CHERRY TREE Caf

2011-2012 Expansion Business Project Plan

By: Cherry Wendy Zoe Sarah Roy

Introduction
CHERRY TREE is a contemporary caf located adjacent to the largest university campus, aiming to offer an affordable high quality coffee & 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

To achieve our goal, we need to control following elements:

Product quality: The food, coffee beverages would be of high value and quality

Service: Our staff will be well trained to provide excellent services.

Marketing Campaign: Introducing CHERRY TREE loyalty 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 Caf to achieve target revenue meanwhile providing excellent customer service.

Project stakeholders and team

y The expanded Cherry Tree caf will be a registered coffee

business that runs as a partnership.

Internal Investors Management Employees External Vendors and Suppliers Banks Customers Government Operating General manager Accountants Full time barista and patisserie cook Shop assistant Delivery

What Makes Us Different

New modern look, classy and relaxing environment A dining lounge with a small reading area Free Wi-Fi spot WiThe introduction of a set of popular breakfast/lunch menu and new line of coffee beans Regular maintenance service on our coffee machine and quality check on the coffee blend used Targeting a net profit of at least 15% by the end of the 2nd year

Market Research
Industry analysis: More than one billion cups of coffee are consumed in Australia each year, an increase of 65% over the last 10 years. The total revenue of this industry is AUD 5 billion with annual growth of 2.6% from 2007 to 2012. This unique market sustained demand during the recent global economic downturn. During this period, revenue for the industry grew compared to rival hospitality industries like restaurants which experienced a decline in revenue for 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 same time, hot dry summers drive people into cafes to order iced drinks. This coffee shop can also provide a relaxing environment for tourist costumers who usually spend considerable time in Melbourne CBD.

Competitor analysis: This cafes direct competitors include Gloria Jean's, Starbucks and many sole local cafes. The proposed coffee shop strongly emphasis not only offers one of the best tasting coffee and cakes, but also provides home-like and comfortable environment. Environmental aspect of industry: In Australia, Sustainable coffee has the largest growth with an annual growth rate between 10% and 20%. Both Rain forest Alliance and Fair Trade coffees are now available in Australia. We consider supporting these programs to more outstanding in the market.

S.W.O.T
STRENGTH Location: The location factor is a key strength for setting-up WEAKNESSES:
OPPORTUNITIES THREATS

value-added services and quality though the potential customers products at in the university is competitive prices. Demand: Increasing number vast, due to the nature of the of students would Introducing business in the stream into the caf various university makes at lunchtime products to meet the customer the overall demand potential as a Customer base: critical weakness as of the customers. The customer base much as it is is not only argued as a Promotion university students strength. through embracing but also visitors culture who accompany the students

Volatile Customer base: Even

Pricing: Offer

Renovation competitive pricing, costs: The

renovation cost is as much as the cost for new entrants into the industry. With the rapid deployment in Melbourne, there is stiff competition in our target market along with the increase in the developing opportunities.

Strategies
High quality using 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 from manufacturers in countries like China to reduce cost achieving a 30% cost saving

Estimated financial profit

The partners have provided the company with sufficient start-up capital, and we are looking for more investments from both finance company and banks as the business carries on. CHERRY TREE Caf will maintain a healthy 62% gross margin, margin which will see its net worth doubling in two years. An annual projected sale of $450,000 in FY 2012 (in line with the industry averages). We anticipate its net profitability to increase from 16.86% in FY 2012 to 19.59% in 2014. The companys net worth is expected to increase from approximately $80,000 by the end of FY 2012 to approximately $300,000 in 12 years time (FY 3014).

Projected P&L
Projected Profit and Loss Sales Sales Revenue Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Sales and Marketing and other Expenses $90,000 $110,000 $122,000 $450,000 $171,000 $0 $171,000 $279,000 62.00% $550,000 $209,000 $0 $209,000 $341,000 62.00% $610,000 $231,800 $0 $231,800 $378,200 62.00%

Year 2012

Year 2013

Year 2014

$2,000

$2,000

$2,000

Year 2012 Depreciation Rent Maintenance Utilities/Phone Other Total Operation Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred 30% Net Profit Net Profit/Sales $5,000 $40,500 $4,500 $6,000 $13,500 $161,500

Year 2013 $5,000 $40,500 $4,500 $6,000 $16,500 $184,500

Year 2014 $5,000 $40,500 $4,500 $6,000 $18,300 $198,300

$117,500 $6,390 $35,250 $75,860 16.86%

$156,500 $6,390 $46,950 $103,160 18.76%

$179,900 $6,450 $53,970 $119,480 19.59%

Projected Balance Sheet

Projected Balance Sheet Assets Current Assets Cash in Hand Inventory Other Current Assets Total Current Assets Accumulated Depreciation Others Total Noncurrent Assets Total Assets $170,000 $20,000 $0 $190,000 $5,000 $0 $5,000 $195,000 $220,000 $25,000 $0 $245,000 $10,000 $0 $10,000 $255,000 $350,000 $28,000 $0 $378,000 $15,000 $0 $15,000 $393,000

Year 2012

Year 2013

Year 2014

Year 2012 Year 2012 Liabilities Liabilities Accounts Accounts Payable Payable Others Total Current Total Current Liabilities Liabilities Long-term Long-term Debt Debt Total Liabilities Total Liabilities Owner's Equity Capital Retained Retained Earnings Earnings Total Equity Total Equity Total Liabilities Total Liabilities and Equity and Equity

Year 2013 Year 2013

Year 2014 Year 2014

$31,974 $0 $31,974 $31,974 $80,000 $80,000 $111,974 $111,974

$31,947 $0 $31,947 $31,947 $60,000 $60,000 $91,947 $91,947

$34,836 $0 $34,836 $34,836 $40,000 $40,000 $74,836 $74,836

$100,000 -$16,974 $83,026 $83,026 $195,000 $195,000

$100,000 $63,053 $163,053 $163,053 $255,000 $255,000

$100,000 $218,164 $318,164 $318,164 $393,000 $393,000

Conclusion
In conclusion, opening and running an expanded size quality caf is not an easy job. To make our business successful, we have done a considerable amount of market research on cafe and local hospitality industry. Legal issues and policies involved are consulted. Business risks are accessed by both internal partners as well as external organization. These have given us various innovative ideas to run our business with risks minimized. However, incidental cost will be taken into account by getting an business insurance

Reference
http://www.acta.org.au/news.php http://www.ibisworld.com.au/industry/default.aspx?indid=2015 http://www.melbournecoffeereview.com/ http://www.ato.gov.au/content/downloads/BUS25193n19080711.pdf 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+Responsibi lities/ y http://www.epa.vic.gov.au/noise/residential/prohibited-hours.asp y http://www.melbourne.vic.gov.au/enterprisemelbourne/Pages/Home. aspx
y y y y y

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