MODEL BISNES - Little White Cafe

BUSINESS DESCRIPTION

Little White Cafe  limited liability company, sells coffee, other beverages and snacks in its 2,300 square feet premium coffee bar located near the Universiti Kebangsaan Malaysia(UKM), MFI, UNITEN, BMI, MIAT & Infrastructure University Kuala Lumpur (IUKL) 
Culture's objectives for the first year of operations are:

• Become selected as the "Best New Coffee Bar in the area" by the local restaurant guide.
• Turn in profits from the first month of operations.
• Maintain a 65% gross margin. 

PRODUCT AND SERVICE

Little White Cafe will make its best effort to create a unique place where customers can socialize with each other in a comfortable and relaxing environment while enjoying the best brewed coffee or espresso and pastries in town. We will be in the business of helping our customers to relieve their daily stresses by providing piece of mind through great ambiance, convenient location, friendly customer service, and products of consistently high quality. Little White Cafe will invest its profits to increase the employee satisfaction while providing stable return to its shareholders.

The keys to success will be :

• Store design that will be both visually attractive to customers, and designed for fast and efficient operations.
• Employee training to insure the best coffee preparation techniques.
• Marketing strategies aimed to build a solid base of loyal customers, as well as maximizing the sales of high margin products, such as espresso drinks.

THE MARKET

Malaysia coffee consumption has shown steady growth, with gourmet coffee having the strongest growth. Coffee drinkers in Malaysia are among the most demanding ones. They favor well-brewed gourmet coffee drinks and demand great service. Little White Cafe will strive to build a loyal customer base by offering a great tasting coffee in a  relaxing environment of its coffee bar located close to the nearest University.

Market Segmentation

Little White Cafe will focus its marketing activities on reaching the University students and faculty, people working in offices located close to the coffee bar and on sophisticated teenagers. Our market research shows that these are the customer groups that are most likely to buy gourmet coffee products. Since gourmet coffee consumption is universal across different income categories and mostly depends on the level of higher education, proximity to the nearest University will provide access to the targeted customer audience.
The chart and table below outline the total market potential (in number of customers) of gourmet coffee drinkers in Bangi.

Target Market Segment Strategy

Little White Cafe will cater to people who want to get their daily cup of great-tasting coffee in a relaxing atmosphere. Such customers vary in age, although our location close to the University campus means that most of our clientele will be college students and faculty. Our market research shows that these are discerning customers that gravitate towards better tasting coffee. Furthermore, a lot of college students consider coffee bars to be a convenient studying or meeting location, where they can read or meet with peers without the necessity to pay cover charges. For us, this will provide a unique possibility for building a loyal client base.

Market Needs

General trend toward quality among Malaysian. consumers definitely plays an important role in the recent growth in gourmet coffee. Additionally, such factors as desire for small indulgences, for something more exotic and unique, provide a good selling opportunity for coffee bars.

Industry Analysis

Coffee consumption has shown a steady 2.5% growth rate in the Malaysia over the last decade. In 2012, total sales of coffee were approximately RM7.5 billion with gourmet coffee representing 33% (or RM2.5 billion) of that. The retail coffee industry is flourishing in Malaysia. The local climate, with a long rainy season, is very conducive for the consumption of hot non-alcoholic beverages. At the same time, hot dry summers drive people into cafes to order iced drinks. Further, coffee has really become a part of the lifestyle in Bangi. Its discerning coffee drinkers are in favor of well-prepared, strong coffee-based beverages, which they can consume in a relaxing environment.

