business plan by Nitesh Jaiswal on coffee shop

2,969 views
2,817 views

Published on

business plan of a coffee outlet.
it was submitted at confluence 2012 conducted by IIM Ahmadabad...

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
2,969
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
240
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

business plan by Nitesh Jaiswal on coffee shop

  1. 1. Executive SummaryDrink & Think coffee bar is determined to become a daily necessity for local coffee addicts, a place todream of as you try to escape the daily stresses of life and just a comfortable place to meet your friendsor to read a book, all in one 24 hr. a day and 365 days in a year. With the growing demand for high-quality gourmet coffee and great service, Drink & Think will capitalize on its proximity to the University ofOregon campus to build a core group of repeat customers. Drink & Think will offer its customers the bestprepared coffee in the area that will be complimented with pastries, as well as free books that its patronscan read to enjoy their visit.The company will operate a 2,300 square foot coffee bar within a walking distance from the MaharashtraInstitute Of technology campus. The owners have secured this location through a three-year lease withan option for extending. They have also provided 1, 25,000 of the required 4, 00,000 start-up funds. Theremaining capital will be obtained through Bank of India commercial loans.The company is expected to grow sales revenue from Rs. 6, 00,000 in FY2012 to Rs.16, 33,500 in yearthree. As Drink & Think will strive to maintain a 65% gross profit margin and reasonable operatingexpenses, it will see net profits between Rs. 4, 50,000 to Rs. 6, 00,000 during the same period.1.1 ObjectivesDrink & Thinks’ 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.
  2. 2. 1.2 Keys to SuccessThe 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.1.3 MissionDrink & Think will make its best effort to create a unique place where customers can socialize with eachother in a comfortable and relaxing environment while enjoying the best brewed coffee or espresso andpastries in town. We will be in the business of helping our customers to relieve their daily stresses byproviding piece of mind through great ambience, convenient location, friendly customer service, andproducts of consistently high quality. Drink & Think will invest its profits to increase the employeesatisfaction while providing stable return to its shareholders.Company SummaryDrink & Think, a NJ group of co., sells coffee, other beverages and snacks in its 2,300 square feetpremium coffee bar located near the Maharashtra institute of technology campus. Drink & Think majorinvestor is Nitesh Jaiswal who cumulatively own over 54% of the company. The start-up loss of thecompany is assumed in the amount of Rs. 68,000.2.1 Company OwnershipDrink & Think is registered as a Private Ltd. Co. under the jurisdiction of pune. Nitesh Jaiswal owns 54%of the company. His cousin sanket rai, as well as friend ricky morgan and somil dixit hold minority stakesin Drink & Think, pvt. Ltd. Co..2.2 Start-up SummaryThe start-up expenses include: Legal expenses for obtaining licenses and permits as well as the accounting services totaling Rs. 25000 Marketing promotion expenses for the grand opening of Drink & Think in the amount of Rs. 145,000 and as well as flyer printing (22,000 flyers at Rs.1 per copy) for the total amount of Rs.167,000 Consultants fees of 65,000 paid to NESCAFE Espresso Services for the help with setting up the coffee bar. Insurance (general liability, workers compensation and property casualty) coverage at a total premium of Rs. 85000.
