Mmmeating caf Business Plan

Gianka Nektaria Mpairaktari Thaleia Retzi Marianna 6/17/2012

Contents
Executive Summary....................................................................................................................................... 3 Company History........................................................................................................................................... 3 Management Team ....................................................................................................................................... 4 Products and Services ................................................................................................................................... 5 Analysis of Markets and Competitors ........................................................................................................... 6 SWOT Analysis........................................................................................................................................... 7 Commercialization ........................................................................................................................................ 8 Operational Management ............................................................................................................................ 9 Main Hypothesis ......................................................................................................................................... 10 Financial Projections & Capital Required .................................................................................................... 11 General overview .................................................................................................................................... 11 Sales revenues ........................................................................................................................................ 13 Financial statements ............................................................................................................................... 15 Income statement ............................................................................................................................... 15 Cash flow statement ........................................................................................................................... 18 Balance sheet ...................................................................................................................................... 19 Exit Possibilities ........................................................................................................................................... 21 Appendix ..................................................................................................................................................... 22 Bibliography ................................................................................................................................................ 23

Executive Summary
Mmmeating corner caf aspires to be the first coffee shop in Athens oriented towards students. Its founders are three friends who believe that this type of coffee shop is lacking in the market. With products ranging from various high quality teas, coffees and pastries to internet usage, renting laptops and tabletop games the Mmmeating corner caf aspires to become a home-awayfrom-home for students. Its prime location (in between two of the biggest universities of Downtown Athens as well as some private institutions), combined with the prices offered is bound to make this venture a success. On the other hand, the dependence of the coffee shop on technology (most attractive product offered) and the student body (main customer target group is students aged 20 - 25) might create certain problems in the long-run. The solution to the latter of these problems is to diversify the target market, especially during the times of year when students have no classes. Once these challenges are overcome all other activities of the coffee shop should not prove to be a challenge. Everyones hope is that the community will embrace the Mmmeating corner caf and its unique services, thus making it a community landmark and the first one of more to come.

Company History

Mmmeating corner caf came to be after an idea that we had about opening a university student-oriented coffee shop. Based on our own experience, as well as those of our classmates, we decided to create a coffee shop that would cater to university students and offer the best coffee and studying experience possible. Our goal is to serve the best quality coffee, tea and light snacks in the greatest variety possible. The service should be superior and the atmosphere will be pleasant and welcoming in order to best satisfy both our customers and employees. After having the initial idea for the creation of Mmmeating corner caf we did some research concerning the existing market, whether a gap in the market was available for us and the viability of the project. After getting positive indications for the viability of the project, we decided to speak with various industry professionals in order to have a firsthand description of the creation of a new coffee business and the challenges that we might face. Following, we ventured into figuring out the 3

legal and bureaucratic processes that are required. After filing all the paperwork needed, we now possess all the necessary permits needed, by both the government and health services, to operate a coffee shop. Following is a brief description of our companys vision, mission statement and values:

Vision To offer the best coffee and studying experience possible and acquire a dedicated customer following Mission To treat our customers with respect and efficiency in a friendly, welcoming and relaxed environment while serving them the highest quality coffee, tea and light snacks. Create a respectful and positive working environment for our employees so that they perform to the best of their abilities. Values Passion for coffee Respect for our customers Commitment to excellent quality and superior service

Management Team
The company is owned by the three founders Gianka Nektaria, Mpairaktari Thaleia and Retzi Marianna, each one having a third of the coffee shop. Considering our management team, its structure is rather simple and flat and emphasizes on several people being responsible for multiple tasks in the business since we are a small scale operation. There will be a general manager (the face of the company) whose main responsibility will be to represent the company in any occasion necessary. An in-store manager (who will also have the title of assistant manager) will be appointed, who will directly supervise the day-to-day operations in the coffee shop. We have also hired an accountant and an insurance agent and have retained the services of an attorney. Unfortunately, our management team is lacking a consultant with significant expertise in the 4

coffee industry and we are still trying to work on alternatives in the case where one of the management teams members is unable to perform his/her duties. (i.e. something similar to succession planning) Moving on to specifics of the management team, Thaleia Mpairaktari will be our manager because of her excellent networking and her extensive job experience. Having superb organizational and time management skills, combined with her management studies, Gianka Nektaria is an excellent match for the Assistant Manager position. Retzi Marianna will be appointed as Facility and Kitchen Manager, due to her first-rate organizational and managerial skills which are perfectly complemented by her passion for food and cooking. Ms Retzi will also be holding the position of Accountant, since she is a freelance accountant herself. Finally, the consultant position will be held by all three owners who will offer their services each on her area of expertise. (See: Appendix - Chart 1)

