Running head: CAFÉ MOOLATA: BUSINESS PLAN
Café Moolata: Business Plan
Christopher Shipper
MSM 520
August, 2012
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CAFÉ MOOLATA: BUSINESS PLAN
TABLE OF CONTENTS
EXECUTIVE SUMMARY ................................................................................................................................................................3
INTRODUCTION ..............................................................................................................................................................................5
MARKET ANALYSIS .......................................................................................................................................................................5
COMPETITIVE ASSESSMENT ....................................................................................................................................................6
ZINGA!...............................................................................................................................................................................................7
STARBUCKS COFFEE .......................................................................................................................................................................8
CARIBOU COFFEE ............................................................................................................................................................................9
COMPARATIVE .................................................................................................................................................................................9
MARKET STRATEGY ................................................................................................................................................................. 10
WORD-OF-MOUTH MARKETING ............................................................................................................................................... 10
TRADITIONAL MARKETING ........................................................................................................................................................ 13
MARKETING PLAN...................................................................................................................................................................... 14
TIMETABLE ................................................................................................................................................................................... 14
ESTIMATED COSTS ....................................................................................................................................................................... 14
TRACKING PROGRESS AND COSTS ............................................................................................................................................. 15
EVALUATION AND ADJUSTMENT ............................................................................................................................................... 15
SALES TARGETS............................................................................................................................................................................ 15
OPERATIONAL REQUIREMENTS ......................................................................................................................................... 16
MANAGEMENT AND STAFF PROCESSES .......................................................................................................................... 17
UPPER MANAGEMENT................................................................................................................................................................. 17
MIDDLE MANAGEMENT .............................................................................................................................................................. 18
STAFF MEMBERS.......................................................................................................................................................................... 19
MEASURING SUCCESS .................................................................................................................................................................. 19
REWARDING SUCCESS ................................................................................................................................................................. 20
FINANCIAL REQUIREMENTS ................................................................................................................................................. 21
START-UP COSTS.......................................................................................................................................................................... 21
AVAILABLE FINANCING ............................................................................................................................................................... 21
BUDGETING ................................................................................................................................................................................... 22
STAFFING....................................................................................................................................................................................... 22
MARKETING ................................................................................................................................................................................... 22
NEW TECHNOLOGIES .................................................................................................................................................................. 23
OUTSIDE CONSULTANTS ............................................................................................................................................................. 23
TRAINING ...................................................................................................................................................................................... 24
CASH FLOW FORECAST ............................................................................................................................................................... 24
ASSESSMENT OF RISK .............................................................................................................................................................. 25
CONCLUSION ................................................................................................................................................................................. 26
APPENDIX A ................................................................................................................................................................................... 27
REFRENCES.................................................................................................................................................................................... 28
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With the increasingly unpredictable seasons that the northern Virginia area has been
experiencing over the last couple of years, people are always looking for ways to brace
themselves against Mother Nature with a cool frozen yogurt or a hot cup of coffee. Though
options exist, none provide the customer with an environment conducive to enjoying their
indulgence. Café Moolata is poised to fulfill this need. The mission of Café Moolata is to
provide fresh, quality products by customer service oriented individuals in a comfortable and
relaxing environment.
Café Moolata will provide a unique environment where people will be able to commune
in a comfortable atmosphere, whether it is by our roaring fire or out on the patio, while enjoying
a frozen treat or sipping on their favorite coffee drink. The main draw of Café Moolata will be
the freedom of choice. At our frozen yogurt bar, people will be to serve themselves from our
rotating selection of frozen yogurts. They will then be able to choose from the numerous options
from the fixings bar, whether it is fresh fruit, a bit of candy, or a liquid topping, in which to
finish off their favorite treat. At the coffee bar, patrons will either be able to grab their favorite
cup of coffee or espresso drink, which then may be customized by adding different flavors.
In the Bristow, VA area, there are no direct competitors to Café Moolata, though a few
indirect competitors do exist to capture the same target consumer: families, especially those with
young children, and students. The competition to Café Moolata’s frozen yogurt offering comes
from Zinga, which similarly provides self-serve style frozen. The major drawback of this
establishment is the perceived atmosphere. There is no logical flow or ability for multiple people
to access the same options at the same time. This establishment also only has limited seating
options available to patrons, and only includes hard wooden chairs and benches inside and metal
chairs outside. Ultimately, people do not have the option of relaxing while they enjoy their treat.
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In contrast, Café Moolata will feature island-style bars for both the yogurt dispenser and the
toppings bar. People will also be able to enjoy their selection while relaxing inside on plush
chairs or supple couches, or outside on the patio.
The indirect competitors to Café Moolata’s coffee beverage offerings include Starbucks
Coffee and Caribou Coffee. Their strengths are their respective brand names. To combat this,
Café Moolata will provide quality coffee drinks at competitive prices, this combined with our
unique atmosphere and superior customer service, will challenge people to leave their old brand
behind.
