Daily Cravings Busters - Essay Example

NAME: STUDENT NO: INSTITUTION: DATE OF SUBMISSION Executive Summary The name of our business will be Daily Cravings Busters to indicate that we shall cater for all the needs of the customer. The business will be a partnership between three people namely: Mubarak, Mohamed and Abdullah. The partnership was registered in accordance to the Australian Business Act 0n 28th of July 2014. The business intends to use a new technology that has not been there in the market to ensure that customers are served efficiently and conveniently. Daily Cravings Busters will offer to its customers the finest cold and hot beverage, specializing in custom blended teas and specialty coffees. In addition, DCB will provide selected domestic soft drinks, fresh baked pastries, Italian sodas as well as other confections. Seasonally, Daily Cravings Busters will add beverages such as frozen coffees, hot chocolate, and hot apple cider. DCB will focus on two markets; The Daily Commuter and The Captive Consumers. Daily Cravings Busters has three main objectives that it wishes to fulfill in the first three years. To achieve a Gross Margin of 45 % and above, To attain a Net Profit after tax that is above 15% of our sales and To have at least 10 drive-through outlets in different locations and at least five well booked mobile restaurants in the next two years. DCB has three missions: Economic Mission, Product Mission and Community Mission. The start-up capital will be $300,000 with every partner expected to contribute an equal share. The startup capital is expected to go into developing the first outlet, buying inventory, paying deposits and catering for operational costs for the next six months 1.0 Introduction 1.1 Business Details and Business Registration The Business Name of our business will be Daily cravings Busters to indicate that we will be able to cater for all cravings of our customers. This business was registered as a partnership on 28th July 2014 in Accordance to Australian Business Name Act (2014). Daily Cravings Busters (DCB) will be a specialized beverage retailer and intends to use a system that is new to the food and beverage industry to give customers cold and hot beverages in a time efficient and convenient way. DCB will give its customers the ability to order and drive out their choice of blended espresso drink well customized to their needs. Moreover, DCB will be offering a better option to gas stations, institutional coffees and fast food. DCB will offer its clients the very best hot and cold drinks and specializing in blended tea, coffees and other custom drinks. In addition to this DCB will offer confections, soft drinks and freshly baked cakes. DCB will also offer seasonally hot chocolate, frozen coffee and hot apple Cider. There is demand for drinks whether hot or cold all year round depending with the season of the year. 1.2 Business Premises and Legal Consideration DCB will open its first facility on Glenferre road, Melbourne VIC in Australia. We expect to open nine more such facilities in the city of Melbourne three years after starting our business. The reason why we found this location suitable for our business is because our outlet will be visible from the roadway, there are a lot of retail shops already set up in the area hence we expect a traffic of about 2000 people per day and there is easy entry to the outlet by the customers. Some of the legal consideration of setting up this business will include complying with the Health Act and getting a business permit before starting off my business (Department of Health,2013). 1.3 Management and Ownership Daily Coffee Busters will be a Partnership of three members namely:. The partners have agreed that day o day running will be done by all the partners. The profits and losses will be shared equally as they are also contributing the start-up capital equally. The manager of the business will be changed every two years with every partner getting a chance to do so. All this terms and conditions have been put in a Partnership Agreement. The start-up capital will be $300,000 with every partner expected to contribute an equal share. The startup capital is expected to go into developing the first outlet, buying inventory, paying deposits and catering for operational costs for the next six months. This is as indicated in the figure below. 1.4 Skills of the owners All partners are qualified accountants and hence they will be able to make accounting decisions that are sound for the business One of the Partners has worked in a Family Coffee house and therefore has skills and knowledge of preparing various coffees. One of the partners once owned a small bakery and a juice stand in the city and will consequently help the other partners in preparing the best cakes and juice in the city. 1.5 Innovation The key to surviving in a highly competitive business is being innovative. In DCB, we intend to put up a Research and Development Unit which will aim at looking for better and creative ways of making beverages and food in the business. This will be like an incubator for young and creative innovators to come together and develop new ideas. We have patented our brand name and logo to ensure that malicious business people will not steal our trademarks. Below is our registered logo 2.0 Operations 2.1 Organizational structure 2.2 Key personnel As agreed, the three partners will remain very active in the day to day running of the business to reduce on operational cost during the first 6 months. In Addition to the partners, the following key personnel will be hired. Chief Chef This is the person who will be in charge of the kitchen to ensure that the beverages and pastries will be delivered in accordance to the recommended formula. Two cooks In addition to the chef, they will hire two more cooks to help with the preparation of the beverages and the food Two attendants These two attendants will help in operation of the mobile café. To get these personnel, we will place the adverts in the daily locals and all partners will then be involved in the selection and the training of this staff. 