  3. 3. Pre-paid rent expenses for one month at Rs. 25 per square feet in the total amount of Rs. 57,500. Premises remodeling in the amount of Rs. 1,35,000. Other start-up expenses including stationery (Rs,3700) and phone and utility deposits (Rs. 4400).The required start-up assets of Rs. 5,05,020 include: Operating capital in the total amount of Rs.1,72,000 which includes employees salaries of Rs. 1,50,000 for the first two months and cash reserves for the first three months of operation (approximately Rs.22000 per month). Start-up inventory of Rs.2,11,700, which includes: o Coffee beans (12 regular brands and five decaffeinated brands) - Rs. 88000 o Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. – Rs. 1,12,000 o Retail supplies (napkins, coffee bags, cleaning, etc.) – Rs. 9000 o Office supplies – Rs.2700 Equipment for the total amount of Rs.1,21,320: o Espresso machine – Rs.12000 o Coffee maker – Rs. 3300 o Coffee grinder – Rs. 1450 o Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) - Rs18,000 o Storage hardware (bins, utensil rack, shelves, food case) – Rs.7,720 o Counter area equipment (counter top, sink, ice machine, etc.) – Rs.9,500 o Serving area equipment (plates, glasses, flatware) – Rs.6,000 o Store equipment (cash register, security, ventilation, signage) – Rs.9,750 o Office equipment (PC, fax/printer, phone, furniture, file cabinets) – Rs.3,600 o Other miscellaneous expenses – Rs.5000Funding for the company comes from two major sources--owners investments and bank loans. Majorowner, Nitesh Jaiswal have contributed Rs. 8,10,000 respectively. All other investors have contributedRs,2,50,000 which brings the total investments to Rs.10,60,000. The remaining Rs.4,40,000 needed tocover the start-up expenses and assets came from the two bank loans--a one-year loan in the amount ofRs.1,55,000 and a long-term (five years) loan of Rs.2,85,000. Both loans were secured through the Bankof India. Thus, total start-up loss is assumed in the amount of Rs.68000.The following chart and table summarize the start-up assumptions.
  4. 4. Start-up RequirementsStart-up ExpensesLegal Rs.25,000Stationery etc. Rs.3,700Brochures Rs.167,000Consultants Rs.65,000Insurance Rs.85,000Rent Rs.57,500Remodeling Rs.1,35,000Other Rs.4,400Total Start-up Expenses Rs.542,600Start-up AssetsCash Required Rs.1,72,000Start-up Inventory Rs.2,11,700Other Current Assets Rs.24,350Long-term Assets Rs.51,970Total Assets Rs.76,320Total Requirements Rs.1,24,320Start-up FundingStart-up Expenses to Fund Rs.542,600Start-up Assets to Fund Rs.1,24,320Total Funding Required Rs.666,920AssetsNon-cash Assets from Start-up Rs.2,63,670Cash Requirements from Start-up Rs.1,72,000Additional Cash Raised $0Cash Balance on Starting Date Rs.1,72,000Total Assets Rs.6,07,670
  5. 5. Liabilities and CapitalLiabilitiesCurrent Borrowing Rs.1,55,000Long-term Liabilities Rs.2,85,000Accounts Payable (Outstanding Bills) $0Other Current Liabilities (interest-free) $0Total Liabilities Rs.4,40,000CapitalPlanned InvestmentNitesh Jaiswal Rs.8,10,000All other investors Rs.2,50,000Additional Investment Requirement $0Total Planned Investment Rs.15,00,000Loss at Start-up (Start-up Expenses) (Rs.68000)Total Capital Rs.1,72,000Total Capital and Liabilities Rs.1,24,320Total Funding Rs.2,96,3202.3 Company Locations and FacilitiesDrink & Think coffee bar will be located on the ground floor of the commercial building at the corner of Wpaudoff paud road near kotak Mahindra bank, pune, MH. The company has secured a one-year lease ofthe vacant 2,500 square feet premises previously occupied by a hair salon. The lease contract has anoption of renewal for three years at a fixed rate that Drink & Think will execute depending on the financialstrength of its business.The floor plan will include a 200 square feet back office and a 2,300 square feet coffee bar, which willinclude a seating area with 15 tables, a kitchen, storage area and two bathrooms. The space in the coffeebar will be approximately distributed the following way--1,260 square feet (i.e., 55% of the total) for theseating area, 