This business plan details a twice-baked Italian-style cookies, and gourmet coffee to capitalize on several niche marke...
Biscotti cafe Bagatelle Mall of Mauritius Shopping Mall Moka Feb 5, 2016 Contact us via: Telephone: 6984800/6984803/6984804 Mail:
[email protected]
Customer Support: https://www.BiscottiCafe.com/ : https://www.BiscottiCafe.com/contact.html
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This business plan details a twice-baked Italian-style cookies, and gourmet coffee to capitalize on several niche market. The plan contention is a two based facet of clientele. Category A: The gourmet coffee will be naturally accompanied by cookies of 4 different flavor. Category B: A smoker who will enjoy a premium cigar will also get to buy a fine coffee thus diversifying the product mix with a trendy twist. Biscotti Cafe anticipated success will be due to its superb location, handmade cookies and coffee, and word to mouth quality service. Biscotti café will offer its customers the best tasting coffee beverages in the area. This will be achieved by using high-quality ingredients and strictly following preparation guidelines. The store layout, menu listings and marketing activities will be focused on maximizing the sales of higher margin espresso drinks. Along with the espresso drinks, brewed coffee, as well as some refreshment beverages, will be sold in the coffee bar. Biscotti café will also offer its clients pastries and cookies. For the gourmet clientele that prefers to prepare its coffee at home, Java Culture will also be selling coffee beans.
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Contents Biscotti cafe ...................................................................................................................2 Background of business plan......................................................................................2 Mission and vision and objective...................................................................................3 Source of competitive advantage ...................................................................................3 Visual Contact from the Shoppe's Sign ......................................................................4 Company ownership /Entrepreneurial profile................................................................5 Management Team Gaps.........................................................................................7 Personnel Plan................................................................................................................7 Competitor Analysis.......................................................................................................8 Competitor analysis table.............................................................................................10 Sales Strategy............................................................................................................... 11 Internal analysis of the business .................................................................................. 11 TOWS ANALYSIS ......................................................................................................12 Porters 5 force ..............................................................................................................14 Industry analysis ..........................................................................................................16 Market Analysis Summary .......................................................................................16 Market Segmentation ...............................................................................................17 Target Market Segment Strategy ..............................................................................18 Market Needs ...........................................................................................................18 Buying Patterns ........................................................................................................19 Determinants of demand ..........................................................................................19 The marketing mix.......................................................................................................20 Strategy ........................................................................................................................21 Operation plan..............................................................................................................22 Risk analysis ................................................................................................................23 Financial plan...............................................................................................................25 Start-up Summary .................................................................................................25 SALES FORECAST....................................................................................................26 Cash flow (Yearly) .......................................................................................................27 Profit and Loss (Yearly) ...............................................................................................28 Balance sheet (Yearly) .................................................................................................29 Break even analysis for 1st year ...................................................................................30 EXECUTIVE SUMMARY..........................................................................................31 Appendix 1 ...............................................................................................................32 Appendix 2 ...............................................................................................................32 Appendix 3 ...............................................................................................................33
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Mission and vision and objective Customers will find the cafe conveniently located in the center Mauritius within the food court. It will be an excellent place for tourist, students, shoppers and business people located nearby to come for a delicious coffee and a good quality cookie whilst the smoker can enjoy this atmosphere in the cigar lounge.
Objective: To deliver a quality coffee in a consistent, courteous and timely manner in order to have the customer return again for another satisfying, flavorsome treat, while at the same time earning a reasonable return on the initial investment.
The business model Biscotti Cafe will offer clients high-end quality cookies and coffee at a reasonable price. We will have 40 seats, plus two patios in the summertime with up to 50 more seats. When customers enter premises, in the foyer, there will be a comfortable couch and coffee table where people can wait for a table or for their friends while smoking a cigar. On the main level there is room for ten seats at three or four tables. Upstairs there will be an "L" shaped drinking area, with two sections. The L lounge- one for each of the four stages of coffee making: growing, roasting, brewing, and aroma- each with its own color combinations, lighting scheme, and component materials. One section has five tables for the non-smokers, while the cigar lounge will have two to three tables, for a total of 40 seats. The shop is broken up into smaller areas that allow the customer more intimate dining and chatting with friends. International music and culture will be incorporated into the outlet through paintings and West Indian reggae music. Source of competitive advantage
Location: Biscotti Cafe is right next to the heart of one of the largest working populations in Mauritius i.e. Ebene. It is also neighboring the wealthy city of Rose-hill and Beau-Bassin and Bagatelle is the leading shopping mall for both
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tourist and the locals. It is also a 10 minute journey for University of Mauritius Student (12 000+ students).
Image: As stated earlier, Biscotti Cafe will be a cafe that caters to specific tastes. However, in order to attract such tastes Biscotti Cafe must offer an environment conducive to the selling of such items. Biscotti Cafe will have the aesthetic atmosphere that consider specific tastes of a multi-racial clientele. All cookies and coffee will be follow halal standards to satisfy the Muslim beliefs
Service: Once we have attracted customers to our cafe with our image, we will keep them coming back with our knowledgeable and accommodating service. Customer feedback on coffee and cookie will be entertained as we will established the tagline ‘ Service delayed is satisfaction denied’
Selection: Although we will cater to those who enjoy finer things does not mean we will include only the wealthy. With a solid selection, Biscotti Cafe will be able to please a wide variety low income people, high class profile and foreigners.