2.3 Service Process This refers to the process involved in production of goods and services. To begin with, we start with our suppliers. DCB will buy its coffee beans from PJ’s Coffee. In addition to this, we will sign purchase agreements with our major suppliers including Royal Distribution, Big Train, coca cola and L & N products. Our first outlet will be manufactured by city station and our first mobile café will be made by Tow Tech Company. The delivery system of Daily Cravings Busters is based entirely on technology. DCB uses a state of art Drive thru facility which is aimed at providing the required efficiency and convenience to its clients. DCB will also have in place a similar mobile café that will from time to time be deployed to corporate campuses, colleges, high schools and special events. The trading hours of the DCB will be from 6.00 a.m. to 8 p.m for seven days a week. However, we hope to operate 24 hours a day with shifts from our employees in the third year in an effort to increase our sales. 2.4 Insurance and sustainability Below is a list of insurance covers that DCB intends to take: Under the business package, some of the risks insured against include business interruption, theft, fire, burglary and public liability. The prices of the premium are as quoted by brokers of the respective insurance companies. The covers will be finalized upon signing of the contracts. 3.0 Marketing 3.1Products Daily Cravings Busters will offer to its customers the finest cold and hot beverage, specializing in custom blended teas and specialty coffees. In addition, DCB will provide selected domestic soft drinks, fresh baked pastries, Italian sodas as well as other confections. Seasonally, Daily Cravings Busters will add beverages such as frozen coffees, hot chocolate, and hot apple cider 3.1.1 Product Description Daily cravings Busters will offer its customers whether at one of the Mobile Cafes or at its Drive-thru facility, the ability to customize orders of coffee beverages to their exact specification. The company’s staff will be trained in the fine art of brewing, blending as well as serving the highest quality cold and hot beverages with exceptional attention to detail Beside from coffees, DCB will offer domestic and Italian soda, teas, seasonal specialty drinks, frozen coffee beverages baked goods, and pastries. Moreover, through its website, our business will market premium commodities such as T-shirts and sweatshirts, coffee mugs as well as ball caps 3.2 Target Market DCB will focus on two markets; The Daily Commuter- these are Customers who are out shopping, travelling to or from work, just out for drive, or delivering goods or services The Captive Consumers-these are customers who are in a restricted environment that does not allow convenient departure and return while searching for refreshments, or where refreshments stands are an integral part of the environment 3.2.1 Market Segmentation DCB will focus on two different market segments, namely; Captive and Consumer customers. To company will develop two different delivery systems so as to access both of the markets. For captive DCB will use the mobile café while for commuters, DCB will use the Drive-thru coffee house. Commuters refer to individuals in a motorized vehicles moving from point A to B. DCB will concentrate more on commuters who are travelling to or from work or those out on their lunch break. On the other hand, captive consumers will include those who are in a restricted entry environment, or in a campus environment that does not allow movement to and from. Examples include college campuses and high schools where there is limited time between classes as well as corporate campuses where there is time constraints involving project deadlines and meetings. 3.3 Industry Analysis The coffee and Cafes industry has grown by tremendous amount over the past five years owing to much of its success to Australia’s love for quality coffee. A strong and vibrant coffee culture has developed across Australia due to the coming of the European immigrants after the World War II and the emergence of popular European-style cafes. This love for quality coffee has fuelled growth over the past five year and the industry revenue is expected to grow by an annualized 5.3% over the next five years. To analyze the coffee and Cafes industry we will undertake a PESTEL Analysis to evaluate the environmental which you business will operate and a competitors analysis to identify our key competitors. 