Café+ – Brisbane’s Premier Coffee Shop

Our Mission and Goal

Question:

Describe about Assumptions, Budget and Expected Profit and loss statement for the Cafe+?

Café+ will be located charlotte street, Brisbane, Queensland. Coffee shop business is one of the bumming industries in Australia because of the rise in the demand of the quality coffee and gourmet at value price.  The café will be owned by the sole proprietor with several year of experience.  The café + will be open for business from Sunday to Saturday 7-10pm (Augenti, 2010).  The café+ will b serving the various types of coffee, teas along with the pastry, muffins, breads, cookies and rolls.  The entire bakery stuff will be supplied daily by the local farmers. Café+ will have exposure from food to beverages especially in the current locations. Although there are number of Café house for the present in the Brisbane but lack of quality of coffee and price are some of the major opportunity which helps the business café+ to grow in the Queensland market (Baligh,  2007).

Mission

• To satisfy the customer needs for high quality coffee along with delicious and nutritious meals
• Excellent service with high degree of unique and fresh products served
• Comfortable and relaxing environment for relaxing and enjoying the latte and pastries in town.
• Café+ will be looking to earn the profit to increase the employee satisfaction while providing stable return.
• Employees of the Café+ will be treated fairly with salary and the other major facilities.
• People of all ages and backgrounds will be welcomed and enjoy the cuppa with family and friends.

Objectives

• To become one of the bets coffee shop in the Brisbane in compare to its competitors.
• Turn the profit from first month of the operations
• Achieve the high market share within the 1^st
• Increase the number of the customers by 32% every year
• Undertaking more aggressive marketing and promotions
• Improving the cost control by reducing the operational wastage (Barringer, 2010).
• Maintaining the same price level by creating the unique, upscale, innovative environment that will differentiate from the local coffee houses.
• The environment will have affordable access to the resources of the internet and other facilities within the café +.
• Maintain 45% gross profit every month (Barney, 2009).

Key success factors

• Design of the store will be both visually attractive and designed for the quick operations  in order create high brand value.
• Training given to the employee to ensure the best coffee preparations techniques
• Marketing strategies aim to build solid base of loyal customers as well as maximizing the sales
• Varieties of coffee to tea to soft drinks along with free Wi-Fi that is not available with existing competitors (Barrow, 2011).
• Creation of unique and innovative form of atmosphere which will differentiate Café+ with others
• Establish the Café+ club for socializations and entrainment.
• Varieties within the gourmet like muffins, Chocó lava, to fruit cake and smoothies which will create niche market for the café+ among the competitors (Clarke, 2010).

Assumption

 The Brisbane market for the coffee shop is been one of the major strength for the business. Most of the population in Brisbane has been habituated to do their breakfast at the coffee shop.  The café+ will be selling the cup of the coffee at value pricing as per the customer orders (Drummond et al. 2012). The café+ will be selling espresso drinks , brewed coffee and teas as well as some of the major refreshments  beverages along with varieties of the gourmet which  is not been sold by the other members. The total capital invested for the café + will be 209,810 that will be break down cost for the monthly expense of 187,300 out of which 22,510 was paid in the advance. 

One of the major marketing objectives is to maintain the sales of 536,650 for the 1^st year and achieve the more than 35% of Brisbane market shares within the 12 months are some of the major marketing objectives for the company.  The product will less costly and will be convenient place for the customer to eat healthy and live healthy (Jackson et al. 2008). Some of the other products which are sold by the Café+ are Green tea, Tulsi tea and cardamom tea along with organic form of gourmet which will be increasing the market share of the company in the current business market. 

Features	Benefits	Unique
Environment of café +	Comfortable  and relax along facilities of Wi-Fi	Yes
Quality of coffee and tea	Refreshing and fresh	Nm
Variety of coffee tea, gourmet and meals	Lots of options of the customers	No
Fresh and organic meals	Health and well being	Yes
Chef	High quality meals and espresso and tea	Yes
Desserts and cakes	Complimentary with coffee and meals	No

ANNUAL SALES FORECAST for Café+
Sales Forecast	AUD $ 2015	AUD $ 2016	AUD $ 2017
Products
Coffee beverages	350,400	385,440	423984
Tea and other beverages	87,600	96360	105,966
Gourmet etc	146,000	160,600	176,660
total sales	584,000	642,400	706,610
Direct cost of sales
Coffee  beverages	87,600	96360	105,996
Tea and other beverages	43,800	48,180	52,998
Pastries	73,000	80,300	88,330
subtotal direct cost	204,400	224,840	247,324