Products and Services

Mmmeating corner caf commits to offer its customers the highest quality beverages by using premium quality products and the best preparation techniques. The best roasted hand-picked coffee beans will be prepared for the customers by our knowledgeable baristas. A wide selection of imported teas will also be offered with certain Fair Trade teas featured occasionally on our menu. Our beverages will be complimented by light snacks such as sandwiches, pastries and ice cream. Our madeto-order sandwiches will be created with an extensive selection of bread and fresh ingredients and our pastries with traditional mom recipes. Apart from food and beverages other services will also be provided to our customers. There is an extensive computer service plan in mind. Two computer terminals will be available for use by our customers with one shared printer under an hourly premium. For those of our customers who prefer doing their web-browsing from the comfort of our couches can use our rent-per-hour laptops. If you want to take a break from studying and sipping you coffee there are also our gaming services where a variety of tabletop games (pool, ping-pong, variety of board games) will be available for free. We believe that what makes us different from our competition is our wide selection of teas and coffees, fresh ingredients and feel-like-home recipes. Furthermore, being able to rent a laptop is a service that is not offered on any other coffee shop in the greater area. Finally, there will be a 20 per cent discount for students living in university housing upon showing appropriate student identification.

Analysis of Markets and Competitors

The coffee shop that we are going to open has an advantage when compared to other coffee shops that are located in the surrounding area. We are providing computer services and very fast internet, which will help the students, which will be our main customers, to do their assignments, to look information that they will use for the assignment or just to play games. The existing coffee shops in the area provide Wi-Fi but do not provide low cost services like we do. We are going to be located at one place that will be nearby the two biggest Universities the ASOE and the Athens Universities (Polytechnic University). The location is very important because it will be a large place which will provide inexpensive coffee and delicious snacks which will attract students but also the employees from the neighboring shops and businesses.

Expected number of clients

10% 25% University Student 65% Local employees Passers

As we can see from the graph, our main customers will be the students from the Universities nearby, a smaller number from the local employees and an even smaller number from the pedestrians passing by (passers in the graph). This means that we intend our main focus to be catering to our main customers and their needs.

SWOT Analysis
Strengths Near the Universities: The coffee shop is near the university and that will attract students and teachers as well as the local employees. Low cost to the coffee and snacks: Our low prices will attract those students who dont have enough money to spend. Furthermore, we will offer low cost snacks in order for them to be enjoyed by the students before or after the lessons. Computer services (rent a laptop) and fast internet: We will provide free Wi-Fi for the first hour and there will be the possibility to rent a laptop in order to work on their assignments or in order to collect the information that they need or simply for their enjoyment. Near the training station (Victoria Station): The coffee shop is near the train station and will help the students move quickly to their destinations. Good ventilation and air conditioning system: We will provide good ventilation and air conditioning system which is important because after their lessons the students will rest in a refreshing environment. Weakness Two bathrooms only: There are only two bathrooms one for men and one for the ladies and that is a problem because a lot of people have to wait their turn in waiting hall especially after class period. A dependence on quickly changing technology. The coffee shop provides, except from food and coffees, internet which is a technology. As we know, the technology seems to change very rapidly and that means that they students may use instead of our coffee they tablet or they phones with their internet. Dependence mainly by the students: The main customers from the coffee shop will be students. That means that when the universities will be closed up for the summer vacation or for the Christmas-East we will have less customers. Opportunities Differentiation by Pricing: The demand for quality products at competitive pricing is an increasing demand at this area especially from the students. This demand can be harnessed by

the coffee shop through providing value-added services and quality products at competitive prices. Diverse Target market: The diversity in the market which is merely due to the diversity in the students provide an effective method from attracting a niche market or more than one segment of the market with customized products whilst providing a base line of product range to meet the overall demand of the customers. Threats: Emerging local competitors: Near to the coffee shop there is a Victoria square which have a lot of brands coffee shops like Everest and Flocafe. These two coffee shops have the same services like we do. Security: The place that the coffee shop will be is Patision Street which isnt the safest street in the Greece. That means that in the area exist a lot of street sellers which may attack or threat the shop especially in the winter were the day is smaller and the night bigger.