Visual Contact from the Shoppe's Sign Signage is planned for the Shoppe in two locations. Large, colourful neon signs will be located over the outlet, making them visible from both the food court and from the middle entrance of the mall. Since the Shoppe will be in a corner location, the Shoppe will be visible from several directions in the "semi-circle" shaped mall. The location for the Shoppe has the greatest amount of foot traffic in front of it than any other food service in Bagatelle. Schedule of capital items and other consumable needed for Biscotti Cafe to be operational Startup expenses for Biscotti Cafe will include leasing the space, acquiring pre-owned furniture, pre-owned fixtures, and pre-owned kitchen equipment and multi-use machinery to make the hand baked cookies. Tenant improvements will be needed, as 4
well as signage and point of sale computer equipment to process the bill.
In addition
to these fixed capital items, there will be a need for consumables such as premium coffee bean, processed cigar tobacco leaf and coffee makers machine.
Then there
are also services to pay for including licenses, and permits
Furniture
There is a need for indoor and outdoor tables and chairs, and some sort of shade in the form of umbrellas or awnings for the outdoor seating area.
Basic fixtures needed is plumbing and lighting. Biscotti Café requires dim light in the evening in the ‘L’ shape area for creating a relaxed atmosphere. Water provision 24/7 is mandatory. Air conditioner system and also provision for music system and Tenant speakers is to be fitted and a stage for karaoke is to be allocated in Improvements special occasion such as ‘Valentine day’. Most importantly an effective ventilation system is to be fixed in the smoking area. Signage will be needed for the storefront and across the bagatelle Signs shopping mall for directional signs. Point of sale cash register, security camera in the café as well as the Computer kitchen, internet access, automatic shutters and welcome display at Equipment night is required. Leased Space 1500- 2000 square feet is required with a monthly rent to be dully paid or a one year contract for instant payment which will be lesser than the monthly payment combined. Café Supplies Orange Aprons, pants, logo jackets and prep towels will be required for kitchen worker. White attire for server and black courtesy for the cashier. Fixtures
Company ownership /Entrepreneurial profile Mrs Lucy Heartfilia (aunt) Qualification: French Culinary Institute in New York City Practical expertise: 10 years in the making of vintage and gourmet coffee Age: 35 years old
Mr El-Natsu Heartfilia (Uncle) Qualification: French Culinary Institute in New York City Practical expertise: 12 years specialized in cookie making and had direct 5
‘apprentisage’ (3 years) under Chef Gordon Ramsay Age: 38 years old
Mr. Yaseen Alladin Qualification: International Business management and Masters at Harvard University Practical Expertise: 3 years’ experience in international consultancy and restauration
Management team A full-time manager of three years of managerial experience in Pastry and restauration will be hired to oversee the daily operations at Biscotti Cafe. This person's responsibilities will include managing the staff, ordering inventory, dealing with suppliers, developing a marketing strategy and perform other daily managerial duties. A profit-sharing arrangement for the manager may be considered based on the first year operational results. Two full-time baristas will be in charge of coffee preparation. Three more part-time waiter will be hired to fulfil the staffing needs cigar. In the second and third year of operation one more part-time employee will be hired to handle the increased sales volume. Every barista hired for a retail job Biscotti café will receive at least 24 hours training in the first two to four weeks. The training will include classes on coffee history, drink preparation and customer service The principals are developing a program of orientation and training which all Biscotti Café’s barista must complete prior to starting work. A written policies and procedures manual will be the foundation for that that training. All Biscotti Café’s employees will be trained to perform all customer service, quality control, and cleanliness and sanitation procedures. Also a cashier will be employed to handle bills paid. In the future a waiter may be considered to help serving the cookies and other snacks.
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Management Team Gaps Despite the owners' and manager's experience in French Culinary Institute in New York City, the company will retain the consulting services from Mr Alladin (Niece) the consultant and partner who have helped to develop the business idea for Biscotti cafe. Mr Alladin has over 3 years of experience in the retail restauration and has successfully opened more than 5 coffee bars across the world.
Personnel Plan Year 1
Year 2
Year 3
Year 4
Year 5
Manager#1 200,000 210,000 225,000
250,000 255,000
Barista #1 130,000 140,000 145,000
150,000 155,000
Barista #2 130,000 140,000 145,000
150,000 155,000
Part timer
Barista #1 104,000 109,000 113,000
118,000 122,000
Barista #2 104,000 109,000 113,000
118,000 122,000
Barista #3 104,000 109,000 113,000
118,000 122,000
Cashier FT 120,000 125,000 130,000
135,000 140,000
Waiter #1
109,000 113,000
Total People
0 7
0 7
104,000
8
8
8
Total Pay 892,000 942,000 1,088,000 1,148,000 1,184,000
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Competitor Analysis There is no current establishment like Biscotti Café at Bagatelle as we will be offering quality coffee and premium cookies. All items will be properly cared for and displayed, in an environment conducive for purchasing said items.
