Business Strategies for Cafe Paradiso - Case Study Example

Business Plan Evaluation fora Café Café Paradiso Student Name Institutional Affiliation Business Plan Evaluation fora Café Café Paradiso Data that identifies the planning incidence of planning in small firms and the associated variables with that planning relies on samples subject to geographical and industry constraints of the business (Gibson and Cassar 2002). This is a business plan evaluation for a café in Australia, café Paradise. The purpose of this business plan evaluation is to and make supported recommendations to improve the plan to ensure achievement of the plan's objectives for various stakeholders. The scope of this evaluation will cover all the relevant aspects outlined in the business plan for the café to be evaluated; Café Paradiso. The core evaluation questions that seek to be answered range from the identification of key market segments after analyzing the data on market size of the coffee market in the business plan, putting in place business strategies by looking through the quantitative market trends and the expectations, identification of key companies in the same business line with café Paradiso in Australia by analyzing information on market share.(Anonymous) Business Executive Plan Summary The idea behind the business plan for café Paradiso, based on the negotiations of the café owners to start a café business, is due a great positioning in terms of the location. As per the business plan, the Mountain Glen Shopping Centre experiences a great number of passing shoppers in addition to a growing number of people in terms of population. Moreover, the limited nature of the number of cafes within that center and the added advantage of a wide field of experience in the café business by the owners having successfully owned and operated a number of cafes in Australia and overseas. The market share, in this case, will, therefore, increase from around 35% to 40% in one year. This is beneficial to this business as it will have competitive advantages over other businesses in terms of location, knowledge and industry experience, availability of financial resources as well as service in food quality and service in general Anonymous (2013). Product Offering Evaluation The main activity of CaféParadiso revolves around the purchase, storage, preparation, selling and serving the available menu to their esteemed customers. The expectation to offer service to over 6,000 customers monthly proves to be a real goldmine regardless of whether the customers prefer to dine in or takeaway the products of the café. In terms of the operation of the café, it is quite reliable and convenient to the customers since it is open from 8:00am to 5:00pm every Monday until Saturday and from 8:00am until midday on Sunday. The café also comfortably houses 36 seated persons. Café Paradiso is driven by a mission which is to suit client needs, offer high coffee quality and delicious meals in the best service operation. This is the proper mission especially for a market player in the food and beverages industry. The main differentiation area, from which, it distinguishes itself from other cafes and coffee shops in that region, is that it boasts of an internationally trained and acclaimed chef. This is the point of pride in café Paradise as the chef will be able to produce fresh, light and healthy meals daily as well as come up with new menu items to suit the ever changing client needs and tastes of people who take keen an interest about what they eat. The high-quality coffee offered is aimed at targeting staff in the shopping centre and shoppers who enjoy good coffee that is valued for money at high competitive prices (Hassanien et al. 2013). Marketing Plan Evaluation The hot drinks market in Australia exhibits a moderate growth historically which is expected to continue at the same rate for the period forecasted through to 2016. Players in this industry try to be differentiated through taste, quality, and health benefits. The company's marketing plan objectives are to: Have and retain market share possession then grow the share to 40%. It also projects to obtain a net margin of 20% before taxation. To achieve first-year sales of $536,650 and second-year sales amounting to $580,000 to make the business to be ranked as a place of eating light and healthy meals. Café Paradiso has great aspects of product differentiation as they do not deal or specialize along one line of product. Instead, they offer the variety to their valued customers. The evaluation of this café's business plan as a reflection of the real world company determines the adequacy of its market needs (Hassanien et al. 2013). The offerings of café Paradise are compelling in regard to the experience of the management team coupled with their commitment. If indeed the financial statements are realistic then this company as a whole has a chance of success in the industry it is operating in. Therefore, for a business to pull through in terms of marketing, it ought to: retaining at least two key staff members of Café Paradise to maintain continuity of customer relationships during the changeover, upgrade signage to be more appealing visually, maintained the existing price levels and controlling costs and lastly undertake more aggressive marketing and promotion (Mazzo and William, 1990). Management Team Analysis At the top helm of café Paradise's management are Brendan and Margaret Elliott, owners of Sea view Pty Ltd. The two are both experienced Café owners/managers who have successfully managed to run a good number of cafes in Australia and overseas. This brings a combination of for experience, integrity and passion in the executive team.Brendan, a qualified chef who has had the privilege of working with groups such as Hilton and Sofitel before acquiring his enterprise. Margaret has a Business Management (Hospitality) degree other than having worked for Hilton and other internationally known groups like Rydges.The bios and brief highlights of each of the executives' strengths in the business plan accompany the standard information of the business like headquarters and corporate structure. It can't be assumed that the company lacks either formal or informal experienced advisers. It is essential that these executives involved in this company showcase their passion and drive towards seeing this project a success. To achieve that, both Brendan and Margaret have given their whole to work on a full-time basis in the business, maintain the continued relationships with clients during the transition by retaining two key staff members from