As Café Moolata is still in the development phase, limited funding is currently available.
Additional funding equivalent to $500,000 will need to be secured, which will go towards the
initial startup costs, which includes construction costs; equipment, both in regards to the yogurt
dispensers and the coffee machines, and supplies acquisition; and the costs associated with hiring
and training staff members. Staff will include a general manager, 2 assistant managers, and 1215 staffers to work a rotating schedule to cover approximately 90 hours of operation per a week.
To help increase employee knowledge and efficiency, each member of the staff will receive
barista training and customer service training. Also, each person, including the managers, will
be required to learn each facet of the business and will be responsible for each task needing to be
performed.
The major risks to Café Moolata include the perceived brand imaging, the relative age of
the staff members, and the financial implications associated with any new start-up venture.
With virtually no competition near the purposed site, and as well as being centrally
located near three large housing developments, the largest being within walking distance, Café
Moolata will prove to be a stellar investment opportunity.
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Introduction
With the increasingly unpredictable seasons that the northern Virginia area has been
experiencing over the last couple of years, people are always looking for ways to brace
themselves against Mother Nature with a cool frozen treat or a hot cup of coffee. Though
options exist, none provide the customer with an environment conducive to enjoying their
indulgence. Café Moolata is poised to fulfill the Bristow, Virginia community’s need for a
relaxing and comfortable location where people can enjoy a frozen yogurt or a coffee beverage.
The mission of Café Moolata is to provide fresh, quality products by customer service oriented
individuals in a comfortable and relaxing environment.
Market Analysis
The current market trends for the frozen yogurt and coffee beverage industries have
enjoyed much success over the past five years. Due to the increase in health conscience
individuals, the frozen yogurt industry has experienced a steady growth of 5.9% over the past
five years, and the projections for the industry show that a continued steady growth is expected
over the next five (Frozen Yogurt, 2011). Similarly, an increase of 1.2% has been experienced
by the coffee beverage shop industry over the last five years and is expected to continue to grow
slightly over the next five (Coffee & Snack, 2012). The primary reasons for the current trends in
the respective industries are due to an increase in consumer confidence in the economy and the
belief that people have more disposable income. This is evident in the spending habits of people
in respect to these industries. In Northern Virginia, people spend on average $125.01 - $256.00
annually on ice cream and frozen yogurt (Allison, 2012); and nationally, people spend $1,092.00
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per a year on coffee beverages (Morran, 2012). This is even more evident in the Northern
Virginia community of Bristow, Virginia.
Bristow, with its population of 35,725 (United States Census, 2010), poses as an ideal
location for many types of business, including Café Moolata. Due to its proximity to several
large housing developments and numerous area schools, including two major universities, a
brick-and-mortar store located in the shopping center, Bristow Center, is the purposed location.
Situated there, Café Moolata will be able to engrain itself as an essential member of the
community by focusing on its two primary target customer groups: families and students.
Families with at least one child per a household comprise nearly 58% of the total population of
the Bristow area (Best Places, n.d). Families, especially those with younger children, will
patronize Café Moolata due to its partnerships with the local schools and its educational
incentive programs. Similarly, of the population that is enrolled in some form of education, 32%
are enrolled in a local high school (grades 9-12), an undergraduate college, or a
graduate/professional college (Linton Hall, n.d.). To encourage students to patronize the
establishment, a free Wi-Fi service will be provided and students with a valid ID will receive
half priced beverages between Monday and Thursday. By catering towards these groups of
individuals, Café Moolata will be able to position itself as an integral part of the community.
Competitive Assessment
Whether it be direct or indirect, competition in an ever-present condition that every
organization must take into consideration and Café Moolata is no exception. Though no other
competitor in the Bristow area presents itself as a direct competitor, that is to say, offers both
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frozen yogurt and coffee beverages in a relaxing environment, indirect competitors do exist that
threaten Café Moolata’s success.
Zinga!
The main threat to the frozen yogurt side of Café Moolata is a similar self-service style
establishment, Zinga. The strength of Zinga lies in providing its customers with the freedom of
choice. Patrons can start by selecting one of a few types of starting layers (chocolate or vanilla
cake, chocolate brownie, or a waffle-cone wafer), known as ‘Bottomz’. They can then choose
from a rotating selection of 48 flavors (only 12 available at one time). Customers can then top
off their frozen yogurt with any combination of the selection of 55 toppings available. Another
strength lies in Zinga’s capitalization on a more health-conscience consumer by advertising some
of their yogurt offerings as reduced fat, low fat, or non-fat; as well as boasting the Live & Active
Culture seal1 (Zinga!, 2012). An inherent weakness to Zinga’s offerings is that they cater to
specific tastes (i.e. cactus sweet agave tart) and they rarely offer the three most popular flavors,
namely vanilla, strawberry, and chocolate. A missed opportunity for Zinga is that, while
available online, they do not offer literature on the nutritional content of their frozen yogurt
within their store.