Direct competitors are: Mugg & Bean M&B offers food like muffins, coffee, tartlets and many other irresistible things. Their brand name and quality seat will attract most tourist and high income locals. Their tartlets is the substitute to our coffee but their coffee is overpriced.. L’Arabica This is the place for great pastries, sandwiches, milkshakes and a varied range of coffees. It offers good coffee at about the same price that we will have. They have a small coffee list but of quality taste. Also there are indoor and outdoor place to sit with the whole view of the food court. Mokaz MOKA’Z best known for its scrumptious French baguettes and freshly brewed coffee. A variety of local dishes, prepared to home-made standards. They would have been our strongest competitors but they are locate outside the mall near the hotel. Their positioning is our strength. Nespresso This coffee shop provides a wide range of different types of coffee. Their coffee bean prices are comparable to us, however their coffeehouse will attract a different crowd than Biscotti Café as our coffee is more hand-made than machine.
Vida e Caffé Vida e Caffé is Portuguese for 'life and coffee' and that's just what they are about: making life better, one authentic espresso-based café at a time. They have a capable 9
facility.
Indirect competitors Belgian WafflesThis is the store for the best in delicious waffles. However it does not provide beverages of any sort and this lacune will gives us the edge over them.
Future competitor Flying Dodo Brewing Company substitute Flying Dodo Brewing Company is a craft brewery which provide a brewery, restaurant, beer spa, conference / multi-purpose room, meeting rooms and private dining facilities, beer garden and souvenir shop. They have reasonable prices and serve reasonable food. If they introduce coffee and cookie in their menu this will have a negative impact in our business.
Competitor analysis table Product Biscotti cafe Mugg & Bean
L’Arabica Mokaz
Nespresso Vida e Caffé Belgian Waffles-
Cookie Coffee Muffins coffee Tartlets Pastries Sandwiches Milkshake Baguettes Coffee Local dish Brewed coffee Espressobased café Waffles
Financial position Stable
Quality
Price
Customer service Efficient service
Years of Business existence reputation Nil Nil
Value position Good
Real Bargain Premiere offering
Customized service
4
Prestigious
Strong
Best
Brand buy
Good
3
Famous
Break Even
Mediocre
Average
Poor
3
Niche based
Strong
High
Premium
4
Famous
Struggling
Medium
Rolls Royce Fad buy
Good
2
Famous
Poor
Standard
Rip off
Standard
1
Standard
Good Liquidity
10
Gelatissimo Le Palais des Macarons Flying Dodo Brewing Company
Ice cream Macaroons
Poor
Cheap
Discount relationship
Very good
3
Niche based
Beer Food Souvenir
Good liquidity
Outstanding
Equitable buy
Pro service
3
Very well known
L’Arabica and Nespresso will definitely be one of the major competitors because of their strong financial position and established marketing and operational practices. However, despite of their entrenched market position, many customers favor smaller, independent establishments that offer cozy atmosphere and good coffee at affordable prices. Biscotti cafe will position itself as a unique coffee bar that not only offers the best tasting coffee and cookies but also provides home-like, cozy and comfortable environment.
Sales Strategy Biscotti Café cashier will handle the sales transactions. To speed up the customer service, at least two barista will be servicing clients--while one employee will be preparing the customer's order, the other one will be taking care of the sales transaction to the cashier. All sales data logged on the computerized point-of-sale terminal will be later analysed for marketing purposes. In order to build up its client base, Biscotti Café will use banners and fliers, utilize customer referrals and cross-promotions with other businesses in the community. More over its Facebook page will be promoted by giving 1 month free access to Biscotti Café for winners. Ten winners will be selected at random but they must have liked and shared Biscotti Café. Also opportunity like photo shoot for girls to be brand ambassador for Biscotti Café will be carried out weekly to foster the online marketing. Those who write the best review on Biscotti Café will be paid and interesting prize like Nixon camera and PS4 will be awarded.
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-Aggressive promotions to a different audience -People are looking for free Wi-Fi connection -Use packaging bio-degradable and sustainable packaging -Biscotti café can go for market extension -Increase product offering like Cigars and tobacco
Opportunities
TOWS ANALYSIS Strengths
Weaknesses
-Positive consumer experience -Consistent, inviting, stimulating environment -Compensate dissatisfied customers with a Biscotti cafe coupon -Ideal location with high traffic of customers Re invest profit in new market of customers -Give good Wi-Fi connection only to Biscotti Café members -Use its brand to make awareness that Biscotti café use bio-degradable packaging and is environmentally friendly -Apply the highest standards of excellence in service
-Competitors have portfolio in other product -Customers shifting to lower priced coffee -Declines in general consumer demand for specialty coffee products -Increased Costs in high quality milk and coffee bean -Increase healthy product into the market as there is a high demand for it -do R&D to sell coffee at Intermart without reducing the quality with cheap price -
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-Smaller coffee which specializes in a trademark coffee will lead to serious competition. -Rising price of diary product and coffee bean -If Biscotti cafe doesn’t get a strong base in reputation and profits before the summer arrives, it may not be able to endure the lack of customers
Threats
Focus on providing quality coffee and cookies instead of relying on advertising. The power of word is far greater than ads.