3.3.1 PESTEL Analysis The macro economic factors that could affect our business are grouped under the below headings. This would help evaluate the impact that each factor could have on our business and would help maximize any opportunities and minimize the risks. Political: Australia has maintained a stable liberal democratic political system and from the perspective of new business, they pay great attention to protect natural heritage through environmental laws. Australia ranks highly in many international comparisons of national performance, such as quality of life, health, education, economic freedom, and the protection of civil liberties and political rights. This means our business will operate in a peaceful environment which will help us achieve our objects to expand our business in many parts of Australia Economic: Australia is an island continent located in the Oceania between the Indian Ocean and the South Pacific Ocean and its placement is an added advantage to a business when it comes to export and imports. Australia is a melting pot of various ethnicities and is one of the largest growing regions of the world economy. This means that our target consumers will have enough disposable income to purchase our products Social: Much of Australia’s history has been focused on assimilating different cultural groups into the predominantly British Australian traditions. The most commonly nominated ancestry was English (36.1%), followed by Australian (35.4%), Irish (10.4%), Scottish (8.9%), Italian (4.6%), German (4.5%), Chinese (4.3%), Indian (2.0%), Greek (1.9%), and Dutch (1.7%). Arab Australians are approximately 2% (350,000) of the population and hence a very good target country to consider for our coffee kiosk business Technological: E-commerce is a very big in Australia and significantly helps international business. This would help our date business in terms of reduced costs, lower overheads, less initial outlay of capital and greater accessibility to the large population of Australia. Overall, this would help us realize a faster turnover on our investment Environmental: Although most of Australia is semi-arid or desert, it includes a diverse range of habitats from alpine heaths to tropical rainforests, and is recognized as a mega diverse country. Natural hazards include cyclones along the coast, severe droughts and forest fires. Australia has introduced multiple environmental laws to protect its natural heritage and minimize the extent of impact Legal: Australia has a practical structure of financial regulations that provides certainty for new businesses. Their flexible business laws make the procedures of opening a business simple and achieval for anyone. Australia ranks #11 by the World Bank in terms of ease of doing business and transparency of governance system 3.3.2 Competitors Analysis When measuring head-to-hear, direct competitor, we have established that there are none in the Melbourne as DCB will be the first double sided, drive-thru coffee house in the area. However, our business will still face competition from traditional coffee houses as well as other retails Local cafes Establishes locally owned cafes are the toughest competitors of Daily cravings Busters. Daily cravings Busters knows the pride and quality that the local cafes has in their products bought by their consumer as every café has a customer base that is dedicated and highly educated. However, DCB will have a competitive edge over the local cafes which is based on the following attributes; Quality products Mobile cafe Drive-thru service Consistent menu Community Benefit Supply Discounts Fast food and Convenience Store DCB will face a certain level of competition from these two industries. The national convenience store chains as well as national fast food chains already serve coffee and some breakfast foods. To have a competitive advantage over the Fast food and Convenience Stores, DCB will offer products of much quality compared to current products offered at the fast food and convenience stores. Other competition Daily cravings Busters is aware that once it enters into this market and establish it presence, other business will try to follow. However, we believe that our organizational design as well as the corporate mission will be imitated but not duplicated. Our company will constantly review its products, services, locations, and corporate mission to ensure that we remain a leader in this industry 3.4 Marketing forecast 3.4.1 Advertising and Promotion Daily cravings Busters will spend moderately on promotion and Advertising in the first year. Most of these funds will be spent on a good publicist since DCB feels that exposure will come from publicity and promotion. Moreover, to drive people to the coffee café DCB believes that word of mouth advertising as well as free beverages coupons will be the best way. In the second year, we will increase the budget so as to promote several locations especially those opening as well as the existing ones. DCB will continue to utilize publicist as a key component of its marketing program through donation over $70,000 to charities and local schools. In the third year, DCB will significantly increase its budget on advertising and promotion with much of this cash being spent on drive time radio. In addition, the company will increase allocation on publicity to $200,000 to be used in donations to local schools and charities 3.4.2 Sales forecast Daily cravings Busters anticipates to have two Drive-thru locations in operation in the first year where the first location will be opened in the third month of this plan and the second Drive-thru will open six months later. The company will build in a certain amount of ramp-up for each facility while commuters become familiar with its presence and we expect the two Drive-thru will generate 288.000 tickets in the first year of operation DCB is planning to introduce two more Drive-thru in the second year and add nine Drive-thru facilities in the third