Zinga’s atmosphere presents another weakness and missed opportunity for the
organization. Zinga seems to target families, especially those with small children by providing
an “ice cream alternative in a fun and creative environment” (Zinga!, 2012). From the sparsely
painted and decorated walls to the hard, wooden chairs and tables inside and hard, metal chairs
outside, the atmosphere does little to encourage the creative and fun environment Zinga aims to
create. Similarly, the customer service provided by the staff leaves much to be desired. While
generally friendly, the staff seems to miss the importance of creating a relationship with the
1
See the National Yogurt Association’s website for a discussion on and the requirements for the Live &
Active Culture Seal (http://www.aboutyogurt.com/).
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customer by actively engaging them and how this translates to potential growth for an
organization.
Starbucks Coffee
The main threat to the coffee beverage side of Café Moolata is Starbucks Coffee. The
indistinguishable brand name of Starbucks is its greatest strength, which it has developed over
the years through rigorous advertising and increased product recognition. Starbucks’ efforts in
advertising has placed it in the forethought of many different target groups, but most notably are
young, affluent, tech-savvy customers (Tewell, Odom, & Snider, 2006, p. 3). This is evident
through well-placed ads, advertising partnerships with companies like Apple and MSNBC
(Starbucks, n.d.), and product placements within pop culture. The atmosphere of Starbucks also
exemplifies this with its modern, café style décor coupled with comfortable seating options and
free Wi-Fi access. Another strength of Starbucks is its product lines, which comes in the form of
hot espresso drinks (i.e. lattes, cappuccinos, Tazo teas) and the in the form of cold coffee
beverage drinks (i.e. iced coffees, frappuccinos). The also provide a variety of breakfast
sandwiches, salads, and bakery items (Starbucks Coffee, 2012), thus allowing people to make
one stop for either breakfast or lunch.
One weakness to Starbucks is its lack of a variety of brewed coffees. While it does offer
a few options (i.e. a house blend, a decaf blend, a seasonal blend), Starbucks mostly focuses on
trendy drinks which can alienate those customers who prefer a simple brewed coffee. The food
offerings also pose a weakness. Though seemingly fresh, they are prepackaged and full of
preservatives. A missed opportunity for the local Starbucks establishments is that they are
nestled within larger stores (i.e. Targets and Harris Teeter) and thus offer little in the way of
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seating options or a tech-savvy atmosphere. The local Starbucks’ lack of customer service, as
evident through review sites such as Yelp.com, also presents a weakness.
Caribou Coffee
Caribou Coffee is the other major indirect competitor to the coffee beverage service of
Café Moolata. Caribou tries to compete directly with Starbucks’ target demographics (Case
Study, n.d.) by attracting a “loyal ‘niche’ consumer base which seeks a more refined product
‘experience’ from the more standardized version offered by Starbucks” (Reid, 2009, para. 3).
But the strengths and weaknesses of Caribou’s product offerings both in terms of its beverage
and food options are similar to those presented by Starbucks’. Caribou’s main strength is they
provide a unique, relaxing atmosphere. Each store is designed to encourage patrons to take their
time while enjoying their beverage and food option in padded booths and chairs. Caribou’s
strength also lies in its emphasis on customer service as is evident through review sites such as
Yelp.com.
Comparative
Café Moolata’s target demographics are similar to those of Zinga, Starbucks and Caribou
Coffee. These groups will be attracted by Café Moolata’s emphasis on fresh, quality products
offered in a relaxing and comfortable environment by a customer oriented staff. Similarly to
Zinga, the frozen yogurt offered, which will be procured through Honey Hill Farms, will be a
rotating selection of 42 flavors (12 at any given time), and will include at least two of the three
most popular flavors (vanilla, chocolate, and strawberry) on a daily basis. The frozen yogurt
from Honey Hill Farms similarly boasts the Live & Active Culture seal as well as flavors that are
non-fat, no sugar added, and low fat (Honey Hill Farms, 2012). Customers will be able to
customize their frozen yogurt with any selection from the available bakery items, which will
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show case local bakeries, and top off their creation with any combination from the large selection
of available toppings including fresh local fruit when available.
The coffee beverages offered through Café Moolata will also emphasis freshness and
quality. A rotation of different coffee and espresso beans (twelve and three varieties are
available, respectively) will be procured from Zecuppa, which emphasizes freshness by the
means in which they roast their beans, package them, and ship them the same day the order is
received (Zecuppa Coffee, n.d.).
