7/23/2012

DESSERT
EMPIRE

ASSIGNMENT 3 : THE DEAL

T03

Gavin | Grace | Wei Xuan | Yi Khoon | Yu Xian

Table of Contents
Executive Summary ........................................................................................................... 3
Background information.................................................................................................. 5
Our Mission: ......................................................................................................................... 6
Our Vision: ............................................................................................................................ 6
Objectives:............................................................................................................................. 6
Goals........................................................................................................................................ 6
Beginning 3 years:.......................................................................................................... 6
Next 5 years:..................................................................................................................... 6
Next 10 years: .................................................................................................................. 7
Key Features and Unique selling points ..................................................................... 7
Research methodology ..................................................................................................... 8
Findings and Analysis ....................................................................................................... 9
SWOT Analysis ................................................................................................................. 15
Strengths......................................................................................................................... 15
Weaknesses ................................................................................................................... 15
Opportunities ................................................................................................................ 15
Threats ............................................................................................................................ 15
S.M.A.R.T GOALS .............................................................................................................. 16
Financial Plan.................................................................................................................... 18
Forecast for 3 Years Plan .............................................................................................. 19
Return of Investment ..................................................................................................... 19
Appendices ........................................................................................................................ 20
Appendix A..................................................................................................................... 20
Appendix B ..................................................................................................................... 22
Appendix C ..................................................................................................................... 23

Executive Summary
In Ngee Ann Polytechnic (NP), there are no cafes or restaurants specializing in the
sale of desserts despite an increasing popularity of desserts among youths. Such
cafes are often found in town areas or neighbourhood shopping malls, but there is
none to be found at tertiary institutions where students and youths often frequent.
It is therefore proposed that a dessert caf, Dessert Empire be set up in Ngee Ann
polytechnic. The Caf will have 4 unique selling points that consist of extensive
dessert variety, affordable pricing, relaxing ambience and an educational styled
menu. This report will discuss and analyze the feasibility of setting up the dessert
caf in Ngee Ann polytechnic. Primary research was conducted via an online survey
to find out the opinions of consumers. As Dessert Empires targeted consumers are
students, most of the respondents are made up of youths.
The results obtained from the research indicated that despite there being a strong
demand for desserts, the general opinion of consumers to the idea of a dessert caf
is mixed with most of the respondents preferring to remain neutral on the matter.
However, majority of the respondents felt that the new dessert restaurant should be
located at a tertiary institution, citing the many outlets that already exist in town areas
and neighbourhood shopping malls, and that a dessert caf would be a refreshing
sight in a tertiary institution. Another contributing factor to the above results is the
satisfaction level of desserts currently offered in tertiary schools. Most of the
respondents felt that the desserts currently being offered in tertiary institutions are
too limited and they would certainly welcome more variety provided that they are
affordable and of good quality. Lastly, almost all of the respondents felt that the
ambience of dessert stalls/restaurants is lacking with no respondent finding it
3

comfortable. This is mainly due to the lack of dessert specialized outlets in tertiary
institutions.
Dessert Empire has an ambitious but realistic target of expanding to Asia and
Europe in the next 10 years. This will require an injection of $200,000 capital in
exchange for 25% equity stake of the company. Dessert Empire is expected to
breakeven within 3 years of incorporation and generates a return of investment of
(0.576), 0.268 and 0.470 for the three years respectively.
Considering the cafs unique selling points, concerns of consumers and expected
returns, it is thus concluded that the idea of a dessert caf in Ngee Ann Polytechnic
is feasible.