COMPETATION

According to the 2010 Oregon Food service Statistics (NAICS 72), Eugene had 45 established snack & non-alcoholic beverage bars (NAICS 722213) with total sales of $14.2 million. Among other establishments that offer coffee drinks to their customers are most of Bangi limited- and full-service restaurants. Little White Cafe direct competitors will be other coffee bars located near the UNITAR. These include Starbucks, Oldtown white coffee, The Bangi kopitiam, and other Food service establishments that offer coffee. Starbucks will definitely be one of the major competitors because of its strong financial position and established marketing and operational practices. However, despite of Starbuck's entrenched market position, many customers favor smaller, independent establishments that offer cozy atmosphere and good coffee at affordable prices. oldtown white coffee is a good example of such competition. We estimate that Starbucks holds approximately 35% market share in that neighborhood, oldtown appeals to 25% of customers, The Bangi kopitiam caters to another 10%, with the remaining market share split among other establishments. Little White Cafe will position itself as a unique coffee bar that not only offers the best tasting coffee and pastries but also provides home-like, cozy and comfortable environment, which established corporate establishments lack. We will cater to customers' bodies and minds, which will help us grow our market share in this competitive market.

Buying Patterns

The major reason for the customers to return to a specific coffee bar is a great tasting coffee, quick service and pleasant atmosphere. Although, as stated before, coffee consumption is uniform across different income segments, Little White Cafe will price its product offerings competitively. We strongly believe that selling coffee with a great service in a nice setting will help us build a strong base of loyal clientele.

OPERATION

Little White Cafe will be located on the ground floor of the commercial building at the corner of masjid jamik Bandar Baru Bangi. The company has secured a one-year lease of the vacant 2,500 square feet premises previously occupied by a hair salon. The lease contract has an option of renewal for three years at a fixed rate that Little White Cafe will execute depending on the financial strength of its business.
The floor plan will include a 200 square feet back office and a 2,300 square feet coffee bar, which will include a seating area with 15 tables, a kitchen, storage area and two bathrooms. The space in the coffee bar will be approximately distributed the following way--1,260 square feet (i.e., 55% of the total) for the seating area, 600 square feet (26%) for the production area, and the remaining 440 square feet (19%) for the customer service area.
This property is located in a commercial area within a walking distance from the nearest campus with the busy downtown commercial area. The commercially zoned premises have the necessary water and electricity hookups and will require only minor remodeling to accommodate the espresso bar, kitchen and storage area. The coffee bar's open and clean interior design with modern wooden decor will convey the quality of the served beverages and snacks, and will be in-line with the establishment's positioning as an eclectic place where people can relax and enjoy their cup of coffee. The clear window displays, through which passerby will be able to see customers enjoying their beverages, and outside electric signs will be aimed to grab the attention of the customer traffic.

MANAGMENT TEAM

Little White Cafe is majority-owned by Arif Shairul and Nazirul. En Arif holds a Bachelor's Degree in Business Administration from the University Teknologi Mara. He's worked for several years as an independent business consultant. For the last five years he has worked as a manager of DEF Ristorante, a successful Italian restaurant in Portland, OR. Under En.Arif s management, the restaurant has consistently increased sales while maintaining a lower than average level of operating expenses.
However, because of the investors' other commitments they will not be involved into the daily management decisions at Little White Cafe. A professional manager (RM35,000/yr) will be hired who will oversee all the coffee bar operations. Two full-time baristas (RM25,000/yr each) will be in charge of coffee preparation. Four more part-time employees will be hired to fulfill the staffing needs. In the second and third year of operation one more part-time employee will be hired to handle the increased sales volume.

 Management Team

A full-time manager will be hired to oversee the daily operations at Little White Cafe. The candidate has had three years of managerial experience in the definitely industry in Malaysia. This person's responsibilities will include managing the staff, ordering inventory, dealing with suppliers, developing a marketing strategy and perform other daily managerial duties. We believe that our candidate has the right experience for this role. A profit-sharing arrangement for the manager may be considered based on the first year operational results.

Management Team Gaps

Despite the owners' and manager's experience in the definitely industry, the company will retain the consulting services of ABC Espresso Services, the consultants who have helped to develop the business idea for Little White Cafe. This company has over twenty years of experience in the retail coffee industry and has successfully opened dozens of coffee bars across the Malaysia. Consultants will be primarily used for market research, customer satisfaction surveys and to provide additional input into the evaluation of the new business opportunities.

Personnel Plan

The table below outlines the personnel needs of  Little White Cafe coffee bar.