The atmosphere of Café Moolata will be such that it promotes a relaxing and comfortable
environment. Through an array of comfortable seating options (both inside and outside),
ambient lighting and music, and a stylish décor, the atmosphere of Café Moolata will be such
that patrons will be encouraged to come in, relax and stay awhile as they enjoy their frozen
yogurt or coffee beverage.
Lastly, the staff and managers of Café Moolata will demonstrate a commitment to
exemplary customer service by their upbeat, positive attitudes and through continuous
interactions with the customers to build relationships.
Market Strategy
The market strategy for Café Moolata will focus on the community in which it serves.
More specifically, Café Moolata will focus on the families and the students of the community by
implementing a mix of word-of-mouth-marketing and traditional marketing-techniques.
Word-of-Mouth Marketing
According to Willis (n.d.), “word-of-mouth marketing is considered to be one of the most
effective forms of marketing” (para. 1), while being the most cost effective. Between social
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media sites and consumer sites, the major strength of word-of-mouth marketing relies on the
inherent trust placed in the recommendations of other people. In fact, consumers place more
value on the opinions of other people over anything the organization can say through more
traditional forms of marketing (Willis, n.d). Also, this form of marketing encourages better
customer service and higher quality products. As this is a major focus of Café Moolata, word-ofmouth marketing provides an opportunity for the business to directly interact and gain feedback
from its customers and respond appropriately. Lastly, word-of-mouth marketing encourages
customer loyalty, “since [it is] through loyal customers that word-of-mouth advertising is
successful (Willis, n.d., para. 5).
Just as word-of-mouth provides great possibilities to increase an organization’s growth, it
can create limitations as well. As Lorette (2012) states, “the customer controls the message by
telling others about personal experience. If the message is negative or incorrect, it can create a
bad image for the product, service or business” (para. 2). These negative views can have a
lasting effect of the organization, which in turn can cause a decline in sales and be detrimental to
the brand image (Lorette, 2012). Several different strategies will be implemented with the aim
of increasing Café Moolata’s brand recognition and image, as well as benefiting the community
as a whole.
The most important market strategy Café Moolata will implement is the creation of
strategic partnerships with local area schools by creating scholastic fundraiser days. These
scholastic fundraiser days will benefit the school by providing the partnered school with 20% of
all sales throughout the chosen day. They will similarly benefit Café Moolata by increasing its
brand recognition and allowing for the capitalization of a potential low-cost advertising
opportunity while showing that Café Moolata supports the educational process. These
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fundraising events also provide an excellent opportunity for Café Moolata to establish new
relationships, as well as strengthen old ones, well after the event with the families of the students
from the schools (Graham, 2011). A possible downside to this type of marketing would be the
increasing popularity of the events. While this would be beneficial to the school, as well as to
Café Moolata in terms of brand image, it could inevitably lead to a reduced profitability.
In a similar effort, to produce positive brand identity, Café Moolata will promote
customer loyalty. These loyal customers then in turn become brand advocates who promote
Café Moolata through word-of-mouth avenues. As Barton (2012) states, “when you are able to
leverage your most influential fans, the reach and amplification of your efforts are easily
magnified” (para. 5). To promote customer loyalty, a Café Moolata customer rewards program
will be implemented.
Opposed to a paper or plastic card that takes up space and can be easily lost, a
smartphone app from Loyalli.com will be utilized. For every $3.00 spent, the customer will
receive a virtual “stamp”. After ten “stamps” are acquired, the customer would then be entitled
to one free coffee beverage or to ten ounces of frozen yogurt for free.
As determined by a study performed by Colloquy, “rewards…program members are 70
percent more likely to be [word-of-mouth] champions” (Mythology, 2009, para. 3). Thus, the
benefits of a rewards program are numerous. They include “help[ing] to retain customers,
increase traffic and improve sales” (Callaway, n.d., para. 2). They also improve customer
service and relations, attract new business (potentially from competitors), and increase and
improve the amount the customer spends during the lifetime of their relationship with the
establishment (Callaway, n.d.). Along with being environmentally friendly, the benefits of using
the service provided by Loyalli.com includes a free app (both for the customer and Café
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Moolata) that helps to “attract new business and reward…valued customers”, “increase customer
retention”, and provide “free advertising” by allowing local customers to find Café Moolata
through the app. Also, customers can link the app through their Facebook or Twitter accounts
allowing the app to post to those sites every time they make a purchase. Lastly, the app allows
the organization to analyze the success of the program by providing daily data to the
organization (Loyalli, 2011). A disadvantage to a rewards program is the belief that it can be
viewed as “bribes to manipulate customer loyalty and purchasing decisions, or in the case of
infrequent-spenders, a means of subsidizing frequent-spenders” (Loyalty Program, n.d., para.
58). Also, as Callaway (n.d.) points out, “when used ineffectually, loyalty card programs
actually can reduce the value of product or service offered because customers can make
assumptions about the value of brands based on the price” (para. 7). A disadvantage to the app is
that some people will prefer not to use a third-party app. For those customers, a paper card
system will be available.
