Business Plan

“Fun @ coffee”

Submitted to: Prof. R. Ravichandran

Submitted by: Group 6

Anshumali
Anupriya Verma
Vinay Rao
Prashant. K
Girish. P

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 BUSINESS DESCRIPTION

GENERAL DESCRIPTION OF BUSINESS

Fun @ coffee is a coffee shop aimed to cater the needs of the student population studying in
Alliance University. As the name suggests there is much more than just coffee on offer. The
amenities on offer include spacious well maintained and aesthetic furniture which would provide
an ideal place to hang out with friends.

Before we commenced our journey we made a thorough analysis of the present scenario at
Alliance.

Alliance University does not have a snack bar to cater to the tastes of the student population. The
beverages provided by the caterers during mornings and evenings are the only source available
for students. Moreover beverages on offer at sip and bite , an adjacent eatery is way off the mark
in terms of quality and there has been steady stream of complaints against the eatery. But the
most visible and striking issue which we noticed among the students was the general and
palpable wave for a new snack bar inside the campus. Students, with whom we managed to strike
a conversation, were disappointed at the failure on the management side to rope in CCD-an idea
which was doing rounds for a long time.

ENTREPRENEUR BACKGROUND

Mr Vinay Rao ,who is going to head this venture is a person with yeoman’s experience in the
hospitality sector having worked for behemoths like ITC and CCD. Mr Vinay Rao is passing out
of the university and is likely to don the mantle of general manager. Other key players in the
venture include Miss Anshumali, a finance and human resource expert. She will in affect head
the finance and human resource wing. Mr Prashant , armed with marketing degree in
management will take care of the marketing function while Mr Girish Rao who is a production
engineer with operations background will take charge of the operations wing. So the
management team of fun@coffee will have experts in all functional domains.

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GOALS AND POTENTIAL OF THE BUSINESS

VISION STATEMENT

“To have a turnover of one crore rupees by 2015”

MISSION STATEMENT

“To ensure that we provide the best in class dining experience to our clients, provide them
with the best coffee and snacks and ensure that clients leave our shop with happy tummies
and a smile”

POTENTIAL OF THE VENTURE

“SKY IS THE LIMIT”-We have a potential winner in hand. Conservative estimates suggest that
a student spends close to Rs 100 on food and beverages a day. Most of this money goes on junk
food like soft drinks and chips brought from the departmental stores. We can fine tune this
spending capacity to our benefit. Our menu has on offerings snacks like puffs, French fries
which are a hit with students. If we can ensure that a portion of student’s discretionary spending
is diverted towards our eatery then we can be extremely successful. We have the advantage of a
captive student base and if we find their favor then we are assured of a consistent revenue
stream. Moreover our snack bar is ideal location for evening get together. So if we are successful
in capturing student’s attention through awareness programs and if we maintain quality in our
offerings then we have a winner in hand.

PRODUCTS AND SERVICES ON OFFER

The menu of the Fun@ coffee will be built around espresso-based coffee drinks such as lattes,
mochas, cappuccinos, etc. Each of the espresso-based drinks will be offered with whole,

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skimmed, or soy milk. We offer customized coffee to our customers based on their
specifications. This is our USP since beverages that are on offer at the canteen has no scope for
customization. We also offer teas, soft drinks, pastries, puffs, French fries as a part of our menu.
We also place magazines so that customers are engrossed in reading while we process their
orders. We also stock a good range of greeting cards and gift-wrap which find favor with the
student community.

The uniqueness which defines our venture is the availability of night service. Many a times it is
noticed that students due to assignments, tests have to burn the mid night lamp. In many a cases
students need refreshment through a snack. Canteen in Alliance closes by 10:30. So we have our
snack bar open throughout the night for the benefit of students who sleep late. We also provide
door delivery without extra charge taking into consideration the time crunch facing the students.

The coffee shop will be offering a menu of snacks and beverages with a distinctive image. There

will be three ways to purchase these products:

1) Table service at the coffee shop

2) Take-out from the shop

3) Delivery to hostels.

