Quick Order Pass
Presented By: Andrej Ciric, Chris Roberts, and
Carlton Northern
Representing: Quick Order Systems, Inc.
CS410 - Professional Workforce Development I
1
Team Members
Andrej Ciric
Project Manager
Christian Crisostomo
Demographics
Kevin Jones
Risk Assessment
Christopher Roberts
Technical Feasibility
Software Development
Michael Schaefer
Website
Documentation
Carlton Northern
Marketing
Systems Development
2
Overview
Societal Problem
 Proposed Solution
 Project Schedule

3
Societal Problem
The process coffee houses use to
provide specialty orders is inefficient,
inconvenient and error prone.
4
Inherent Complexity of Specialty Orders
Starbucks menu:
73 Regular Menu Items
10 Flavors of Syrup
13 Modifiers
9490 possible combinations assuming only (1) of
each is selected.
http://www.starbucks.com
5
Traditional Transactions
Order

Inefficient
 Inconvenient
 Error prone
Amount Owed
Cash/Credit
Change/Credit & Receipt
Order
Amount
Owed
Consider a typical order by a daily customer:
Cash/
Credit
Change/
Credit &
Receipt
“ I’d like a double tall, non-fat, decaf,
vanilla latte, one-pump walnut, with
room, please”
6
Proposed Solution

Develop a system that can digitally:
Retrieve an order
 Provide payment

Without verbal communication.
7
Typical Transaction with Our System
Order & Payment
Receipt

Quick
 Order is accurate
 Payment is precise
 Easy to use
8
Typical System Use:
Customer #, 30bits
1010010111101010101
Waves Pass
Customer #
Receipt
Central
Database
Customer #
Order &
Account Balance
New Account
Balance
Customer #
9
Software Diagram
New Account
Balance
New Account
Balance
Order &
Account Balance
API Com Module
Order &
Account Balance
Database Com Module
Order &
Account Balance
API
Central
Database
API opens check,
Orders, pays and
closes check
New Account
Balance
Customer #
Customer #
Reader Input Module
New Account
Balance
Pre-existing POS
Program
10
Solution Will Not
Eliminate preparation errors
 Preclude current ordering systems


Can always order and pay
Prohibit order changes
 Eliminate the casual customer

11
Project Organization
Project Organization
Management Plan
Evaluation Plan
Marketing Plan
Funding Plan
Team Formation
Testing
Industry Consultation
Scheduling and Accounts
12
Management Organization

Weekly team meetings



Schedule deadlines



WBS
Team status checks
Technical Progress and Reporting


Take minutes
Progress performance assessment
Evaluation plan
Software development protocols


CVS – (Concurrent Versions System )
Design Documentation
13
Evaluation Plan

Design Reviews




Quality Reviews




All design documents evaluated before implementation
Industry consultation as necessary
Documentation generated
Deliverables evaluated at each phase by team
Post mortem evaluation of group process and effectiveness
Documentation generated
Testing



Testing at each stage of Research and Development
Software team evaluation of product
Documentation of testing process and integration
14
Evaluation Plan, Cont.

Beta-site testing
Product in real world environment
 Customer feedback
 Consumer feedback


Seamless integration
15
Funding Plan
• SBIR Grant Funding
• National Science Foundation
•
The NSF support’s high quality projects on important scientific, engineering, or
science/engineering education problems and opportunities that lead to
significant commercial and public benefit.
• Phase 1
• Maximum 100k
• December 8th
• Phase 2
• January 29th
• Maximum 750k
• Old Dominion University
• Provides
• Facilities
• Ethernet
16
Marketing Plan
Major coffee shop retailer criteria:
Extensive market share
 Strong future growth and revenue
potential
 Compatible market strategies in regards
to our product
 High repeat order frequency

