Game of Scones cones Café Caf é
Business Plan Horia Herman, Amanda Arts, Robert Langner, Samiya S amiya Jahar, Ivan Ortiz
Wednesday July 22, 2015 Technological Entrepreneurship GEN TECH 3EN3 For Michael W. Piczak, Dipl. T., B. Comm., MBA McMaster University, Hamilton, ON, Canada
Table of Contents
Table of Contents
2
Executive Summary
3
Company Profile
3
Marketing Plan
4
SWOT Diagram
5
Opportunities
6
Threats
7
Target Market
8
Market Potential
10
Methods of Identifying & Attracting Customers
13
Marketing Mix & 4 P’s
14
Promotion & Networking Plan
17
Operations Plan
20
Customer Service Plan
23
Financial Plan
29
Appendix
38
Citations
39
Table of Contents
Table of Contents
2
Executive Summary
3
Company Profile
3
Marketing Plan
4
SWOT Diagram
5
Opportunities
6
Threats
7
Target Market
8
Market Potential
10
Methods of Identifying & Attracting Customers
13
Marketing Mix & 4 P’s
14
Promotion & Networking Plan
17
Operations Plan
20
Customer Service Plan
23
Financial Plan
29
Appendix
38
Citations
39
Executive Summary Game of Scones Caf é, board game and specialty coffee house, is determined to become a daily entertainment venue for local coffee lovers and gaming enthusiasts, a comfortable place with an inviting atmosphere to meet your friends or spend time with family. With the growing demand for high-quality specialty coffee with an emphasis on excellent service, Game of Scones Café will gain advantage from its proximity to the Hamilton downtown core to build a base group of repeat customers. Only the best prepared coffee in the area will be supplied to customers, complimented with pastries, as well as board games, contests and live entertainment en tertainment to keep the patrons engaged. The company will operate a 1,257 square foot coffee bar within walking distance from downtown amenities such as bus routes and parking, as well as embody its historic and retro style.
Company Profile Company Name
Owners
Industry Type Location
Game of Scones Café
Horia Herman Robert Langner Amanda Arts Samiya Jahan Ivan Ortiz Coffee & Entertainment 12 John Street North, Hamilton,On,Canada
Marketing Plan Analysis of Target Market I.
Purpose
The purpose is to outline the basics of Game of Scones Café. This includes SWOT, company statements, and the financial supportive research. II. Mission Provide good service to Game of Scone Café C afé customers and have an experience that entices their return. III. Vision Game of Scone Caf é’ é’s vision is to remain focused on hospitality and customer service, specialty beverages, and its board games. IV. Values •
Specialty/fair trade coffee products
•
Large board game library
•
Reliable and knowable staff
•
Excellent customer service
•
Wide array of social and game events
The intended trading area is the Hamilton downtown core and its suburban surroundings. Most of the business will be drawn from the allure of the downtown nightlife and persons interested in alternative entertainment on the weekends.
SWOT Diagram Opportunities
Threats
-
-
Alternatives – Arcades/ Video Games26
-
Other recreational/social activities28
-
Rapid expand of large coffee chains 29
-
Constant releases of new board games (sales ↑ 2040% in the last four years)23 Increase in demand for a place to play board games (20+ board game Cafés in Toronto vs. 1 in Hamilton)25
•
-
Increase in demand for one on one interaction Decrease in video Game sales
• New
coffees and coffee-like products
26
Specialty Coffee is trending upwards •
Board Game Friendly
30
•
Aggressive (marketing & advertising)
12
Expected 25% increase in coffee demand in the next 5 years24
Strengths
Weaknesses
-
Location20
-
Limited consumers
-
Demand / Interest
-
Consumer Patience
-
Competitive Prices / Hours
-
Board Game Maintenance
-
Fun new idea for Hamilton
-
Non-alcoholic beverages
-
Larger variety of board games
-
Limited food option
-
Social events:
-
Inexperienced staff
-
Expensive compared to big name merchandise
•
live acoustic nights
•
coffee tasting
•
tournaments
-
Environmental conscience
-
Fair Trade coffee, sugar and cocoa
-
Organic Products
-
Additional products •
Other baked goods
Opportunities •
Constant release of new board games - in the last four years board game sales went up
20-40%23, indicating a consumer demand and supplier response. New iterations of old board games as well as new ideas have hit the market and done well. •
Increase in demand for a place to play board games9 - there is over twenty board game
Cafés in the Toronto area compared to one location in Hamilton. The Hamilton location has done very well since entering the market, providing community incentives that have been mentioned in the newspaper as well as all of the Toronto locations are still open for business. •
Increase in demand for one on one interaction30 - with the popularity of technological
advancements and increased use of automated services, people feel they are forgetting what it’s like to have quality one on one interaction and is being highly sought after. •
Decrease in video game sales26 - while usually steady sales are seen here, the availability
of free to play video games, increased price for gaming devices and a more informed populous, video games sales have declined which may signal a change of entertainment choices. •
Increase in demand for specialty coffee30 - there has been a steady increase in specialty
coffee shops across Canada, from java to organic free trade coffee, as consumers try to find better alternatives to large coffee chains and new exciting trends.