Background information
Product Offered:
Desserts from every part of the world

Problem Definition:
Currently, in Ngee Ann Polytechnic (NP), there are no specific cafes or restaurants
for students to chill out and have desserts. There are a few dessert stalls in NP; 1 in
Makan Place that sells yoghurt, and there is definitely a stall in each canteen which
sells both traditional hot and cold desserts such as green bean soup and ice
Kachang. However, there isnt a cafe in NP which sells mainly desserts and can offer
students a place to do their projects or just hang out with their friends.
There is increasing popularity of desserts such as ice cream and yoghurt among
youths, visible from the recent spike of such parlours in recent years. For instance,
there are cafes such as Island Creamery, Udders, Cold Stone Creamery etc. selling
ice cream. For yoghurt stalls, brands such as yoguru, Frolick and Sogurt has
become increasingly common in town areas or even neighbourhood shopping malls.

Solution Proposed:
Therefore, our group propose to set up a dessert cafe in NP, offering desserts from
all over the world. It will be the first ever dessert cafe in a tertiary institution, and our
menu will be done up in a textbook concept with descriptions and history of the
dessert, so that students can savour the desserts yet at the same time, learn about
the dessert and beef up their knowledge about sweet treats.
Our cafe not only provides a place for students to enjoy and learn more about food, it
will also be a place for students to hang out with their friends over desserts and
forget about their troubles of meeting deadlines for projects.

Our Mission:
To enrich consumers in both taste and knowledge of the dessert world.

Our Vision:
To be the leading caf chain specializing in desserts from all over the world.

Objectives:
The main objective of our business is to provide consumers with a wide variety of
desserts from all over the world to enjoy and at the same time, enrich consumers
awareness and knowledge about the particular dessert through our encyclopaediaconceptualised menu.

Goals
Beginning 3 years:
Enter the market and create awareness on the brand name of the Caf among
tertiary institutions in Singapore. The menu would mainly consist of various local and
popular Asian desserts.

Next 5 years:
Expand the business by opening stores across Singapore, with the main focus in the
city area. The Cafs name will be well-established in Singapore, with the menu
being more diversified and extensive by including European and Middle-eastern
desserts on top of the desserts in the existing menu.

Next 10 years:
Expand the business to the whole of Asia and Europe, with the name of the Caf
being well-known across the two continents.

Key Features and Unique selling points

Extensive dessert variety
Dessert Empire offers a large variety of desserts from all over the world. Consumers
will be able to enjoy various types of famous and delicious desserts both from their
home country and internationally in Dessert Empire.
Affordable prices
At Dessert Empire, we offer consumers our desserts at reasonable and affordable
prices. Despite this, quality is of utmost importance and it will be maintained
regardless of the price amount of the dessert. Desserts are priced according to the
amount and difficulty of preparation needed, and also according to the type of
ingredients needed. Desserts offered by Dessert Empire would be priced affordably
for students.
Cosy and relaxing ambience
In Dessert Empire, consumers dine in a cosy, comfortable and relaxing ambience,
providing them with a channel to break away from their hectic lifestyles. The design
of the caf will follow a home-concept whereby customers would feel at ease and at
home while enjoying the soothing dessert they picked.
Educational menu
Dessert Empires menu will adopt an encyclopaedia concept. Besides the usual
pictures and name of desserts, the menu will include descriptions and background
information about the type of desserts as well. Consumers will then be able to
increase their knowledge about the dessert they picked, thereby enabling them to
appreciate and enjoy their desserts to the fullest.

Research methodology
The primary research was conducted through a survey of 5 questions and a sample
size of 30 respondents. Respondents are made up of mostly youths, who are
students studying in Singapore. This is because the target consumers of Dessert
Empire are mainly local tertiary students, since Dessert Empire aims to be the
leading caf specializing in desserts in every tertiary education institution in
Singapore. The survey focused on consumers preferences such as dining styles,
and also spending trends in typical dessert stalls. These allow us to have a clearer
picture and gain better understanding of the needs and wants of our target
consumers so as to provide quality products and services.

Target consumers
Dessert Empires extensive collection of desserts at affordable prices are targeting at
tertiary students who seek a cosy and relaxing environment to chill with friends while
enjoying a sweet and delicious dessert of their choice. The reason for choosing this
target group is because of the high demand of such places by students and also, the
lack of availability of such places as well. This target group is also relatively large
due to the size and number of tertiary institutions here in Singapore. In addition,
desserts are popular among youths and the willingness to spend on desserts is high.

