Transcript
Business Plan Project
Jessica Speicher, Kelly Tasky, Joe Becker
Bus 339
4/30/2012
1 Title
Executive Summary
Our company is The BREWster, a coffee shop
located in the new Offutt School of Business. Our
business is centered on the aspect of being funded by
Concordia College but being student run, allowing current students to use their
classroom knowledge in an actual work environment, allowing them to gain valuable
work experience and jumpstarting their ability to become responsibly engaged in the
world (BREW).
The target market for our coffee shop will be the students of Concordia College,
more specifically business students and residents of east complex due to the amount of
contact these students will have with the location of the coffee shop.
Based on the hours of operation we laid out that we would need to hire 1 full-time
employee and 22 part-time student employees in The Brewsters vertical organization
structure. We will have 4 student managers over-seeing the coffee shop and 3
specialized student managers in marketing, accounting, and nutrition and dietetics
along with 15 regular student workers.
The Brewster will be similar to its four main competitors on campus for price and
products offered, however, The Brewster will distinguish itself by being the coffee
vendor that is open latest, has the best atmosphere, and offers the most promotions to
its customers. The Brewster will be run by Concordia College students; and being that
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Concordia students are our largest demographic, The Brewster will be the best in the
business for being able to understand what their customers desire.
Our variety of promotions includes daily deals, re-usable mugs, Brewster bucks,
punch cards, social media, and ads through c-news and the Concordian.
With the assistance in funding though the Offutt School of Business for the first
three years of our business we will be able to purchase equipment and provide the
necessary foundations to create a successful business that will serve as both beneficial
to student learning and profitable for the school.
3 Title
Table of Contents
Executive Summary ........................................................ 1
Table of Contents ........................................................... 3
Company Description ..................................................... 4
Industry Analysis ............................................................. 5
Market Analysis .............................................................. 7
Marketing Plan ............................................................. 10
Management Team & Company Structure .................. 16
Product (or service) Design & Development Plan & Operations Plan 19
Financial Projections ..................................................... 21
Sources ......................................................................... 26
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Company Description
Concordia College has adopted a focus to have
students become responsibly engaged in the
world (BREW). This aspect of the curriculum
was vital when planning the new Offutt School
of Business, so it was decided that a small
student-run business would be at the heart of the building giving students the
opportunity to apply the skills they learn in class. As the plans were discussed further, a
coffee shop became the definitive idea not only for the educational facet, but to add to
the social and community feel of the new building.
When deciding on a name for this future coffee shop we thought it was important to
include the aspect of BREW in the title because not only did it sum up the reasoning
behind the purpose of the coffee shop, but who wouldn’t love to wake up to a cup of
BREW every morning? (no pun intended) After discussing several options with staff,
family, and friends we had a unanimous vote to name the Offutt School of Business
student-run coffee shop, The BREWster. We also, found it crucial to include the
intention in the mission statement. Our mission for The BREWster is to provide a
friendly, comfortable atmosphere where the customers can receive quality food, drinks
and service at a reasonable price while stimulating a learning environment.
The BREWster will target Business staff and students along with students that live in
East complex surrounding the Offutt School of Business. This is a prime location as there
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is a need on this side of campus. Since the grant cafeteria left East complex, students
have had to travel other places to get beverages or snacks. This coffee shop will provide
a convenience for this target market that has not been available for several years. The
coffee shop will provide coffee, tea, hot chocolate, apple cider, smoothies, sandwiches,
chips, yogurt and other miscellaneous breakfast items.
Industry Analysis
Our coffee shop is categorized as a snack and nonalcoholic beverage bar under the
NAICS system using the number 722213. According to the 2007 NAICS definition, “this
US industry comprises establishments primarily engaged in (1) preparing and/or serving
a specialty snack, such as ice cream, frozen yogurt, cookies, or popcorn or (2) serving
nonalcoholic beverages, such as coffee, juices, or sodas for consumption on or near the
premises” (2007 NAICS Definition). In the surveys done in 2007 there were 50,491
establishments in this industry, a growth of 14,455 since 2002 or approximately forty
percent. Employment also increased by 57% in this five year span and sales almost
doubled finishing with a total of $24,254,000 in 2007 (Industry Snapshot).