Threats •
Alternatives - arcades and venues such as Playdium26 are a threat to the business as they
provide ‘more exciting’ entertainment that may entice the newer generations. •
Other recreational activities28 - there is competition in outdoor and other recreational
activities, especially during the summer months. •
Large coffee chains29 - they are able to offer coffee at a lower price and faster service
which some people may be looking for.
Target Market The Game of Scones Café’s target customer, is one who is actively seeking new sources of social experiences. They enjoy caffeinated beverages and frequent cafés on a regular basis. They follow social trends and enjoy retro activities. They are environmentally aware and respect free trade products. PRIMARY CUSTOMER PROFILE Teens (15 - 19) Young Adults (20 - 34) •
Have low disposable income
•
Have high disposable income
•
Students looking for afternoon activities
•
In need of alternative entertainment
•
Active social lives and follow social trends
•
Enjoy busy venue and music
•
Likely to spend more on specialty
•
Looking for night and weekend activities
caffeinated beverages
•
Likely to spend more on specialty
•
Familiar with games and require little assistance
•
Visit after school and on weekends
caffeinated and alcoholic beverages •
Inexperienced with games and require some assistance
• Group mentality with potential to gather in
an entertaining establishment
SECONDARY CUSTOMER PROFILE Matures / Families (35 - 64) •
Families with children and higher disposable income
•
Looking for alternative entertainment to sports and crafts
•
Visit during weekend days
•
Likely to spend more on non-alcoholic beverages and food
•
Focus is on a child friendly environment
•
Environmentally conscious
•
Value healthy, green and organic options
•
Less likely to need assistance
•
Families of 4 or more with potential to spend less than two hours at the Café
Market Potential To determine how much is spent on coffee annually in the proposed trading area. Focus is on coffee consumers only. •
(3 cups/day)3 x (365 days/year) x (0.56 coffee purchased from shop)3 x $2.38 drip coffee = $1,459 annually, on purchased drip coffee
•
(3 cups/day)3 x (365 days/year) x (0.56 coffee purchased from shop)3 x $3.55 espresso based coffee = $2, 177 annually, on espresso based coffee
•
Annual Average Coffee Expenditures = ( $1,459 x 0.207) + ($2,177 x 0.807) = $2,033 per person
•
Target Consumer Population = (36,200 +100,470 +215,975)1 = 352, 645 males and females aged 15 - 64 (Primary & Secondary Customers)
•
Annual Market Potential = Annual Average Coffee Expenditures x Target Consumer Population = $2,033 x 352, 645 = $717, 927, 285
Market Share To determine how much of the market Game of Scones Café can reasonably take. There is only one direct competitor in the Game of Scones Café niche group (Gameopolis) which translates to a very open market. Focus is on coffee competitors only. •
Coffee Competitors in proposed trading area = 1394
•
Since, 70%5 of sales are generated from the top 50 coffee shop operators. Market share for specialty Cafés = $716,927,285 x 30% = $215, 078, 200
•
Estimated Average Competitor Floor Space = 30ft x 50ft = 1500 sqft6
•
Game of Scones Café Floor Space = 1257 sqft
•
Anticipated Market Share = Game of Scones Café floor space / Total Competitor floor space = 1257 sqft / (( 139 competitors x 1500 sqft ) + Game of Scones Café floor space ) = 1257 sqft / 210, 900 sqft = 0.006 = 0.6%
•
Anticipated Share of Total Sales = Annual Market Potential x Anticipated Market Share = $215, 078,200 x 0.6% = $1,290,469 gross annually
•
Targeted customers (30% @ Age: 14-641) per day = 352, 645 x 0.3 x 0.6% market share = 6347
Attracting 6347 customers and generating 1.29M gross from a newly established specialty caf é is unrealistic. Therefore more research has been done for better sales projection •
Calculated sitting7 for the restaurant = ((1257 sqft – 30% food prep space – 10 sqft Shelving – 10sqft
sittings
entrance – 18sqft counter) = 842 sqft/15 sqft per customer sittings = 70 customer
•
Customers per week 8 = (70 persons/chairs x Monday to Wednesday 60% occupied chairs x 2 times during the day = 70 x 3 x 0.6 x 2 = 252 person) + 70 persons/chairs x Thursday to Sunday 80 % occupied chair x 3 times during the day = 70 x 4 x 0.8 x 3 = 672)
•
Customers per day = (252 + 672)/7 = 132 Based on customers correction factor = 6347/132 = 48.09
• •
Corrected Annual income projection = $1,290,469 x 48.09 = $268,357
•
The number of competitors in specific niche group is one (Gameopolis) with events strictly focused on board games and minimal food selection. Game of Scones Café estimates that its potential market share is at least 70%.
