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CHERRY TREE Caf
2011-2012
Expansion Business
Project Plan
By:CherryWendy
ZoeSarah
Roy
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Introduction
CHERRY TREE is a contemporarycontemporary caf located adjacentto thethe largestlargest university campus, aiming to offer anaffordable high quality coffeecoffee & food& food
Our project is to expand the existing small caf,providing a new friendly, comfortable
ambience meeting point.
Strike to achieve both our mission
statement and expected profit
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To achieve our goal, we need to controlfollowing elements:
Product quality: The food, coffee beverageswould be of high value and quality
Service: Our staff will be well trained toprovide excellent services.
Marketing Campaign: Introducing CHERRY TREEloyalty club program as well as providing sponsorship to
major student events as a way of advertising.
Management team:Act in the best interest of the Cafto achieve target revenue meanwhile providing excellent
customer service.
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Project stakeholders and team
y The expanded Cherry Tree caf will be a registered coffeebusiness that runs as a partnership.
Internal
Investors Management Employees
External
Vendors andSuppliers
Banks Customers Government
Operating
Generalmanager
Accountants Full time
barista andpatisserie cook
Shop assistant Delivery
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What Makes Us Different
New modern look, classy and relaxingrelaxingenvironmentenvironment
A dining loungedining lounge with a small reading area
Free WiWi--FiFispotspot
The introduction of a set of popularbreakfast/lunch menubreakfast/lunch menu and new line of coffee beans
Regular maintenanceRegular maintenance service on our coffee machine andquality check on the coffee blend used
Targeting a net profitnet profit of at least 15%15% by the end of the 2ndyear
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Market Research
Industry analysis:
More than one billion cups of coffee are consumed in Australia each year, anincrease of 65% over the last 10 years. The total revenue of this industry is AUD5 billion with annual growth of 2.6% from 2007 to 2012.
This unique market sustained demand during the recent global economicdownturn. During this period, revenue for the industry grew compared to rivalhospitality industries like restaurants which experienced a decline in revenuefor 2008 and 2009.
Customer analysis:The local climate in Melbourne, with considerable rainy days, is very
conductive for the consumption of hot non-alcoholic beverages. At the sametime, hot dry summers drive people into cafes to order iced drinks.
This coffee shop can also provide a relaxing environment for touristcostumers who usually spend considerable time in Melbourne CBD.
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Competitor analysis:
This cafes direct competitors include Gloria Jean's, Starbucks and manysole local cafes.
The proposed coffee shop strongly emphasis not only offers one of the besttasting coffee and cakes, but also provides home-like and comfortableenvironment.
Environmental aspect of industry:
In Australia, Sustainable coffee has the largest growth with an annualgrowth rate between 10% and 20%.
Both Rain forest Alliance and Fair Trade coffees are now available inAustralia. We consider supporting these programs to more outstanding inthe market.
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S.W.O.TSTRENGTH
Location:Location: Thelocation factor is akey strength forsetting-up
Demand:Demand:Increasing numberof students wouldstream into the cafat lunchtime
Customer base:Customer base:The customer baseis not onlyuniversity studentsbut also visitorswho accompany the
students
WEAKNESSES:
VolatileVolatileCustomerCustomer
base:base: Eventhough the
potential customersin the university isvast, due to thenature of thebusiness in theuniversity makesthe customer
potential as acritical weakness asmuch as it isargued as astrength.
OPPORTUNITIES
Pricing:Pricing: Offercompetitive pricing,value-addedservices and quality
products atcompetitive prices.
Introducingvariousvariousproductsproducts to meet
the overall demandof the customers.
PromotionPromotionthrough embracingculture
THREATS
RenovationRenovationcosts:costs: Therenovation cost isas much as the
cost for newentrants into theindustry.
With the rapiddeployment in
Melbourne, thereis stiffstiffcompetitioncompetition inour target marketalong with theincrease in thedeveloping
opportunities.
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Strategies
High qualityHigh qualityusing Imported coffee beans :
Our buyers will spend approximately 8 weeks
per year travelling to countries of origin,
including Colombia, Brazil, and Yemen etc.
Most of the equipment can be purchased frommanufacturers in countries like China to
reduce cost achieving a 30% cost saving30% cost saving
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Estimated financial profit
The partners have provided the company with sufficient start-upcapital, and we are looking for more investmentsmore investments from both financecompany and banks as the business carries on.
