast and quality service.

Analysis of the competitive environment is an essential tool for strategic management of future business. Thus, it is possible to identify the strengths and weaknesses of the organization in comparison with its rivals. Accordingly, when the company enters the market, ‘Great Coffee’ will encounter competitors that are located near the university. The largest competitor to Great Coffee is Starbucks. Starbucks offers its customers a variety of beverages, including frappuccino, smoothies, espresso (the primary drink), chocolate, roasted cava, bottled water, and children’s drinks, among other matters.

Customers have the opportunity to take away their drinks or enjoy them on the premises of the cafe (AlJaber et al., 2019). In addition, the cafeteria offers a variety of food categories that belong to the fast-food category. This includes bakery, bistro boxes, salads, sandwiches, Panini & Wraps, ice cream, yogurt parfait, Starbucks Petites, and a hot snack. The disadvantage of this company is that students will have to spend time walking to the location of the store and waiting for their order to be accepted. Although, the choice of products is extremely extensive, which encourages people to buy them.

El Farouki Coffee Center is also a potential competitor for ‘Great Coffee.’ El Farouki Coffee Center is the market leader in the sale of coffee in the Kingdom of Saudi Arabia. The company is constantly expanding both its domestic and foreign trade. Thus, the number of cafes has recently been growing to reach a larger section of the population. It is meaningful to note that El Farouki Coffee Center only offers drink specialties such as coffee, other hot beverages, and tea. Another rival in the market is Najjar Co, the second-largest coffee seller in Saudi Arabia.

It is essential to mention that the company offers prepared coffee and suggests buying coffee beans to make coffee independently (AlJaber et al., 2019). Thus, the above three companies are the main competitors of Great coffee. Still, the principal rival advantage for the future business is the principle of working with the Vending Machine for four types of coffee: espresso, americano, latte, and cappuccino at the university campus. This way, tired students will not waste time looking for other cafes but instead will quickly buy coffee within the university campuses.

It is notable that Great coffee has initiated preparations to obtain legal permits to place coffee vending machines on campus. The business also adheres to all state and local trade laws (Putri et al., 2020). Successful negotiations have already been conducted, and documents are being prepared to sign an agreement with the university. At the same time, contracts have already been signed with a firm that will inspect and repair the coffee machines. Therefore, the operation of ‘Great Coffee’ will conform to the legal obligations of Saudi Arabia.

Form of Business Ownership and the Organizational Structure

In order for the company to work effectively, it is necessary to choose the right form of entrepreneurship, and the most proper alternative is a sole proprietorship. Since the business will start with the local installation of machines, the number of which will be optimal to manage with a small team, individual ownership is chosen. ‘The Great Coffee’ has only one keeper and director simultaneously, so this is the most suitable and optimal variant. It will reduce the tax burden, document flow, and possible fines (Muafi et al., 2019). Advantages of the sole proprietorship are availability, simplicity of registration, liquidation, and minimal reporting.

It is believed that this form can also entail risks, which relate primarily to the assignment of full responsibilities only to the owner and not the company, which will bear all obligations. However, since there is only one founder, he will be the central accountable person in any case. The sole proprietorship also allows hiring an unlimited number of employees, controlling the entire business process fully, and concentrating all the profits in the same hands, which allows arranging finances without much effort (Muafi et al., 2019). Therefore, this form of business ownership will be a reliable start for further promotion, and as it expands, it is possible to switch to another structure.

Creating a reliable and trustworthy structure is primarily about hiring only qualified, honest, customer-oriented people willing to build a thriving business that benefits all stakeholders. All executives will be allowed to participate in profit sharing, which will be based on their performance (Muafi et al., 2019).

As already indicated in human resources, the company’s positions will consist of an accountant, an executive director of customer service, a freight forwarder-technologist, and two operators. The central management of them will be carried by the owner, responsible for the holistic organization. Thus, the organizational structure will vary in three main areas: finance, marketing, and service. It will be hierarchical; the company owner will be directly responsible for controlling each employee’s work. At the same time, the operators will be liable to the technologists, who will instruct them and make sure that the machines are always full and in working order.

Market Analysis, Segmentation, Pricing, Distribution, and Promotion

The Saudi coffee market has shown rapid growth and popularization in recent years. This phenomenon is mainly caused by an increase in the population, the working class, and the change in corporate culture. A particularly significant factor for the vending business is also the growing demand for coffee among young people. According to data provided by 6Wresearch, the market size is expected to increase by seven percent over the 2021-2027 period (Lee et al., 2018). Currently, it is focused on imports from Africa, Latin America, and Asian countries.

The analysis also allows concluding that the central region now receives the maximum share of profits due to the larger population (Ebert, 2011). However, the regional coffee industry is also expected to develop in the coming years, contributing to an overall increase in demand.

As for the other segments, the two most popular types of beans – Arabica and Robusta can be distinguished. Arabica occupies the dominant share, mainly because of its flavor properties, extraordinary aroma, and usefulness. However, robusta, in turn, also continues to catch up due to the booming interest in black coffee among the population, which devotes a lot of time to health issues. Types are specified by bean, ground, instant, and capsule coffee (Putri et al., 2020). It is complicated to identify the predominant class because all indicators are almost equivalent.