Methods of Identifying & Attracting Customers To identify and attract Game of Scones Caf é customers, several market strategies will be implemented. The name itself, “Game of Scones Caf é” will attract customers. There’s a huge social following for the HBO series Game of Thrones. Customers will choose Game of Scones Caf é over the competition because of the familiarity to the popular series. The location of Game of Scones Caf é will be in trendy downtown Hamilton. Downtown Hamilton is currently undergoing many renewal projects that are revitalizing old historic buildings and neighborhoods.
This is attracting young families, professionals, and trendsetters seeking
opportunities in new up and coming urban environments. An interactive webpage will be created to attract attention to the mass of potential customers surfing the web for a new hang out or past-time activity. The webpage would offer daily word or number puzzles online to encourage people to revisit. A schedule of events will be highlighted and will promote gaming tournaments, happy-hours, specialty coffee tasting nights, comedy and acoustic music nights. A running blog with in-store game reviews with tips and tricks will be included. Game of Scones Caf é will actively engage with the community and support local events. Free wall space will be available for local artists, especially during events like the James Street Art Crawl. Local musicians will be featured during acoustic nights and sponsored game nights with charitable children’s groups like Big Brothers Big Sisters and Boys and Girls Clubs will be organized.
Marketing Mix & 4 P’s The focus of the Marketing Plan is to build hype and communicate an image and brand that is respected and loved by the community.
Product Strategy The Game of Scones Cafe’s product in its pure form, is an enjoyable social experience in combination with high quality food and caffeinated/non-caffeinated beverages. The brand is directly derived from its name. It suggests a fun, gaming element with a combination of food with the use of the word scone. It is catchy and easy to remember due to its similarity with the highly popular HBO series Game of Thrones. This provides many promotional possibilities without any legal implications. Product packaging is the physical environment as a whole. The location is found in a trendy up and coming sector of downtown Hamilton on John Street North. It is in walking distance to James Street, which is famous for artistic crowds and retro-seekers. Inside the café, an extensive game library will available to meet the needs of people of all ages. The layout will be casual with some large oversized sofas, tables with seating up to four which can be manipulated to add tables for larger groups. Some booths will be available around the perimeter with a stage for featured entertainment. The café will feature a bistro-style bar to showcase their coffee-barista’s skills with specialty coffee and the equipment used to prepare it. Part of the Game of Scones Caf é experience is its dedication to customer service and providing an overall package that is enjoyable for all. To enhance the customer experience, a membership and loyalty program has been developed. This gives more purchasing power and incentives for
frequent customers. The coffee and tea products sold have been thoughtfully selected. Game of Scones Caf é is committed to purchasing fair-trade and organic products with high quality and exceptional taste. This commitment is not only for customers but also for providing producers with better trading opportunities, while promoting sustainability in third world countries.
Pricing Strategy Price determination is based on the “follow the leader ” strategy; basing food, beverage, and game rental costs similar to that of the competitors. Research suggested that the majority of sales in the caffeinated beverage sector, which will be the main focus of sales for Game of Scones Caf é, follows an 80/20 ratio7. Where sales are focused 80% to espresso based drink and 20% to drip coffee drinks. Following the metrics, the plan maker was slightly adjusted to fit the needs of the Game of Scones Caf é financial plan. Cost ($)
Price ($) Profit ($)
Drip Coffee (Avg.)
0.56
2.38
1.82
Specialty Coffee (Avg.)
0.77
3.55
2.78
Other Food (Avg.)