Traditional Marketing
To reach those members of the community that may not utilize social medias, or just to
make those customers who are unaware of the services and goods supplied by Café Moolata,
advertising space in the local newspaper, The Gainesville Times, which reaches over 16,000 area
customers (Gainesville Times, n.d.), will be acquired. By advertising through The Gainesville
Times, Café Moolata will be able to select the necessary ad space and placement within the
newspaper to communicate its vision and brand image to the community. It also allows Café
Moolata to quickly communicate new events, such as upcoming scholastic fundraiser days, with
the community, usually within a day or two (Pleshette, 2004). Another benefit of using print
advertising is that it will likely stimulate word-of-mouth referrals (Trusov, Bucklin, & Pauwels,
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2009, p. 93). A disadvantage to using traditional print advertising is that it is a popular medium
for businesses to use, thus Café Moolata’s advertisements will be in direct competition with
other advertisements for the attention of consumers, even if the products and services offered
differ greatly (Pleshette, 2004).
Marketing Plan
Timetable
As creating and improving upon its brand recognition and promoting customer loyalty are
imperative for Café Moolata, especially early on in its development, these marketing strategies
will need to be implemented as soon as possible. Realistically, the timetable for setting up and
promoting the school fundraiser days will be three to six months. For a rewards program, the
timetable will be immediate so that customers can begin earning rewards from day one.
Similarly, the timeline for implementing print advertisements will be immediate. This will help
to create brand recognition quickly within the community.
Estimated Costs
One benefit of using more word-of-mouth marketing techniques and minimal traditional
techniques is the lower cost associated with them. For the school fundraiser days, it will be up to
the school to promote itself and the event. Since they will be the beneficiaries of the event, the
school will be responsible for advertising through both traditional mediums (flyers, school
newspaper) and social media groups. Thus the cost will be negligible to Café Moolata. The cost
associated with a rewards program will be minimal since the technology is free. Only a nominal
cost will be necessary for procuring a small stock of paper punch cards. The most significant
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cost associated with Café Moolata’s marketing strategy is the print advertising. At the rate of
$17.00 per a column inch (Gainesville Times, n.d.), the monthly cost can quickly add up.
Tracking Progress and Costs
The viability and costs associated with these marketing strategies must be monitored
against the actualized growth of Café Moolata. To accomplish this, the management staff will
closely watch the estimated budgets and actualized sales each month to determine how these
strategies have influenced the monthly sales performance versus estimated goals. If it is
determined that these strategies are insufficient, then further marketing strategies will be
considered and implemented.
Evaluation and Adjustment
As customer interaction and brand identity is of great concern to Café Moolata, the
management and staff will continually monitor social media outlets as well as internet review
sites to address any areas of deficiency. Since word-of-mouth advertising can be influential and
beneficial as well as costly and detrimental, the management and staff will actively respond to
customers’ praises and concerns to ensure that the community understands that they are valued
members of the Café Moolata family. The management will address any adjustments to the
current marketing strategies, or the creation of new ones, as necessary.
Sales Targets
To break even, Café Moolata will need to average 60,000 ounces of frozen yogurt, 6,050
cups of brewed coffee, and 3,050 cups of espresso sold each month to break even in its first year.
It is understood that these numbers may not be feasible so it is the goal of Café Moolata to sell
75% of these numbers within the first three to four months, sell 100% within the first six to eight
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months, and 100+% by the end of the year. If these goals prove to be unobtainable, adjustments
to the strategies will have to be made.
Operational Requirements
The requirements necessary for Café Moolata’s operational success includes operational
space, the equipment utilized to dispense frozen yogurt and brew coffee beverages, and the
technical equipment necessary to operate. The leased space chosen for Café Moolata provides
2,000 square feet of interior space and approximately 500 square feet of exterior space. This will
provide enough space for a small kitchenette area, unisex bathrooms, a back office and break
room, serving areas for frozen yogurt and coffee, and interior and exterior seating areas.
Since
this space is in a bare-bones state, significant renovations are necessary. Included in the
necessary renovations is the build outs for the previously identified space as well as all
subsequent equipment and furniture (i.e. sinks, dishwasher, refrigerator, cabinets, counter spaces,
storage options, display cases, interior and exterior seating options, and tables). It is important to
also ensure that all build outs are compliant with the requirements set forth by the Americans
with Disabilities Act2.
For the dispensing of frozen yogurt, six E131 Endura Twin Twist Countertop dispensers
will need to be acquired (Turn Key Parlor, n.d.) as well as the initial frozen yogurt mixes and
supplies (i.e. customizable yogurt cups, taster cups, napkins, to-go lids, and disposable spoons).
