Our the property on Parnie Street in the Merchant city (behind the Tron theatre) is one mile from Buchannan Street and Argyle Street, two major shopping areas, and very close to the University of Strathclyde.
Our competition in this are can be broken down into two main categories.
The majors – These are major coffee shop brands, namely Starbucks, Costa Coffee and Café Nero on Buchanan Street and Bean scene on Argyle Street. These establishments have scale, no shortage of capital, standardised operations, a good training model and excellent purchasing power. Above all they all have strong brand names.
The locals – These are the regular small coffee shops like Where The Monkey Sleeps, West Regent Street and AMT Coffee. These outfits are preferred by a lot of coffee drinkers as they have a better and more familiar vibe and are cheaper than the major coffee brands. They usually are short of capital, have no major expansion plans for future.
We need to offer something that will be attractive to customers of both these categories of coffee shops.
- We have to demonstrate the high quality and professionalism like the majors.
- We need to have the feel of a local coffee shop and offer better value.
- We must exhibit our values throughout the operation.
Coffee shop Description:
- An area of 190 square metres at Merchant City, in the heart of Glasgow.
- A comfortable and congenial environment.
- Providing not only coffee but other drinks sandwiches, cakes and salads.
- Quality at a fair price.
- Excellent customer service.
- A place to meet friends or just kick back and relax.
The coffee shop can be refurbished to present a slightly professional but a very stress-free atmosphere and design would be built around this. We would like to introduce pub-style seating to cater to the different needs of the customers and to maximise the floor-space utilisation.
Customers-
We are basically targeting
- The local residents.
- Office Employees
- Shoppers
- Families
- Students
- Home-based workers
Marketing and Advertising:
A large part of our target customer base include local employees and home-based workers who work in the surrounding areas, and resident students within a two-mile radius. Coffee Kingdom is very close to two major commercial streets; Buchanan Street and Argyle Street. In this area there are at least 20 superstores like Primark, Marks & Spenser’s and Top Shop where approximately 500 customer visits within each stores. The other smaller streets in this area are lined with small shopping centres. The Strathclyde University Halls are also situated close to Coffee Kingdom, and therefore a 10% students discount would be an advantage.
We definitely need to put in more work on our brand and the marketing. However, we believe in the brand “Coffee Kingdom” to make it more popular. Advertisement can be in the form of posters, table leaflets, and maybe even t-shirts. The advantage of it is that it fits with lots of other letters to make great words. We would also love to have leaflets and posters around with a word at the top, and then a description. Our advertising can also be extended to buses, trains and local newspapers.
Website Marketing Strategy
All communications materials will include the Coffee Kingdom’s website address. For the media, online information will be available which will include downloadable images of coffee shop with some funky designs of the coffee kingdom with coffee beans, stories of interest, testimonials, insight on management how they work and how the business is carried on. Also we would promote our gift items which would be available during festival times. We will host online "events" for our customers.
We need to target our advertisements in a way where we reach the right people. We need to attract people to the coffee shop via
- Publicising Coffee Kingdom at major people centres like Buchanan Street and Argyle Street
- Word of mouth
- Leaflets distributed at nearby bus stops, tube stations and surrounding areas.
- Promotional coupons distributed in an around the University of Strathclyde
- The take-away cups can have the logo of Coffee Kingdom to increase brand recognition
- Ensure that people come back and be long time loyal customers
- Great design & comfortable places to rest.
People & Management:
The manager of Coffee Kingdom is required to have the following qualifications. The manager has to have been in the food industry most of his working life, cooking commercially for a number of years, working in a variety of restaurants and trained under expert chefs. He or she needs to have worked in all areas, including management of kitchens, bakeries, coffee bars, front house staff, and catering facilities. This person also must have experience in purchasing food, scheduling kitchen and waiting staff, food cost control, inventory, hiring and firing, teaching food service sanitation to staff, safety, food handling procedures, and labour cost control. This kind of knowledge in the beverage business is very valuable to us. He or she must also be accustomed to keeping diligent records for sales, product, and inventory information.
If the present manager does not meet these expectations a new recruit will be required. The job will entail management of day-to-day operations including financial management including weekends and keeping the books and records up to date.
The full time and part time employees will be asked to sign our vision statement, and will be assessed against how well they adhere to these values in their work. We will require experienced people, with a friendly and personable manner.