CHERRY TREE Caf will maintain a healthy 62% gross margin62% gross margin,which will see its net worth doubling in two years. An annualprojected sale of $450,000projected sale of $450,000 in FY 2012 (in line with the industryaverages). We anticipate its net profitability to increasenet profitability to increase from16.86% in FY 2012 to 19.59% in 2014.
The companys net worthnet worth is expected to increase fromapproximately $80,000 by the end of FY 2012 to approximately$300,000 in 12 years time (FY 3014).
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Projected P&L
Projected
Profit and
Loss Year 2012 Year 2013 Year 2014
Sales
Sales Revenue $450,000 $550,000 $610,000
Cost of Sales $171,000 $209,000 $231,800
Other $0 $0 $0
Total Cost of
Sales $171,000 $209,000 $231,800
Gross Margin $279,000 $341,000 $378,200
Gross Margin
% 62.00% 62.00% 62.00%
Expenses
Payroll $90,000 $110,000 $122,000
Sales and
Marketing and
other
Expenses $2,000 $2,000 $2,000
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Year 2012 Year 2013 Year 2014
Depreciation $5,000 $5,000 $5,000
Rent $40,500 $40,500 $40,500
Maintenance $4,500 $4,500 $4,500
Utilities/Phone $6,000 $6,000 $6,000
Other $13,500 $16,500 $18,300
Total Operation
Expenses $161,500 $184,500 $198,300
Profit Before
Interest and
Taxes $117,500 $156,500 $179,900
Interest
Expense $6,390 $6,390 $6,450
Taxes Incurred
30% $35,250 $46,950 $53,970
Net ProfitNet Profit $75,860$75,860 $103,160$103,160 $119,480$119,480
Net
Profit/Sales 16.86% 18.76% 19.59%
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Projected Balance Sheet
Projected
Balance
Sheet Year 2012 Year 2013 Year 2014
Assets
Current Assets
Cash in Hand $170,000 $220,000 $350,000
Inventory $20,000 $25,000 $28,000
Other Current
Assets $0 $0 $0
Total Current
Assets $190,000 $245,000 $378,000
Accumulated
Depreciation $5,000 $10,000 $15,000
Others $0 $0 $0
Total Non-
current Assets $5,000 $10,000 $15,000
Total Assets $195,000 $255,000 $393,000
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Year 2012 Year 2013 Year 2014
Liabilities
Accounts
Payable $31,974 $31,947 $34,836
Others $0 $0 $0
Total Current
Liabilities $31,974 $31,947 $34,836
Long-term
Debt $80,000 $60,000 $40,000
Total Liabilities $111,974 $91,947 $74,836
Owner's
Equity
Capital $100,000 $100,000 $100,000Retained
Earnings -$16,974 $63,053 $218,164
Total Equity $83,026 $163,053 $318,164
Total Liabilities
and Equity $195,000 $255,000 $393,000
Year 2012 Year 2013 Year 2014
Liabilities
Accounts
Payable $31,974 $31,947 $34,836
Others $0 $0 $0
Total Current
Liabilities $31,974 $31,947 $34,836
Long-term
Debt $80,000 $60,000 $40,000
Total Liabilities $111,974 $91,947 $74,836
Owner's
Equity
Capital $100,000 $100,000 $100,000Retained
Earnings -$16,974 $63,053 $218,164
Total Equity $83,026 $163,053 $318,164
Total Liabilities
and Equity $195,000 $255,000 $393,000
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Conclusion
In conclusion, opening and running an
expanded size quality caf is not an easy job.
To make our business successful, we havedone a considerable amount of market research on cafeand local hospitality industry. Legal issues and policiesinvolved are consulted. Business risks are accessed byboth internal partners as well as external organization.
These have given us various innovative ideas to run ourbusiness with risks minimized. However, incidental costwill be taken into account by getting an business
insurance
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Reference
y http://www.acta.org.au/news.phpy http://www.ibisworld.com.au/industry/default.aspx?indid=2015y http://www.melbournecoffeereview.com/y http://www.ato.gov.au/content/downloads/BUS25193n19080711.pdfy http://www.worksafe.vic.gov.au/wps/wcm/connect/wsinternet/WorkS
afe/Home/Insurance+and+Premiums/WorkSafe+Injury+Insurance/y http://www.worksafe.vic.gov.au/wps/wcm/connect/wsinternet/WorkS
afe/Home/Laws+and+Regulations/Employer+Rights+and+Responsibilities/
y http://www.epa.vic.gov.au/noise/residential/prohibited-hours.aspy http://www.melbourne.vic.gov.au/enterprisemelbourne/Pages/Home.
aspx
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yQuestion?
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yThank you!:]