600 square feet (26%) for the production area, and the remaining 440 square feet (19%) forthe customer service area.This property is located in a commercial area within a walking distance from the MIT campus on thecorner of a major thoroughfare connecting Deccan road neighborhood with the busy downtowncommercial area. The commercially zoned premises have the necessary water and electricity hookupsand will require only minor remodeling to accommodate the espresso bar, kitchen and storage area. Thecoffee bars open and clean interior design with modern wooden decor will convey the quality of theserved beverages and snacks, and will be in-line with the establishments positioning as an eclectic placewhere people can relax and enjoy their cup of coffee. The clear window displays, through which passerbywill be able to see customers enjoying their beverages, and outside electric signs will be aimed to grabthe attention of the customer traffic.ProductsDrink & Think will offer its customers the best tasting coffee beverages in the area. This will be achievedby using high-quality ingredients and strictly following preparation guidelines. The store layout, menulistings and marketing activities will be focused on maximizing the sales of higher margin espresso drinks.Along with the espresso drinks, brewed coffee and teas, as well as some refreshment beverages, will be
  6. 6. sold in the coffee bar. Drink & Think will also offer its clients pastries, small salads and sandwiches. Forthe gourmet clientele that prefers to prepare its coffee at home, Drink & Think will also be selling coffeebeans.The menu offerings will be supplemented by free books and magazines that customers can read insidethe coffee bar.3.1 Product DescriptionThe menu of the Drink & Think coffee bar will be built around espresso-based coffee drinks such aslattes, mochas, cappuccinos, etc. Each of the espresso-based drinks will be offered with whole, skimmed,or soy milk. Each of these coffee beverages is based on a shot of espresso, which is prepared in theespresso machine by forcing heated water through ground coffee at high pressure. Such espresso shotsare combined with steamed milk and/or other additives like cocoa, caramel, etc., to prepare the espresso-based beverages. Proper preparation techniques are of paramount importance for such drinks. A minordeviation from the amount of coffee in the shot, the size of the coffee particles, the temperature of milk,etc., can negatively affect the quality of the prepared drink.3.2 Sales LiteratureTwo thousand flyers will be distributed in the adjacent neighborhood, on the Institutes campus, at themalls and in the selected office buildings within two weeks prior to the opening of Drink & Think.Subsequently, free postcards with Drink & Think endorsement will be printed to increase the companyvisibility among the patrons.Market Analysis SummaryIndian coffee consumption has shown steady growth, with gourmet coffee having the strongest growth.Coffee drinkers in the Northwest are among the most demanding ones. They favor well-brewed gourmetcoffee drinks and demand great service. Pune, with its liberal and outgoing populace and calm whether,has traditionally been a great place for coffee establishments. Drink & Think will strive to build a loyalcustomer base by offering a great tasting coffee in a relaxing environment of its coffee bar located closeto the bustling MIT campus.4.1 Market SegmentationDrink & Think will focus its marketing activities on reaching the Institute students and faculty, peopleworking in offices located close to the coffee bar and on sophisticated teenagers. Our market researchshows that these are the customer groups that are most likely to buy gourmet coffee products. Sincegourmet coffee consumption is universal across different income categories and mostly depends on thelevel of higher education, proximity to the MIT campus will provide access to the targeted customeraudience.The chart and table below outline the total market potential (in number of customers) of gourmet coffeedrinkers in pune.