We wish to offer a living wage of £7 an hour for the Shift Leader, £6 an hour for full time staff and £5.60 an hour for part timers.
Implementation and Development Plan:
We have designed a new price band for our main product. The price difference between sit-in and take-away will be reduced by 10 pence since majority of the customers from 8am to 6pm are shoppers or employees working in the Merchant City. To encourage student population to visit our Café we will offer a discount of 10% on every order placed, on producing their student ID. The free biscotti will be served only from 6pm to 9pm, this is again intended to attract students and avoiding the same during working hours will make sure that the waiting time is reduced during peak time. The subscription of magazine will be reduced to control the sitting-in time but the wi-fi usage will not be prevented.
We will collect coffee beans at the rate of £53 per case and arrange the delivery to be made free of cost. Since we have a reasonable power over the suppliers we will demand a further discount for the same.
An extra person will be introduced in the morning to prepare in-house bakery items. He will be a part-time employee and will be paid £5.6/hour. This will help us to provide fresh and tasty food and he will be working for 21 hours per week. We will employ two part-time workers who will be responsible for cleaning and sweeping the premises working for 7 hours/week, one person working in the morning and the other person in the afternoon. They will be paid the minimum wage which law insists. We have also decided to send the specialized sandwich maker for the highest level of training in Basic Food Hygiene. Every day before the shift time there will be a 10 minute role play on effective customer service, which will be ensured by the shift leader. Manager will be entrusted with more responsibilities since he is drawing a huge salary and since we cannot afford to loose his services at this stage.
We will arrange for various kinds of music to be played. For example, we will play fast music in the morning, soft and relaxing music during afternoon and ‘rock’ during evenings which is more popular amongst students.
Cold drinks will be made available during summer which will continue to be served in June, July and August. We have decided to include Coca-Cola, Pepsi, Fanta and Sprite in our menu, which will be served round the year. We will also serve packed juice during summer. Cakes, muffins and other bakery items will be included in the menu and will be procured from external sources which will help us save cost and improve quality since the contract has been given to one of the best producers in Glasgow.
We have designed a completely new layout which will appeal to customers and will also help us improve the productivity of the employees because a refreshing ambience will create a better work atmosphere. A new coffee counter will be created which will resemble the counter in a pub and this will provide an additional self-service facility for customers who are in a hurry. Take-away will be easier and will avoid any crowding within the shop. This will also help the serving staff to concentrate more on sit-in customers.
Financing:
Working capital is the amount of cash we need to carry out our Coffee Kingdom operations. We currently have no cash with us to buy the necessary supplies, pay the wages etc. However, since we have significantly changed the way the money is being spent our expenses for year 2007 calculated to be £64,081/-. Also, our loan payments for unsecured loan of 15,000 pounds which we are looking from you will be repaid by instalment of £312/- each month and we owe £6,727/- to our creditors. Our expected sales for this year (2007) is £2, 04,633/-. We have taken this value (sales) based on the minimum number of customers according to the data available to us from the previous setup, menu and prices. This will surely increase as we have added new items, reduced the price and upgraded the quality of our products. We will also need an unsecured loan of £15,000/- which will be used on expenses mentioned above. All the calculations are shown in the appendix document including the break even analysis, income statement, cash flow statement and balance sheet.
Break Even Analysis:
Fixed cost= £ 54,311/-
Variable cost= £ 9,770/-
Sales= £2, 04,633/-
Contribution= £1, 94,893 /-
Break Even pt= September 2007
Projected Profit and Loss
Projected profit and loss for the year 2007 is in graph below. Payroll expenses reflect the annual salaries of the manager, 2 shift leaders, 2 full time employees and 6 part-time baristas. Rental Expense is based on leasing 190 square feet.
We project marketing/Advertising expenses at £ 4,000/- for the year. Depreciation of the machinery is calculated using fixed cost method where the life of the machinery is for 9years.
Profit Monthly
Projected Cash Flow
Sales are in cash, giving excellent cash structure. Got good product sales and intelligent marketing will secure cash balance of close to £ 11,798 by end of December 2007.
Projected Balance Sheet
The following graph shows our projected assets and liabilities over the next year. We anticipate a steadily net worth, as we pay off our loan and sales show modest increases.
