1 BUSINESS PLAN The Guayaba Bagel and Coffee TRADING AS The Guayaba Bagel and Coffee Jose Antonio Vargas Cuinas Julie C Molina February 17th, 2015 The Guayaba Bagel & Coffee Limited -Business Venture- 2 CONTENTS INTRODUCTION Page Nature of business 4 People involved 4 Start-up costs 6 Legal Status 8 Aims 8 RESOURCES Premise details 10 Legal requirements 11 Health & Safety 11 Service Delivery Methods 11 Suppliers 12 Terms and conditions of sale THE MARKET Analysis of the Market 13 Market Research undertaken 14 Competition 14 Marketing Strategy 14 SWOT Analysis 15 FINANCE Start-up costs 17 Funding required 18 The Guayaba Bagel & Coffee Limited -Business Venture- 3 Costing 18 Breakeven point Calculation 19 Survival Budget 20 Sales & Profit Projections 21 Additional Information 22 The Guayaba Bagel & Coffee Limited -Business Venture- 4 INTRODUCTION NATURE OF BUSINESS To offer the public a complete menu with premium quality ingredients in the fast, chilled food area. Always bearing in mind a variety of ingredients and the healthiness of the food offered so that the best menu can be offered; to bear in mind our clientele and their dietary requirements. Our project is to maintain a coffee shop that provides fast, nutritionally balanced food; to establish a new image for bagels and ‘continental’ coffee shops in the market with a parallel of cereals, fruit salads, coffee, tea, fresh juices, etc. PEOPLE INVOLVED Two people will be involved and they will be equal partners in the business. Between them two there is a variety of skills and experience. A third person with the right skills and who has already been chosen will be hired from the day the business opens Jose Antonio – experienced in the set-up of a sales business, including distribution and commercialisation of merchandise to the market place with good logistical knowledge. Able to plan well for supply and demand, at the same time, maintaining a balance in the business allowing it to evolve and grow. Thrives under pressure, always keeping the goal in mind. One of his latest successful ventures is his 4 year old company that he set up in Venezuela called Vargas Sell, which specializes in importing Android and Apple computer and smart phones spares. Julie – varied background, mainly in banking and teaching. First jobs were in catering; bar work, waitressing and two years as a Trainee Hotel Manager in The Guayaba Bagel & Coffee Limited -Business Venture- 5 London, where qualification gained (BTEC Diploma in Hotel Management and Institutional Operations) was applied. Defined customer service skills and extensive experience in administration, especially billing and payments. Organised, methodical and plans well. Currently working as a TEFL Qualified English Teacher for an International School. Third Person – solid catering background in both his family’s restaurant in Venezuela and a Bagel Shop in Denmark. In the restaurant, Anthony undertook various roles, such as barman, cashier and, at times, working in the kitchen. In the Bagel Shop, where he was the main operative/manager, his responsibilities were diverse including food preparation and cooking, preparation of juices, barista, opening/closing the business on a daily basis, ordering and stock control. Also, has worked as a commercial photographer for products and on an artistic level. Roles and responsibilities Each of the partners to the business will, initially, work alongside one employee upon the opening of the business. This is to ensure the business is not overstretched and to be able to control costs/overheads. The long term plan is to be able to employ enough people to meet the customer demand and for the partners to concentrate on the areas that they dominate to manage the business themselves, working an equal number of hours each. As Julie has administration experience and some accounting experience, it will be her responsibility to ensure the administration side of the business is adequately covered and evidence for the same is available. Meanwhile, the employee, with his experience in this area, and Jose, with his entrepreneurial experience, will run the front of house operation. The Guayaba Bagel & Coffee Limited -Business Venture- 6 START UP COSTS Funding will be required and we will be looking to raise the start-up costs from business loans from financial institutions. Advice is being sought in this area, Costs are approximate: Rent: 2 months deposit, 1 month rent - Assuming £ 6,000.00 2,000 p/m Business Rates: Assuming £ 1,000 p/m £ 1,000.00 Kitchen, Full Decoration and Furnishing £ 75,000.00 Coffee Machine £ 2.000.00 Orange juice machine (Citrocasa) £ 1,000.00 Bagel Oven £ 1,600.00 Juice Extractor £ 1,600.00 Blender (Blendtec) £ 600.00 Kitchen Tools £ 600.00 Raw Material £ 1,000.00 Insurance £ 1,000.00 Licences £ 1,000.00 Advertising £ 1,500.00 Legal Costs £ 3.000.00 TOTAL The Guayaba Bagel & Coffee Limited -Business Venture- £ 96,900.00 7 Food Costs Type of Bread Units Pack Plain All Grain Chilli & Cheddar Everything Sesame Poppy Seeds Sundried Tomatoes 32 32 32 32 32 32 32 01 01 01 01 01 01 01 Unit Price (£) 0.47 0.47 0.47 0.47 0.47 0.47 0.47 