  7. 7. Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5Potential Customers Growth CAGRStudents and Faculty 2% 18,000 18,360 18,727 19,102 19,484 2.00%Teenagers 1% 3,000 3,030 3,060 3,091 3,122 1.00%Office workers 2% 8,000 8,160 8,323 8,489 8,659 2.00%Other 0% 5,000 5,000 5,000 5,000 5,000 0.00%Total 1.63% 34,000 34,550 35,110 35,682 36,265 1.63%4.2 Target Market Segment StrategyDrink & Think will cater to people who want to get their daily cup of great-tasting coffee in a relaxingatmosphere. Such customers vary in age, although our location close to the University campus meansthat most of our clientele will be college students and faculty. Our market research shows that these arediscerning customers that gravitate towards better tasting coffee. Furthermore, a lot of college studentsconsider coffee bars to be a convenient studying or meeting location, where they can read or meet withpeers without the necessity to pay cover charges. For us, this will provide a unique possibility for buildinga loyal client base.4.2.1 Market NeedsGeneral trend toward quality among Indian consumers definitely plays an important role in the recentgrowth in gourmet coffee. Additionally, such factors as desire for small indulgencies, for something moreexotic and unique, provide a good selling opportunity for coffee bars.4.3 Industry Analysis
  8. 8. Coffee consumption has shown a steady 2.5% growth rate in the Indian over the last decade. In 1994,total sales of coffee were approximately Rs.7.5 billion with gourmet coffee representing 33% (or Rs.2.5billion) of that. The retail coffee industry is flourishing in the Indian Northwest. The local climate, with amoderate calm and cold atmoshphere, is very conducive for the consumption of hot non-alcoholicbeverages. 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 the Northwest. Its discerning coffee drinkers are in favorof well-prepared, strong coffee-based beverages, which they can consume in a relaxing environment.4.3.1 Competition and Buying PatternsCompetitionAccording to the 1997 Maharashtra Food service Statistics (NAICS 72), Pune had 45 established snack &non-alcoholic beverage bars (NAICS 722213) with total sales of Rs.14.2 million. Among otherestablishments that offer coffee drinks to their customers are most of Pune’s limited- and full-servicerestaurants. Drink & Thinks’ direct competitors will be other coffee bars located near the MIT campus.These include CCD, Zest, durga, and other Food service establishments that offer coffee. CCD willdefinitely be one of the major competitors because of its strong financial position and establishedmarketing and operational practices. However, despite of ccd’s entrenched market position, manycustomers favor smaller, independent establishments that offer cozy atmosphere and good coffee ataffordable prices. Durga is a good example of such competition. We estimate that CCD holdsapproximately 35% market share in that neighborhood, Durga appeals to 25% of customers, Zest catersto another 10%, with the remaining market share split among other establishments. Drink & Think willposition itself as a unique coffee bar that not only offers the best tasting coffee and pastries but alsoprovides 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 competitivemarket.Buying PatternsThe major reason for the customers to return to a specific coffee bar is a great tasting coffee, quickservice and pleasant atmosphere. Although, as stated before, coffee consumption is uniform acrossdifferent income segments, Drink & Think will price its product offerings competitively. We strongly believethat selling coffee with a great service in a nice setting will help us build a strong base of loyal clientele.Strategy and Implementation SummaryDrink & Thinks’ 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 paramountimportance since such customer core will not only generate most of the sales but also will provide favorablereferrals.5.1 Competitive EdgeDrink & Think will position itself as unique coffee bar where its patrons can not only enjoy a cup of perfectlybrewed coffee but also spend their time in an ambient environment. Comfortable sofas and chairs, dimmed light and