For the brewing and dispensing of coffee beverages, three Bunn (20900.0011) – 19 ga/hr Dual
Brewers with Portable Server will be acquired. To grind and brew the espresso beverages, one
Nuova Simonelli (AMXA602013) – 2-lbs MDX Espresso Grinder and one Nuova Simonelli
(MAPPIA5SEM01) – 1-Group Semi-Automatic Appia will be acquired (Food Service
2
See the Department of Justice’s website for a discussion on and requirements for the Americans with
Disabilities Act (http://www.ada.gov/).
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Warehouse, n.d.). The initial coffee/espresso supplies needed includes the beans and supplies
(i.e. cups, plates, silverware, espresso maker supplies, syrups, stirrers, sugar/sugar-substitute
packets, creamer, to-go cups/lids/jackets).
The technical requirements necessary includes point-of-sale equipment and a
communications package. The point-of-sale equipment utilized will be two Apple iPad 2’s and
two Apple iPod Touch’s with attached iDynamo Credit Card Readers tethered to two Cash
Drawers with Interface Cables and two Blue Bamboo: Bluetooth Printers with built-in card
readers (Zephyr Hardware, 2012), as well as the compatible software (POS Lavu, 2012). The
communication package, which will be provided through Verizon Small Business, includes FiOS
high speed internet with wireless routers and two separate phone lines (Verizon Small Business,
2012).
Management and Staff Processes
The success of Café Moolata is largely dependent upon the dedication and determination
of its members. Each member will need to be fun, energetic individuals that will exude Café
Moolata’s values through their dedication to building relationships with Café Moolata’s
customers as well as with the other members. The members of Café Moolata are broken into
three distinct groups with differing responsibilities and in which each member success will be
monitored in varying ways.
Upper Management
The upper management of Café Moolata is comprised of two people, the owner and the
general manager. The ideal candidate for the general manager position will have at least five
years of restaurant management experience with coffee shop/barista expertise. They will
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demonstrate open and direct communication and fairness will every member of the organization.
And most importantly, the general manager will be a motivational leader by working closely
with all members of Café Moolata, leading by example, and “…tak[ing the] time to understand
[the] employee’s strengths, weaknesses, desires, and levels of commitment” (Lemoine, n.d, para.
3). For the most part, the general manager and the owner will share the operational duties.
Working together, they will be responsible for the day-to-day operations and general
oversight of the staff members and the assistant managers, as well as providing exemplary
customer service and driving sales. Along with ensuring that all members of the staff are
appropriately trained by the assistant managers on proper equipment usage and Café Moolata
procedures, they will be responsible for training, and any subsequent refresher training, in areas
pertaining to sexual harassment, diversity awareness, customer service, and ethical practices.
Together they will conduct performance reviews for the assistant managers and for the staff
members. The owner, or the general manager in the absence of the owner, will perform all
human resource processes, including the interviewing, hiring, on-boarding, and if necessary,
discipline and dismissal, for all employees. Likewise, the owner will be responsible for all
accounts receivable/payable and payroll.
Middle Management
The middle management is comprised of two assistant managers. The ideal individuals
will be experienced restaurant workers with at least two years of coffee shop/barista experience
who likewise believe in the importance of open and direct communication and fairness between
all members of the organization.
Along with providing exemplary customer service and driving sales, the assistant
managers will be responsible for training the staff members on all of the equipment and the
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appropriate Café Moolata procedures. They will also assist the general manager and owner with
the day-to-day operations. The assistant managers will work with the staff members to ensure
the appropriate level of cleanliness of all areas of the establishment, appropriate levels of stock
items are maintained, all processes are adhered to, and that all members exemplify the values of
Café Moolata. They will also be responsible for conducting and reporting staff member
evaluations, which will be conducted on a monthly basis. Assistant managers, with the
assistance of upper management, will address any areas of improvement that may arise and work
with the member to improve performance.
Staff Members
The staff members comprise the backbone of Café Moolata. Whether it is forging
relationships with customers through superior service or attending to the many day-to-day
operations, the individuals that comprise the majority of the work force must be desirous of
becoming integral members of Café Moolata. They will be responsible for implementing the
day-to-day operations, serving the customer’s needs in a courteous manner, and maintaining the
cleanliness and overall appearance of the establishment.
Measuring Success
Each member, as well as the organization itself, will be held accountable to slightly
different factors. The general manager’s performance will be reviewed on a semi-annual basis
and will be based upon the overall success of the organization and the entire staff. The assistant
managers’ performance will be reviewed on a semi-annual basis and will be measured against
the day-to-day operations and the performance of the staff members, including overall sales,
customer service and satisfaction, and the cleanliness of the establishment. Both the upper
management’s and the middle management’s performance will be based upon their ability to
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lead and manage the staff members to increase sales by promoting customer service and quality
products. The performance of staff members, being that high turn-over is a possibility, will be
reviewed on a quarterly basis. The performance of everyone, including the staff members, will
be evaluated against past performance and current growth in terms of customer service, sales,
attitude, and initiative.
