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  1. SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN THE DESIGN SCHOOL FOUNDATION IN NATURAL BUILD ENVIRONMENT GROUP MEMBERS: MOY CHIN HOONG 0314014 PARHAM FARHADPOOR 0313698 HASAN RUBAYET 0308941 ENGLISH 2 (ENGL 0205) FINAL ASSIGNMENT: COMPARATIVE ANALYSIS OF 3 BUSINESSES LECTURER: CASSANDRA WIJESURIA SUBMISSION DATE: 13TH FEBRUARY 2014 (THURSDAY)
  2. TABLE OF CONTENT  SUMMERY…………………………………………..……..PAGE 2  BRIEF BIO OF CHINA HOUSE………………...…..…..PAGE 2 - 3  ANALYSIS OF THE BUSINESS BENCHMARKS FOR CHINA HOUSE……………………………………………........PAGE 3 - 4  BRIEF BIO OF DR. CAFÉ COFFEE………..………..……...PAGE 5  ANALYSIS OF THE BUSINESS BENCHMARKS FOR DR. CAFÉ COFFEE……................................................................PAGE 6 - 7  BRIEF BIO OF STARBUCKS COFFEE………..….............…PAGE 8  ANALYSIS OF THE BUSINESS BENCHMARKS FOR STARBUCKS COFFEE……...............................................................PAGE 9 - 10  RECOMMENDATIONS FOR IMPROVEMENT OF ALL THE BUSINESSES……………………………………..…. PAGE 11 - 12  THE SUMMARY TABLE OF SIMILARIRTIES AND DIFFERENCES BETWEEN ALL THREE BUSINESSES…………...………..PAGE 13  APPENDIX………………………...………………...…...…PAGE14 - 26  REFERENCES LIST…………………….………………...………PAGE27 1
  3. SUMMARY For this assignment and research, our group chose three businesses in the food industry. First we went to Penang Island to accomplish our first research. The first coffee shop is situated in the heart and tourist attraction of Penang Island, that is Victoria Street, George town and the second interview we did in the posh area of KL, called Montkiara. Whereas, the third café we chose is in Subang, Selangor. Gradually the name of those coffee shop are China House, Dr. Café Coffee and Starbucks Coffee. The focal aim is to compare between these coffee shop businesses. For instance, compare between the business strategies, number of the competitors, geographical location, number of brunches, main product, and commercial success list goes on. Eventually we have found a lot of contrast. BRIEF BIO OF CHINA HOUSE The café that we chose to interview and analyse in Penang is China House. This very unique café is located in Victoria Street, George Town and it is founded by an Australian lady, Narelle McMurtrie on October 21, 2011 and is managed by Ms. Shirley. China House doesn’t have any other branch and there is only one. This place service to its daily average 110 to 130 customers by around 25 employees and a manager. China House is a traditional compound of 3 heritage buildings, linked by an open air courtyard. Now converted into 14 existing spaces with shops, cafes, restaurants, galleries and theatre. Their specialties include breakfast, lunch, dinner, coffee, and drinks but what they are very famous is making the best quality homemade cakes, however their food style contains Italian, Chinese, and Japanese, but their signature dish is ginger buds spaghetti with grilled chicken.China House has different lounges, the first lounge at the entrance is a bar where all the alcoholic drinks and cocktails serve there and also there is a stage for musical performance during weekends, there are other lounges such as vine store for serving vine and having a more quiet moments and also fine dining where people should enter more formal. The rest of the salons are reading space, galleries, and art space and its name is VIC because it’s facing Victoria Street. However the motives to set up this business are to portrait the fusion of heritage and modernity plus uniqueness for heartening the art culture around Penang Island. This café’s recent developments 2
  4. include providing free Wi-Fi, upgrading coffee machine, and held Gisela and Marcella Mueller art and photography exhibition. ANALYSIS OF THE BUSINESS BENCHMARKS FOR CHINA HOUSE For China House, there are approximately 8 competitors around its geographical market. For examples, The Twelve Cups, Lighthouse Coffee, TRAFFIC and Kopitan Classic, these four café are on the same street with China House and these café are also considered as the top competitors of China House. Other than these, there are still Edelweiss Café, Campbell House, Rainforest Bakery & Pastry and Brix & Baume around that area. This situation has summed up that the competition of Café around that area is very strong. Out of these 8 coffee houses, the top 3 competitors are figured out in order to compare their main products and specialties with China House. So, the nearest coffee shop to China House is The Twelve Cups, which is also the top one competitor among the three coffee shops. The Twelve Cups is founded in 2012, which is a year after China