  9. 9. quiet relaxing music will help the customers to relax from the daily stresses and will differentiate Drink & Thinkfrom incumbent competitors.5.2 Sales StrategyDrink & Think baristas will handle the sales transactions. To speed up the customer service, at least two employeeswill be servicing clients--while one employee will be preparing the customers order, the other one will be takingcare of the sales transaction. All sales data logged on the computerized point-of-sale terminal will be later analyzedfor marketing purposes.In order to build up its client base, Drink & Think 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 tomake sure the customers are coming back and spending more at the coffee bar.5.2.1 Sales ForecastFood costs are assumed at 25% for coffee beverages and 50% for retail beans and pastries. Proximity to the MITcampus 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.Sales Forecast Year 1 Year 2 Year 3SalesCoffee beverages Rs.13,50,400 Rs.13,85,440 Rs.14,23,984Coffee beans Rs.1,87,600 Rs.1,96,360 Rs.2,05,996Pastries, etc. Rs.2,46,000 Rs.2,60,600 Rs.3,76,660Total Sales Rs.17,84,000 Rs.18,42,400 Rs.20,06,640Direct Cost of Sales Year 1 Year 2 Year 3Coffee beverages Rs.1,57,600 Rs.1,66,360 Rs.2,00,996Coffee beans Rs.63,800 Rs.58,180 Rs.61,998
  10. 10. Pastries, etc. Rs.83,000 Rs.90,300 Rs.1,05,330 Rs.3,14,840Subtotal Direct Cost of Sales Rs.3,04,400 Rs.3,68,324Previous PageNext Page »Management SummaryDrink & Think is majority-owned by Nitesh Jaiswal. Mr. Jaiswal holds a PGDM degree from MIT-SOB. Healso owns a construction co., which he is profitably operating from last 3 years. Mr. Garfield has extensivebusiness contacts in pune and also being an alumni of MIT that he will leverage to help his new venturesucceed.However, because of the investors other commitments they will not be involved into the dailymanagement decisions at Drink & Think. A professional manager (Rs.2,40,000/yr) will be hired who willoversee all the coffee bar operations. Two full-time baristas (Rs.1,20,,000/yr each) will be in charge ofcoffee preparation. Four more part-time employees will be hired to fulfill the staffing needs. In the secondand third year of operation one more part-time employee will be hired to handle the increased salesvolume.6.1 Management TeamA full-time manager will be hired to oversee the daily operations at Drink & Think. The candidate (whosname is withheld due to his current employment commitment) has had three years of managerialexperience in the definitely industry in Pune. This persons responsibilities will include managing the staff,ordering inventory, dealing with suppliers, developing a marketing strategy and perform other dailymanagerial duties. We believe that our candidate has the right experience for this role. A profit-sharingarrangement for the manager may be considered based on the first year operational results.6.2 Management Team GapsDespite the owners and managers experience in the definitely industry, the company will retain theconsulting services of Nescafe Espresso Services, the consultants who have helped to develop thebusiness idea for Drink & Think. This company has over twenty years of experience in the retail coffeeindustry and has successfully opened dozens of coffee bars across the India. Consultants will be primarilyused for market research, customer satisfaction surveys and to provide additional input into theevaluation of the new business opportunities.6.3 Personnel PlanThe table below outlines the personnel needs of Drink & Think coffee bar.Personnel Plan Year 1 Year 2 Year 3Manager Rs.2,40,000 Rs.3,20,000 Rs.3,20,000
  11. 11. Baristas Rs.2,40,000 Rs.3,20,000 Rs.3,20,000Employees Rs.2,52,000 Rs.3,60,000 Rs.4,44,000Total People 7 7 8Total Payroll Rs.7,32,000 Rs.1000000 Rs.1084,000Financial PlanDrink & Think will capitalize on the strong demand for high-quality gourmet coffee. The owners haveprovided the company with sufficient start-up capital. With successful management aimed at establishingand growing a loyal customer base, the company will see its net worth doubling in two years. Drink &Think will maintain a healthy 65% gross margin, which combined with reasonable operating expenses,will provide enough cash to finance further growth.7.1 Important AssumptionsGeneral Assumptions Year 1 Year 2 Year 3Plan Month 1 2 3Current Interest Rate 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00%Tax Rate 25.42% 25.00% 25.42%Other 0 0 07.2 Projected Cash FlowAs the chart and table below present, the company will maintain a healthy cash flow position, which willallow for timely debt servicing and funds available for future development.