Commercialization
Mmmeating corner caf offers a wide variety of products, such as high quality coffees and teas, refreshments and pastries. Tea and coffee are served in unique mugs in order to offer a feeling of individuality and homeyness. Our goal is to serve snacks and pastries that taste like home. Furthermore, our unique internet services combined with our tabletop games are two of our features that differentiate us from the rest of the competition. Our major customer target group lies in the 20 25 year old bracket. Since the members of this group are students, and mostly low-income ones, our beverage prices will range from 1.50 to 2.50 in order to accommodate them. One of targets is to be a price leader. Our coffee shop is situated in Patision Street, two city blocks from the Economic University of Athens and the Polytechnic University. It is a prime location in the heart of our target group, a fact that also makes promotion easier. We have acquired well-designed furniture that make people feel like home and high speed internet in order to be able to make available free Wi-Fi to all our customers for the first hour. Concerning promotional tactics, our excellent location, combined with word of mouth and flyer distribution at the university, other private institutions in the vicinity and various preparatory schools in 8

the area. Another key feature will be our Reward Card, which will be part of our loyalty program and would offer rewards such as a free beverage or an extra hour of free Wi-Fi.

Operational Management
Location As mentioned before the building will be at the one of the most central and busy streest in the Athens in the Patision and for that reason is very accessible for the customer to get it (for students, local employees and for those who are walking along the street). Organizational structure and operational management Our organizational structure will be a simple pyramid style with the owners putting in as much work as the employees. The organizational structure will be like this: 2 full time employees, one or two part time employees (depended on the demand of the work) and one of us (alternative) will be at the fund. The coffee shop will open at 8 p.m. and will close at 12 oclock. We will be there e arlier at 7 p.m. in order to prepare the shop (snacks, the glasses for the coffee, cleaning the table and the shop). The customer service will start at 8 p.m. when the students get to their lessons and the employees from the local shops get their work. We believe that its hours will cover the needs of our customers as the shop will remain open in the hours where the students will have lessons and the local employees will prefer our food for they lunch. Furthermore we close the shop at 12 oclock because we believe that the students after they lessons which may have at the evening will prefer our shop for taking a beverage or a coffee playing different games that we will provide them for free in the shop. Additional every night the employee who works in the shop will prepare the shop for the morning employee, meaning that he will be filling the refrigerator with the necessary beverages and waters. Every night will be the close of the fund and the counting of the money. The next day this money will be placed in the bank in order to pay our employees (the full timer because the part timer employees will pay them directly after they work in the shop) our suppliers, our rent of the shop and the rest operational expenses that we will have. Every Friday one of us will check the supplies that remain in the store and will make the orders for the next week but not for all the products only for the ice-creams supplier, for the sausages suppliers and for the beverage suppliers. For the product like milk, bread and horticultural products the supply will be daily or every two days at least. Personnel Plan

As mentioned before, the staff will consist of 2 full time employees and one part time. The 2 full time will be one barista and one who will be responsible for the snacks and beverages. The part timer will be responsible for the cleaning of the table and for the customer service.

Personnel Plan Year 1 Owners Full time 1 Full time 2 Part time Total People Total Payroll 28.799 14.400 12.000 4.800 3 59.991 Year 2 30.527 15.264 12.720 5.088 3 63.600 Year 3 32.359 16.180 13.483 5.393 3 67.416

The wages of employees are increased on the current associated legal framework in Greece which is 6% per year.

Main Hypothesis
As it was mentioned earlier our coffee shop will serve the customers with the best quality of the coffee and combining it with light snacks we have the perfect reason to visit us. But our advantage over our competitors is that we have the only internet coffee shop in the area. We are able to provide the customers with a variety of coffees and teas, fresh and delicious snacks, a variety of different tabletop games like pool, Ping-Pong and a large number of board games. Furthermore, we are able to rent a laptop and this is a unique service, because isnt offered in any other coffee shop in the area. We also offered to the students a multitude of advantages such as free Wi-Fi in the first hour, opportunity to use laptops under an hourly premium and a 10% discount to the students which living in university housing. The main risk of this idea is how the students will accept it and how they will be respond to this idea. Our coffee shop is totally different from the other coffee shops in the area and that concerns us if this idea will be successful. Abroad, a coffee shop of this style is common but here the people and especially the students, which are our main clients, have a totally different behavior. We offer unique services,

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good prices and pastries with traditional mom recipes, but are all these enough? We are sure about our idea and we believe, the only thing is now to impart this confidence to our client.