Findings and Analysis

How Frequent do you consume desserts weekly?

3%

7%

20%

Never
1 - 3 times
4 - 6 times

70%

More than 6 times

Figure 1: Frequency of Dessert Consumption weekly

By investigating the frequency of dessert consumption by student, we can determine

the demand for desserts among students and the feasibility of setting up a dessert
specialized restaurant. The desserts here include Cakes and Ice Cream among
others which would be included in Dessert Empires Menu. Based on the survey
results, 70% of the respondents consume dessert more than 6 times a week while
only 3% responded that they are unlikely to consume desserts in a week. The results
certainly show that there is a high demand for desserts among students in Singapore
and a dessert specialized restaurant would be viable.

Where would you want a dessert cafe to be located at?

Tertiary School

24

Shopping Malls

Neigborhood Plaza

Bus interchanges

10

15

20

25

30

Figure 2: Locations where Respondents hope to have a Dessert Cafe

Respondents were asked where they most hope for the dessert cafe to be situated
at. Among the respondents, an overwhelming 80% hope to see the dessert caf
being set up in a tertiary institution, while 10%, 3% and 7% hope to see the desert
caf being set up in Shopping malls, Neighbourhood plazas, Bus interchanges
respectively. Desserts such as cakes, ice cream and frozen yogurts are more
popular with teenagers and young adults, which would explain the huge majority
favouring a dessert cafe to be set up at a tertiary institution as most of these
teenagers and young adults are tertiary students. Despite the respondents being
made up of students, locations such as shopping malls (where teenagers and young
adults often frequent) were considered a much less popular choice compared to
tertiary institutions. This may be due to the many existing dessert outlets and stalls in
shopping malls, whereas, the variety of desserts offered in school canteens are
relatively limited. Setting up a dessert specialized restaurant would be a unique and
innovate sight, and it would also be convenient and accessible for students, who are
the main consumers of desserts.

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How favourable are you to the idea of a dessert stall?

12
10
10
8

6
4

3
2

2
0
Very favorable

Favorable

Neutral

Unfavorable

Very
Unfavorable

Figure 3: How favorable are you to the idea of a dessert cafe?

In order to better gauge consumers views and opinions of a dessert specialized caf
with a unique textbook menu, respondents were asked how favorable they are to this
idea. From the survey, 50% of the respondents were either favorable or very
favorable to the concept. 33% of the respondents were neutral while the rest were
either unfavorable or very unfavorable to the idea. The group of 50% of the
respondents who were favorable or very favorable indicated that consumer views
were relatively lukewarm. This implies that there is significant risk in setting up this
innovative concept as only half of the respondents were favorable to the idea despite
70% of the same group of respondents consume desserts more than 6 times a
week. The highest proportion of respondents falls into the Neutral level with 33%.
As this concept is relatively new, consumers might prefer to reserve their judgment
and opinion before patronizing the restaurant. Despite these however, a 50%
favorable rate indicates that there is a good initial support.

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How do you find the desserts currently offered in tertiary schools in

terms of variety and ambience?

Variety
20

19

18
16
14
12

10

Variety

8
6

4
2

0
Limited

Sufficient

Wide

Figure 4: How respondents find the variety of desserts in tertiary schools

Of the 30 respondents surveyed, 19 respondents found the variety of desserts

offered in tertiary school limited. This constitute a majority of 63%, while 7 (23%) and
4 (13%) found it sufficient and wide respectively. The majoritys opinion that dessert
choices are limited is mainly attributed to the low number or lack of dessert outlets in
tertiary schools, as these desserts are often offered as a secondary product, thus
explaining the limited variety. Setting up a specialized dessert restaurant would thus
provide us with a competitive advantage and a fresh choice of dessert for students.