Create new complementary product which contain good quality and lower price to attract more customers. Just don’t rely on the cookies
Porters 5 force Biscotti café needs a systematic and effective external analysis system because external forces in Mauritius vary so greatly Porters 5 force Rivalry among competing firm
Details
Industry Profitability High The intensity of rivalry increases as businesses LOW try to improve their position in the industry. In order to gain new customers, direct competitors like L’Arabica may reduce prices, introduce new products or substitutes, and increase marketing efforts Mugg&bean and offer a full menu while Mokaz offer a bakery-café menu (Baguette). Pricing varies among competitors as well. Biscotti pricing is considered to be higher than average. The ambiance among Nespresso and is like a fast-food chain where the objective is to get fast service, while Vida e Caffé ambiance is slow-paced and relaxed by offering specials to 14
lure customer in. Threat of new entrant
Threat of substitute
LOW High -There is a great deal of risk of entry by potential competitors like McDonalds (not yet in bagatelle) due to low startup costs. McDonalds is able to add specialty coffee to their existing services to tap into the specialty coffee market. Their coffee is 2nd in the US after Starbuck -New entrants can increase the fight for market share, lowering prices, and the profitability of an industry. -The most significant barrier to entry is catching a niche market. Name brand franchises have ultimately captured most of the market share because of their own personal niche in Bagatelle High -Biscotti cafe experiences a high threat of LOW substitution because any new product could be the start of the next consumer trend or craze, creating an initial high demand for that product.
-The highly caffeinated drinks such as Monster and Red Bull have certainly proven to be big sellers among consumers. Some former coffee drinkers now prefer to get their caffeine from the energy drinks rather than through coffee products. Water can also be a substitute product as adverse public or medical opinions about the health effects of consuming caffeine continue.
Bargaining power of buyer
Low
While most of Biscotti Cafe products contain high fat and calorie count have been the focus of adverse health effects. This will cause a significant reduction in the demand for Biscotti cafe products and an increase in the demand for healthier products. The buyers hold enough power to influence HIGH biscotti café pricing. The industry depends upon consumer spending on coffee; a lack of demand will ultimately force a firm to change its product line and to lower prices However when it comes to premium café, 15
Bargaining power of supplier
differentiation involved is the specialty coffee industry reduces the bargaining power of buyers High There is more bargaining power for suppliers of LOW technological innovations such as automated coffee machines, latte and espresso machines. There are not as many suppliers for such equipment as there are for coffee beans.
Industry analysis Coffee consumption has shown a Steady growth rate in Mauritius over the last decade following the introduction of intelligent machine making coffee and brand like L’Arabica and N’espresso. The local climate, during winter, is very conducive for the consumption of hot non-alcoholic beverages. Also the Mauritian government is increasing price of alcoholic drink and much awareness are being made on the harm of these drink. At the same time, hot dry summers drive people into cafes to order iced drinks. Trend The warm, cozy feeling is one of the most key features in their coffee shop experience. For teenagers and young adults, it is somewhere that they can gather with friends and engage in conversation. Another trend is coffee shops tend to take on the role of being more socially responsible. On an international level, many coffee shops have chosen to go with organic coffee beans that are used in their natural state. Biscotti café will be implementing this concept in the 3rd year of operation. Market Analysis Summary Mauritian coffee consumption has shown slow growth, with gourmet coffee having the strongest growth though Mauritian prefer traditional food and beverages. Mauritian favor well-brewed gourmet coffee drinks and demand great service. However they now prefer Machine coffee as it is fast, affordable and classy. Biscotti
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Market Analysis Year 1
Year 2
Year 3
Year 4
Year 5
Potential Customers
Growth
Shoppers
2%
75,000 76,500
Tourists
5%
100,000 105,000 110,250 115,763 121,551
Travelers
5%
20,000 21,000
22,050 23,153
24,311
Students
1%
40,000 40,400
40,804 41,212
41,624
Local businesses
1%
20,000 20,200
20,402 20,606
20,812
Total
3.22%
255,000 263,100 271,536 280,324 289,479
78,030 79,590
81,181
Target Market Segment Strategy Biscotti cafe will cater to people who want to get their daily cup of great-tasting coffee in a relaxing atmosphere. Such customers vary in age, although our location close to the University campus means that most of our clientele will be college students and faculty. Furthermore, a lot of college students consider coffee bars to be a convenient studying or meeting location, where they can read or meet with peers without the necessity to pay cover charges and get free Wi-Fi. This will provide a unique possibility for building a loyal client base.
Market Needs General trend toward quality of coffee and service among Mauritian will definitely play an important role in the growth of coffee as bad service to Mauritian will result to lost clientele. Mauritian ego’s is bigger than the national debt. Additionally, such factors as desire for small indulgencies, for something more exotic and unique and all baristas will be trained which provides a good selling opportunity for coffee bars.
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Buying Patterns The major reason for the customers to return to a specific coffee bar is a great tasting coffee, quick service and pleasant atmosphere. Although, as stated before, coffee consumption is uniform across different income segments, Biscotti café will price its product offerings competitively. Selling coffee with a great service in a nice setting will help to build a strong base of loyal clientele
Determinants of demand Price As the price of Biscotti café coffee increases, the demand will decrease where many people may and decide to switch to a less costly alternative such as frequenting a L’Arabica, However this will not be the case for Biscotti café as Bagatelle is a shopping mall where people come to spend. Lower price will mean lower quality of coffee. Complements Complements of Biscotti café coffee can be milk, cream, sugar, and flavored syrups. For example, if the price of sugar should increase as the Mauritian government is becoming aware of Obesity and diabetes, many consumers may be unwilling to purchase it and opt for another alternative. Still Biscotti café provide sugar excluding the coffee. It means the customer decide their amount of sugar or no sugar at all. Substitutes Substitutes for Biscotti coffee could include cheaper coffees (Mokaz and Vida e caffee), teas, water and fizzy drinks. If the price of any of these substitutes should rise, the demand for coffee will rise. However Biscotti café will cater for a loyal niche market and the threat of substitute will be low. Tastes If people enjoy drinking and develop a preference for the stronger tasting Biscotti café coffee, they will want more of it. Income changes and lower priced substitutions could affect their tastes and a cheaper priced alternative could become a new 19
preference.