Financial Projections & Capital Required

General overview
As it was mentioned earlier in this business plan, except for coffees, beverages and light snacks, our coffee shop will also offer computer services (customers will have the opportunity to use laptops under an hourly premium), Internet services (using the Internet under an hourly premium), as well as gaming services (customers will have the opportunity to play a wide variety of tabletop games, which will be available for free). For the first year of operations, 200 customers per day (from Monday to Friday) are expected to visit the coffee shop. 140 of them are expected to order at least one beverage or beer (90 of them living in university residences, thereby being subject to 20% discount), 60 of them are expected to use Internet services for at least one hour (40 of them living in university residences, thereby being subject to 20% discount), and 30 of them are expected to ask for a laptop for at least one hour (20 of them living in university residences, thereby being subject to 20% discount). Additionally, 60 customers are expected to order a snack (40 of them living in university residences, thereby being subject to 20% discount). Based on the financial objectives for developing the coffee shop under discussion, a 5% increase of annual sales has been estimated for the second year of the plan (2014), and a 7% increase for the third year (2015) (annual sales have been calculated using the mean values for each product or service category). The following table summarizes the costs of beverages and services offered by our coffee shop.

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(For students living in university residences, a 20% discount is offered to the following prices, upon showing the corresponding university ID card)

HOT BEVERAGES Instant Coffee (hot) Cappuccino Espresso Greek coffee Filter Coffee Irish coffee Chocolate (hot) Tea (hot) (original) Tea (various flavours)

2.00 2.00 1.50 1.50 2.50 2.50 2.50 2.00 2.50

Please ask us for the coffee and tea flavors of the day!!!

COLD BEVERAGES Instant Coffee (cold) Cappuccino Freddo Espresso Freddo Chocolate (cold) Ice tea (original) Ice tea (various flavours) Soft drinks Beers 2.00 2.00 2.00 2.50 2.00 2.50 2.00 3.50

SNACKS 12

Make-your-own sandwich (extra ingridients after the 3rd one) Pastry of the day Ice Cream (two balls)

2.50 0.25/ingredient 1.50 2.50

COMPUTER SERVICES Laptop rent Internet 1.50/hour 1.20/hour

Sales revenues
As the figures below indicate, our coffee is expected to record sales of approximately 131,000 for its first year of operations (year 2013), which will be increased by 5% in the second year (year 2014) and 7% (i.e. another 2%) in the second year (year 2015) (see sales revenues file in the appendix). This means that once the coffee shop has established its name and reputation, it will see an increase in sales by acquiring new customers, while less new customers are expected to emerge in the third year, given that many customers will have become loyal by then. The majority of revenues will come from selling beverages and snacks, while fewer revenues are expected to be acquired from laptop and Internet services, due to their lower cost and the high availability of Internet connections in houses and university libraries and residences. August will not be subject to sales revenues, given that in August the coffee shop will be closed for summer holidays (no students are expected to visit the shop during that month). As far as seasonality is concerned, June and September are expected to be the months reporting higher sales revenues than the others. This is more or less obvious, given that in June students are practicing for their exams, so they need laptops and Internet services, which they normally accompany with a beverage or light snack.

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Total Sales Revenues for year 2013

20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 Feb May Nov Aug Sep Dec Mar Jul Jan Jun Oct Apr

sales revenues

products services total2013

months

Sales revenues per month per year

25000 sales revenues 20000 15000 10000 5000 0 Feb Apr Aug Sep Oct May Dec
total2013

Nov

Mar

Jan

Jun

Jul

total2014 total2015

month

Total Sales Revenues for year 2014

20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0

sales revenues

products services total2014

months

14

Total Sales Revenues for year 2015

25000 Sales revenues 20000 15000 10000 5000 0

products services total2015

Jun

Aug

May

Sep

Feb

Jan

Apr

Nov

months

200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 Totalyear2013 Totalyear2014 Totalyear2015

Dec

Mar

Oct

Jul

160,493

168,516

171,723

Financial statements
Income statement

Opening Year Year 2 2013 2014

Year 3 2015

Projection

Projection

Projection

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REVENUES Direct Sales Miscellaneous Sales Total Revenues Cost of Sales Direct cost of Sales Other cost of Sales Total Cost of Sales Gross Margin 39.149 1.507 40.656 119.837 41.102 1.575 42.677 125.848 41.890 1.605 43.495 128.240 160.493 168.525 171.735 130.493 30.000 137.025 31.500 139.635 32.100

EXPENSES Marketing Activities and promotion Promotion Rent (1500 per month) Salary Utilities Repairs and Maintenance 2.002 2.002 2.002 59.991 1.280 1.000 500 14.400 14.976 63.600 1.300 15.575 67.416 1.350 800 400 700 300

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Insurance Furniture Beverages and Bar equipment Energy expenses Communications Software requirements Hardware requirements License Accounting expenses Total Expenses