0.90
5.00
4.10
Game Rental (cover charge)* 0.00
5.00
5.00
* An hourly rate of $1/per person after the first hour is applied Game of Scones Caf é will actively follow a bundling strategy to encourage customers to buy into the whole coffee and gaming experience. During times of peak sales, daily food and beverage specials will be available, as well as combos that include a discounted hourly game rental or two for one cover charge. With the combination of products and low marginal costs, sold during times
of high volume sales, higher margins can be reached. Further examples of this will be included in active participation of the membership and loyalty program, which will offer exclusive deals and points for redemption with purchases. To increase margins, additional fees have been incorporated into game rentals and memberships. A cover charge of $5 per person is initially charged to game renters with a time limit of one hour. Once that limit is reached, each person is charged an additional $1 per each additional hour. This fee will help go towards maintenance and up keep of the games in service. Membership fees will also be applied to those who sign up. Options for membership include, but are not limited to dropping the additional hourly charge and offering slightly discounted food options while playing only. Individuals who are part of this program will be signed up to mailing list, which extends to the promotional plan.
Promotional Strategy Game of Scones Café’s plans to build brand awareness through several promotional and advertising methods. In an age of technology, the most effect way to reach potential customers is through use of social media and developing a website that is searchable and easy to use. The advertising campaigns will be focused in the institutional perspective which will showcase the café and gaming experience as a whole. Individual product advertising is not feasible. Adds, flyers, and small billboards will be purchased and/or rented. Examples of this effort would include: Crossword or Sudoku puzzles sponsored in local newspapers, printed puzzle hand-outs with coupons at libraries and sporting complexes.
Awareness will also be gained through active involvement in the community. Charitable gaming tournaments will be hosted and local artists will be featured during nightly events. With this type of involvement, Game of Scones Caf é can seek out media attention through news sources like CHCH and the Hamilton Spectator.
Promotion & Networking Plan Monthly volunteer activities will be planned in the community, such as park clean-ups, soup kitchen work and Habitat for Humanity. In addition to the monthly work, Game of Scones Caf é will donate any and all usable food items to local soup kitchens, such as Inn of the Good Shepherd, etc. The local media will be contacted for the Grand Opening. The goal is to be featured during a CHCH news segment and also to get featured in an article in the Hamilton Spectator, as well as other local newspapers. Social networking accounts, such as Facebook, Instagram, Twitter, Yelp, and TripAdvisor, will be opened to attract customers and offer incentives for visiting. “Pop-up
Cafés” will be established in malls, festivals, and parks for brief periods to increase our
brand exposure. During these events, we will serve a select range of coffee and tea-based beverages with paired pastry treats to encourage the community to try our products. Quick-play games would be available for further participation. Memberships and loyalty cards will be provided to customers. Customers can accumulate points, which can later be redeemed for food or game play. For a small fee, customers who sign up for
memberships will be provided exclusive offers and limited-time discounts. To promote participation in our memberships, non-members are offered punch cards. For example, after five scones have been purchased, the sixth is free, or one free game play after ten consecutive visits. We will create partnerships with local businesses and who can distribute coupons to draw attention to Game of Scones Caf é.
Physical Distribution Strategy To gain access to the fair-trade organic industry, Game of Scones Caf é will partner with the wholesaler Alternate Grounds. The decision to use a wholesaler, over all other routes (direct channels or through brokers) is based on the fact that they are an existing business with an established reputation and network. They have over 20 years’ experience and have done extensive research into the producers they deal with. They purchased green coffee beans directly from coffee cooperatives and roast them at their facility in nearby Toronto. The fact that they prepare these products locally makes purchasing more accessible and reduces shipment costs. The games library will be collected through a more creative route of distribution. To reduce cost, a large majority will be collected through donations. Some games will be purchased through online auctions, online ads, and garage sales. A relationship with several gaming wholesalers will be established to acquire the remaining games. Having used games also emphasizes Game of Scones Café’s commitment to recycling and having an environmentally eco-friendly mind-set.
Selling Approach The main source of income will be dependent on sales from the café. This includes coffee, tea, espresso based specialty drinks, non-caffeinated drinks, baked goods, and light meal options. Our commitment to high quality, environmentally friendly, and free-trade products will create a trusting relationship and familiarize the brand with customers. The selling approach is to up-sell and offer customers other products while enjoying their visit. Knowledgeable staff will offer food pairings with their drink purchases. Quick-play games — such as: Connect Four, Snakes and Ladders, Tic-Tac-Toe etc. — will be suggested to the short stay beverage only consumers. Coffee and game combos will be available. Incentive and loyalty programs will be offered to increase their purchasing power as consumers and entice their return. The game portion of this business will be rental based., offering an hourly rate per person for usage. This rate will include a small fee which covers lost or damaged game pieces.
Operations Plan This section is to be used as a snapshot of how the company will be structured. It is an execution strategy of day-to-day operations for a successful business.