Fillings Unit Kg Meat/Fish Spicy Chicken Plain Chicken Turkey Tasty Turkey Pastrami Tuna Salmon Serrano Ham Omelette Egg Salad Pulled Pork Chorizo Bacon 01 01 01 01 01 01 01 01 01 01 01 01 01 2.5 2.5 0.5 1.5 0.5 2.0 2.0 1.0 2.0 3.0 1.0 0.5 0.5 15.00 14.00 15.00 10.00 6.00 8.00 12.00 11.00 21.00 14.00 10.00 5.00 5.50 01 01 01 1.0 1.0 10.0 5.50 7.00 28.00 01 1.0 5.00 01 01 01 01 1.0 1.0 1.0 1.0 Cheese/Diary/Deli Cheddar Mozzarella Cream Cheese (Plain) Humus Purees Chilli Garlic Sundried Tomato Pesto The Guayaba Bagel & Coffee Limited -Business Venture- Cost price (£) Pack Price (£) 16.00 16.00 16.00 16.00 16.00 16.00 16.00 Unit price (£) 5.50 5.00 5.00 6.00 8 Vegetables/Salad Tomatoes Romaine Salad Onions Rucula Avocado Jalapenos Coleslaw Cucumber Spinach Sundried tomatoes Pickles 01 01 01 01 12 01 01 01 01 01 01 6.0 4.5 10.0 0.5 2.8 5.0 4.5 0.5 0.5 9.0 7.00 7.00 10.00 4.00 12.00 4.50 15.00 5.00 4.00 4.00 8.00 Dressings Curry Sour Cream Mustard Strong Mustard Mayonnaise 01 01 01 01 01 0.9 0.9 3.0 3.0 3.0 3.50 3.50 5.10 9.00 9.00 Desserts/Snacks Crisps Choc Chip Cookies Muffins 48 90 01 25 4.00 35.00 71.00 LEGAL STATUS OF THE BUSINESS AIMS The Business will be set up as a brand new limited company, with Jose Antonio Vargas and shareholders and directors. Julie Molina being the only two A third shareholder with a smaller percentage may be included. The main objective is to have a very exclusive coffee shop in the area and to make sure clients enjoy their visit to the premises and want to come back, to increase the level of sales within 2 years to The Guayaba Bagel & Coffee Limited -Business Venture- 9 the level that we can make a few extra loan re-payments per annum and eventually to be able to set up a branch. This will be done by having excellent customer service, excellent quality and marketing. Principally, our objective is for the popular coffee shop culture, providing a balanced menu of sandwiches (bagels rather than bread), an all-day light breakfast menu and cupcakes, biscuits, fruit, etc., alongside coffee, tea, hot chocolate and fresh juices. Please refer to our ‘Nature of Business’ above. In addition to this, we would like to be able to offer a continental coffee shop culture later in the business’s evolution, whereby we have a licence to sell alcohol, e.g beers/wines. We believe that the name of the business is attractive and we will try to make the premises look attractive too, but more importantly we believe that the healthy, uncommon products that we will offer together with an excellent service and the competitive prices; will attract many people. The second opportunity, at a later stage, once the business is up and running well, will be in the delivery of a personalised EFL (English as a Foreign Language) course with an experienced teacher. The courses will be tailored to the student and ideally delivered in an area adjacent to the coffee shop, a second floor or designated area away from the hustle and bustle of the coffee shop, using tried and tested methods alongside the use of technology; a program designed and delivered by the teacher and access to this after the tailored course has completed via pre-designed software course(s). The Guayaba Bagel & Coffee Limited -Business Venture- 10 RESOURCES PREMISES DETAILS The business will be run from external premises that have the appropriate business usage. We are currently investigating areas of Greater London, but wish to have premises that are in Zones 1-2 that have a high footfall so as to maximise the opportunity. Areas of London that are currently being considered are Central London (Zone 1, e.g. Waterloo) where the high footfall would include tourists, office staff and commuters. In addition, East Putney (Zone 2) is currently being investigated, where personal knowledge of the area is being used. Here, the high residential population, busy thoroughfare, commuters and current redevelopment of this affluent area make it a viable option. The size of the premises would need to be a minimum of 50 x 10 metres squared and rent would need to be paid as per the agreement. The budget for the premises is approx. £2,000 pcm. Investigations are underway as to terms and conditions, help will be sought in connection with this. Business rates information is being sought and the cost would depend on the location and the London Borough where the premises are located. It is not foreseen that we would need to apply for planning permission as we are looking for the appropriate usage. However, there has been an allowance for decoration/adaptations worked into the set-up costs (above). The Guayaba Bagel & Coffee Limited -Business Venture- 11 LEGAL REQUIREMENTS The public liability and contents insurance will cost about £1000,00 p/a. An A1 licence will be required and this will also cost around £1000,00 p/a HEALTH & SAFETY The health and safety requirements should be placed in order very easily, however Jose Antonio Vargas will take a one day health and safety training course as soon as the premises are ready. SERVICE DELIVERY METHODS As we are looking for premises that are, ideally, in a main shopping area or thoroughfare