the previous owner add four staff. At least two of that staff on a part-time basis. The faith in this project is also demonstrated by the reality that the pioneers have invested their own money as capital to the business and they don't have any other day jobs apart from the business (Mazzo and William, 1990). Financial Plan Analysis According to café Paradise's business plan, the projected performance is summarized below: Turnover: Year 1 $536,650 Year 2 $580,000 Gross margin $378,690 (71%) Net profit (before tax) of $109,869 in the first year, growing to $131,175 in the second year of operation. It can be seen that the business has a positive cash flow from the first month of operation Break-Even is estimated at a monthly sales level of $30,869 Return on Total Assets: 37.3% Return on Equity: 51.2% The purchase price of the business is $170,000. Total start-up cost being $209,810 and a bank loan is expected to be part of the funding. It amounts to $104,905. The two executives have injected $104,905 as equity. The cash flow will facilitate the loan payment within a two-year period. Indeed the financial projections are both promising and realistic. However, with the fact that most entrepreneurs extremely the potential of their companies starting with the market size and share of the market's financial figures should, therefore, be based on historical data if available, or projections in a case whereby the firm is not yet profitable. For investors who project capturing 20 percent market share in the first two years, may be perceived to be having unrealistic expectations (Fridson and Alvarez. 2011). Competition Analysis Club Café and Coffee Extravaganza are the two main competitors to café Paradiso since they possess a strong brand recognition coupled with high product quality and well-documented processes on how the business ought to be operated when it comes from becoming a national franchise business. The presence of operating limits of the franchise denies them the flexibility to change menu items easily. Café Paradiso can have an advantage over them due to this flexibility especially with the presence of a chef amongst them who can create new menu products to meet the changing needs of their customers. In as much as Zhavargo's Café can change to market needs hence attract the price concerned clientele with a product of average quality, the market space it competes in is not the one Café Paradiso is competing in. This is an indication that café Paradiso understands their competition, as well as, and they have a core customer foundation. For the competition, the company has to have a competitive advantage as well as unique selling points.] (Hassanien et al. 2013). The first and major competitive advantage enjoyed by café paradise is the locational advantage. It boasts of the best-possible location for and has three years of the original 5-year lease to operate as well as another 5-year choice. The value and quality of the great variety of light and healthy meals given by the business can't be equated to what the competitors provide. The industry expertise and the experience of both owners running successful similar businesses in the past are also another point to note (Hassanien et al. 2013). These competitive advantages create the basis of the unique selling points in line with the slogan of "Paradiso's – convenient, light and healthy" and will also involve the promotion of the culinary skills of their International Chef. Industry Analysis The café market is a competitive one full of with franchised operators pioneering in the coffee shop segment and light meals (Hassanien et al. 2013). With time, the concentration of this segment will increase. With the increasing nature of competition , the shopping center in which Café Paradiso is caps the number of coffee shops and cafes within the complex (by covenant in the Lease Agreement).There has to be limited competition up to this extent, and it is anticipated that all cafés and coffee shops around the complex will be quite profitable (Mazzo and William, 1990). Major aspects to note about the restaurant and cafe industry: Trend towards singles, business personnel and families eating out Sensitivity to transformations in actual household disposable incomes Wider concentration in more than average household income fields Growth with households increasing the frequency of purchase and the spent amount in transaction in this area.The concentration on the provision of value for money with an emphasis on franchise opportunities, as well as family restaurants, is the current trend. The truth is that the industry will still get the advantage of higher outcomes and time constraints on some household as well as lifestyle transformations that include dining out and take away food consumption. (Hassanienet al.2013) Three major success factors in the café industry that enhance the success of the business in terms of competition include: Location of café in terms of: Proximity to surrounding attractions Short distance to consumers Convenience and accessibility Physical appearance in terms of: Cleanliness of premises, quality of food , quality of service and clear market position The understanding of this evaluation is that the catering nature of this business indicates an established catering niche. With the coming up of more catering businesses up against seasoned caterers having reviews and reputations aswell as brand recognition. Café Paradiso's plan outlines how they intend to stand out from the other similar businesses in Australia. For instance, they offer a unique menu specialty (Mazzo and William, 1990). References Anonymous. March 1, 2013.Hot Drinks Industry Profile: Australia.Pdf Anonymous.. Weblog.https://www.google.com/webhp?sourceid=chrome- instant&ion=1&espv=2&ie=UTF-8#q=cafe%20paradiso%20business%20plan Fridson, M. S., & Alvarez, F. (2011).Financial statement analysis: a practitioner's guide (4th ed.). Hoboken, N.J.: Wiley. Gibson, B. Cassar, G. July 2002. Journal of Small Business Management. , Vol. 40 Issue 3, p171-186. 16p. Hassanien, Ahmed, Crispin Dale, and Alan Clarke.2010; Hospitality business development. Amsterdam: Butterworth-Heinemann/Elsevier. Print. Mazzo, William L. 1990. A business plan and evaluation: simple as 1-2-3..]3rd ed. S.l.: Business Plan Pub.] The University of California Irvine (uci.edu): 2007. Stradling Yocca Carlson & Rauth Business Plan Competition Evaluation From.Weblog.http://74.125.95.132/search?q=cache:hfsjb6LFP0EJ:merage.uci.edu/Resources/documents/200607Bplan_JudgeEvalForm.doc+How+to+evaluate+a+business+plan&cd=5&hl=en&ct=clnk&gl=us Read More