 

RISK/OPPOTUNITIES

Little White Cafe's marketing strategy will be focused at getting new customers, retaining the existing customers, getting customers to spend more and come back more often. Establishing a loyal customer base is of a paramount importance since such customer core will not only generate most of the sales but also will provide favorable referrals.

Competitive Edge

Little White Cafe will position itself as unique coffee bar where its patrons can not only enjoy a cup of perfectly brewed coffee but also spend their time in an ambient environment. Comfortable sofas and chairs, dimmed light and quiet relaxing music will help the customers to relax from the daily stresses and will differentiate Java Culture from incumbent competitors.

Sales Strategy

Little White Cafe baristas will handle the sales transactions. To speed up the customer service, at least two employees will be servicing clients--while one employee will be preparing the customer's order, the other one will be taking care of the sales transaction. All sales data logged on the computerized point-of-sale terminal will be later analyzed for marketing purposes.
In order to build up its client base, Little White Cafe will use banners and fliers, utilize customer referrals and cross-promotions with other businesses in the community. At the same time, customer retention programs will be used to make sure the customers are coming back and spending more at the coffee bar.

Sales Forecast

Food costs are assumed at 25% for coffee beverages and 50% for retail beans and pastries. Proximity to the University campus will dictate certain sales seasonality with revenues slightly decreasing during the school vacation periods.
The chart and table below outline our projected sales forecast for the next three years

FINANCIAL SUMMARY

The start-up expenses include:

• Legal expenses for obtaining licenses and permits as well as the accounting services totaling RM1,300.
• Marketing promotion expenses for the grand opening of Little White Cafe in the amount of RM3,500 and as well as flyer printing (2,000 flyers at RM0.04 per copy) for the total amount of RM3,580.
• Consultants fees of RM3,000 paid to ABC Espresso Services <name changed> for the help with setting up the coffee bar.
• Insurance (general liability, workers' compensation and property casualty) coverage at a total premium of RM2,400.
• Pre-paid rent expenses for one month at RM1.76 per square feet in the total amount of RM4,400.
• Premises remodeling in the amount of RM10,000.
• Other start-up expenses including stationery (RM500) and phone and utility deposits (RM2,500).

The required start-up assets of RM142,320 include:

• Operating capital in the total amount of RM67,123, which includes employees and owner's salaries of RM23,900 for the first two months and cash reserves for the first three months of operation (approximately RM14,400 per month).
• Start-up inventory of RM16,027, which includes:
  • Coffee beans (12 regular brands and five decaffeinated brands) - RM6,000
  • Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. - RM7,900
  • Retail supplies (napkins, coffee bags, cleaning, etc.) - RM1,840
  • Office supplies - RM287
• Equipment for the total amount of RM59,170:
  • Espresso machine - RM6,000
  • Coffee maker - RM900
  • Coffee grinder - RM200
  • Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) - RM18,000
  • Storage hardware (bins, utensil rack, shelves, food case) - RM3,720
  • Counter area equipment (counter top, sink, ice machine, etc.) - RM9,500
  • Serving area equipment (plates, glasses, flatware) - RM3,000
  • Store equipment (cash register, security, ventilation, signage) - RM13,750
  • Office equipment (PC, fax/printer, phone, furniture, file cabinets) - RM3,600
  • Other miscellaneous expenses - RM500

Funding for the company comes from two major sources--owners' investments and bank loans. There major owners, Arif, shairul and Nazirul, have contributed RM70,000 and RM30,00 respectively. All other investors have contributed RM40,000, which brings the total investments to RM140,000. The remaining RM30,000 needed to cover the start-up expenses and assets came from the two bank loans--a one-year loan in the amount of RM10,000 and a long-term (five years) loan of RM20,000. Both loans were secured through the Bank of Malaysia. Thus, total start-up loss is assumed in the amount of RM27,680.

CAPITAL REQUIREMENT

Minimum capital requirements are put in place to ensure banking institutions have. sufficient capacity to
undertake the intermediation function necessary for the
development of the economy
The start-up loss of the company is assumed in the amount of $27,680.