Location Game of Scones Café will be located in immediate proximity to the downtown core at 12 John Street North, Hamilton, Ontario, Canada. With its historic appeal, and surroundings that include large and small businesses alike, artistic influences and retro feel this is a perfect location to build a customer base of those looking for alternative venues for meetings and entertainment. With a total floor space of 1257 square feet, the leasehold agreement includes existing furniture, bar and beverage equipment with a layout suitable for a board game Café. The layout is comprised of an open seating arrangement close to the entrance, beverage bar and board rental area near the back and side, as well as an open space near the bar for live entertainment. This is a high traffic downtown commercial area which is advantageous to the density of customers, it is easily accessible by public transportation while providing moderate immediate parking as well as ne arby public parking on a designated lot and/or street.
Supply and Inventory Management The chosen supplier, Alternate Grounds, is an existing business with a reputable background and over twenty years’ experience. They boast a comprehensive network and have a facility in Toronto; this is important to avoid supply disruptions, reduce shipping costs and build a strong local relationship. They adhere to fair-trade organic products which is a key business strategy.
Effective inventory management is important to maintain a satisfied customer base and avoid disruptions to service. A weekly inventory audit will be scheduled to avoid setbacks and maintain adequate stock. After the first three months, average sales of product will have to be assessed to better modify ordering schedule and avoid holding excess inventory of low sales products. Game of Scones Café will be implementing a Kanban system to aid in the managing of inventory and production. As for board game management, a running list of popular games and customer requested games will be kept on hand to allow for a visual depiction of what is offered currently, what will be coming soon and what can be phased out.
Production A plan will be produced to best utilize employee hours and maintain quality service for customers through times of rising and falling demand. These trends will be analyzed in the first year of operation
to
better
plan
ahead
when
new
employees
are
hired.
In terms of physical demands of production, three employees at the counter will effectively cover complete orders for customers in a timely fashion. Depending on the items ordered, standard p oint of sale equipment is used, followed by a trained barista who sees the order on a display screen and proceeds to make the order utilizing specialty coffee equipment such as espresso and specialty coffee machines. The third representative will be in charge of preparing the requested board game and anything that may come with it. One or two servers, considering peak hours, will be responsible for attending to tables and their orders. One daily manager will oversee the trained and certified personnel to ensure quality control is being considered with every transaction while follow up promotional surveys will supply feedback for improvement.
Organization The Game of Scones Café management philosophy and business culture can be summarized as follows:
I.
Managers are leaders Focus on people and personal development
II.
Enable employees Position opportunities for success
III.
Equality and fairness Treat people with respect and honesty
IV.
Communication for success Avoid conflict and stay on track
V.
Quality above all Maintains a satisfied customer
VI.
Positivity and inclusivity Embody this to supply a welcoming environment
VII.
Adapt and learn Change is inevitable
These are important to business success in how customers and employees are treated, and how the Game of Scones Caf éé reputation will be built on. Management responsibilities will fall to the owners as outlined below.
Customer Service
The Customer Service department will oversee customer interaction at the Café level and will ensure they keep up with industry trends and customer feedback
Horia Herman Customer Service Manager
Marketing
The Marketing Department will focus primarily on promotional and advertising incentives; including online
Amanda Arts Marketing Manager
Accounting
The Financial Department is responsible for moneys involved in any transaction with the Café and its employees
Robert Langner Accounting Manager
Operations & Quality Control
The Operations Department will oversee quality control and safety concerns, as well as day to day processes
Ivan Ortiz Operations Manager
Human Resources
The Human Resources Department is directly involved with hiring, and dealing with internal and external concerns with employees
Horia Herman Human Resources Manager
Samiya Jahan Accounting Manager
Future Considerations The caf é will be owner operated, until such time that expansion or demand is peaking. A proposed plan to hire full-time managers and part-time staff will be implemented when such time arises. These persons will have the opportunity to apply in person, online or recommended through approved agencies. They must meet general criteria for servers, cashiers and baristas and follow the management philosophy. Compensation will be assessed based on experience. Employee incentives will be put in place to retain valuable staff, training will be provided and employee benefits for those on salary.
Customer Service Plan Game of Scones Caf é is an entertainment café that relies deeply on its customer experience through its large variety of board games, specialty food/beverages and diverse activities. Through them, growth and success will be attainable for this business.
Principles Services are based on customer feedback and on latest trends. Consumer opinion matters the most when deciding what selection of board games the café should have, as well as what type of events should be hosted. Having a close connection with the costumers allows the café to stay up to date with the latest trending board games. Also, Game of Scones will be able to differentiate and attract more clients by hosting events requested by them, such as paint night, tea/coffee tasting and live music night (local bands). A closer relationship will be established with the customers by satisfying their requests. Through them, Game of Scones Café can grow and have a great distinctive advantage over the competition.