House has been founded. Their main products are crepe cakes where come with a lot of flavours such as mango, strawberry, and Orea. But of course, their coffee also have a very good review from their customers. That is why The Twelve Cups can be known as the top competitors of China. They also use the strategy of designing a drawing on the plate with chocolate syrup while they serve the food. The lighthouse Coffee is the second top competitor and it is founded in 2006. They are famous in their cakes, coffee and also non-coffee based beverages. Their tiramisu cake got a very good respond from their customers and also is one of their bestseller cakes. Other than that, they have a signature tea, which come with a pink colour lid is called Dilmah Tea. The third one is TRAFFIC. It is a combination of kitchen, bar and music room. There are few reasons why it is one of the top competitors of China House. The first one is the location, where it is just around 10 minutes walking distance from China House. The second one is because of the music room and bar. This causes a competition with the bar in China House. 3
  5. Due to there are a lot of competitors around China House, China House has the specialty of 5 lounges in one café. This will eventually attract more customers with different interests because they provide all sorts of entertainments such as cake house, fine dining, bar and art galleries. Besides, China House also provides comedy and musical performances from different countries during weekends. And, they also use a white paper as the tablecloth to allow their customers draw on it while waiting for their meals. It is very hard to start up a coffee house business today especially in Penang. This is because there are so many café in this small island and the competition is very big. Unless you have a very unique way in operating the café and also the menu, or else it is almost impossible for you dominate the market of café. Furthermore, China House is operating in an oligopoly situation. This is because there are few coffee houses dominating the market and competing with each other in the island. 4
  6. BRIEF BIO OF DR.CAFE COFFEE We found another café in the Klang Valley, which its business name is Dr. Café Coffee. It is a franchise coffee shop founded by Mr.Yousef S. Al Rajhi in 1997. He opened the very first outlet of Dr. Café Coffee in Al Arouba Plaze in Riyadh, the Kingdom of Saudi Arabia. The branch that we interviewed is located in Publika, Mont Kiara. Dr. Café Coffee has around 115 branches around Saudi Arabia and Asia. Most of the branches are located in Riyadh and only parts of the branches are situated in Singapore and Malaysia. It has thousands of employees and around 10 to 15 per branch. The date we went there was 5th of January, which is on Sunday. We reached there at around 1400 hours and there are approximately 15 customers including us. Coffee and teas are the main products of Dr. Café coffee. Other than their main products, they have also served the other beverages such as fruit juice, cocktails and Franilla. Franilla is actually a Frappuccino with the base of vanilla instead of coffee. Furthermore, Dr. Café also provides some food like cakes, doughnuts, salads and Ebreakfast.Besides the food and beverages, they are also selling their own merchandises such as tumbler, tea maker and coffee brewtech. The founder, Mr. Yousef is a coffee lover. He was stimulated by the love of magic beans (coffee) and therefore he started his journey by travelling around the world in order to find the perfect cup of coffee. He had been to Yemen, where the coffee was first discovered. And, he finally found out that he would be in the food and beverage industry for the rest of his life while he smelled the aroma of freshly brewed coffee. Then, he was inspired to learn more about coffee and the processes of making coffee and also meet and socialize with the friends around the world. His aim to start this business is to maintain the classic value of coffee traditions in a new way. 5