  12. 12. Pro Forma Cash Flow Year 1 Year 2 Year 3Cash ReceivedCash from OperationsCash Sales Rs.17,84,400 Rs.18,42,400 Rs.20,06,640Subtotal Cash from Operations Rs.17,84,400 Rs.18,42,400 Rs.20,06,640Additional Cash ReceivedSales Tax, VAT, HST/GST Received Rs.0 Rs.0 Rs.0New Current Borrowing Rs.0 Rs.0 Rs.0New Other Liabilities (interest-free) Rs.0 Rs.0 Rs.0New Long-term Liabilities Rs.0 Rs.0 Rs.0Sales of Other Current Assets Rs.0 Rs.0 Rs.0Sales of Long-term Assets Rs.0 Rs.0 Rs.0New Investment Received Rs.0 Rs.0 Rs.0Subtotal Cash Received Rs.17,84,400 Rs.18,42,400 Rs.20,06,640Expenditures Year 1 Year 2 Year 3Expenditures from OperationsCash Spending Rs.7,32,000 Rs.10,00,000 Rs.10,84,000Bill Payments Rs.3,27,865 Rs.3,88,715 Rs.4,20,945Subtotal Spent on Operations Rs.10,59,865 Rs.13,88,715 Rs.1,504,945Additional Cash SpentSales Tax, VAT, HST/GST Paid Out Rs.0 Rs.0 Rs.0Principal Repayment of Current Borrowing Rs.3,300 Rs.3,300 Rs.3,300Other Liabilities Principal Repayment Rs.0 Rs.0 Rs.0Long-term Liabilities Principal Repayment Rs.0 Rs.3,585 Rs.3,961Purchase Other Current Assets Rs.0 Rs.0 Rs.0Purchase Long-term Assets Rs.0 Rs.2,000 Rs.2,000Dividends Rs.0 Rs.0 Rs.0Subtotal Cash Spent Rs.1,063,165 Rs.1,397,600 Rs1, 510,245.Net Cash Flow Rs.1,784,400 Rs.1,842,400 Rs.2,006,640Cash Balance Rs.721,235 Rs.444,800 Rs.496,395
  13. 13. 7.3 Key Financial Indicators7.4 Break-even AnalysisWith average monthly fixed costs of Rs.1,50,000 in FY 2012 and an average margin of 65%, Drink &Thinks break-even sales volume is around Rs. 2,20,000 per month. As shown further, the company isexpected to generate such sales volume from the out start.
  14. 14. Break-even AnalysisMonthly Revenue Break-even Rs.231,247Assumptions:Average Percent Variable Cost 35%Estimated Monthly Fixed Cost Rs.95,3117.5 Projected Profit and LossAnnual projected sales of Rs. 1,784,000 in FY2012 translate into Rs.775.7 of sales per square foot, whichis in line with the industry averages for this size of coffee bar. Overall, as the company gets established inthe local market, its net profitability increases from 17.06% in FY 2012 to 17.63% in FY2014. The tablebelow outlines the projected Profit and Loss Statement for FY2012-2014.Pro Forma Profit and Loss Year 1 Year 2 Year 3Sales Rs.1,784,000 Rs.1,842,400 Rs.2,006,640Direct Cost of Sales Rs.3,04,400 Rs.3,14,840 Rs.3,68,324Other Rs.0 Rs.0 Rs.0Total Cost of Sales Rs.3,04,400 Rs.3,14,840 Rs.3,68,324Gross Margin RS.1,479,600 Rs.1,527,560 Rs.1,638,316Gross Margin % 65.00% 65.00% 65.00%ExpensesPayroll Rs.732,000 Rs.1,000,000 Rs.1,084,000Sales and Marketing and Other Expenses Rs.167,000 Rs.160,000 Rs.165,000Depreciation Rs.5,400 Rs.5,500 Rs.5,500Rent Rs.18000 Rs.18000 Rs.18000Maintenance Rs.15,840 Rs.16,424 Rs.17,066Utilities/Phone Rs.9,000 Rs.9,500 Rs.10,000Payroll Taxes Rs.18,690 Rs.21,570 Rs.23,272Other Rs.0 Rs.0 Rs.0Total Operating Expenses Rs.965,930 Rs.1,230,994 Rs.1,322,838Profit Before Interest and Taxes Rs.513,670 Rs.296,566 Rs.315,478EBITDA Rs.51,270 Rs.49,866 Rs.64,034Interest Expense Rs.2,821 Rs.2,326 Rs.1,618Taxes Incurred Rs.33,740 Rs.35,510 Rs.42,424Net Profit Rs.425,839 Rs.208,864 Rs.207,402Net Profit/Sales 17.00% 16.58% 16.52%7.6 Projected Balance SheetThe companys net worth is expected to increase from approximately Rs.6, 00,000 by the end of FY2012to approximately Rs. 16, 35,500 in FY2013. The table below summarizes the projected balance sheets forthis period.Pro Forma Balance Sheet Year 1 Year 2 Year 3Assets