17
Market Identified

Net Revenue 2003:
$4.1 billion
 Net Earnings 2003:
$268.3 million
 77% of Net Revenue
from beverage sales
http://www.fool.com/news/commentary/2004/commentary040130ram.htm http://www.starbucks.com/
18
Starbucks U.S. Market by Stores

Source: http://www.organicconsumers.org/starbucks/indie-coffee.cfm AND
http://www.starbucks.com/aboutus/pressdesc.asp?id=454
19
Market: Customer Use
Starbucks Survey
50 people
60
98%
Amount of People
50
70%
40
52%
54%
30
48%
46%
30%
20
10
2%
0
Yes
No
A
Yes
No
B
Yes
C
No
Yes
No
D
A: Are you a repeat customer here?
B: Do you order the same thing most of the time?
C: If you had small device that could store your order would you use it?
D: If you could pay with this device also, would you use it?
20
Faster Service Generates Revenue

Statistics indicate that each six-second
improvement in speed of service
generates an extra 1 percent of sales.

Wireless payment methods have shaved
15 to 20 seconds off transaction times.

McDonald’s CEO Jack Greenberg
http://pittsburgh.bizjournals.com/pittsburgh/stories/2004/05/31/story6.html?t=printable%208sep04
http://www.chainleader.com/archive/0702/0702tech.html


21
Starbucks Card

Consumer use





Stored value card
Starbucks Card: 35 million cards activated to date.
Customer “buys” card at store, over the phone, or
on the Starbucks website
Customer registers on Website or over the phone
Ties registered user to unique number on card
22
Competition Table: Quick Pass vs. Starbucks Card
Quick Order Pass
(RFID)
Starbucks Card
(Magnetic Stripe)
Transaction time
15-20 seconds faster
Normal
Duration
100,000 cycles
1,000 cycles
Durability
High Durability
Low Durability
Storage Capacity
1000+ Bytes
210 bytes
Security
Encryption possible
No Encryption
Cost
$0.20 +
$0.01-$0.40
23
Quick Order System

Will follow exact same registration process as
current system

Transponder can be in card or keychain format

Requires addition of customer order number
field in the central database
24
Functional Flow
25
Quick Pass: First Use
26
Functional Flow
27
Quick Order Pass Full Use
Register Person: Hi, how may I help you?
Customer: (Uses Quick Order Pass)
Register Person: Thank you and have a nice day.
Order Display:
Double café latte
Total: $1.03
Change: $0.00
Save
Order
Pass28
Required Components

RFID Reader

Model p_1023

Transponder
 POS Terminal


IBM 4695-322
Software Package
29
Phase 0: Deliverables
Feasibility presentation
 Milestone presentation



Final Approval presentation


WBS
SBIR
Project Website
30
Phase 0: Conception Schedule
31
Phase 0: Project Conception
32
Phase 0: Budget

None
33
Phase 1: Deliverables

Documentation




Technical Description Paper
Budget White Paper
Draft Sub-contractual Paper
User’s Manual
Market Research
 Prototype Design
 Lab Prototype
 Project Website
 SBIR Phase 2

34
Phase 1: Proof of Concept Schedule
35
Phase 1: Organization
36
Phase 1: Budget
37
Phase 2: Deliverables
Production Specifications
 Beta-test contracts
 Management plan
 Personnel plan
 Test/Evaluation plan
 Marketing plan

38
Phase 2: Prototype Development
39
Phase 2: Prototype Development Organization Chart
40
Phase 2: Budget
41
Phase 3: Deliverables
Sales Contracts
 Product Manuals
 Customer Support Location
 Product Roll-out
 Out Year Strategy