  7. ANALYSIS OF THE BUSINESS BENCHMARKS FOR DR. CAFÉ COFFEE Competing for a café such as Dr. Café Coffee can be the main challenge, especially for branches located in shopping mall where all the competitors gather together. This branch that is located in Publika, faces so many competitors such as Namoo Bistro, San Francisco Coffee, The Red Beanbag, O’Briens, Marmalade Café and others. All these cafés are in around one minute distance from Dr. Café Coffee. Among all of the competitors locating in Publika shopping mall, three of them are the most important ones for Dr. Café Coffee. The first strong competitor for this café is The Red Beanbag that is located exactly upstairs of Dr. Café Coffee which founded in 2011 with only one branch till now. The fact is that they have much more customers than Dr. Café Coffee and it’s because of the wide range of food and drinks in their menu. The Red Beanbag’s main products are food, beverages, and coffees however Dr. Café Coffee. The second top competitor is San Francisco Coffee. It is founded in 1997 and they are also a franchise brand. This café’s location is right opposite of Dr. Café Coffee, so competition for them is very important. San Francisco Coffee’s menu is wider than Dr. Café coffee but not as big as The Red Beanbag. Their main products are coffee and snacks such as donuts and cakes, but this café claims that they serve the freshest coffee. O’Briens – Irish Sandwich Café is the other challenger that is trying to compete with Dr. Café Coffee, however the number of customers is less than other competitors. This Irish café started since 1988 and now is known as a franchise brand. O’Briens reputation has been shaped on our famous made-to-order hot or cold sandwiches and they believe is to serve with the highest quality. The strategies used by Dr. Café Coffee to compete with other competitors are very similar to famous cafes such as Starbucks and Coffee Bean but with just a bit cheaper price. For example this café has chosen to serve customers very fast and convenient. The other way of competition that separates them from other competitors is to serve the best quality coffee gathered from all over the world such as central and Latin American, east African, Arabian, and Indonesia and pacific region. 6
  8. Since the nature of the business is oligopoly and there are very strong competitors in this sector, so they always need to maintain the quality which is challenging for them. Another obstacle faced by Dr. Café Coffee is to travel around and look for the best coffee beans, because this is the reason that makes them famous. 7
  9. BRIEF BIO OF STARBUCKS COFFEE The third and the last cafe interviewed is Starbuck Coffee, and for this purpose this group went to one of the branches in ss15, Selangor. This café is known as the most famous coffee shop all around the world and also for providing high quality coffee drinks. Starbucks has more than 18,000 branches in countries and almost everyone knows this café or at least has tried once. This brand started with a coffee shop in Seattle, Washington which opened by a writer Gordon Bowker, an English teacher Jerry Baldwin, and a history teacher Zev Siegl in March 30, 1971. These three partners met each other for the first time as students in University of San Francisco. Howard Schulz joined Starbucks in 1982 but he couldn't convince the owners, so he went his own way to start the Il Giornale chain of coffee bars in 1986 and then this café started expanding its branches beyond Seattle to rest of the United States of America and then to all over the world during 1990s.After becoming one of the first companies to offer stock options to its part-time employees, Starbucks has become a publicly traded company and then has started to become the most popular cafe in the world by far. The Starbuck mission is to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time. So they believe that they always try to serve with the best possible quality by sending their coffee buyers to America, Africa, and Asia to select the highest quality coffee bean. Starbucks products are generally divided to four categories, coffee with more than 30 blends and single-origin premium coffees, handcrafted beverages, merchandise such as mugs, books, and gifts, and also fresh foods including baked pastries, sandwiches, salads and many more. In overall they see themselves as a responsible company that always have the best quality plus other considerations such as ethical sourcing, environmental stewardship, and community involvement. 8
  10. ANALYSIS OF THE BUSINESS BENCHMARKS FOR STARBUCKS COFFEE As Starbucks is an international coffee trademark, it has lots of international competitors all around the world, but for our assignment we chose Starbucks coffee shop located in SS15, Subang. In that locality we had found 8 top competitors of Starbucks coffee shop, those are Shakespeare, Coffee beans, Good friend restaurant & café, It’s a Grind Coffee House, BROOKLYNB bakery & café, Cuppa Kaffe, Flat White and MEEPLES European Boardgame Café. These coffee houses sited very close to Starbucks coffee shop, possibly just about 10-15 minutes walking distance from Starbucks. The placement of those coffee shops creates immense rivalry to Starbucks. Among those competitors we found, there