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Brewing a Successful
Concept
Agate Ose, Brian Kamuk, Boniface Molnar, James Sakib Hameed
Agenda
1. Strategic Situation
2. Analysis
3. Alternatives
4. Recommendation
5. Implementation
6. Conclusion
7. Additional slides
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Strategic Situation
Key Issues
• Competitive landscape
• Substitutes
• Upstream complexity in Haiti
• Capital constraint
Goals
• Create a credible concept
• Thrive for sustainability
• Quick return on investment
How can Xaragua formulate and execute a
business strategy that will allow for longevity and a
secure flow of revenues?
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Sourcing Café Xaragua’s Value
Resources
- Business knowledge
- Deep knowledge of
Haiti
- Canadian cultural
know-how
Superiority
Distinctive
capabilities
Capabilities
- Supply coffee from a
Haiti
- Have distinctive
environment
Value created
through passion,
connection
and distinction
Deliver special coffee
with a distinctive
environment
Revenue from
distinctive
with
cultural experience
Value sourced from distinctive Haitian beans with business
knowledge
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Strengths and Weaknesses of Café Xaragua
Strengths
• Business education
• Distinctive coffee product
• Understanding of target
group
• CSR in Haiti
Weaknesses
• Low capital
• Inexperience
Distinctive product can be hindered by lacking
business experience
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Porter’s Five Forces of Consumer Coffee Industry
Threat of Entrants
Power of Buyers
•Branding
•Investment
•LOW
•Branding
•Economic & cultural
influence
•HIGH
Competitive Rivalry
HIGH
Threat of Substitutes
•Consumer product
 Many competitors
•HIGH
Power of Suppliers
•Substitutable
•Coffee value
•MEDIUM
Competitive advantage possible by understanding consumers
and possessing distinctive product
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Trends Vs KISF Factors for Consumer Coffee
Industry in Canada
Trends
- High Canadian coffee
consumption
- Calgary strong economic
area
- Increasing café
competition
Status
*
Key Industry Success Factors
U
Perceived quality and
brand
D
Strong supply chain
U
Capital investment
A
Consumer insight
- Increasing CSR interest
- 18-35 years
- Gentrification
*Key: U – unattained
D – developing
A - attained
High consumption of coffee could be seized with strong
branding and correct investment
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Alternatives
Status Quo
Continue online sales
Pros
•
•
Organic growth
Established market niche
Cons
•
•
•
Limited expansion opportunities
Personal aspiration issues
Vulnerable to competition
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Alternatives
Café Xaragua
Open a coffee shop in Calgary
Pros
•
•
•
•
•
Increased customer awareness
Offline brand presence
Larger growth possibilities
Market knowledge in Canada
First mover advantages
Cons
•
•
•
Capital requirements
Demand uncertainty
High market competitiveness
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Alternatives
Open café Xaragua and exporting
Open a coffee shop in Calgary
Become a supplier of Haitian coffee
Establish distribution channels
Pros
•
•
•
•
Flexibility
Higher profitability
Higher ROI
Increased growth
Cons
•
•
•
•
Capital requirements
Supply uncertainty
Lack of negotiating power
Low global market knowledge
Analysis
Alternatives
Recommendation
Implementation
Strategic Situation
Key Issues
• Competitive landscape
• Substitutes
• Upstream complexity in Haiti
• Capital constraint
Goals
• Create a credible concept
• Thrive for sustainability
• Quick return on investment
Conclusion
Additional Slides
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Evaluation Criteria
Ease of
execution
•
•
•
•
Weight 0.3
Capital
requirements
Market
knowledge
Business
acumen of
the founders
Impact
•
•
•
Weight 0.3
ROI
Profitability
Growth
•
•
•
Weight 0.2
Establishing
clientele
Scalability
Competition
•
•
•
Weight 0.2
Direct
competition
Competitive
response
Diversified Concept - Intact Revenue Channels
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Payoff Matrix
Ease of
execution
Impact
Growth
1. Status Quo
Competition
Total
1.8
2. Café Xaragua
1.6
3. Open Café Xaragua
and exporting
2
Unfavourable
Favourable
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Recommendation
Commence with the store concept
with the usage of external financing
Further diversify the model by extending the online
selling to exporting
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Recommendation
Store
 Sluggish sales
 Less traffic
 Optimal: 1st year
 Conceptually sufficient
profitability
 Optimal location
 Bearish scenario:
 Product superiority
(29.000) USD
 Higher operating costs
o Renew store concept
o Adjust branding
Relying strictly on product quality to drive
The café concept is conceptually strong however certain
revenues is not attainable due to the
countermeasures are to be taken to avert reliance on the
geographical
rivalry
store to drive profitability
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Recommendation
Store
Export
E-Store
o Leverage
market/product understanding
o