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There are many financial ratios that businesses use, but there are five main ratios
that are significant for the snack and nonalcoholic beverage bars. The first is the current
ratio. The current ratio is determined by dividing the business’ current assets by the
current liabilities. This shows if your company has the ability to pay off any current
obligations (short term loans, accounts payable, tax expenses), the higher the ratio the
more likely you are. Conversely, if a current ratio is high the business could have too
much cash on hand. The next ratio is the return on equity, net income divided by total
equity. This ratio shows the amount of profit a company is making from the money
invested by shareholders. Another ratio is return on assets which indicates how
“efficient management is at using assets to generate earnings”; this is done by dividing
net income by total assets. The last ratio important to our industry shows a company’s
efficiency of managing their assets in relation to their sales. This is simply calculated by
dividing total assets from total sales (Coffee Shops).
This industry has changed dramatically throughout the years and companies
continue to identify and follow new trends in order to increase competitiveness and
profits. One significant trend in the last fifty years is an increase in coffee consumption
in both young (18-24) and old (60-plus) age groups. Coffee is no longer just seen as a
morning drink while the parents read the newspaper, but instead has developed its own
culture throughout the different age groups. This coffee culture has changed the design
of coffee shops today. Unlike other food industries the focus of coffee shops today is
not only to deliver your drink but to offer a place for you to relax, socialize, or even a
place to work. Not only is the atmosphere of the coffee shop changing but the menus as
well. Since the 1990s there has been an upward trend in the consumption of specialty
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coffees along with the development of more food items that are offered. The increase in
coffee consumption has also generated awareness trends. Since 2002 more people have
been observing the ecological and economic issues surrounding coffee as well as a
growing concern about the health effects of coffee and the benefits that they will
receive. “Sixty-one percent of coffee drinkers said that coffee improves their focus and
forty-six percent listed the health benefits of drinking coffee as one of the reasons they
drink coffee.” (Coffee Shops)
Market Analysis
There are several segments we can form for within our coffee shop market:
1. Students
2. Professors
3. Visitors
The target market for our coffee shop will be the students of Concordia College.
With over 2000 students on campus they would have the largest impact on the success
of our business, so it is most important to target and satisfy their needs and wants. Also
18-24 year olds are the largest segment of consumers that drink coffee for an energy
boost (average of 43%) as well as, to help them concentrate (26%). Although all
students are important with the location and flow of traffic, business students and
residents of east will have a higher target on our companies marketing profile.
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9 Title
We would have three major competitors on the college campus; Dining Services, Coffee
Stop, and the Korn Krib. Off campus we would also have some competitors with local
coffee shops or similar business in Moorhead. These include Starbucks, McDonalds,
Atomic Coffee, and Moxie Java.
Company Drinks Average Price per
Unit
Target Market Logo
Coffee Stop Brewed Coffee
Latte
1.99
3.99
18-24 college
students
Starbucks Iced Latte
Caramel Mac.
4.55
4.25
18-45 upper class
adults
McDonalds Mocha
Brewed Coffee
2.90
1.75
18-45 middle class
adults
Atomic Coffee Latte
Iced Latte
3.95
3.60
18-45 middle class
adults
Moxie Java Latte
Mocha
3.75
2.70
18-45 middle class
adults
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Marketing Plan
Positioning strategy
The Brewster will be similar to its four main competitors on campus for price and
products offered, however, The Brewster will distinguish itself by being the coffee
vendor that is open latest, has the best atmosphere, and offers the most promotions to
its customers. The Brewster will be run by Concordia College students; and being that
Concordia students are our largest demographic, The Brewster will be the best in the
business for being able to understand what their customers desire.
Points of Differentiation from competition
The Brewster has four main competitors and three secondary competitors. Our
four main competitors are from other coffee vendors located in various outlets on
Concordia’s campus. The three secondary competitors are located just near Concordia
campus in south Moorhead. What distinguishes The Brewster from its competition is
having the most convenient hours of operation for its clients, having the best
atmosphere, and offering the most and best promotions on campus. The Brewster will
be of most convenience to students living in Hallet and Erickson dormitories and
students and faculty who attend classes in the Offutt School of Business. In addition to
its prime location, The Brewster offers its guests an environment ideal for studying and
meeting with group members. The shop is designed to be a relaxing atmosphere with
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small and large tables to study alone or with groups. Every table will be close to an
outlet so students can spend many hours at The Brewster. Unlike any other coffee
shop, The Brewster has a “Daily Deals” promotion offering 50% off of the muffin
featured for the day. In addition to the Daily Deals promotion, The Brewster wanted to
reward its customers for their outstanding achievements and contributions on campus.