are 3 top competitors. They regard as top competitors by reason of their main products. The nearest coffee shop is Flat White, it is only 100 meters away from Starbucks and located in same street with Starbuck. The main product Coffee, Cakes and Snacks in point of fact make them the top competitor. Their cake looks moist and most of the customers review in their favorite. Nutella Cappuccino is their main advertising creation that bring most customers and it isserved with many designs on top of it. The second top competitor is the Coffee Beans. This coffee shop is the international coffee brand and originated from same country U.S.A as Starbuck. Coffee Bean established in 1963 even before Starbuck had established. The brunch in the Malaysia situated at SS15 is less that 1Km away from the Starbucks brunch in the same street. Their main product such as coffee, tea, merchandise and food are widely recommended by the customers. MEEPLES European Boardgame café consider as third top competitor. This coffee shop founded in 2010 at Subangjaya. While customers are having fun time with their buddies, they can play various kind of board games. The staff there will guide and teach you everything about a new board game, since most of them are not available in Malaysia.Their main product coffee, milkshake, snacks & desserts are not the main appeal to the customers because customers mostly spend time playing board game there. 9
  11. The obstacle of the Starbucks is the all coffee shop around it. But we realize that though coffee bean we consider as top competitor, but it is the tuff one. It is because if it is really nearby the Starbucks like less than 100m, certainly it will affect Starbucks business, but still Coffee Bean getting attention from customers although it is 1kmaway from Starbuck. The second barrier Starbuck facing is the cleanliness of the entire area, the coffee shop situated just next famous Asia Café and due to that Café the whole area is stinking and grimy. So there is every possibility to get fewer customers. Third case is wrong choice of the location. People around the area are students and the more likely to go to Asia Café for cheaper price of food and drinks, since Starbucks is one the most expensive coffee house. From the very beginning, the Starbucks marketing strategy has focused on creating the “third place” for everyone to go to between home and work. Creating this unique and relaxing “experience” and “atmosphere” for people has been very important for the company as they have realized that this is one of the strongest concepts attached to the company, to which customers have been strongly attracted.Customer satisfaction is a very important issue with Starbucks. From entrance to the store to the very last drop of their coffees, it is a must that customers feel the uniqueness of enjoying their Starbucks coffee experience. Without a doubt, Starbucks Coffee Company knows the answer to the question, “Why is customer service important”. Starbucks history has shown that they place a huge emphasis on product quality. Their coffee, even if priced slightly more expensive than expected, is notorious for satisfying customers with its rich, delicious taste and aroma. 10
  12. RECOMMENDATIONS FOR IMPROVEMENT OF ALL THE THREE BUSINESSES Penang is an isolated island from main land of Malaysia and because of the geographical issue the property value in Penang is very far above the ground and furthermore its historical place that is under UNESCO World Heritage Site. As a result whoever wants to set up business in Penang is extremely easier said than done. Likewise the first interview we did for China House is to be found in the heart of Heritage site. Around the China House coffee shop, there are many coffee and food shops. When we review those food shops they all have their own style of food and signature dish, but compare with China House those shops are not as complete and unique as China House, but still for earning more capital they (China House) can put a special menu like every week basis there will be some new cuisine to change customer’s mouth experience. There is one more thing that can actually bash the other competitors, if somehow China House provides several parking spaces for customers. On the other hand the circumstances we had found during our second interview for Dr. Cafe coffee just upside down. We found Dr. Café Coffee is too weak to even compete its competitors. Compare with main three competitors like The Red Beanbag, San Francisco Café and O’Briens Irish Sandwich Café; Dr. Café Coffee lacking many things. For example they (competitors) have more customers, more food options, variety