The marketing mix 1. Price Biscotti café will positions itself as a specialty premium coffee retailer which focus on quality and experience rather than price as image and experience will be the key elements to their success. A price skimming strategy will be employed. Biscotti café will set coffee as a new cachet and establish themselves as a price setter through product differentiation. Consumers will pay for what they consider an elite lifestyle and many believe that the higher the price, the better the quality. Biscotti café cannot become the low price leader as it will take away the brand image and ambience. 2. Promotion Biscotti café will focus on the customer’s in-store at the beginning as it will be more effective than having advertisements and commercials for via mass media which is expensive. Biscotti café will encourage the promotion of their café as another home to the consumer by providing a comfortable chairs for the customers to relax in, relaxing music, and outlets for laptops. Biscotti café will depends on word-of-mouth advertising (its rich taste and aroma) and will advertise more efficiently by spreading all over social media which is free and accessible to the primary target customer (University Student)
3. Place The 10km radius around the Mall of Mauritius is the most densely populated on the island and is home to around 530 000 people which is equal to almost half of the entire Mauritian population. This middle to higher urban income group represents approximately 78% of the Mauritian purchasing power. Also more than 60% of foreigners is witnessed to visit Bagatelle on their visit. The café will be rented on a 25,000 monthly basis. 20
4. Product The menu of the Biscotti café bar will be built around espresso-based coffee drinks such as lattes, mochas, cappuccinos, etc. Each of the espresso-based drinks will be offered with whole, skimmed, or soy milk. Each of these coffee beverages is based on a 'shot' of espresso, which is prepared in the espresso machine by forcing heated water through ground coffee at high pressure. Such espresso shots are combined with steamed milk and/or other additives like cocoa, and caramel to prepare the espresso-based beverages. Proper preparation techniques are of paramount importance for such drinks. A minor deviation from the amount of coffee in the shot, the size of the coffee particles, the temperature of milk, can negatively affect the quality of the prepared drink. More about the product is provided in the APPENDIX.
Strategy Customer Retention Strategy Biscotti café will also offer items like thermos and mugs with the Biscotti café logo on it. We may even give a discount to those who bring in their reusable thermos or mug into the store to help them cut down on the consumption of paper products (especially as the café aims to be as eco-friendly as possible). For those customers that aren't able to make it by the coffee house on a daily basis, Biscotti café will also sells packages of the same coffee beans at Intermart. Launch Strategy Launch marketing will promote awareness, build immediate traffic and establish our brand image via several methods:
Public relations/publicity, Local print and broadcast media , Design and packaging ,Superior location (Bagatelle), Desirable café ambiance
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Local Media to be used on Launch
Le defi, L’express, La sentinelle, Radio Plus, Top Fm, Radio 1
Operation plan
Order Cookies or other snacks
Charges customer for cookies or snack
22
Customer: The customer walks in the café after seeing the café sign, word of mouth or wants to try the café products. She/he is greeted by the cashier and order her coffee after consulting the price of menu displayed on the wall. She pays instantly and is given a receipt with a number on it. After preparation of the drink, she/he present the receipt to the barista and take the coffee and chose any place to sit including the L lounge or outdoor.
Cashier: The cashier is to greet the customer and the name of the customer, the requirement (brewed/non-brewed) of the drink on the cup and additional requirement (chocolate topping, vanilla essence) as specified by the customer to be handed to the barista. The cashier charges the money either cash or credit and is obliged to provide for a receipt.
Barista: The barista is to follow the procedure of making the coffee, and/or if machine is to be used after taking the cup from the cashier. Then within a fixed delay the customer name is called by the barista and handed the coffee. Additionally the barista is to provide advice for additional topping that can be included in the coffee which indeed is to be paid.
Risk analysis Market risk: Improvement in competitor financial health and/or competitor activity results in a loss of market share. Consumer trends will be analyzed and competitor activity in Bagatelle will be monitored.
Operational risk: Inability to operate the Biscotti café for more than one week. So a long standing and experienced workforce is needed. Also a contingency plan, including for coffee to be brewed elsewhere if required.
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Health and safety risk: Death or serious injury as a result of the café negligence. The only way for employee to face such injury is electrocution by the coffee machine. On part of customers, it will be food poisoning. However coffee is brewed and prepared instantly by experienced barista who are to follow hygiene procedure before sending the coffee out. Information systems risks: Disruption in POS due to ineffective implementation of a major systems upgrade or installation or power cut. Indeed it’s the POS only which give the receipt and measures for regular servicing will be provided. Management risk: Employee fraud and dishonesty covers the loss of stock, business contents and money caused by an employee’s acts of theft or fraud. However security camera are present all around the café.