INDUSTRY ANALYSIS

FUTURE OUTLOOK

According to Technopak Advisors, the café market in India is estimated at $150 million (Rs 678
crore) and growing at 40 per cent over the last five years. Coffee consumption has seen an
increase of 6% CAGR. In India tea has held sway in the northern markets while coffee has
always been the preferred drink in southern parts of the country. But with new entrants like
Barista and CCD entering coffee bar space there has been a surge in coffee consumption
especially among youth, our key target group. So there is a visible trend in favor of coffee
consumption-our flagship product. Alliance University where our coffee bar is located has grown

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steadily with student intake nearly touching seven hundred (both January and July batch intake
combined). A majority of them come from urban India and have experienced dining at modern
coffee bars like CCD and Barista. So the concept of coffee bar is not new to a vast majority
crowd .So we do not have to sell the concept, we have to sell just the product.

COMPETITOR ANALYSIS

For a coffee bar like us competition stems from other non coffee eateries which target the same
set of customers.

Our main competitor is sips and bite, an eatery located inside the food court

We have done a SWOT analysis for them

STRENGHTS

 Location advantage- near hostels, in the food court-prime location.

 Well entrenched customer base
 Wide range of eatables on offer
 Pricing-easy on student’s purse, perceived to be fair priced

WEAKNESS

 No variety on offer
 Quality is a major deterrent

OPPORTUNITIES

 Can increase profitability by bringing in more offerings-there is a captive student base

who can serve as a great market.
 By extending the timing of operations it can gain the goodwill of students.
 Can bring new merchandise like greeting cards to cater to existing demand.

THREATS

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  Any new eatery which can offer better cuisine is sure to take away major chunks of
existing business.
 Fatigue and indifference shown by students ( no of complaints is a clear indicator) can
play spoil sport.

The other major competitors are small restaurants located outside the college. Mothers Pizza and
Food Club are noticeable among them. We have done a SWOT analysis for these restaurants.

STRENGTHS

 Perceived to have tasty offerings

 Well entrenched customer base
 Decent range of offerings

WEAKNESS

 Hygiene is a major cause of worry-cases of repeated food poisoning has raised alarm
bells.
 No variety on beverages.

OPPORTUNITIES

 Growing student population provides excellent growth opportunities.

 By offering a menu for health conscious student segment it can cater to a wider customer
base.

THREATS

 A hygienic quality food eatery can spell doom for these restaurants
 Floating customer base (student community) ensures that awareness programs have to be
in place throughout the year.

An understanding of SWOT analysis for our competitors indicates that there is a major untapped
space on offer which can be capitalized. It is worth noting that we do not consider established

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coffee bars like CCD as our competitors though we operate in the same domain and offerings are
identical. The reason is the fact that these hippy bars are located in prime locations far from the
University. So one cannot expect the student community to travel so far just to have a snack and
a coffee. Moreover the rigid timings of the university make it very difficult for students to travel
to city except for Sundays. Thus our competitors are those eateries which have the same
advantage as we do- the location factor and cater to the same customer group .It is worth
recalling that Coke considers tap water not Pepsi as its prime competitor.

MARKET SEGMENTATION

We have segmented our customers based on parameters like consumption patterns, spending
patterns and location.

Consumption pattern and location show a strong interplay. People belonging to south show a
tendency to prefer coffee to tea and expect strong coffee with the aroma of coffee beans looming
large. People in the north have only recently picked up coffee consumption and prefer lighter
variants of coffee. Our studies have also indicated that students from urban locations irrespective
of region prefer to go for Italian coffee variants thanks to the advent of coffee bars like Barista.

Spending patterns observed in coffee bars indicate that a large chunk of one’s spending goes not
on coffee but on other dishes like puffs that are on offer.

Considering the above mentioned issues we have decided to have wide variants of coffee on our
menu to cater to regional differences.

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 DETAILS OF THE MARKETING PLAN:-

For Fun@ Coffee, below is a detailed description of the budgeted expenditure on marketing and
a roll out of the marketing plan:-

a) Budgeted Expenditure:-

For this venture, the marketing budget is 6 lakhs, owing to the nature of this business.

This is further divided into:-

1) Rs 1 lakh on OOH systems in store, to enhance store ambience.

2) Rs. 50,000 on standees and danglers in-store.

3) Rs. 1 lakh on leaflets and coupons for café promotion.

4) Rs. 2 lakhs on forming strategic alliances with youth brands like Yamaha, HTC etc for a joint
promotion of the store and the partner’s product offerings.

5) Rs. 1.5 lakh on the merchandising efforts of the store i.e Fun@ Coffee mugs, keychains, T-
Shirts and stationery.

b) Roll-out of the marketing plan:-

The marketing of this store would be carried out in 3 phases.