Incentives Game of Scones Caf é will be offering a lot of incentives to attract and keep more customers. The goal is to create a positive business to customer relationships. One way to achieve that is by creating a membership system where the customers can gain points through their purchases. Another incentive that Game of Scones Café will offer is coupons, to different events and discounts to other stores by creating partnerships with the local small business community. It will gain
popularity by attracting customers from other markets and also ensure that the current customers benefit from that as well.
Membership Game of Scones Caf é will have a membership system for its regular customers. Upon creating a membership for a small fee, the client will receive a free board game night, in which he/she will not have to pay the standard board game fee. With each food or beverage purchase the customer will be able to use the membership to gain points. The accumulated points can be used to get a free board game night access, free beverages or win a free board game. Non-members are offered punch cards. After five scones have been purchased, the sixth is free, or one free game play after ten consecutive visits.
Members 6250 5000 3750 2500 1250 0 January
March
May
July
Members
Figure 1: Anticipated Members
September
December
PURCHASE
POINTS
Board game hour
50
Beverage Small
10
Beverage Medium
15
Beverage Large
20
Food
30
POINTS
PRIZE
300
Free board game night
100
Free beverage
500
Free board game
Board Games In order to ensure that the games meet the customer demand, Game of Scones Caf é will have surveys, in which the clients can suggest board games that they would like to play. The staff will be responsible for verifying that the board game has all the necessary pieces before and after a customer uses it. This way, Game of Scones Caf é will be able to ensure that no customer will have a bad experience while playing the game. The café will also research and keep up to date with the latest and most popular board games to continue entertaining the clients and also create a very distinctive game library. In addition, to ensure that no customer will be disappointed, Game of Scones Caf é will have at least two of each game.
Weekly Events Every Friday night, Game of Scones Caf é will be hosting events. Through them, it will gain awareness, attract more clients and also improve its customer experience. Every week, a lottery draw will be hosted, in which the event participants could win a free board game. Game of Scones Caf é will be hosting the following events: I.
Coffee Tasting
II.
Live Karaoke
III.
Live Local Band
IV.
Comedy Night
V.
Charity Tournament Night
Specialty Tea/Coffee The business is very aware of the environmental and ethical problems around world. It will be providing fair trade coffee, sugar and cocoa. The specialty drinks will attract customers who enjoy specialty coffee/tea and are environmentally concerned. The goal is to differentiate and attract customers through delicious and special drinks.
Staff Game of Scones Caf é’s staff will be welcoming to each of the customers with a big smile and will treat them with courtesy and respect. They will always know that the customer is always right and
that they play an important role toward business success. They will also be trained to know how each one of the board games should be played. The staff will be able to provide answers to our customers’ questions and concerns.
Online Website Customers will be able to access our website, view the board game library, write reviews about a specific game, read the rules of and also be able to keep up to date with the latest board game arrivals. The webpage will offer daily word or number puzzles online to encourage people to revisit.
Keeping Customers Close Game of Scones Caf é understands that the vast majority of its customer are teens and young adults. The business will be able to stay in touch with them through social media. It will have a Facebook, Instagram, Twitter, Yelp, and TripAdvisor account in which it will be posting upcoming events, new board game arrivals and also receive customer feedback. The cafe will learn and listen to customer suggestions and implement them for a better experience.
Financial Plan Start-Up Costs The total value of assets required at start up for Games of Scones Cafe will be $124, 230. This covers the current assets, pre-paid expenses, fixed and other assets. 75% of the start-up costs are fixed and other assets; this includes all coffee equipment, furniture, millwork and re-modelling. The leasehold improvement, machinery and equipment, and furniture percentages are lower than normal because the location/space proposed requires a minimal amount of improvement and the other assets are from personal collections or donation. The remaining 25% accounts for total current assets and pre-paid expenses; this includes cash on opening day, rent, insurance and licensing. The pre-paid expenses are minimal with start-up because the café will be owner operated and salary less. The percentages of each aspect at start-up are outlined in Figure 2. 0% 6%
12% 0%
22%
13%
0%
17% 30%
Cash & Bank Accts.
Inventory
Prepaid Expenses
Land & Buildings
Furn. & Fixtures
Leasehold Improv.
Vehicles
Other
Figure 2: Start-up Cost Pie Chart
Machinery & Equip.