  15. 15. Current AssetsCash Rs.195,358 Rs.296,358 Rs.417,648Inventory Rs.21,175 Rs.23,293 Rs.25,622Other Current Assets Rs.0 Rs.0 Rs.0Total Current Assets Rs.216,533 Rs.319,651 Rs.443,270Long-term AssetsLong-term Assets Rs.59,170 Rs.61,170 Rs.63,170Accumulated Depreciation Rs.5,400 Rs.10,900 Rs.16,400Total Long-term Assets Rs.53,770 Rs.50,270 Rs.46,770Total Assets Rs.270,303 Rs.369,921 Rs.490,040Liabilities and Capital Year 1 Year 2 Year 3Current LiabilitiesAccounts Payable Rs.31,974 Rs.31,947 Rs.34,836Current Borrowing Rs.6,700 Rs.3,400 Rs.100Other Current Liabilities Rs.0 Rs.0 Rs.0Subtotal Current Liabilities Rs.38,674 Rs.35,347 Rs.34,936Long-term Liabilities Rs.20,000 Rs.16,415 Rs.12,454Total Liabilities Rs.58,674 Rs.51,762 Rs.47,390Paid-in Capital Rs.140,000 Rs.140,000 Rs.140,000Retained Earnings (Rs.27,680) Rs.71,628 Rs.178,159Earnings Rs.99,308 Rs.106,530 Rs.124,491Total Capital Rs.211,628 Rs.318,159 Rs.442,650Total Liabilities and Capital Rs.270,303 Rs.369,921 Rs.490,040Net Worth Rs.211,628 Rs.318,159 Rs.442,6507.7 Business RatiosThe table below outlines the companys business ratios. The last column represents industry averagebusiness ratios for Specialty Eating Places (SIC 5812).Ratio Analysis Year 1 Year 2 Year 3 Industry ProfileSales Growth 0.00% 10.00% 10.00% 7.60%Percent of Total AssetsInventory 7.83% 6.30% 5.23% 3.60%Other Current Assets 0.00% 0.00% 0.00% 35.60%Total Current Assets 80.11% 86.41% 90.46% 43.70%Long-term Assets 19.89% 13.59% 9.54% 56.30%Total Assets 100.00% 100.00% 100.00% 100.00%Current Liabilities 14.31% 9.56% 7.13% 32.70%Long-term Liabilities 7.40% 4.44% 2.54% 28.50%Total Liabilities 21.71% 13.99% 9.67% 61.20%Net Worth 78.29% 86.01% 90.33% 38.80%Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 65.00% 65.00% 65.00% 60.50%Selling, General & Administrative Expenses 47.94% 48.47% 47.37% 39.80%
  16. 16. Advertising Expenses 2.26% 2.18% 2.26% 3.20%Profit Before Interest and Taxes 23.27% 22.47% 23.85% 0.70%Main RatiosCurrent 5.60 9.04 12.69 0.98Quick 5.05 8.38 11.95 0.65Total Debt to Total Assets 21.71% 13.99% 9.67% 61.20%Pre-tax Return on Net Worth 62.87% 44.64% 37.71% 1.70%Pre-tax Return on Assets 49.22% 38.40% 34.06% 4.30%Additional Ratios Year 1 Year 2 Year 3Net Profit Margin 17.00% 16.58% 17.62% n.aReturn on Equity 46.93% 33.48% 28.12% n.aActivity RatiosInventory Turnover 10.91 10.11 10.11 n.aAccounts Payable Turnover 11.25 12.17 12.17 n.aPayment Days 27 30 29 n.aTotal Asset Turnover 2.16 1.74 1.44 n.aDebt RatiosDebt to Net Worth 0.28 0.16 0.11 n.aCurrent Liab. to Liab. 0.66 0.68 0.74 n.aLiquidity RatiosNet Working Capital Rs.177,858 Rs.284,304 RS.408,334 n.aInterest Coverage 48.16 62.07 104.13 n.aAdditional RatiosAssets