The Brewster will pass out “Brewster Bucks” to all faculty members on the Concordia
College Campus. The Brewster Bucks are to be handed out to students rewarding them
for their hard work or good deeds done in the classroom.
Pricing Strategy
Our products will meet the market value of our competition on campus;
however, we plan to have many promotional events throughout the year.
Distribution Strategy
For proper distribution of our products, we plan to have more workers on at times
when we are most busy and less at times when we are not. In the mornings before the
shop opens we will have our full time staff member, one student manager, and three
student employees. The reason for having the most employees on in the mornings is so
that they can prepare sandwiches for the day, stock the coolers, start the coffee
brewers and do any other preparation needed to ensure a smooth work day. Late at
night is when there will be the fewest number of workers due to relatively little traffic at
the shop. There will be one student manager on staff as well as one student worker.
The student manager will take inventory, stock as much as he or she can for the
morning staff, and close the shop.
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To support our flat organization business model, our full time staff member, student
managers, and student workers will collaborate and do very similar tasks throughout the
workday. There will, however, be certain tasks that can only be done by the full time
worker, the student-marketing consultant, the student accountant and the four student
managers.
PROMOTIONAL STRATEGIES
“Daily Deals”
The Brewster will offer 50% off the muffin featured for the day. The goal of this
promotion is to drive sales. If customers are coming for the daily muffin deals, they will
hopefully form habits for coming on certain days of the week or at least persuaded to
purchase a beverage when they purchase their muffin.
“Re-usable Coffee Mugs”
The Brewster will off its customer’s re-usable coffee mugs. If a customer uses its re-
usable coffee mug that The Brewster distributes they will receive 10% off of their
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beverage. The goal of this promotion is to support environmentally friendly practices,
save money on one time use cups, and increase awareness of The Brewsters from
advertising the brand name on the coffee mugs.
“Brewster Bucks”
Brewster Bucks save a student one dollar towards their next purchase. The
Brewster student-marketing associate will be in charge of distributing “Brewster Bucks”
and “Brewster Buck Stamps” to all faculty members on the Concordia College Campus.
The Brewster Bucks are to be handed out to students rewarding them for their hard
work or good deeds done in the classroom (i.e. getting a good grade on a test,
participating, or helping others). To ensure copyright, teachers will have a Brewster
Bucks stamp that needs to be present on the back of every coupon to get the
promotion. Furthermore, there will be numbers on the back of every coupon and
employees will track these. This promotion will not only drive sales and awareness of
The Brewster, but also develop a positive brand attitude with its customers and make
students feel good.
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“Social Media”
Send out promotional events via The Brewster’s various social media outlets to
effectively reach our target market. The Student Marketing associate will be in charge of
updating all of The Brewster’s online accounts.
The Brewster will have a Facebook page that will keep students updated on
current promotions and events. Facebook “likes”, followers, and reposts will be a
great way to measure brand attitude and awareness. The Brewster’s Facebook
page will have a direct link to its website.
The Brewster will also have a Twitter account that allows students to keep up
with daily promotions. Measuring the amount of “re-tweets” and followers will
be another great way to measure brand attitude and awareness.
Lastly, The Brewster will have a Foursquare account that will allow its customers
to “Check In” when they are in the shop. There will be rewards for those who
“check in” most often.
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“C-News”
The C-News is sent via e-mail to every Concordia College Student and faculty
member. We would include the “Daily Deals” and any other promotional events for that
week in every C-News e-mail. This is a great way to effectively reach out target
audience.
“Punch Card”
Every customer will receive “The Brewsters’ punch card” upon check out. After the
customer has accumulated 10 punches in their card they will receive a free drink or
product. The goal of this promotion is to establish brand loyalty, if we reward out
customers each time they come they will think of coming to The Brewster before any
other coffee vendor.
“The Concordian”
Purchase an advertising spot in The Concordian News Paper for the grand
opening of The Brewster.
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Management Team & Company Structure
The management team and workers can make or break a company. It is crucial to
have informed, welcoming and well-trained employees that are willing to cater to the
customer’s needs. We decided based on the hours of operation we laid out that we
would need to hire 1 full-time employee and 22 part-time student employees. These
student employees will be hired as part of the Concordia college work-study program.
We will have 4 student managers over-seeing the coffee shop and 3 specialized student
managers in marketing, accounting, and nutrition and dietetics along with 15 regular
student workers.