Sales Projection Game of Scones Café Target Customer Population Total Number
Population
Description
14-19 year old1 (Primary)
36,200 Based on Census 2011
20-34 year old1 (Primary)
100,470 Based on Census 2011
35-64 year old1 (Secondary)
215,975 Based on Census 2011
Total Customers
352,645 Based on Census 2011
Targeted customers (30% @ Age: 14-64)
105,793 Calculated based on Census 2011 Data
Table 1 - Target Customer Population Game of Scones Caf é’s Operation Data
Total days annually
312 Based off of 6 day business week
Hours of operation per day
13 Industry practice
Required number of product to be sold per
12 Carried over from above
hour Number of coffee person during operating
3 Based on Coffee Association of Canada
hours Required customers per hour
4 Calculated by required # of products to be sold divided # of coffee per person
Table 2 - Operation Data
Market Potential
Total Number of Customers
105,793 Carried over from above
Annual spending by Canadians
2,033 Based off of study done on average annual
on coffee ($) per person Calculated value of market ($)
spending of Canadians on coffee 215,078,200 Calculated by multiplying avg. annual spending by total number of customers
Estimated market share (%)
0.6 Estimated based on sq. footage vs competitors
Projected number of customers
6348 Projected by multiplying % of market share by the
total # of customers per day Average number of customers
132 Calculated on Market Share analyses based on
per day Projected annual income ($)
Dynamic Business Plan8 268,357 Calculated by dividing market share by value
correction factor for customers Price of product7 ($)
3.78 Average price for coffee (Based on CoffeeTalk,
2015), Food, and Cover charge Required number of sales per year Required Number of sales per day Required Number of sales per operating hour Table 3 - Anticipated Market Potential
70994 Calculated by dividing projected annual income by
average product price 227 Calculated by dividing required # of sales
by # of operational days 17 Calculated by dividing required # of sales by hours
of operation
MONTHLY SALES PROJECTION $38,750 $31,000 ) D A$23,250 C ( s e l a$15,500 S
$7,750 $0 SEP
OCT
NOV
DEC
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
Month
Figure 3: Monthly Sales Projection
Cash Flow The net cash flow fluctuates based on factors affecting sales of each month such as weather, holidays and summer vacation, and company growth. Cash flow is steady after start-up with advertising fizzling out and annual premiums paid for. At the end of the fiscal year there is a large drop in cash flow due to the payment of income taxes. The net cash flow per month is represented in Figure 4.
MONTHLY NET CASH FLOW $30,000 ) $24,000 D A C ( w$18,000 o l F h s$12,000 a C t e N $6,000
$0 SEP
OCT
NOV
DEC
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
Month
Figure 4: Monthly Net Cash Flow Year 1
Income Statement At start-up, the board game café will do its best being that it is a new item to downtown Hamilton. In the follow year the sales will decline but stay steady every year after. The gross margin and income/loss before tax will also see the same decline and stay steady but proportionate to the yearly sales.
SALES, GROSS MARGIN & NET INCOME - YEARS 1-5
$400,000
) D$320,000 A C ( s$240,000 e l a S l $160,000 a u n n $80,000 A
$0 Year
Sales
Gross Margin
Income/Loss Before Tax
Figure 5: Sales, Gross Margin & Net Income – Years 1-5
Balance Sheet The retained earnings grow from $256,738 at the end of year 2 up to $554,100 at the end of year 5. The earnings grow 115% with a minimal amount of re-investment and draw on credit. By year 5 all loans will be paid off., indicated in Figure 6. RETAINED EARNINGS ) $600,000 D A C ( $450,000 s g n $256,738 i $300,000 n r a E d$150,000 e n i a t e $0 R
2
$554,100
$456,332 $356,738
3
4
4 Year
Figure 6: Retained Earnings
5
6
Breakeven Point The breakeven point at the end of year 1 is $80,563 or 19,754 units. Represented in Table 4 and Figure 7. Game of Scones Café
BREAKEVEN POINT CALCULATION FOR YEAR 1 YEAR 1 FIXED COSTS (Yr. 1 Inc. Stat.):
$70,980
UNIT CONTRIBUTION Average Unit/Customer Selling Price:
$4.08
Less: Average Unit/Cust. Var. Cost:
$0.49
Unit Contribution:
$3.59
BEP = TFC/UC =
19,754 UNITS/CUSTOMERS
BEP ($SALES) = BEP(UNITS/CUST.) X USP =
$80,563
Table 4: Breakeven Point
BREAKEVEN POINT $130,000.00
$106,250.00 ) $ ( D A C
BEP, 80562.3614
Expenses Sales BEP
$82,500.00
$58,750.00
$35,000.00 5000.
11250.
17500.
23750.
30000.
36250.