Phase 1:- This would include pre-launch promotion through teaser ads in the college magazine,
by partnering with college authorities.

Phase 2:- In the second phase of the marketing plan, it would purely focus on the brand building
of Fun@Coffee. Detailed flyers with product offerings of Fun@Coffee would be distributed to
students at key points of contact, in the college/outside college premises.

Phase 3:- In the final phase of the marketing activity, an event would be conducted in the college
announcing the commencement of this coffee store. By partnering with college authorities, an
announcement over the Public Access system in college could be used to the same effect.

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 OPERATIONAL PLAN:-

For a café, the following issues are to be considered:-

a) Ensuring clarity about who is a frequenter of the establishment, what foods and drinks
customers prefer, what unpopular dishes should be removed from the menu & on what day of the
week visits peak.

b) Production of food by third party vendors, and co-ordinating with the same to ensure timely
delivery.

c) Vendor management, in order to ensure effectiveness of the supply chain.

d) Procurement of raw materials, for in-store deployement.

e) Food allowance for the retention period.

f) Seasonally adjusted consumption.

g) Tracking the status of orders from buyers and suppliers

h) Maintenance of procedural and managerial accounting in a single information database.

i)  Exchange of data with different Front-office systems

j) Defining the metrics for meeting required service levels, for back office staff/suppliers and
vendors.

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The different levels of staff and their operational requirements are as below:-

Level Title Purpose

1 Runner To provide essential facilitating services to the café / bar unit in

order to support the provision of the highest standards of customer
service

2 Waiter / Barista To take orders and serve food and/or beverages to customers in
café / bar establishments

3 Crew Leader / To supervise day to day front of house floor activities for the
Lead Barista / café/bar unit in order to ensure that front of house operations are
Floor Supervisor carried out in the most efficient and effective manner and the
highest standards of customer service are achieved

4 Supervisor / To direct and control front of house floor activities for the café/bar
Asst. Manager unit in order to ensure that front of house operations are carried
out in the most efficient and effective manner and the highest
standards of customer service are achieved

5 Site / Unit To lead and manage the Café / Bar Unit, developing and
Manager implementing Unit plans and procedures in line with the corporate
brand and under the direction of the Multi Site Manager

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Role Purpose: To facilitate food and beverage service in the café in order to support the provision of
the highest standards of customer service
KEY ACCOUNTABILITIES PERFORMANCE INDICATORS
1. Carry out a range of activities in preparation for  Completion of tasks to required
café / bar opening, (re-stock consumables; lay standards
tables; clear and clean front and back of house;
etc.) in order to ensure the unit is ready to receive
customers
2. Clean and polish counters, shelves, walls, furniture  Hygiene standards met
and equipment in food service areas and customer  Customer feedback
areas and mop and vacuum floors in order to ensure
high standards of hygiene and cleanliness in the
unit
3. Be polite and friendly to customers at all times in  Customer service measures
order to support the achievement of the highest  Direct customer feedback
standards of customer service
4. Clear and clean tables on an ongoing basis  Tables cleared and cleaned promptly
throughout the shift in order to ensure high  Direct customer feedback
standards of hygiene and a positive image is
presented to customers
5. Carry out a range of activities for other staff and/or  Task requests responded to promptly and
customers in order to support operational delivery completed accurately
of customer service standards
6. Clean and clear café/restaurant areas as required in  Areas cleaned and cleared promptly and
both front and back of house in order to ensure effectively
high standards of hygiene and a positive image is
presented to customers
7. Maintain supplies of basic items – glassware /  Items restocked regularly
crockery / napkins / silverware, etc. in order to  Incidence of “run out” of items
support operational efficiency
8. Replenish supplies of food / drinks and equipment  Items replenished promptly
in service areas in order to support operational  Incidence of “run out” of items
efficiency
9. Lay tables with essential items – clean linens,  Tables laid and re-laid promptly
condiments and other supplies – on an ongoing  Direct customer feedback
basis throughout the shift in order to ensure
customers needs are met and a positive image is
presented to customers at all times
10. Serve customers when waiters need assistance in  Orders taken and fulfilled accurately and
order to support operational efficiency and promptly
maintenance of customer service standards  Customer feedback

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 ORGANIZATIONAL PLAN

Our venture is going to be a partnership firm with four active partners and one dormant partner.
We plan to raise capital through partner’s funds. Each of the five partners have agreed to equally
finance the venture. We have also plans to raise funds through bank loans. We do not have any
intentions to go for venture capitalists funding. A business draft outlining our operations will be
submitted to the bank in order to raise a loan.