Supply high-end players without reach
o
Use the Kensington location as an SKU
o
Target Rombouts & Malongo
as potential candidates
Exporting is attainable and should be pursued in order to
mitigate risks of the store opening
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Implementation
Establish café Xaragua
Create strong brand equity
Establish distribution network
Additional Slides
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Timeline
Short Term (0-12 months)
Q1
Physical establishment on café
Xaragua
Opening café Xaragua
Increasing branding efforts
Negotiate with Haitian suppliers
for exclusive distribution rights
Negotiate with Rombouts
Negotiate with Malongo
Evaluation of café’s performance
Evaluation of branding strategy
Q2
Q3
Q4
Mid-term (12-36 months)
12-18
18-24
24-30
30-36
Long Term (36-60 months)
36-42
42-48
48-54
54-60
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Café Layout
Roasting
Front window promotion
Tables and decorations
Coffee counter
Easy access, interest creation as well as atmosphere
creation
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Branding
Facebook
Twitter
Instagram
Google+
Content Marketing
Own store
SEO
Community creation
Establishing client base
•
•
Online and offline shop promotion
• Special offers
• Contests
• Educating customers
Storytelling about Haiti and coffee
Conventional Marketing
• Guerilla marketing
• Printed local advertising
Creating a strong brand image and loyal customers
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Exporting to Europe
Retain
distributor
exclusivity
Ensure Haitian
suppliers
guarantee to
Café Xaragua
Protect against
uncertainties
Negotiation
Rombouts
or Malongo
(Belgium)
High quality
coffee
Unique
bean as
leverage
Control
20% margin
offer
Marketing
by
distributors
Evaluation
annual basis
Result is a sustainable business model which is profitable
and credible
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Start-up Budget
Equipment
Leasehold Improvements
Upfront Costs
Utilities Deposit
Rental Deposit
Installation
Total
145,000
35,000
10,000
2,000
6,000
10,000
208,000
Equity
20 Year Loan nominal
Interest
PMT
75,000
250,000
13%
35,588
-
No extra credit line is needed
Additional Slides
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Rombouts & Malongo Assumptions
Rombouts
Malongo
Approximately
700.000 customers
Approximately
500.000 customers
2 % customer reach
2 % customer reach
1 coffee bag per
customer in the first
year
1 coffee bag per
customer in the first
year
Rombouts is the optimal partner
Additional Slides
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Sales forecasts
Rombouts (units)
Expected Revenue
Operating Profit
2013
14,000
185,000
92,400
2014
14,700
194,250
97,020
2015
15,435
203,963
101,871
2016
16,207
214,161
106,965
2017
17,017
224,869
112,313
Malongo (units)
Expected Revenue
Operating Profit
10,000
132,000
66,000
10,500
138,600
69,300
11,025
145,530
72,765
11,576
152,807
76,403
12,155
160,447
80,223
Both partners will contribute largely to total
revenue
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Profit & Loss Budget
2013
2014
2015
2016
2017
Revenue
Malongo
Shop
Total Revenue
132,000
576,000
708,000
138,600
590,400
729,000
145,530
605,160
750,690
152,807
620,289
773,096
160,447
635,796
796,243
Variable Costs
Malongo
Shop
Total Variable Costs
Operating Profit
66,000
178,650
244,650
463,350
69,300
184,010
253,310
475,691
72,765
189,530
262,295
488,395
76,403
195,216
271,619
501,477
80,223
201,072
281,296
514,947
Fixed Costs
Rent
Wages
Salaries
Marketing
Utilities
Telephone and Internet
Insurance
Administrative Expenses
Maintenance
Total Fixed Costs
EBITDA
70,695
194,000
25,000
21,000
24,000
3,600
3,000
7,000
6,000
354,295
109,055
72,109
197,880
25,500
12,000
24,600
3,600
3,000
7,140
6,060
351,889
123,802
73,551
201,838
60,000
13,000
25,215
3,600
3,100
7,283
6,121
393,707
94,688
75,022
205,874
61,200
14,000
25,845
3,600
3,100
7,428
6,182
402,252
99,224
76,523
209,992
62,424
15,000
26,492
3,600
3,100
7,577
6,244
410,951
103,997
EBITDA covers the loan and makes the
operations profitable
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Outcome
Adjust &
Strategize the
store concept
Diversify the
company
further
Create a
longstanding
venture
+103.000 USD
(EBITDA-2017)
New Store Concept
& Brand strategy
Attract EU players
Thank you for your attention!
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Risk Matrix
Risk
Mitigation
Contingency
Haiti political
& weather
upheaval
Alternative
bean supply
chain
More stable
source
Negotiation
fail with
Belgians
Offer higher
% margin
Scandinavian
distributor
Landlord
dissatisfaction
Make a signed
security
contract
Move to a
better
location
Additional Slides
Analysis
Alternatives
Recommendation
Implementation
Conclusion
Additional Slides
Opportunities and Threats Facing Café Xaragua
Opportunities
•
•
•
•
Kensington
Fixed term loan
Coffee culture
Centrification
Threats
• Haiti unstable socio-politically
causing supply chain issues
• Haiti subject to extreme
weather
• Competition is very high
Chances for higher capital and culture could be
hindered by insecure supply chain and competition
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