in Zone 1 or 2 in London, the potential customers will range from the local workers/commuters (offices, shops, theatres, attractions, etc.) to tourists and passers-by. In addition, once the coffee shop is established and the English classes have started, students that attend the classes will, more than likely, patronise the coffee shop as well. The use of ‘healthier’ options should attract a wider public too as an alternative to other fast food outlets in the vicinity. As we are aiming to having a ‘continental’ style café too, it is hoped that the customers will see this as another unique selling point compared to existing competitors and opt for our café as opposed to them. Customer Service will also be a key factor in the attraction of potential customers and all of the owner/proprietors have extensive experience in this area. Training will be given to new staff members to ensure service standards are achieved. Feedback will be sought in the form of questionnaires to address compliments and complaints effectively. The Guayaba Bagel & Coffee Limited -Business Venture- 12 The client needs to feel relaxed in their surroundings and have the sense that they are being dealt with in a professional, clean and aesthetically pleasing environment in order to enjoy their purchase, on or off the premises. In this respect, careful attention is being paid to the premises, fittings and facilities provided. It is our aim to provide wi-fi, appropriate background music, newspapers (English and Spanish) to enhance the Customer Service experience of our clientele. The quality of food/beverages offered is also being carefully considered to provide value and promote a healthy relationship between the consumer and the business. Payment methods will need to include card payments and cash. Credit will be considered for deliveries to functions/conferences, and large orders. with an invoice being produced for regular customers on a monthly basis. SUPPLIERS This is currently being researched and until the business has funding, premises, a start date, etc. it is very difficult to get much information. Initially probably the purchases will have to be paid in cash, but a few months later the company may apply for a 30 day credit account; although it is not expected to be needed The Guayaba Bagel & Coffee Limited -Business Venture- 13 THE MARKET ANALYSIS OF THE MARKET Coffee Shops – are currently in high demand with a high daily footfall with a wide clientele, especially in London, e.g. tourists, commuters, workers, students, etc. This market, at present, offers a good prospect for success and, if positioned correctly, will almost guarantee good returns on any investments. Our concept is not a ‘run of the mill’ coffee shop that just offers the ‘norm’, our concept is to appeal to those looking for a ‘healthier’ alternative promoting bagels rather than bread and going that extra mile with customer service and meeting our clientele’s needs. We would also like to offer the ‘continental’ feel to our ambience by providing beers/wines, something that we have not found during our research. This would be undertaken after the main business is established and running. Again, once the business is established and running, EFL (English as a Foreign Language) is an aim for the business. Currently working in an EFL school, Julie has an excellent understanding of the industry and its pitfalls. Having a good reputation, tried and tested skills, experience and the ability of being able to pinpoint areas of weakness (for her students) are some of the main requirements in working in the EFL industry, your reputation goes before you. Small, tailored classes or one-to-one classes are an excellent form of learning that students are often in need of due to their positioning in the accredited schools within London (class sizes vary from 8-17 students and are often of mixed ability levels). The Guayaba Bagel & Coffee Limited -Business Venture- 14 MARKET RESEARCH UNDERTAKEN As the premises have not yet been found, the main methods used to determine that people will come to our business are as mentioned above. In addition, careful consideration is being taken in finding premises that have the potential to fulfil the high footfall and development we are aiming for. The ambience, quality of fare offered and customer service are key factors in this area and, as such, we have frequented and, some of us, have experience as staff in such a business, giving an excellent insight to the pros and cons of such a proposal. Extensive research has also been undertaken on similar concepts via the internet and via word of mouth with people who have started this type of business, COMPETITION To be confirmed upon funding and location of premises, however there is always many ways of competing, and to do this we will analyse our competitors, and as mentioned above, we will be and look different from them in many ways. MARKETING STRATEGY A product or service will not sell unless a market exists, fortunately in this case the customers are already there waiting for us to attract them. Some of the new marketing techniques that are intended