The business will have a vertical management structure. The full-time manager will
be there to supervise the student managers and workers and oversee the coffee shop as
a whole. They will be in charge of hiring the student employees, scheduling hours,
training staff, and placing food orders. Some of the student manager positions will
overlap or help with some of the full-time management position roles, so that students
have the opportunity to learn new concepts and gain experience. This position offers
employment for nine months out of the year during the time that classes are in session,
but the employee will be given the option to disperse checks throughout the entire year
if desired. The position pays $40,000 salary and includes benefits. The benefits are
offered through the college and will be offered in addition to the salary pay, summing
up to about 30% additionally to the salary.
The student managers will report to the full-time manager and be in charge of
overseeing the work of student employees. They will work like a regular student worker,
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but will have additional roles such as opening and closing the coffee shop, taking
inventory, and supervising other student workers. Along, with overseeing other
students comes the responsibility of doing student work evaluations, reporting
disciplinary actions, and maintaining the integrity of the business. These students will be
paid a dollar more than regular student employees and will make $9.25/hour with a ten
cent increase for every semester of 60+ hours worked.
We also decided that having 3 specialized student workers was necessary, so that
students could have the opportunity to apply some of the knowledge they learn in the
classroom. The three specialized management positions offered include a nutrition and
dietetics manager, a marketing manager, and an accounting manager. The nutrition and
dietetics manager will be in charge of food safety training, food nutrition labels, helping
the full-time employee with ordering and menu planning, along with regular student
manager roles while working. Most of the students on this side of campus are athletes
and the current food trends are leading towards healthy options and so we found that
our target market would enjoy having access to the nutrition information of the
products served. Also, it can be used as a marketing tool for our products and we could
offer healthy nutrition tips to our customers. Anytime, products are sold that are going
to be consumed it is important to look at the safety of the food to maintain the integrity
and protect the customers, so this position will work on providing training to staff and
therefore to qualify for the position they must be ServSafe certified. We estimated that
they would work about 7 hours a week. The marketing manager will work on
advertising, coupons, weekly deals, and social media such as Facebook and twitter. They
will work about 5 hours per week along with the nutrition manager in marketing the
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product and will report to the full-time manager with new ideas and promotions. Lastly,
the accounting manager will work about 12 hours per week on bookwork and financial
documents. They will report to the full-time manager and provide ideas of how to better
the company with the results. All of these employees will be paid the same as the
regular student managers and will work scheduled hours as planned by the full-time
manager.
All student managers will be hired by the full-time manager and must meet certain
criteria to qualify. To be considered for the student manager positions students must be
a junior or senior, have a 3.0 GPA or above, be enrolled full-time, and have served in
leadership roles. For the specialized positions students must be a major in the
perspective field. We expect our employees to work hard, be dedicated, and provide
quality products and service to our customers.
To fulfill all of the coffee shop hours we will hire 15 part-time student employees.
The will be paid $8.25/hour and will be able to work as many hours as they would like.
They will also be hired by the full-time staff member and will be required to attend staff
training. They do not however have to be a business or nutrition major to work in the
coffee shop. To be fair to all students on campus and allow anyone to gain work
experience the student worker positions will be open to any students. They will be in
charge of stocking shelves, making beverages, serving customers and cleaning. They will
report to student managers with any questions and will have set hours each week.
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The BREWster Company
Structure
Product (or service) Design & Development Plan & Operations Plan
Development Cost
The cost to build The Brewster is being funded by Concordia College.
Operations flow
Customers will enter The Brewster, proceed to the counter to order at the cash register,
then pick up their order at the left end of the counter, and exit the coffee shop.
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Inventory & Quality control
Inventory will be checked on a weekly basis by one of the four student
managers. The reason that the student managers will be checking inventory is because
that is one of their main priorities to do at night before closing the shop. There will be a
log sheet on how many of each product is in stock so that there will always be enough
inventory on hand. The inventory log sheet will be left for the full time staff member to
look over and make orders during the morning shift. We will base our inventory data on
the projected number of customers The Brewster sees per day. All inventories in store
will be dated and organized from oldest to newest date. This will insure that every
product is being used so no inventory goes to waste.
The best two ways to measure quality are to adequately train employees and
send out surveys to customers. Each team member will go through 16 hours of
employee training and is required to pass a test on making The Brewster’s specialty
brews and sandwiches before employment starts. In case of bad memory, there will be
cheater cards at every brewing and sandwich station to assure a quality product. In
addition to employee training, The Brewster will have a comments and suggestions box
placed outside of the coffee shop for customers to write any problems or concerns they
have about the coffee shop. All submissions are to be anonymous. The Brewster will
also send out a “rate your service” e-mail to its current customers, however, customers
can choose whether or not they would like the e-mails.