of coffee making technique etc. Though Dr. Café’s price is cheaper than other coffee shop, still they have to fight with Starbuck and Coffee Bean, those consider as best. Besides they don’t have that much international customer service. Not to beat but to be in the competition Dr. Café Coffee must add range of coffee recipe; add more choices and cuisine on menu, so that customers can have three times of proper meal in a day and finally employ more skilled waiter/waitress. However, Starbucks Coffee also has a lot of weakness as it is a very modern coffee shop. For instance, they are having the problems like limitation of menu. Although they have a lot of choices for the drinks, but they only have little choices for food. Most of the food the selling are just pies and cakes. Unlike Coffee Beans, Coffee Beans serves a lot of food such as Big Breakfast, salmon sandwiches and speghetti. Thus, many people believe that Starbucks Coffee can be substituted by the other 11
  13. coffee shops. Futhermore, as Starbucks provides an excellent customer service to earn their customers’ loyalty. They pay their employees more than the normal restaurant or retailers and also provide a lot of benefits for their employees. So, this may results a high costs for the company. Starbucks Coffee should improve themselves by adding more food into the menu such as breakfast and lunch set to attract more customers. Whereas for the high costs, they should manage their capital well and maintain the quality of the customer service. 12
  14. THE SUMMERY TABLE OF THE SIMILARIRTIES AND DIFFERENCES BETWEEN CHINA HOUSE, DR. CAFÉ COFFEE & STARBUCKS COFFEE COMPETETIVE CHINA DR. CAFÉ STARBUCKS TRAITS HOUSE COFFEE COFFEE (Penang) (Klang (Subang) Valley) Number of 8 10 8 Hard Hard Hard More expensive Less Expensive competitors Barrier to entry Pricing expensive Size Daily number of 1 lounge 1 lounge Fusion style Modern Modern style Design 5 lounges style Around 40 More than More than 100 customers Type of the café 100 Oligopoly Single Single purpose Nature of the Multipurpose purpose Oligopoly Oligopoly business 13
  15. APPENDIX Contact Details for China House:- 153, Lebuh Pantai Georgetown, 10300 Georgetown, Penang. - +60 4-263 7299 - www.chinahouse.com.my - info@chinahouse.com.my - https://www.facebook.com/ChinaHousePenang 14
  16. Contact Details for Dr. Café Coffee:- Level G2, Block A4. Solaris Dutamas, No. 1 Jalan Dutamas 1, 50480 KL - 800 – 122 8222 - http://www.dr-cafe.com/DCWebsite/Default.aspx - info@dr-café.com - https://www.facebook.com/drcafe.coffee.37?fref=ts 15
  17. Contact Details for Starbucks Coffee:- 79, G Floor, Jalan SS15/8A, 47500 Subang Jaya - 1300 80 8989 - http://www.starbucks.com.my/ - customer@starbucks.com.my - https://www.facebook.com/Starbucks 16
  18. Interviewed notes:- 17
  19. PICTURES:CHINA HOUSE VIC BAR 18
  20. READING SPACE CAKE HOUSE DRAWINGS DONE BY CUSTOMERS GINGER BUD SPAGHETTI W/ GRILLED CHICKEN THE DICRECTORY THE OLD STYLE DESIGN 19
  21. DRAWINGS DID BY RUBAYET COMPETITORS OF CHINA HOUSE& THEIR PRODUCTS THE TWELVE CUPS THE CREPE CAKES LIGHTHOUSE COFFEE DILMAH TEA 20
  22. TRAFFIC GRILLED CHICKEN MOCHITO DR. CAFÉ COFFEE DR. CAFÉ COFFEE PARHAM WAS ORDERING 21
  23. THE MAGIC BEANS THE FOOD &SNACKS THE CUSTOMERS THE DRINKS ORDERED BY US COMPETITORS OF DR. CAFÉ COFFEE & THEIR PRODUCTS THE SAN FRANCISCO COFFEE THE BREAKFAST 22
  24. THE O’BRIENS THE MENU THE RED BEANBAG THE COFFEE THE CARBONARA 23
  25. STARBUCKS COFFEE STARBUCKS COFFEE STARBUCKS COFFEE DOING RESEARCHES THE STARBUCKS CARDS 24
  26. COMPETITORS OF STARBUCKS COFFEE & THEIR PRODUCTS COFFEE BEANS THE BREAKFAST FLAT WHITE CAFE 25
  27. CHOCOLATE CAKE THE AFFOGATOS MEEPLES THE MENU 26
  28. CUSTOMERS ARE PLAYING BOARDGAME REFERENCES LISTS dr.cafe coffee. (2014). Retrieved from http://www.drcafe.com/DCWebsite/Default.aspx China House Penang. (2012-2013). China house. Retrieved from http://www.chinahouse.com.my/ Shirley. (2013, December 13). Interview by Parham Farhadpoor []. Brief bio of china house. Interview by Parham Farhadpoor []. Brief bio of dr. cafe coffee. Dr. Cafe Coffee. (2009). Art Of Espresso, 6. coffee.org. (2013). History of starbucks. Retrieved from http://www.coffee.org/history-of-starbucks Interview by Parham Farhadpoor []. Brief bio of starbucks coffee. Starbucks corporation. (1999). Retrieved from http://www.mhhe.com/business/management/thompson/11e/case/starbucks -2.html Learning and development. (2013). Retrieved from http://www.starbucks.com.my/about-us/career-center/learning-anddevelopment Cafe menu. (2010). Retrieved from http://www.meeples.com.my/cafemenu.php 27
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