42
Phase 3: Production Schedule
43
Phase 3: Production Organization Chart
44
Phase 3: Production 1st Year Budget
45
Phase 3: Out Year Budget
46
Risk Analysis/Mitigation
Transition
Security
Starbucks Not Interested
Component Cost
Consumer Acceptance
47
Risk Matrix
5
3
5
Legend
2
Likelihood
Low
4
1
High
1
5
Consequence
Rank
Risk
Mitigation
Likelihood
Consequence
1
Consumer Acceptance
Slight difference from current
use
3
5
2
High component cost
Cost Benefit
Analysis
4
3
3
Starbucks not interested
Additional market research modify product
2
5
4
Security
Device Proximity
2
3
5
Transition
Training
5
1
48
Starbucks Profit by Tag Use
Starbucks Profit by Customer use
(per fiscal year)
25,000,000
23,700,000
20,000,000
14,200,000
15,000,000
Profit (dollars)
9,500,000
10,000,000
4,730,000
5,000,000
2,840,000
947,000
0
1 percent 3 percent 5 percent
10
percent
15
percent
25
percent
Customers using Tag
Refer to Appendix for details
49
Starbucks Break Even Analysis
Starbucks Break Even Analysis
12000000
9,500,000
10000000
8000000
Profit (dollars)
6000000
3,300,000
4000000
2000000
0
Year 1
Year 2
Year 3
-2000000
-4000000
-6000000
-6,200,000
-8000000
Year
Refer to Appendix for details
50
QOS, Inc. Profit by Transponder
QOS, Inc. Profit by Tranponder
4,500,000
4,500,000
4,000,000
3,500,000
3,500,000
3,000,000
2,500,000
5 million
2,500,000
15 million
Profit (dollars)
2,000,000
25 million
1,500,000
35 million
1,500,000
45 million
1,000,000
500,000
500,000
0
5 million
15 million
25 million
35 million
45 million
Number of Transponders
Refer to Appendix for details
51
QOS, Inc. Profit by Hardware
QOS, Inc. Profit by Hardware
3,790,000
4,000,000
3,500,000
3,000,000
2,605,000
2,500,000
1000 stores
1,895,000
Profit (dollars) 2,000,000
2500 stores
4000 stores
1,500,000
5500 stores
1,185,000
8000 stores
1,000,000
474,000
500,000
0
1000 stores
2500 stores
4000 stores
5500 stores
8000 stores
Stores
Starbucks SEC filing: Long term goal of 30,000 stores
Refer to Appendix for details
52
QOS, Inc. Break Even Analysis of Product Roll Out
QOS, Inc. Break Even Analysis of Product Roll Out
6000000
Revenue (dollars)
5000000
Revenue
4000000
3000000
Cost
2000000
1000000
0
0 days
Refer to Appendix for details
91 days
182 days
273 days
364 days
455 days
53
QOS, Inc. Profit and Cost Analysis of Years after
Product Roll Out
QOS, Inc. Profit and Cost Analysis of Years after Product Roll Out
2000000
1600000
Revenue (dollars)
Revenue
1200000
Cost
800000
400000
0
0 days
Refer to Appendix for details
73 days
146 days
219 days
292 days
365 days
54
Summary
Efficient and convenient
 Based on developed technology

Highly accurate
 Easy to integrate


Strong market potential
55
Questions

?
56
Appendix
A. Hardware Cost 47 - 48
 B. Projected Cost and Profit 49 - 54
 C. Determining Cost 55
 D. Survey Raw Data 56 -57
 E. Starbucks Information 58 – 62

57
Hardware Cost

Hardware cost:
RFID Readers: Base cost is 45.00, Cost to Starbucks 90.00
Cables: Base cost is 3.00, Cost to Starbucks 6.00
Installation: Base Cost is 110.00, Cost to Starbucks 220.00
Figures from Hardware Installation Table assume 3 registers.
Transponder: Base Cost is 0.20, Cost to Starbucks is 0.30