1.496 10.000

1.496 1.000

1.496 1.000

3.300 8.998 4.004 2.000

3.300 10.000 3.800

3.300 10.300 3.500

2.000 6.000 3.000 9.996 1.650 1.650 126.617 119.320 9.996

2.000

2.000 9.996

1.650 122.585

Operating Profit Before Tax Deduct Estimated Tax Net Profit (Loss) After Tax

-6.780

6.528

5.655

Personal funding

30.000

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net cash

23.220

29.748

35.403

The income statement presented above is indicative of the economic situation of our coffee shop for the three years of the plan under discussion. More specifically, except for the estimated sales of products (beverages and snacks) and services (laptop and Internet services) and their associated costs, there are also additional sales and costs that may emerge, which have also been calculated. As the statement shows, a 4% increase in the rent of the shop has been calculated for each year, together with an increase of 6% to employees wages, both increases based on the current associated legal framework in Greece. Software and hardware expenses have also been included in the statement, given that the shop will need to update and upgrade its computer systems, in order to offer up-to-date services. For bar and kitchen equipment, a standard annual cost has been estimated, given that these are going to be paid through equal monthly installments.

Cash flow statement

30,000 25,000 20,000 15,000 10,000 5,000 0 -5,000 -10,000 1 2 3 4 5 6 7 8 9 10 11 12

Net Cash Flow Cumulative Cash Flow

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As the table above indicates, our company is expected to face negative cash flows in April, July, August and December (a detailed cash flow statement is available in the appendix). Given that the coffee shop refers to university students, this is a totally normal. More specifically, in April and December students enjoy their Easter and Christmas vacations respectively, which means that for some days sales revenues will be reduced. Except for that, in July students finish their exams and go on holidays (universities close for summer as well), while, as it was mentioned earlier, in August the coffee shop will be closed. Of course, negative cash flows form a matter of serious concern for any business. However, taking cumulative cash flow into consideration, it is clear that our company will be able to make up for their losses from previous months revenues, thereby having the necessary cash flow to meet its monthly financial obligations. Balance sheet

Opening Year (2013) ASSETS Current Assets Cash Accounts Receivable Total Current Assets Fixed Assets Equipment and furniture Computer hardware and sodtware Less: Accumulated Depreciation 6.300 8.000 10.000 30.000 130.493 160.493

Year 2 (2014)

Year 3 (2015)

0 137.016 137.016

0 139.623 0

11.000

11.000

5.000

4.000

8.400

7.500

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Total Fixed Assets Total Assets LIABILITIES Current Liabilities Accounts Payable Current Portion of Loan Long Term Liabilities Long Term Portion of Debt Total Liabilities OWNERS EQUITY Owners Equity Net Income / Retained Earnings OWNERS EQUITY TOTAL EQUITY AND LIABILITIES

11.700 172.193

7.600 144.616

7.500 147.125

172.193 0

144.616 0

139.623 0

172.193 172.193

144.616 144.616

139.623 139.623

As it is indicated in the above balance sheet, after the first year owners equity will be approximately 172.000 for the first year, 145.000 for the second year and 140.000 for the third year. These are the amounts that the owners of the coffee shop will be able to receive at the end of each fiscal year, if they wish to finish the business for some reason. Of course, the reduced amount of equity for each year is explained by the depreciation of the companys assets after each year, as well as the fact that there are many of the coffee shops assets that will be difficult to be turned into cash. 20

Exit Possibilities
When conducting a business plan, except for making all necessary investment plans, it is also vital to ensure that owners of a company have also planned the way they may exit their business, because they wish to or because of unforeseen reasons (Lynch, 2003). For the case of the coffee shop under discussion, the exit strategies to be followed will be those of acquisition and selling. If the owners of the company wish to withdraw from the company all together, then they will just put the whole company for sale, hoping that one or more buyers will totally acquire the company. If only some of the owners of the company wish to exit the business, they can sell their share to the other owners, or they can look for a buyer of their share in the company. In this case, the seller(s) have a number of options, such as for example to just sell their share or to negotiate for equity, hoping to gain dividends afterwards. It is worth noting that there are also other exit strategies available in business literature, such as liquidation or letting the company run dry, but these strategies are more applicable to long-term involvement of owners and do not correspond to this business plan.

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Appendix

Chart 1

Manager Mpairaktari T.
Assistant Manager Gianka N. Accountant Retzi M. Attorney Insurance Agent Consultant Retzi M., Mpairaktari T. & Gianka N. Mentor and Key Advisor

Facility & Kitchen Manager Retzi M.

Cashier , Front & BackEmployees

Bibliography

Lynch, R. (2003), Corporate Strategy, 3rd edition, Prentice Hall Financial Times.

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