Financial risk: If Biscotti café cash flow is not managed properly, it will not be able its bills on time, which can lead to poor credit. It can also cause serious problems, such as eviction from the Bagatelle due to non-payment of rent. In addition, a cash flow problem makes it difficult for the café to purchase needed supplies and coffee beans which is the heart of the café. Inventory levels should be checked frequently to ensure that the café does not over-order on items with a slow turnover. Freshly roasted coffee beans makes the best but it will be more expensive especially if low number of customers on that particular day
Problem to be addressed Biscotti café will rely a great deal on point-of-sale processing. Any technical failure within these systems can cause delays in sales and decrease efficiency. Mauritian government policy exists to manage entry into an industry with licensing requirements regulations. Opening a coffee shop or restaurant will require obtaining 24
certain licenses, i.e., business licenses, and tax id’s, among other possible licenses.
Financial plan Start-up Summary The start-up expenses of RS 651,900 include:
Legal expenses for obtaining licenses and permits Rs 45,500
Marketing promotion expenses for the grand opening of Biscotti cafe as well as flyer printing Rs 100,000
Consultants’ fees of Rs 35,000 paid to Mr. Alladin for the help with setting up the coffee bar.
Insurance (general liability, workers' compensation and property casualty) coverage at a total premium of RS 84,400.
Pre-paid rent expenses for one month at Bagatelle for Rs,25000
Premises remodeling in the amount of RS 350,000.
Internet set-up for Rs 12,000
The required start-up assets of RS 2,000,000 include:
Operating capital in the total amount of Rs 560,000 which includes employees and owner's salaries of Rs260, 000 for the first two months and cash reserves for the first three months of operation (approximately 100,000 per month).
Start-up inventory of RS 510,500, which includes: o
Coffee beans (12 regular brands and five decaffeinated brands) – RS 234,000
o
Coffee filters, baked cookies cost of sale, beverages, etc. – RS 276,500
Equipment for the total amount of RS 929,500 o
Espresso machine – RS 210,000
o
Coffee maker – RS 31,500
25
o
Coffee grinder –RS 7,000
o
Serving area equipment (plates, glasses, flatware) – RS 50,000
o
Store equipment (cash register, security, ventilation, signage) – RS 480,000
o
Office equipment (PC, fax/printer, phone, furniture, file cabinets) – RS 126,000
o
Other miscellaneous expenses – RS 25,000
Total start-up cost amount to RS 3,581,400
Funding for the café comes from two major sources--owners' investments and bank loans. Three major owners, El-Natsu Heartfilia, Lucy Heartfilia and Alladin Yaseen, have contributed Rs 1,000,000 and Rs 850,000 and Rs 750,000 respectively. The remaining Rs 981,400 needed to cover the start-up expenses and assets came from a long-term (3 years) loan from The Mauritius Commercial Bank (MCB).
SALES FORECAST Sales Forecast (MRU) Year 1
Year 2
Year 3
Year 4
Year 5
Sales Coffee and espresso
1,050,000 1,100,000 1,650,000
1,800,000 1,880,000
Flavored espresso drink 150,000 180,000 200,000
220,000
250,000
Hot cocoa drinks
200,000 225,000 235,000
250,000
265,000
Cookies
250,000 265,000 285,000
295,000 310,000
Snack and Pastries
190,000 200,000 200,000
215,000 225,000
Total Sales
1,840,000 1,970,000 2,570,000
2,680,000 2,830,000
Direct Cost of Sales
Year 1
Year 4
Coffee beverages
150,000 175,000 205,000
230,000 250,000
Coffee beans
250,000 265,000 280,000
295,000 310,000
Pastries & cookies
100,000 120,000 120,000
130,000 150,000
Year 2
26
Year 3
Year 5
Subtotal Direct Cost of 500,000 Sales
560,000
605,000
710,000 655,000
Cash flow (Yearly) Year 1
Year 2
Year 3
Year 4
Year 5
1,025,000 1,120,000
Cash Received Cash from Operations Cash Sales
840,000 910,000
965,000
Subtotal Cash from Operations
840,000 910,000
965,000
Sales Tax, VAT,
0
0
0
New Current Borrowing
0
0
0
New Long-term Liabilities
0
0
0
Sales of Other Current 0 Assets
0
0
New Investment Received
0
0
0
Subtotal Cash Received
840,000 910,000
1,025,000 1,120,000
Additional Cash Received
965,000
0
0
0
0
0
0
0
0
0
0
1,025,000 1,120,000
Year 1
Year 2
Year 3
Year 4
Year 5
Cash Spending
300,000
350,000
375,000
410,000
450,000
Bill Payments
100,000
150,000
175,000
200,000
225,000
Subtotal Spent on Operations
400,000
500,000
550,000
610,000
675,000
76,000
76,000
76,000
76,000
76,000
Expenditures Expenditures from Operations
Additional Cash Spent Principal Repayment of Current MCB Borrowing
27
Other Liabilities Principal Repayment
0
0
0
Long-term Liabilities Principal Repayment
0
0
0
0
0
0
0
Purchase Other Current Assets
0
0
30,000
75,000
100,000
Purchase Long-term Assets
50,000
50,000
75,000
Dividends
0
0
0
0
0
Subtotal Cash Spent
526,000 626,000
731,000
761,000
881,000
Net Cash Flow
314,000 284,000
234,000
264,000
239,000