Fixed Cost for Café +
Equipment	Amount ($AUD)
Espresso Machine	6000
Coffee Maker	900
Coffee Grinder	200
Food service equipment	18000
Storage	3720
Counter Area Equipment	9500
serving Area Equipment	3000
Bookkeeping  register	13,750
Office equipment	3600
Miscellaneous Expenses	500
Total usage of the equipment for 300 days (Excluding national holidays)

Employees	AUD $ 2015	AUD $ 2016	AUD $ 2017
Managers	35000	37800	40824
Employee (3 waiters, 2 dishwashers, 2 security guard 1 book keeper accountants	50,000 (6000*4=24000) (2500*2= 5000) (3000*2=6000) 5000 10,000	54000	58320
Chef	39600	52000	56000
Total people	10	11	13
Total payroll	124,600	143,800	155,144
Note : Working on the 3000 days as per the flexible working timings from (7am to 9pm ) every days ( except on national holidays)

Although the managers and owns are experience in the chosen industry but some of the major employee are required which will help to garb the opportunity to manage the café+ (Kaufman, 2010). Most of the personnel plans are very much required to control and develop the business objectives to achieve. With the help of flexible work timings and changing shift will help the business to manage and control the business (Rhyne, 2009).

Segmentation bases		Target customers segment of Fast food industry
Geographic	Region	Queens land, Brisbane
	Density	Rural and Urban (1.23 million)
	Age	All age category
	Gender	Male, females and others
	Income	High ,Low and middle income groups
	Occupation	Employees and professionals
Demographic	Social status	Working class, middle class and higher class
	Family size	Single, nuclear, joint family
Psychographic	Lifestyle	Traditional and moderns
	Occasions	Regular  and other Festive seasons
Behavioural	Benefits	Price advantages and diversify products under one roof.
	Occasions	Parties, Birthdays, anniversary and festive season along with normal days

From the above, it has been found that, both the partners will be investing 50,0000  each in order to on the business . The rest of $345000 is been arranged by the debt financing. Debt financing is one of the prominent ways of financing the business (Farrell,  2007). However, with large interest rates make it more riskier and dangerous. Apart from that, next options will be equity financing which has been which will not be easily available for the business because of new entrepreneur. It is less risky than the debt but company has to share with profit with the general share holders (Germain et al. 2008).

Our Products and Services

Assumptions

Particulars	2015	2016	2017
Current interest rates	10%	10%	10%
Long term interest rates	10%	10%	10%
Tax rates	25.43%	25%	25.50%

Income statement  for the Café+ for the year 2015-17
Particulars	AUD $ 2015	AUD $ 2016	AUD $ 2017
Sales	584,000	642,400	706,640
Direct cost (Raw materials and equipments)	204,400	224,840	247,324
Gross profit	379600	417,560	459,316
Expenditure
Salary	124600	143,800	155,144
Sales and marketing expenditure	25,800	27,600	31,000
Depreciations	5400	5500	5500
Rent	48400	52800	52800
Lease rent	6000	6000	6000
Maintenance	5840	6424	7066
Phone and register	9000	9500	10000
Total operating expenses	243,730	273,194	290782
PBIT	135,870	273,194	290,782
EBDITA	141,270	1443660	168,534
Interest expense	2821	2326	1618
Tax incurred	33740	35,510	42,424
Net profit	99,308	106530	124,491
Net sales	17%	16.58%	17.62%

Sales forecast for the year 2015
Sales	month 1	month 2	month 3	month 4	month 5	month 6	month 7	month 8	month 9	month 10	month 11	month 12
Sales
Coffee beverages	24000	27000	28800	28800	28800	28800	28800	28800	29400	31200	33000	33000
Tea and other beverages	6000	6750	7200	7200	7200	7200	7200	7200	7350	7800	8250	8250
Gourmet etc	10000	11250	12000	12000	12000	12000	12000	12000	12250	13000	13750	13750
total sales	40000	45000	48000	48000	48000	48000	48000	48000	49000	52000	55000	55000
direct cost
Coffee  bevergaes	6000	6750	7200	7200	7200	7200	7200	7200	7350	7800	8250	8250
Tea and other beverages	3000	3375	3600	3600	3600	3600	3600	3600	3675	3900	4125	4125
Pastries	5000	5625	6000	6000	6000	6000	6000	6000	6125	6500	6875	6875
subtotal direct cost	14000	15750	16800	16800	16800	16800	16800	16800	17150	18200	19250	19250