Ownership agreements have been signed by each and every partner. The major terms of this
contract are that no partner will quit in the first two years of operations. To prevent nepotism, no
partner will be allowed to recommend any of the relatives for any form of employment in the
firm.

Any partner who decides to quit after two years would have to given an undertaking that he/she
would not enter any business which would be competing with us. In other words all the partners
have agreed to enter into a non compete agreement.

Each of the partners would have equal say in the matters regarding the functioning of the
venture. Profits will be equally shared and the partners have agreed to invest 80% of the profits
back in the business, the remaining 20% would be distributed equally to all the partners.

The board of directors would include all the partners. The board will also include notable people
from the industry who have relevant background. To ensure fairness in board affairs, an
independent director (who would have no stake in the business) who has a CA background
would be appointed who would act as a watch dog and monitor financial transaction that take
place in board.

We plan to hire professional consultant and advisors to oversee our business operations. We have
plans to appoint Mr. Natarajan, former joint director of industries, government of Tamil Nadu as
a consultant. Mr. Natarajan is a professional consultant to many a firms. Mr. Natarajan is
credited with formulating the industrial policy of Tamil Nadu and creating of Thiru Vi Ka
industrial estate. His yeoman service will enrich our business.

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We also plan to rope in R Khattar and associate a consultant firm in New Delhi who can help us
in getting clearance from registrar of companies apart from drafting Memorandum & Articles of
Association & incorporation formalities.

We also plan to rope in Bellissimo, a world renowned coffee business consultant who offer wide
range of services.

The key players in the management team are Mr. Vinay Rao who will be the general manager in
charge on the entire operations. Mr. Vinay Rao who is a partner has excellent work experience in
the hospitality sector with stints in ITC hotels and CCD. A person with business acumen and
knowledge of the nitty gritty of this business- Mr. Vinay Rao is the best fit to head the firm.

Mr. Prashant K who has technology background with work experience in Infosys and has
marketing degree will be in charge of managing technology apart from conducting marketing
programs.

Miss Anshumali Sinha who has human resource and finance background will act as CHRO apart
from heading the finance wing.

Mr. Girish Rao who is a production engineer with operations background will head the
operations wing.

Apart from these key management team players the venture also plans to appoint five chefs, a
supervisor, a clerk and two cleaners to assist in the operations. The salary range for chefs would
be Rs 20000-25000 per month, for supervisor it would be 15000-20000 per month for clerk it
would be 10000-15000 per month and for the cleaners it would be 5000-8000 per month. Apart
from this fixed pay structure five percent bonus would be given based on collective performance.
An individual bonus would be given based on individual performance.

As mentioned earlier the partner’s emolument would be based on profits twenty per cent of
which would be shared equally among the partners.

Mr. Natarajan would be given a consultant fee of Rs 30000 per sitting.

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 THE FINANCIALS

COST ANALYSIS:

FIXED COST

S.NO PARICULARS AMOUNT

1 Civil work cost 5,00,000
2 Land cost 3,00,000
3 Kitchen cost 5,00,000
4 Gas connection 2,09,500
5 Telephone connection 5000
6 Computer 25000
7 Furniture 6,00,000
8 Fire fighting plan 16300
9 Generator 65000
Total cost 22,20,800

VARIABLE COST

S.NO PARICULARS AMOUNT

1 Salary 3,00,000
2 Staff meal 50,000
3 Electricity 50,000
4 Telephone 15,000
5 Stationary 20,000
7 Gas 35,000

Grand total 4,70,000

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It has been estimated that the initial investment will be around 33 lakhs. 10% of the amount will
be contributed by the promoters of the company. The remaining capital will be arranged from the
venture capitalists and private investors.

BREAK EVEN ANALYSIS

The fixed cost of the firm is Rs. 2220800

The total variable cost is 470000 per month

Hence per day = 15670 per day

It’s assumed that the average sale each day will be around Rs. 25,000.

It can be assumed on the basis of the target customers, their number is around 2,000 with
considerable disposable amount. And the assumption is also that about 200 students will visit the
café and will spend Rs. 100 each on an average

Break even= fixed costs/(selling price-variable costs)

= 2220800/(20000-15670)

= 512.88 = 513 days

Thus we can break even in 513 days approximately which is 1.4 years.

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