30,000
Cash Balance
Profit and Loss (Yearly) Year 1 Sales
Year 2
Year 3
Year 4
Year 5
1,840,000 1,970,000 2,570,000
2,680,000
2,830,000
500,000 560,000 605,000
655,000
710,000
-
-
500,000 560,0000 605,000
655,000
710,000
Gross Margin
1,340,000 1,410,000 1,965,000
2,025,000
2,120,000
Gross Margin %
24.3%
23.8%
34.1%
32.4%
33.1%
25,000
15,000
10,000
5,000
5,000
30,000
20,000
15,000
Sales and Marketing % 1.6%
1.01%
0.6%
Direct Cost of Sales Production Payroll Total Cost of Sales
-
-
-
Operating Expenses Sales and Marketing Expenses
Advertising/Promotion 5,000
10,000
10,000
10,000
15,000
20,000
25,000
Travel Donations Total Sales and Marketing Expenses
28
0.8%
0.9%
General and Administrative Expenses General and 1148,000 892,000 942,000 1,088,000 Administrative Payroll
1,184,000
Depreciation
10,000
10,000
10,000
10,000
10,000
Internet
5,000
10,000
10,000
10,000
10,000
Utilities
5,000
3,000
5,000
5,000
6,000
Insurance
5,000
8,000
13,000
20,000
20,000
Rent
25,000
25,000
25,000
25,000
25,000
Total General and Administrative Expenses
942,000 998,000 1,151,000
General and Administrative %
51.2%
1,218,000 1,255,000
51%
55.6%
55.9%
53.9%
Profit Before Interest 368,000 392,000 799,000 and Taxes
787,000 840,000
Tax Incurred (15%)
55,200
118,050 126,000
Net Profit
312,800 333,200 679,150 668,950
714,000
Net Profit/Sales
17%
30.6%
58,800
119,850
16.9%
32.8%
30.7%
Balance sheet (Yearly) Pro Forma Balance Sheet Year 1
Year 2
Year 3
Year 4
Year 5
Assets Current Assets Cash
500,000
560,000
605,000
655,000
710,000
Inventory
100,000
150,000
185,000
211,000
263,000
Other Current Assets
0
0
30,000
50,000
120,000
Total Current Assets
600,000
710,000
820,000
916,000
1,093,000
29
Long-term Assets Long-term Assets
2,167,000 2,494,000 3,258,000
Accumulated Depreciation
10,000
Total Long-term Assets
2,157,000 2,474,000 3,228,000
3,583,000 3,674,000
Total Assets
2,757,000 3,184,000 4,048,000
4,499,000 4,740,000
Liabilities and Capital
Year 1
20,000
40,000
30,000
Year 2
3,623,000 3,724,000
Year 3
50,000
Year 4
Year 5
Current Liabilities Accounts Payable
150,000
200,000
220,000
230,000
250,000
Current Borrowing
0
0
0
0
0
Other Current Liabilities
75,000
125,000
125,000
100,000
25,000
Subtotal Current Liabilities
225,000
325,000
345,000
330,000
275,000
Long-term Liabilities
200,000
100,000
50,000
Total Liabilities
445,000
430,000
325,000
Paid-in Capital
325,000
2,000,000 2,500,000
345,000 3,000,000
3.200,000 3,500,000,
Retained Earnings
0
25,800
24,450
200,050
201,000
Profit
312,800
333,200
679,050
668,950
714,000
Total Capital
2,312,800 2,859,000
3,703,500
Total Liabilities and Capital
2,757,000 3,184,000
4,048,500
Net Worth
2,312,800 2,859,000
3,703,500
4069,000 4,415,000 4,499,000 4,740,000
4,069,000 4,415,000
Break even analysis for 1st year With average monthly fixed costs of Rs.25, 000 and an average margin of 24.3%, Biscotti café break-even sales volume is around Rs 103,000 per month. As shown further, the café is expected to generate such sales volume from the outstart. Margin of sales is 24.3% Fixed cost= (25000x12=RS 300,000), Break even= Fixed cost/Margin of sales 30
Yearly- 300,000/(0.243)= Rs 1,234,500 Monthly- Rs 103,000
EXECUTIVE SUMMARY Biscotti Cafe will be an upscale retail establishment located in the province of Bagatelle Mall of Mauritius that carries the following:
Coffee
Italian-style cookies
Biscotti Cafe will cater the need of people who need a short break and enjoy the pleasure of life. With a growing number of people needing which need some space, be alone or cherish some precious moment with loved one, Biscotti Cafe is fully committed to provide coffee first-rate cookies along with a comfortable yet elegant atmosphere in which to relax, meet friends, or have a drink after work. The target market will be shoppers, tourist, local business people, students and passerby. The café will be owned and managed by Mr El-Natsu Heartfilia (Uncle), Mrs Lucy Heartfilia (aunt) and Mr. Yaseen Alladin who will provide for startup capital for operating the café. The primary factors in making Biscotti Cafe a success will be---positioning, service and satisfaction and a well-trained and trustworthy workforce with expertise. However the café is faced with already established competitors and future competitors which can pose a future threat. However the café unique atmosphere, quality service and differentiated coffee will limits these drawback. There is also financial, operational, information, health and safety and other risk but the café is committed to provide for all these risk due to the owners background in restauration. Sales is expected to grow at a rate of 10-15% per Year. The coffee will be the revenue-maker in the beginning, but the cookie should balance out the revenue within 18-24 months. Thus, making Biscotti Cafe the premiere cookies seller and retailer of coffee in bagatelle. Opening day is scheduled for November 5, 2016.