Profit and Loss Statement for the year 2015
	month 1	month 2	month 3	month 4	month 5	month 6	month 7	month 8	month 9	month 10	month 11	month 12
Sales	40000	45000	48000	48000	48000	48000	48000	48000	49000	52000	55000	55000
Direct cost	14000	15750	16800	16800	16800	16800	16800	16800	17150	18200	19250	19250
Gross profit	26000	29250	31200	31200	31200	31200	31200	31200	31850	33800	35750	35750
Expenditure
Salary	10383	10383	10383	10383	10383	10383	10383	10383	10383	10383	10383	10383
Sales and marketing expenditure	2150	2150	2150	2150	2150	2150	2150	2150	2150	2150	2150	2150
Depreciations	450	450	450	450	450	450	450	450	450	450	450	450
Rent	0	4400	4400	4400	4400	4400	4400	4400	4400	4400	4400	4400
Lease rent	500	500	500	500	500	500	500	500	500	500	500	500
Maintenance	400	450	480	480	480	480	480	480	490	520	550	550
Pay roll taxes	1558	1558	1558	1558	1558	1558	1558	1558	1558	1558	1558	1558
Phone and register and WIFI	750	750	750	750	750	750	750	750	750	750	750	750
Total operating expenses	16191	20641	20671	20671	20671	20671	20671	20671	20681	20711	20741	20741
PBIT	9809	8609	10529	10529	10529	10529	10529	10529	11169	13089	15009	15009
EBDITA	10259	9059	10979	10979	10979	10979	10979	10979	11169	13089	15009	15009
Interest expense	248	245	243	241	239	236	234	232	232	229	227	225
Tax incurred	2868	2091	2572	2572	2573	2574	2574	2735	3216	3696	3696	3696
Net profit	6693	6273	7715	7716	7718	7720	7721	7723	8205	9647	11088	11090

Cash Flow for the year 2015 , Café+
Particulars	month 1	month 2	month 3	month 4	month 5	month 6	month 7	month 8	month 9	month 10	month 11	month 12
cash sales	40000	45000	48000	48000	48000	48000	48000	48000	49000	52000	55000	55000
Sales tax	0	0	0	0	0	0	0	0	0	0	0	0
long term liabilities	0	0	0	0	0	0	0	0	0	0	0	0
total	40000	45000	48000	48000	48000	48000	48000	48000	49000	52000	55000	55000
Cash spending	10383	10383	10383	10383	10383	10383	10383	10383	10383	10383	10383	10383
Bill payments	728	22112	30569	29450	29449	29447	29447	29445	29474	30424	32727	34199
total Spent on operations	11,112	32,496	40228	40952	39834	39832	39830	39829	39857	40808	43110	4458
Repayment of loan	275	275	275	275	275	275	275	275	275	275	275	275
total cash spent	11387	32771	40503	41227	40109	40107	40105	40104	40132	41083	43385	44853
net cash flow	28613	12229	7497	6773	7891	7893	7895	7896	8868	10917	11615	10417
cash balance	95736	107966	115462	122235	130127	138020	145914	153811	162679	173596	185211	195,358

Balance Sheet for Café + for the Year 2015
Particulars	month 1	month 2	month 3	month 4	month 5	month 6	month 7	month 8	month 9	month 10	month 11	month 12
Asset
Current Asset
cash	95736	107966	15,462	122,235	130,127	138,020	145,914	153,811	162,679	173,596	185,211	195,358
Inventory	15400	17325	18480	18480	18480	18480	18480	18480	18865	20020	21175	21175
total current asset	83150	111136	125291	133942	140,715	148607	156500	164,394	172291	181544	193616	206386
long term asset	59170	59170	59170	59170	59170	59170	59170	59170	59170	59170	59170	59170
depreciation	450	900	1350	1800	2,250	2700	3150	3,600	4050	4500	4950	5400
total long term asset	58720	58270	27820	57370	56920	56470	56020	55570	55120	54670	54220	53770
total asset	169856	183561	191762	198085	205,527	212970	220414	227,861	236664	248,286	260606	270,303
liabilities
current Liabilities
accounts payables	21118	28825	29587	28469	28465	28464	28462	29335	31586	33092	31974	31974
current borrowing	9725	9450	9175	8900	8625	8350	8075	7800	7525	7250	6975	6700
total current liabilities	30843	38275	38762	37369	37092	36815	36539	36262	36800	38836	40067	38674
long term liabilities	20,000	20,000	20,000	20,000	20,000	20,000	20,000	20,000	20,000	20,000	20,000	20,000
paid up capital	140000	140000	140000	140000	140000	140000	140000	140000	140000	140000	140000	140000
earning from selling of ownership	-27680	-27680	-27680	-27680	-27680	-27680	-27680	-27680	-27680	-27680	-27680	-27680
Total capital	119013	125286	133000	140717	148435	156154	163876	171599	179804	189450	200538	211628
total liabilities	169856	183561	191762	198085	205527	212970	220414	227861	236664	248286	260606	270303
net worth	119013	125286	133000	140717	148435	156154	163876	171599	179804	189450	200538	211628