to be used are: Leafleting the local area once a month The Guayaba Bagel & Coffee Limited -Business Venture- 15 Paying for a digital marketing campaign that involves all the social networks, the website and internet in general. Targeting customer by profile, i.e. age, gender, ethnicity etc. and creating the healthy options they need Keep up to date with the latest health news and try to have natural products that help combat different health issues i.e. a smoothie that helps control cholesterol, high blood pressure, etc. SWOT ANALYSIS STRENGTHS Healthy Products have a good demand nowadays Business will be well located Prices will be very competitive Quality of products and customer service will be excellent There are not many healthy coffee shops in London, The directors will be working full time in the business venture The directors are very experienced in different fields that relate to the business The director will not get any salaries during the first few months WEAKNESSES No clientele stablished Start up cash not available OPPORTUNITIES This could be a good opportunity to grow the company into many coffee shops as nowadays the demand for healthy food is increasing, however it is normally a bit pricy. We believe that with our competitive prices many more The Guayaba Bagel & Coffee Limited -Business Venture- 16 people will be able to afford having a healthy breakfast/lunch on daily basis and therefore we will grow fast. THREATS We must have enough money to cover three months of the full monthly expenses just in case our sales do not go according to plan. The Guayaba Bagel & Coffee Limited -Business Venture- 17 FINANCE START UP COSTS Funding will be required and we will be looking to raise the start-up costs from business loans from financial institutions. Advice is being sought in this area. Costs are approximate: Rent: 2 months deposit, 1 month rent - Assuming £ 6,000.00 2,000 p/m Business Rates: Assuming £ 1,000 p/m £ 1,000.00 Kitchen, Full Decoration and Furnishing £ 75,000.00 Coffee Machine £ 2.000.00 Orange juice machine (Citrocasa) £ 1,000.00 Bagel Oven £ 1,600.00 Juice Extractor £ 1,600.00 Blender (Blendtec) £ 600.00 Kitchen Tools £ 600.00 Raw Material £ 1,000.00 Insurance £ 1,000.00 Licences £ 1,000.00 Advertising £ 1,500.00 Legal Costs £ 3.000.00 TOTAL The Guayaba Bagel & Coffee Limited -Business Venture- £ 96,900.00 18 ADDITIONAL FINANCE REQUIRED Back up Money for the First Three Months £ 10,000.00 TOTAL FUNDING REQUIRED £ 106,900.00 COSTING The costing of work will be at the rate of £ 8.00 per hour labour charge. The labour charge has been based on the following: 3 people working, 48 weeks per year, 48 hours per week (Mon - Sat) Total hours to be worked = 48 * 48 * 3 = 6912 We assume that only 80% of these are productive hours Total productive hours: 6912 * 80% = 5529.60 Business Cost Per Hour Overheads including drawings (As per attached spreadsheet) Productive hours Business Cost Per Hour = 151981.92 / 5529.6 = £ 27.48 The Guayaba Bagel & Coffee Limited -Business Venture- 19 Profit = Profit = Total Sales – Overheads – Wages (As per attached spreadsheet) = 174160 - 105389 - 46592 = £ 22,179.00 This profit is after tax as the corporation tax was included into the overheads BREAK EVEN POINT Break-even point (BEP) is the point at which cost/expenses and revenue are equal, so there is not net profit neither loss The daily break-even (without including the investment capital) has been calculated with the following formula: BEP = Overheads (Including drawings) Number of Working Days BEP = 151,981.92/312 = £ 487.12 This means that the annual break-even point is Annual BEP = £ 487.12 * 312 = 151,981.44 Break-even point (BEP) to recover investment capital in three years BEP = Overheads (Including drawings) x 3_+ Total Funding Required Number of Working Days BEP = 151,981.92 x 3 + 106,900.00 / 936 = £ 601.33 This would be the minimum amount of daily sales to break even by 31/05/2018. The Guayaba Bagel & Coffee Limited -Business Venture- 20 SURVIVAL BUDGET This would be the minimum level of daily sales for the business achieve tha targets shown in the forecast attached.; assuming that we will sell only 20 units of each one of the following items, which we expect to be the most popular: PRODUCT PRICE UNIT £ DAY TOTAL (20 UNITS) Bagel 4.00 80.00 Different Coffees 2.00 40.00 Smoothie 2.50 50.00 Fruit Salad 2.00 40.00 Light Breakfast 3.00 60.00 Salad 3.00 60.00 Healthy Drinks 3.00 60.00 Beer & Wine 2.50 50.00 Set Lunch 3.00 60.00 Others 2.00 40.00 Total Day We believe that this is a very reasonable expectation. The Guayaba Bagel & Coffee Limited -Business Venture- 540.00 21 SALES & PROFIT PROJECTIONS The Guayaba Bagel & Coffee Limited -Business Venture- 22 ADDITIONAL INFORMATION The above is a pessimistic forecast, as all the expenses have been estimated over the real value. The real value of the expenses/overheads is expected to be smaller than the figures in this forecast. This is a way of covering for any un-accounted/unexpected expenses, but if such event does not happen, then the profit will be bigger. The Guayaba Bagel & Coffee Limited -Business Venture-