5500 stores are capable of accepting the Starbucks Card currently





http://www.phidgetsusa.com/viewcategory.asp?category=USB+Sensors http://www.starbucks.com
58
Hardware Installation Profit Table
Item
Number of
units
Base Cost
Cost to
Retailer
Profit
RFID Reader
3 @ 45.00
135.00
270.00
135.00
Cables
3 @ 3.00
9.00
18.00
9.00
3 @ 110.00
330.00
660.00
330.00
948.00
474.00
Mounting and
Installation
Total
59
Hardware Costs to Starbucks
Hadware Installation Cost to Starbucks
7,580,000
8,000,000
7,000,000
6,000,000
5,210,000
5,000,000
1000 stores
3,790,000
Cost (dollars) 4,000,000
2500 stores
4000 stores
3,000,000
5500 stores
2,370,000
8000 stores
2,000,000
948,000
1,000,000
0
1000 stores
2500 stores
4000 stores
5500 stores
8000 stores
Number of Stores
Refer to Appendix for details
60
Transponder Cost to Starbucks
Transponder Cost to Starbucks
13,500,000
14,000,000
12,000,000
10,500,000
10,000,000
7,500,000
8,000,000
Cost (dollars)
6,000,000
4,500,000
4,000,000
2,000,000
1,500,000
0
5 million
15 million
25 million
35 million
45 million
Transponders
Refer to Appendix for details
61
Determining Profit / Cost
Estimates based off Starbucks Net Revenue, 2003.

77% beverage sales
4.1 billion X 0.77 = 3.157 billion
Time: 15-20 second range from statistics, we use 18 second average

Sales increase 1% for each 6 seconds saved, therefore 18 / 6 = 3% increase in sales
3.157 billion x 0.03 = 94,710,000 million
94,710,000 assumes 100% customer use
Scaled Values based on current Starbucks Card Customer use
1.
Starbucks Card represented 10% of all transactions in 2003
2.
Starbucks Card, 35 million total activated to date
Profit potential (assuming 10% customer use): 94,710,000 x 0.10 = 9,471,000 million
Potential Cost: 35 million x 0.30 = 10.5 million
http://www.fool.com/news/commentary/2004/commentary040130ram.htm http://www.starbucks.com/aboutus/pressdesc.asp?id=451
http://www.entrepreneur.com/article/0,4621,315202,00.html http://www.mindfully.org/Technology/2004/HyperActive-Bob8sep04.htm
62
Determining Profit / Cost for QOS, Inc.








Estimates based off current Starbucks trends and data.
6,000 Starbucks, 3 new stores open daily
35 million Starbucks Cards sold to date assume complete replacement in 3 years
12 million Starbucks Cards sold per year, assume sales of 12 million tags per year
$.10 profit per sale of transponder, $474 profit per store installation
1st year QOS, Inc. production cost is 1,368,600 (estimated in budget)
25 installation technicians, assume retrofit average of 25 stores per working day
240 working days per year
Profit for Product Roll Out:
35,000,000 / 3 years = 11,666,000 + 12,000,000 = 23,666,000
6,000 stores x $474 = $2,844,000 profit to retrofit existing Starbucks
25 / 6,000 = 240 working days to retrofit (240 working days = 1 year)
23,666,000 * $.10 = 2,367,000 profit from transponder sales
$2,367,000 + $2,844,000 = $5,211,000 total
Profit for years after product roll out:
3 new stores daily * 365 days = 1,095 stores
1,095 stores x $474 = $519,000 profit to retrofit new Starbucks stores
12,000,000 x $.10 = 1,200,000 profit from transponders
$519,000 + $1,200,000 = $1,719,000
http://biz.yahoo.com/bw/041014/145258_1.html http://www.glscs.com/archives/1.02.norton.htm?addcode=30
http://www.thebatt.com/news/2002/08/12/FrontPage/Starbucks.Store.Comes.To.College.Station.Scene-518368.shtml
63
Survey Raw Data







Total 50 people surveyed

Starbucks, Ghent Location 3-5pm
Questions Asked:
1. Are you a repeat customer here

Yes: 49

No: 1
2. Do you order the same thing most of the time?

Yes: 35

No: 15
3. If you had a small device that could store your order, would you use it?