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Location
The Brewster will be located on the main floor of the Offutt School of Business
that is located between Hallet and Erickson dormitories and next to the skyway. This
location will be superb for our business because it is located close to many of our target
customers. Also, being located just off of 8
th
street in Moorhead, we not only would
have the possibility of having students and facility members, but outside customers that
aren’t apart of Concordia College. With Jake Christiansen Stadium only a short distance
away we also expect to see other customers that would be attending many of the fall
and spring events hosted at the stadium.
Equipment
Equipment for The Brewster includes an espresso machine, coffee bean grinder, a
double tank coffee brewer with four additional canisters, and two blenders. The
equipment will be purchased through the funds administered from Concordia College
and will be depreciated over fifteen years using a straight line method.
Financial Projections
Products and Marginal Revenues:
Beverages Cost of Goods Sold Selling Price Marginal
Revenue
Brewed Coffee 1.05 1.99 .94
Tea 0.27 1.10 .83
Lattes 2.04 3.39 1.35
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Hot Cocoa .26 3.39 3.13
Apple Cider .30 1.70 1.40
Frappuccino 2.40 3.99 1.59
Iced Coffee 2.40 3.99 1.59
Smoothies 2.40 3.99 1.59
Food Cost of Goods Sold Selling Price Marginal Revenue
Muffins 1.07 1.79 .72
Cookies .36 .60 .24
Breads 1.07 1.79 .72
Bagels 1.19 1.99 .80
Rolls 1.19 1.99 .80
Fruit .30/..45 .50/.75 .20/.30
Candy .62 1.29 .67
Chips .65 .99 .34
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Granola Bars .53 .89 .36
Sandwiches 2.09 3.49 1.40
Yogurt 1.19 1.99 .80
Oatmeal Packets .36 .75 .39
Pop tarts .71 1.09 .38
Nutrigrain bars .50 .99 .49
Cereal cups .97 1.69 .72
Chex Mix 1.98 3.69 1.71
Financial Assumptions
Revenues:
To determine our monthly sales projections I used the fact that there are approximately
460 residents living in the east complex, either Hallet or Erickson, and 600 business
majors. Taking into account that there are most likely some crossover between these
two categories, the number used for students coming into the contact with the coffee
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shop will be 900. Out of these 900 students it is estimated that 40% will make a
purchase of an average of $4.75. This equals to be 360 purchases a day, totaling $1,710
a day or $51,300 a month. Consumer discounts were calculated by assuming that
through our promotions half of our customers would have one dollar off their purchase.
As the year goes on, fewer promotions would be available, decreasing this value. Costs
of goods sold were calculated using a forty percent markup.
Salaries and Wages:
Position Hours * Wage Total Expense (Weekly)
Full Time Manager Salary $40,000 $833.33
Student Manager 40*9.25 $370.00
Accounting 12*9.25 $111.00
Marketing 5*9.25 $46.25
Nutrition 7*9.25 $64.75
Student Workers 63*8.25 $519.75
Depreciation Expense: Calculated using the straight line method over fifteen years.
Supplies Expense: The monthly expense of supplies for The BREWster was designed
using the previously calculated number of 360 purchases a day, 10,800 a month. To
cover the amount of drinks we will most likely sell we estimated that we would need to
purchase 8000 cups a month; 4000 of the twelve ounce size and 2000 each of the eight
and sixteen ounce sizes. We would then need the lids for the purchased cups along with
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coffee sleeves. Other supply expenses include the coffee grounds, teas, syrups, filters,
and creamers.
Office, accounting and legal, and advertising expenses were determined by assumptions
based on similar business, average licensing fees for Minnesota, and the extent we
would like to advertise our new business. At the start of the year we plan to have more
promotions and then slowly lower the amount until the start of the next school year.
The amount for the utilities expense was formulated for us by the college rates.
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Sources
"Coffee Shops." Center for Economic Vitality. Western Washington University, July 2009.
Web. 13 Apr 2012. .
"Industry Snapshot." US Census Bureau. N.p., 2007. Web. 13 Apr 2012.
.
Grant Center coffee survey shop results (2012). [Analysis of electronic & print responses].
Unpublished data analysis.
United States. Census Bureau. 2007 NAICS Definition. Web.
.