Rewarding Success
Utilizing the performance reviews and evaluations, the management staff can identify
areas where the individual excels and areas where improvements can be made. They can then
determine if a merit increase or promotion is warranted. For the general manager and the
assistant mangers, merit raises (one to three percent based upon performance reviews) and a
yearly bonus will be awarded, if the profit margin allows for it (three to five percent for the
general manager and one to two percent for the assistant managers). For staff members, a merit
increase of one to three percent will be awarded. To increase motivation and reward hard work
and dedication, an employee-of-the-month program will be implemented, with the reward being
a $50 gift card and a small plaque. Each month, the staff and management of Café Moolata will
vote on which member deserves the honor. In this sense, each staff member has a chance to have
their efforts recognized by the other members. Similarly, two or three individuals will be
promoted to shift supervisors. The shift supervisors will responsible for assisting the assistant
managers with the day-to-day operations and the training of new staff members, which also
warrants a small raise. The shift supervisors, if their performance reviews warrant it, will be
eligible for promotion to an assistant manager position if a position becomes available. This
gives the members something to aspire to and shows career progression.
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Financial Requirements
Start-up Costs
As Café Moolata is a new, independent start-up venture, the initial costs associated with
it are fairly significant. In total, an investment of $500,000, or a small business loan of $100,000
and a construction loan equal to $400,000, will need to be secured. This amount includes
$400,000 to cover the costs of the renovations, equipment, and furniture needed for the operating
space. New equipment must also be purchased. To cover the cost of the six frozen yogurt
dispensers, $74,000 is necessary. For the coffee and espresso brewers and the espresso brewer,
$9,700 is necessary to cover the costs. $6,000 is needed to cover the initial cost of acquiring all
of the supplies associated with the dispensing of frozen yogurt and coffee beverages. The
hardware and software associated with the point of sales transactions will cost $4,000. The
remaining amount will be used in conjunction with staffing, training, initial marketing, and other
miscellaneous expenses.
Available Financing
As Café Moolata is still in the idea planning phase, the only funding currently available is
a cash amount of $200,000. Half of the available cash flow will be used to cover any subsequent
costs that may arise and also to cover any losses incurred over the first year. The other half will
be used in conjunction with the acquisition of equipment, financing, and any other expenditures
incurred prior to the opening of Café Moolata. Whether in whole or in part, funding equal to the
initial start-up costs still needs to be secured from either financial institutions or investors.
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Budgeting
A growth budget is used to identify those key areas within Café Moolata where positive
growth potential exists, namely staffing, marketing, new technologies, outside consultants, and
training. A cash flow forecast is then used to make certain forecasts about the profitability of
Café Moolata.
Staffing
As the staff members and the management of Café Moolata will be the driving force of
new and repeat customers, it is important to ensure that each individual is paid a competitive
wage. To cover the wages and taxes for all members of Café Moolata, $370,000 is budgeted for
a one year period. This will cover up to 15 staff members being paid $10/hour for 20 hours of
work per week, two assistant managers being paid $18/hour for 40 hours of work per week, one
general manager being paid a salary of $50,000/annually working 40-50 hours of work per a
week, and the owner being paid a salary of $60,000/annually working 40-50 hours of work per a
week. The wages and salary presented here are in alignment with, or slightly above, the average
for each type of position according to Salary.com (http://www.salary.com). With these wages,
Café Moolata will be able to command a better qualified workforce.
Marketing
Brand recognition and creating customer loyalty will be integral to the success of Café
Moolata, especially early on. To accomplish this, Café Moolata will implement several
marketing initiatives to ingrain itself into the community. To increase word-of-mouth
advertising, Café Moolata will work with local schools to implement scholastic fundraiser days.
As the beneficiary of the proceeds of the sales, it will be up to the school to incur all advertising
expenses. As well as increasing word-of-mouth advertising, these initiatives will increase
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customer loyalty. Another initiative that will lend itself to customer loyalty will be the
implementation of a customer loyalty program. When used in conjunction with the free
smartphone app provided by Loyalli.com, the cost of a customer loyalty program will be
negligible. Approximately $100 a month will be budgeted to keep a small stock of paper loyalty
cards on hand for those people who wish not to utilize the smartphone app. The most costly of
the implemented marketing strategy will be the print advertising in The Gainesville Times, which
equates to $3381.30 that includes a 15% discount for signing a three month contract. A total of
$5,000 for one year will be budgeted, though this will be re-evaluated after determining the
validity of these strategies.
New Technologies
By utilizing the point of sale hardware and software, Café Moolata will be able to better
serve its customers in a more trendy, customer friendly and time-efficient manner. $1,000 a year
is budgeted to cover the monthly costs of the software and any maintenance costs that may arise
in conjunction with the use of software and equipment.