Yes: 27

No: 23
4. If you could pay with this device also, would you use it?

Yes: 26

No: 24
5. Of the people who answered Yes to 3 would they also pay with it?

Yes: 26

No: 1
64
Survey Raw Data



Location: Starbucks (Greenbrier location)
Time:
Times below recorded from Employee greeting, to receipt generation (in seconds)

81, 38, 32, 51, 46, 33, 72, 117, 76, 19, 24, 18, 23, 33, 77, 65, 32, 66, 16, 23, 31,
28, 14, 33, 40, 29, 25, 40, 130, 60, 31, 52, 20, 43, 41, 21, 37, 52, 24, 14, 18, 66,
24, 22, 35, 50, 20, 80, 34, 45

Average is 42 seconds
65
Starbucks Growth
66
Starbucks Projected Growth
Starbucks Store Growth
30,000
30000
25000
20000
15,000
Number of Stores 15000
8700
10000
4400
5000
1000
0
1998
2001
2004
2006
long term
Year

www.starbucks.com
67
Commitment to Innovation

“These strong trends can be attributed to an all-time
high level of innovation, continued speed-of-service
improvements, and successful new store concepts”

Jim Donald, Starbucks CEO designate
68
Starbucks Vision
Starbucks continues to refine the
Starbucks Experience:

“Starbucks has become an enduring, global brand by continually
raising the bar and finding ways to innovate throughout all areas
of the business”

CEO Designate, Jim Donald
69
Starbucks Order Modifiers


















Americano: A coffee made w/ two shots of
espresso and hot water.
Breve: A latte made w/ half-and-half.
Cappuccino: A drink made w/ espresso and
foamed milk.
Con Panna: Italian for whipped cream
Creme: A coffee-free beverage
Demitasse: Half-cup
Doppio: Italian for double
Double: Two shots of espresso
Dry: More foam, less milk
Espresso: Coffee's purest, sweetest and most
intense form.
Frappucino: Icy and smooth drink
Grande: 2nd to the largest size drink
Half-Caf: One shot of regular and one shot of
decaf
Latte: A drink made w/ espresso and steamed
milk
Light: Less of something in a drink
Macchiato: Italian for marked or stained
Misto: Italian for mixed, combination of drip coffee
and steamed milk
Mocha: A drink made w/ espresso, chocolate and
steamed milk
















Quad: Four shots of espresso in a drink
Ristretto: A short pull of espresso, capturing only
the sweetest part
Shaken: Iced tea or coffee mixed w/ ice in a
shaker
Short: Small drink size
Single: One shot of espresso in a drink
Skinny: Made w/ nonfat milk
Solo: One shot of espresso by itself
Tall: Regular size drink
Triple: Three shots of espresso in a drink
Unleaded: Decaffeinated
Valencia: Orange syrup
Venti: Large size drink
Wet: More milk, less foam
Whip: Whipped cream
With Legs: To Go
With Room: Space to add milk in a drink
70
Order Times
Transaction Time
140
120
Time (seconds)
100
80
60
40
20
0
1
3
5
7
9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
Order Number
Average Order Time (from greeting to receipt): 42 seconds
71
Software GUI
Register Person: Hi, How may I take your order?
Customer: I would like a double café latte please.
Register Person: Double café latte, that will be $1.03 please.
Customer: Here is $2.00.
Register Person: Okay $2.00
Register Person: here is your change and receipt. Thank you and have a nice day.
Order Display:
Double café latte
Total: $1.03
Payment: $2.00
Change: $0.73
72
Software Translation
Software Translation
Order #, 100 bits
1010010111101010101….
Customer Order Number
0010010101001011100101
Venti Decaf Café Latte
Skim milk
Extra Hot
Actual Start
Actual Finish
Existent register
software
matches item to
cost and totals
order
Register Side Database
matches bits to actual order
items
01001
à
Cafe Latte
73