year. This will increase revenue to over 1,000,000 tickets in the second year and 2,786,000 tickets in the third year. Apart from the Drive-thru, DCB will also introduce a mobile unit in the last quarter of the first fiscal year and we expect that this mobile unit is going to generate 10,000 tickets at an average price of $2.45. In the second year, DCB is planning to increase the mobile units by adding 2 more units, the mobile units are expected to generate 150,000 tickets in the second year. DCB expects to see 264,000 mobile unit tickets in the third year as the company will add four mobile units. Moreover, Daily cravings Busters expects to generate more revenue from the commercial portion of its website through selling of insulated coffee mugs, The Daily Perc" t-shirts, sweatshirts, and packaged coffee beans. The graphs below shows monthly and yearly sales of DCB in the first three years Chart: Sales Monthly Chart: Sales by Year All the partners will have a life insurance cover. 4.0 Future 4.1 Objectives Daily Cravings Busters has three main objectives that it wishes to fulfill in the first three years. To achieve a Gross Margin of 45 % and above To attain a Net Profit after tax that is above 15% of our sales To have at least 10 drive-through outlets in different locations and at least five well booked mobile restaurants in the next two years 4.2 Mission Economic Mission-we at DCB aim to operate, grow and remain in business by making sound economic choices. Product Mission- We at DCB will aim at ensuring customer satisfaction by offering the best quality of beverage in a timely manner Community Mission- We will ensure community support by involving them in decisions of our business that will affect them. 4.3 Keys to Success There are four important factors are key to success of every business and especially to the food and beverage industry. It is based on our mission that this key success factors were determined. Convenient Location It is Important that our business which is dealing with perishable is located in a location that s visible, has high traffic of people and is accessible to all. For this reason, our chosen location to start our business is Glenferre road, Melbourne VIC in Australia. Friendly sales persons We believe in quality customer care if customers are to be satisfied with services. For this reason, our servers have to be friendly, articulate, cheerful and very professional. Greatest reputation We intend to build a good reputation based on the services we offer and giving back to the society. We believe that it is cheaper to retain a customer than to find a new one and as such we will invest in our customers so that through word of mouth, they will bring us more customers. Fine products We intend to give the best products there is in the market by using the freshest coffee beans, ensure consistent flavor and use well cleaned equipments for all our beverages and food. 5.0 Financial Management 5.1 Risk Management Risk Description Likelihood Impact Priority Preventative Action Contingency Plans Fire – loss of property/life M H H Installation of smoke alarms and sprinkler system, fire extinguishers installed and regularly checked, regular staff training in emergency fire procedures including evacuation plans (shop & centre), Ensure insurances including fire, public liability and business interruption are adequate and in place. Immediate access to personal resources to rebuild shop and business quickly whilst waiting for insurance payments. Change in suppliers terms M M M Maintain good relationships with suppliers and maintain access to personal cash reserves. Utilise alternative suppliers or increase working capital (from personal cash reserves) Food poisoning VL VH H Use quality products, correct storage of food stuffs, train staff in hygiene principles as part of a Quality Control Process Develop a complaint handling process. Investigate source of food poisoning and remediate Supplier unable to supply L M M Arrange alternative suppliers, evaluate substitute products Purchase from alternative suppliers or use suitable substitute products Major dispute with centre owner L M H Ensure formal lease agreement is in order. Develop and maintain a sound working relationship with the Centre Manager. Engage lawyer for advice Loss of key person VL M M Take out key person insurance, effect knowledge and skill transfer to other staff Short term contract for suitable replacement (until permanent staff can do the job). Call up insurance policy 5.2 Start up funds The start-up capital will be $300,000 with every partner expected to contribute an equal share. The startup capital is expected to go into developing the first outlet, buying inventory, paying deposits and catering for operational costs for the next six months. This is as indicated in the figure below. Annual profit Budget DCB is expecting to growth at a higher rate in the next three year, reaching healthy sales and gross profits margins by the end of the first year. However, due to the high expenses in the first year DCB will report net after tax loss but the company will recover in the second year. the diagram below shows DCB budgeted profit for the next three years Chart: Gross Margin Yearly Chart: Profit Yearly Projected Balance Sheet References Department of Health (2013). Starting a food business. Retrieved on 18th August 2014 from http://www.health.vic.gov.au/foodsafety/bus/foodbus.htm Australian Business Act (2014),Registering a new Business in Australia http://www.business.act.gov.au/ Read More