Outside Consultants
While not seen in terms of a consultant, Café Moolata will need to ensure regular
maintenance is performed on all of the equipment. If any piece of equipment breaks down, the
implications could be devastating. Thus, it is imperative that Café Moolata enters into a service
contract with a refrigeration and appliance repair company to make sure that all of the equipment
receives regular maintenance, and to respond in cases of emergency maintenance. The budgeted
amount to cover this cost is $1,800 a year.
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Training
Training, both in terms of customer service and the proper use of all of the equipment, is
critical for the initial and continued success of Café Moolata. Training will be accomplished
through a combination of software and written modules, through the attendance of associated
workshops and conferences, and working with Café Moolata’s vendors. To facilitate all training,
$10,000 a year is budgeted.
Cash Flow Forecast
Appendix A shows a detailed cash flow forecast for Café Moolata, including additional
operating expenses. Utilizing a cash flow forecast, a prediction about “whether the sales or
income…forecast[ed] cover[s] the costs of operations” (Cash Flow Forecasting, n.d., para. 1).
The prices represented in the forecast are comparable to the national averages for the prices of
one ounce of frozen yogurt ($0.45/ounce), one cup of brewed coffee ($1.38/cup) and one cup of
an espresso based drink ($2.45/cup) (Williams, N., 2011; Coffee Statistics, 2012). While these
prices are slightly higher than those of Café Moolata’s competitors, customers are generally
willing to pay slightly more when the perceived value is greater than those of the competition. In
relation to bakery items, they have been purposefully left off of the forecast as Café Moolata has
not entered into a partnership with any of the local bakeries as of time of this writing. The
monthly cost of repaying on any loans has been left off since this amount represents a variable
that changes due to how much the loan is for and when the loan is closed upon.
In analyzing the data presented in Café Moolata’s cash flow forecast, it is evident that for
Café Moolata to be profitable within the first year, an average of 60,000 ounces of frozen yogurt,
6,050 cups of brewed coffee, and 3,050 cups of espresso drinks has to be sold each month. Even
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then, the profit is negligible and does not take into account the monthly loan(s) repayment
amount(s).
Assessment of Risks
Every organization must contend with risks associated with operating, and Café Moolata
is no different. From the chosen market to operations to finances, each facet of Café Moolata
presents the possibility of risks. A significant risk associated with the chosen location for Café
Moolata is the location itself. While the Bristow Center is located along a major commuter road
and situated near several large housing developments, the locations of its competitors are situated
in more heavily trafficked shopping plazas. Another significant risk to Café Moolata is its lack
of a nationally recognized brand name. As a locally owned and operated establishment, Café
Moolata does not have the backing of a larger corporate office. To counter both of these risks,
Café Moolata will have to rely upon its marketing efforts to increase initial word-of-mouth, its
products and services to build customer loyalty, and community outreach and involvement to
promote growth.
Risks also exist to the operational success of Café Moolata. A risk to the operational
structure comes from the individuals that make up the staff members. Being that the majority of
these individuals hired to fulfill these positions will be high school and college students, a high
turnover rate is possible. To combat this, the managers and the current staff “should never stop
recruiting, either to fill open slots or upgrade existing staff” (Lemoine, n.d., para. 2). This can be
accomplished by exuding an air of fun, family-like work environment. Another operational risk
is that the equipment needs to be serviced at regular intervals as well as in cases of emergency.
At this time, an appliance repair company has not been contracted to provide this service, but one
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will be established in due time. Also, another operational risk comes from theft, both from
external and internal forces. To deter theft from external forces, a security system with be
installed from and surveillance provided by a company such as ADT. To deter theft from
internal threats, internal investigative authorities will be researched and a company will be
implemented as is necessary. The last significant risk of this type is the possibility of lawsuits.
A lawyer will be consulted and insurance will be obtained to include workman’s compensation.
Lastly, risks exist to the financial stability of the organization. As previously stated, a
significant amount of product has to be sold each month to break even for the year. Some loss is
to be expected in the first year or two of any new business, but significant financial loss must be
planned for. In expectation of this, the owner of Café Moolata is prepared to take a reduced
salary, or forego one altogether, to offset any significant loss that may occur.
Conclusion
By analyzing the external and internal forces that act upon an organization, the
management can formulate the appropriate strategy necessary to ensure the organization’s
overall success. By examining the current market conditions, the threats imposed by
competitors, the operational and financial requirements necessary to operate, and the associated
risks, Café Moolata can implement sound marketing, budgeting, and organizational strategies to
ensure its longevity and future success. With its emphasis on fresh and quality products, strong
customer relationships, and a unique environment, Café Moolata is poised to become a staple of
the Bristow community for many years to come.
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Appendix A
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