# of Units Sold
Figure 7: Breakeven Point Graph
Financial Ratios Game of Scones Café’s gross profit margin and net profit margin are 88% and 62% respectively. This indicates that the café is very profitable. The Return-on-investment at the end of year 1 is 66%, this shows that the investment gains compare favorably to investment cost. The investment is very efficient. After year 1, the café will have a networking capital of $219,304, allowing for an opportunity to expand. The café has a debt ratio of 0.18 and debt-equity ratio of 0.22, this signifies that the café is less dependent of leverage. Detailed financial ratios shown in Table 3.
Game of Scones Café KEY BUSINESS RATIOS – AT END OF YEAR 1 Profitability Ratios Gross profit margin = gross profit/sales =
87.48%
Net profit margin = net profits after taxes/sales =
62.09%
Return on investment (ROI) = net profits after taxes/total assets =
65.75%
Return on equity (ROE) = net profits after taxes/owners ‘equity =
80.31%
Liquidity Ratios Net working capital = current assets-current liabilities =
$219,304
Inventory turnover = cost of goods sold/average inventory =
36.6 times
Average age of inventory = 360/inventory turnover =
10 days
Debt Ratios Debt Ratio = total liabilities/total assets =
0.18
Debt-equity Ratio = long-term debt/owners' equity =
0.22
Table 5: Financial Ratios Year 1
Appendix •
Total population of Hamilton Ontario in 2011 - 519,9501
•
Total population of Hamilton Ontario in 2006 - 504,5601
•
Population is growing ( 3.1% in 5 years)1
•
Combined males and females in Hamilton Ontario in 2011 aged 15-34 – 1366701
•
Combined males and females in Hamilton Ontario in 2011 aged 35-64 – 2159751
•
In 2011, the number of census families in Hamilton was 144,120, which represents an increase of 2.4% from 20061
•
Ontario family’s average food expenditures increased by 4.8% in 2013 from 2012 Recreation expenditures increased by 11.0% during that same period2
•
56% of coffee purchased prepared is bought at donut or bagel shops3
•
The average Canadian drinks 3 cups of coffee a day3
•
139 coffee shops in Hamilton (only one coffee shop has Fair Trade coffee, in-store seating, organic selection, Wifi) & one board game Café4
•
Estimated Competitor Floor space calculated through Google Maps5
Citations 1. 2. 3. 4. 5. 6. 7.
Statistics Canada, Census, 2011 Statistics Canada, Household Spending and Savings, 2015 Coffee Drinking Association, Canadian Coffee Drinking Study, 2011 Findmecoffee, Coffee Shops, 2015 Statistics, Brandon Gaille, 2013 Google Maps, Earth View, 2015 http://www.dynamicbusinessplan.com/realistic-number-of-customers
8. Coffee Talk, Coffee Shop Ratio that Boosts Profits by 50%, 2015 9. http://www.cbc.ca/news/canada/hamilton/news/couple-rolls-the-dice-on-hamilton-s-first board-game-café-1.1406624 10. http://www.canadiangrocer.com/uncategorized/crazy-for-coffee-11529 11. http://www.investopedia.com/financial-edge/0709/the-real-cost-of-drinking-coffee.aspx 12. http://www.coffeeassoc.com/coffee-in-canada/canadian-coffee-drinking-study-2011highights/ 13. http://www.thestar.com/business/small_business/leadership/2011/10/13/standing_out_in_a_c rowded_coffee_market.html?referrer=http%3A%2F%2Ft.thestar.com%2F 14. https://www12.statcan.gc.ca/census-recensement/2011/as-sa/fogs-spg/Facts-csdeng.cfm?LANG=Eng&GK=CSD&GC=3525005 15. http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil130g-eng.htm 16. http://www.rcinet.ca/en/2014/01/29/statistics-canada-canadian-household-spending/ 17. http://www.bplans.com/coffee_shop_business_plan/company_summary_fc.php 18. http://brandongaille.com/25-coffee-shop-industry-statistics-and-trends/ 19. http://www.findmecoffee.com/ 20. http://spacelist.ca/p/on/hamilton/12_john_st_n 21. http://www.alternativegrounds.com/about-us 22. http://magazine.coffeetalk.com/may13-boost-profits/ 23. http://www.theguardian.com/technology/2014/nov/25/board-games-internet-playstationxbox 24. https://www.specialtyfood.com/news/news-center/article/coffee-consumption-increase-25-5years/ 25. http://www.blogto.com/eat_drink/2014/06/the_top_20_bars_and_cafes_for_board_games_in _toronto/ 26. http://www.homemediamagazine.com/financial/march-video-game-sales-decline-6-35684 27. http://www.playdium.com/pricing_portal.php 28. http://www.outdoors.ca/en-CA/Articles/FamilyActivitiesInCanada.aspx 29. http://listdose.com/top-10-largest-coffee-chains-in-the-world/