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Restaurant Ambience
30

28

25
20
15

Restaurant Ambience

10
5

2
0

0
Lacking

Neutral

Comfortable

Figure 5: How respondents find the variety of desserts in tertiary schools

28 of the respondents or 93% feel that the ambience offered when consuming
desserts is lacking while the rest (7%) were neutral. No respondents found the
ambience of dessert stalls/restaurant comfortable. This is perhaps again due to the
lack of any real dessert restaurants/cafes in tertiary schools, as desserts are often
sold in stalls located in canteens. As such, there is no real restaurant ambience. The
proposed plan for the dessert restaurant would include the renovation and
transformation of a small but strategically located area into a cosy and warm hangout
for students. This hangout would allow students to relax and take a break from
studying while enjoying our delicious desserts.

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What is the maximum amount consumers would spend on a single

visit to a dessert stall?

13%

13%
$2-$3

17%

$4-$5
$5-$6

$7-$8
57%

Figure 6: Respondents maximum expenditure on a single visit to a dessert

stall

57% will be willing to spend about $5-$6 on a single visit to a dessert stall. 13% are
willing to spend $7-$8 on a single visit to a dessert stall. Another 13% are willing to
spend $2-$3 on a single visit to a dessert stall. 17% are willing to spend $3-$4 on a
single visit to a dessert stall.
With 57% of the participants willing to spend $5-$6 on a single visit to a dessert stall,
as well as the dessert consumption frequency rate of about 6 times per week, we
can therefore expect high sales revenue to be generated.

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SWOT Analysis
Strengths
Dessert Empire will be the only cafe opened in Ngee Ann Polytechnic that
specialises in desserts. Hence, it will be the only choice for students who are in
search for a cafe within campus during free time.
There will be a wide variety of dessert that ranges from Western pastries and
milkshakes to Asian shaved ice dessert with assorted flavours. The menu will be
able to cater to every student.
The focus of the interior design of the cafe is the cosiness. The cafe will give off a
soothing ambiance with warm lightings and comfortable sofa seats. This is to allow
the students and lecturers to seek refuge from the hectic day.

Weaknesses
The menu of the cafe is generally slightly more expensive compared to the local
desserts offered in the canteens of Ngee Ann Polytechnic. Students may not be
willing to spend their limited pocket money on the desserts in the cafe on a daily
basis.

Opportunities
The target audience for the cafe is campus wide. Ngee Ann Polytechnic has
approximately 40,000 students. There are 5 polytechnics in Singapore currently, and
a handful of local and private universities. There is a wide potential market for
Dessert Empire to expand to other tertiary institutions and universities.

Threats
Dessert stalls at the canteens may add more variety of desserts for the students to
attract them. The canteen stalls will be able to sell the desserts at a lower and more
competitive price compared to the cafe. In addition, students may not particularly
have time to relax in a cafe during school time due to their hectic schedules and
timetable.
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S.M.A.R.T GOALS
Specific
The company is targeting at students of Ngee Ann Polytechnic who are looking for a
cosy caf to hang out and enjoy premium desserts in the campus.

Measurable
Given the popularity of desserts among youths, Dessert Empire is confident there is
a high demand for desserts among students in Ngee Ann Polytechnic.

Attainable
Students spend most of their time in school and often meet up in campus for
academic related purposes or simply to hang out. For this purpose, a caf with a
cozy and relaxing ambiance would serve as an attractive and conducive environment
for students. Guerrilla marketing can be utilized through word of mouth by students,
not only within the school but also outside of the school and this would inevitably
help Dessert Empire gain exposure.

Realistic
Ngee Ann polytechnic is one of the top tertiary institutions in Singapore. Setting up a
dessert caf in a prestigious school would help to create publicity and awareness of
the brand. It is expected that within a month from the opening of the caf, majority of
students, in and outside of Ngee Ann Polytechnic would have heard of the caf.