Ratios
Profitability ratios	month 1	month 2	month 3	month 4	month 5	month 6	month 7	month 8	month 9	month 10	month 11	month 12
Current ratios	2.70	2.90	3.23	3.58	3.79	4.04	4.3	4.53	4.68	4.67	4.83	5.34
Current asset/current Liabilities
Gross profit margin ratio	0.65	0.65	0.65	0.65	0.65	0.65	0.65	0.65	0.65	0.65	0.65	0.65
(gross profit*100)/sales
ROA ratio	0.060	0.049	0.057	0.055	0.053	0.052	0.050	0.048	0.047	0.053	0.058	0.056
(EBIT*100)/total asset
ROCE	5.51	4.80	4.95	5.30	5.54	5.78	6.03	6.28	6.43	6.39	6.50	6.99
Total asset/current liabilities
Expense ratio	0.98	0.9	0.94	0.94	0.94	0.94	0.94	0.94	0.95	0.98	0.98	0.98
(expenditure/revenue)

From the above financial feasibility, it has been found that, current ratio for the business is been adequate enough to handle the their operation which is to manage the employee pay roll and the manage the short term purchasing for the company which coffee beans, gourmet raw materials and the various napkins and the utensils for the business (Germain et al. 2008). The Current Ratio and the Quick Ratio (Acid Test) are both very high reflecting the fact that the business has a very strong and positive cash flow. This is due to sales being predominantly cash, whilst purchases are bought on largely on 30 day terms. Liquidity is sound.

The current ratio of the company is there has been numerous occasion  where the companies are looking to spend on the advertisement which will help the company to gather the large customer base of the Brisbane Australia (Glynett, 2012).  After the ROCE of the company is for the  first is more than 5 which shows that company has invested in the right  areas for the owners of the company. The ROCE depicts the return on capital employed which has been one of the most important parts of the business ratios to understand whether or not company is bale to invest in the right areas (Morris et al. 2011).

Apart from that, ROA of the company for the 2015 is very much depicts that company is able to manage and control asset as per the company development. ROA is been one of the major areas for the business which will give an insight for the valuation of asset. Expenditure ratio of the company is very much able to higher which shows that company is able to manage and control the revenue for the company. Besides that, gross profit margin of the company is higher than the expectation which is 0.65 (Godsmark et al. 2009).   The ratio for the café+ shows that company has enough cash and asst to manage its expenditure in the long run for the company.

Conclusion

From the above, it has been found that,  the study, the research project highlights the relationship existent between  the business plan and resources. The entire discussion on the selected topic centers round the aspect of understanding of the business and the financial feasibility which will helps to give an insight for  whether the company is able to create the profitability with current business trend or not . As observed from the primary research, impact of financial feasibility is no doubt shows the positive aspect for the current business process. The study of the chapter described the response of expected financial  plan which helps to gather the information  to explain whether t or not the business is profitable . With help of cash flow ,  it has been found that company has enough cash to maintain the  operation of the company. Apart from that, with help of income statement, it shows company ahs to investment 500, 00 of investment which will give the company enough scope to manage and control the expenditure and income. Lastly, balance of the  café+ very much help to understand whether the company is has  asst like land and building and the equipment which the company ahs top purchase for the sake of the running the business.   With the help of ratio analysis , it has been found that company ROCE is higher rather than what is was expected , therefore the business is very much financially feasible. Lastly, with the help of budgeted financial statements like profit and loss statement and the balance sheet would help to analyses the potential net return on investment of the ownership along with total expenditure.

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