31
Appendix 1 Barista job description (salary Rs 10,850)
Barista Job Responsibilities: Promotes coffee consumption by educating customers; selling coffee and coffee grinding and brewing equipment, accessories, and supplies; preparing and serving a variety of coffee drinks, along with pastries and cookies. Working hours- 40hr per week
Barista Job Duties:
Welcomes customers by determining their coffee interests and needs.
Educates customers by presenting and explaining the coffee drink menu; answering questions.
Prepares and sells coffee drinks by following prescribed recipes and preparation techniques for coffee drinks, such as, expresso, expresso lungo, caffe latte, and cappuccino.
Maintains inventories by replenishing coffee bean supply; stocking coffee brewing equipment; maintaining supplies, pastries, and cookies for coffee bar.
Keeps
equipment
operating
by
following
operating
instructions;
troubleshooting breakdowns; maintaining supplies;.
Maintains safe and healthy work environment by following organization standards and sanitation regulations.
Improves quality results by studying, evaluating, and re-designing processes; implementing changes; maintaining and improving the appearance of the store and coffee bar.
Barista Skills and Qualifications: Listening, Verbal Communication, Customer Focus, Customer Service and 3 year of experience 32
Biscotti café cashier job description (Salary Rs 9,250), (40 hr. per week) Cashier job responsibilities: 1. Handle all customer payment and credit transactions. Receive payment by cash, check, credit cards, vouchers, or automatic debits
2. Responsible for the daily balancing and reconciling of cash office account/s.
3. Count money in cash drawers at the beginning of shifts to ensure that amounts are correct and that there is adequate change
4. Maintain clean and orderly checkout areas.
5. Greet customers entering the café
6. Establish or identify prices of coffee and cookies and tabulate bills in POS and give receipt.
Cashier Skills and Qualifications: Energy Level, Dependability, Customer Service, Professionalism, Attention to Detail, Customer Focus, General Math Skills, and Job Knowledge
Appendix 2 Coffee and Espresso (MRU) Name
Description
Regular Large
Espresso
A double shot of straight espresso.
65
80
Caffe Americano
Espresso combined with hot water, a gourmet brewed coffee.
70
85
Cappuccino
Espresso with a smooth topping of milk foam.
90
125
33
Caffe Latte
Espresso combined with steamed milk, topped with a 95 small amount of velvety milk foam.
115
Caffe Mocha
A Caffe Latte combined with Ghirardelli chocolate, 105 topped with whipped cream and chocolate shavings.
135
Espresso Macchiato
A straight shot of espresso topped with a spoonful of 65 rich milk foam.
90
Espresso Con Panna
A straight shot of espresso topped with a generous dollop of whipped cream.
90
65
Espresso Latte A Caffe latte made even creamier with half and half. 80 Breve
125
Espresso "Red Espresso combined with our gourmet coffee of the day to get your day going. Eye"
100
70
FLAVORED ESPRESSO DRINKS (MRU) Name
Description
Regular Large
Vanilla Cappuccino
Cappuccino made with vanilla flavored milk foam. 90
125
Vanilla Latte
A Caffe Latte with vanilla essence added.
105
150
105
150
The 50/50 Latte
Espresso. Vanilla and orange syrups, steamed milk 105 and whipped cream topping.
150
The Raspberry Mocha Latte
Coffee. Raspberry and chocolate syrups. Half and 115 half. Whipped cream topping.
160
Chai Latte
Espresso. Chai. Steamed milk and whipped cream. 105
150
Espresso, white chocolate flavoring and steamed White Chocolate milk topped with velvety foam and white Latte chocolate shavings.
COFFEE DRINKS Name
Description
Small Large
Coffee. Warm milk. Banana, macadamia nut and vanilla The Banana syrups. Topped with whipped cream and cinnamon 100 Nut Java dusting.
135
Coffee. Warm milk. Amaretto and vanilla syrups topped 100 with whipped cream and almonds.
135
The Cafe Milano
34
HOT COCOA DRINKS All hot cocoa drinks are Rs100 Name
Description
French Vanilla Cocoa Hot cocoa with vanilla and whipped cream. White Chocolate Cocoa
Hot cocoa with white chocolate and whipped cream.
Chocolate Truffle Cocoa
Rich dark hot cocoa with whipped cream topping.
Holiday Spice Cocoa
Rich hot cocoa and holiday spices. Topped with whipped cream.
Peppermint Cocoa
Rich chocolate and refreshing peppermint. Topped with whipped cream.
Ovaltine
Ovaltine Chocolate Malt and milk.
SMOOTHIES All smoothies are Rs135 Name
Description
The Espresso Chocolate Malt
A chocolate malt for grownups.
The Double Dutch Chocolate Smoothie
Very chocolatey!
The Mocha Smoothie
An all-time favorite.
The Vanilla Smoothie
Rich natural vanilla flavor.
50/50 Smoothie (Orange and Vanilla)
A 50's favorite
Snacks and Pastries Item
Price
Biscotti Cheesecake, Company.
70
Fresh scones, hot from the oven.
60
Bagels
35
Brownies
70
Blueberry Muffins
70
Croissants
70
Black Forest chocolate-covered espresso beans
135
35
60
Best Ever Bakery Fancy Cookies
Appendix 3 The proposed Interior of café
The proposed L lounge
Coffee and cookie
36
37