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Target

$6,000

$9,600

$7,200

$10,800

$8,400

$12,000
Shaved Ice Dessert
Milkshake
Pastries/Cakes

$12,000

Year 1

$18,000

Year 2

$24,000

Year 3

Targeted monthly gross income from the Dessert Empire stall in Ngee Ann
campus

In year 1, Dessert Empire aims to have gross revenue of $27,600 per month. In year
2, it aims to increase its gross revenue to $36,000 monthly. Lastly, in the last
forecasting year, the company plans to have the gross revenue of $44,400.

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Financial Plan
Production Cost (Per Pastry/Cake)
Direct Materials (Ingredients):
Butter
Eggs
Flour
Direct Labour:
Total Cost:
Production Cost (Per Milkshake)
Direct Materials (Ingredients):
Milk
Cream
Fruits
Direct Labour:
Total Cost:
Production Cost (Per dessert)
Direct Materials (Ingredients):
Syrup
Jellies
Direct Labour:
Total Cost:
Selling Price
1 slice of pastry/cake
1 cup of milkshake
1 bowl of dessert
Profits
1 slice of pastry/cake
1 cup of milkshake
1 bowl of dessert
Operational Cost (Annual)
Purchase of Materials
Labour Cost
Utilities
Rental
Total Cost:
Start-Up Cost
Capital
Renovation
Purchase of Fixed Assets
Operation Cost

$0.50
$0.30
$0.40
10 minutes
$1.20

$0.20
$0.20
$0.40
2 minutes
$0.80

$0.30
$0.20
5 minutes
$0.60
$4.50 - $7.00
$3.30 - $6.00
$1.50 - $2.50
$3.30 - $5.80
$2.50 - $5.20
$0.90 - $1.90
$40,000
$90,000
$144,000
$24,000
$298,000
$500,000
$80,000
$122,000
$298,000

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Forecast for 3 Years Plan

Year 1
Year 2
Year 3

Value for
Pastries/
Cakes Sold
$144,000
$216,000
$288,000

Value for
Milkshake
Sold
$115,200
$129,600
$144,000

Value for
Dessert
Sold
$72,000
$86,400
$100,800

Gross
Revenue
$331,200
$432,000
$532,800

Profit
Before
Tax
($288,800)
$134,000
$234,800

Return of Investment
ROI = Net Profit before Tax / Owners Equity
Year 1: (0.576)
Year 2: 0.268
Year 3: 0.470

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Appendices
Appendix A
1. How frequent do you consume desserts weekly?
Never
1 - 3 times
4 - 6 times
More than 6 times

Response Response
Percent
Total
3%
1
7%
2
20%
6
70%
21
Total Respondents
30

Response Response
2. Where would you want a dessert restaurant to be located
Percent
Total
at?
Bus interchanges
7%
2
Neighborhood Plaza
3%
1
Shopping Malls
10%
3
Tertiary School
80%
24
Total Respondents
30
Response Response
Percent
Total
23%
7
27%
8
33%
10
10%
3
7%
2
Total Respondents
30

3. How favorable are you to the idea of a dessert restaurant?

Very favorable
Favorable
Neutral
Unfavorable
Very Unfavorable

Response Response
4. How do you find the deserts currently offered in tertiary
Percent
Total
schools In terms of Variety
Limited
63%
19
Neutral
23%
7
Wide
13%
4
Total Respondents
30
Response Response
5. How do you find the deserts currently offered in tertiary
Percent
Total
schools In terms of Restaurant Ambience
Lacking
93%
28
Neutral
7%
2
Comfortable
0%
0
Total Respondents
30

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6. What is the maximum you would spend on a single visit to Response Response
Percent
Total
a dessert stall?
$2-$3
13%
4
$4-$5
17%
5
$5-$6
57%
17
$7-$8
13%
4
Total Respondents
30

21

Appendix B

22

Appendix C

23