According to distribution levels, a division is made into cafes, online stores, supermarkets, and vending machines. The latter is considered prevailing among this segment because of the ability to provide constant free access. Another segment of the market relates to ads, and there the advantages shift seasonally. Thus, hot drinks dominate in winter, while in other periods, the share is divided between ready-to-drink and flavored beverages.

Due to the specifics of the business, ‘Great Coffee’ will utilize a Vending Machine and plan to sell merchandise at retail using the coffee machines. They will be placed in each campus buildings; 30 coffee vending machines will serve the needs of students and professors. Significantly, clients can call customer service and make suggestions for more coffee machines if large queues form. At the same time, if a machine is broken, buyers can also tell ‘Great Coffee’, and the company will repair the problem quickly. Sales retail provides more opportunities to communicate with customers one-on-one and obtain real-time responses from them (Lee et al., 2018).

If this method of coffee distribution is profitable, ‘Great Coffee’ will expand the coffee vending machines to other universities in the future. It is essential to mention that the coffee machines will be serviced by a special firm in accordance with the contract. At the same time, ‘Great Coffee’ will purchase coffee wholesale from suppliers, who will deliver different types of coffee to the company’s headquarters for further delivery to the coffee machines.

Based on those factors, which are listed above, the organization will form a price offer to customers. Considering that the business is student-oriented and the company is only entering the market, prices will be set to a minimum to cover purchasing and other costs. Based on those factors, which are listed above, the organization will form a payment offer to customers (Suryawardana & Nurdeagraha, 2020). Considering that the business is student-oriented, prices will be set to a minimum in order to cover purchasing and other costs.

However, this strategy will allow buyers to have a taste of coffee made with the Vending Machine and demonstrate the benefits and efficiency of the brand. Thus, in the first three months of operation, the cost of a medium expresso will be 7 SAR, an Americano 8 SAR, a Latte 9 SAR, and a Cappuccino 9SAR. This pricing can be increased if the products are popular with buyers. Accordingly, rates could be set at 9-14 SAR, depending on the portion and type of coffee.

Promotions can be used to attract consumers first: for example, a few cups can be marked. The customer who gets the signed coffee will receive a guaranteed prize. It will increase interest and excitement and therefore attract more people to the goods. Setting up an area near the vending machine can also be a great marketing strategy. It is planned to equip a small space for rest – table, a bench or a sofa. Another way to attract attention is branding that can be made by ordering a sticker film or painting the machine’s surface with the original image. Aroma marketing is very relevant because the smell can cause quick and clear associations (Lee et al., 2018). Aromatization is especially relevant in places of impulsive demand, such as a university. The scent will be felt in a radius of 1-5 meters and can attract people who will not pay attention to the vending machine itself. For this purpose, aroma devices will be installed outside the device near the bill acceptor.

Financial Aspects

In order for the company not to collapse, it is imperative that income and expenses be constantly evaluated. Thus, the financial aspect includes the costs of production, raw materials, and the purchase of 30 Vending Machines (each costing 28,200 SAR at wholesale prices). Labor costs should also be considered; the company has five employees at this time, so that the average wage will be SAR 21,000 per month. At the same time, the registration and settlement for the business will be SAR 4,500 per month. The costs can be attributed to paying for the services of the company, which will be engaged in the maintenance of the coffee vending machine SAR 5 000 SAR (Alexander, 2018).

An essential aspect of the expense still payments to the university for placing the machines 3,000 SAR per month and the cost of advertising, which includes promotions and improvement of the resting place, consequently the price of promotion will be 6,000 SAR per month. Finally, the wholesale purchase of coffee per month would cost SAR 50,000.

Considering that the sale of coffee in the first three months will produce an average of 8 SAR per average cup, and over time will be an average of 12 SAR. Thus, for the efficient operation of the enterprise, the initial demand for the production of coffee from one machine should be 400 cups per day. At the same time, the 30 machines will produce 12,000 cups of coffee per day and 372,000 cups per month (Al-Marri et al., 2021).

Thus, the company will make an average monthly profit of SAR 372,000 in the first three months and a forecast profit of SAR 446,000 in the future. Accordingly, the ‘Great Coffee’ will make a net profit of SAR 208,000 in the first month of operation. It will also take SAR 70500 each month to recover the cost of the 30 Vending Machine in one year from the net profit. Consequently, the final anticipated profit for the first three months of the company’s operation is SAR 137,500. If the business will operate as declared in the business plan, earnings will increase.


Consequently, the business project will focus on the sale of coffee using the Vending Machine in university buildings. The company’s advantage will be a wide range of coffee at an affordable price and location on the campus. At the same time, the utilization of the Vending Machine will attract a small number of workers to serve customers, which will allow for a quick recovery on the cost of the coffee machines. Financial projections indicate that the business is promising, and there is potential for future growth on the fringe of other universities.


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