to Sales 0.46 0.58 0.69 n.aCurrent Debt/Total Assets 14% 10% 7% n.aAcid Test 5.05 8.38 11.95 n.aSales/Net Worth 2.76 2.02 1.60 n.aDividend Payout 0.00 0.00 0.00 n.aAppendixSales Forecast Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 h 12SalesCoffeebever 0 Rs.24, Rs.27, Rs.28, Rs.28, Rs.28, Rs.28, Rs.28, Rs.28, Rs.29, Rs.31, Rs.33, Rs.33,ages % 000 000 800 800 800 800 800 800 400 200 000 000Coffee 0 Rs.6,0 Rs.6,7 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,3 Rs.7,8 Rs.8,2 Rs.8,2beans % 00 50 00 00 00 00 00 00 50 00 50 50Pastries, 0 Rs.10, Rs.11, Rs.12, Rs.12, Rs.12, Rs.12, Rs.12, Rs.12, Rs.12, Rs.13, Rs.13, Rs.13,etc. % 000 250 000 000 000 000 000 000 250 000 750 750
  17. 17. Total Rs.40, Rs.45, Rs.48, Rs.48, Rs.48, Rs.48, Rs.48, Rs.48, Rs.49, Rs.52, Rs.55, Rs.55,Sales 000 000 000 000 000 000 000 000 000 000 000 000Direct Costof Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont MontSales h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 h 12Coffeebever Rs.6,0 Rs.6,7 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,3 Rs.7,8 Rs.8,2 Rs.8,2ages 00 50 00 00 00 00 00 00 50 00 50 50Coffee Rs.3,0 Rs.3,3 Rs.3,6 Rs.3,6 Rs.3,6 Rs.3,6 Rs.3,6 Rs.3,6 Rs.3,6 Rs.3,9 Rs.4,1 Rs.4,1beans 00 75 00 00 00 00 00 00 75 00 25 25Pastries, Rs.5,0 Rs.5,6 Rs.6,0 Rs.6,0 Rs.6,0 Rs.6,0 Rs.6,0 Rs.6,0 Rs.6,1 Rs.6,5 Rs.6,8 Rs.6,8etc. 00 25 00 00 00 00 00 00 25 00 75 75SubtotalDirect Costof Rs.14, Rs.15, Rs.16, Rs.16, Rs.16, Rs.16, Rs.16, Rs.16, Rs.17, Rs.18, Rs.19, Rs.19,Sales 000 750 800 800 800 800 800 800 150 200 250 250Personnel Plan Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont h1 h2 h3 h4 h5 h6 h7 h8 h9 h 10 h 11 h 12Mana 0 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20ger % 000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000Barist 0 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20as % 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000Empl 0 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28oyees % 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000TotalPeople 7 7 7 7 7 7 7 7 7 7 7 7TotalPayro Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68,ll 000 000 000 000 000 000 000 000 000 000 000 000General Assumptions Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 h 12
  18. 18. PlanMonth 1 2 3 4 5 6 7 8 9 10 11 12CurrentInteres 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00t Rate % % % % % % % % % % % %Long-termInteres 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00t Rate % % % % % % % % % % % %Tax 30.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00Rate % % % % % % % % % % % %Other 0 0 0 0 0 0 0 0 0 0 0 0Pro Forma Profit and Loss Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 h 12 Rs.14 Rs.14 Rs.10 Rs.10 Rs.12 Rs.12 Rs.16 Rs.16 Rs.18 Rs.11 Rs.11 Rs.11Sales 8,700 8,700 0,700 0,700 0,000 0,000 5,000 5,000 5,000 5,200 5,200 5,200DirectCost of Rs.30, Rs.30, Rs.17, Rs.17, Rs22, Rs.22, Rs.32, Rs.33, Rs.35, Rs.20, Rs.20, Rs.20,Sales 367 367 800 800 800 800 800 766 150 250 250 250Other Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0TotalCost of Rs.30, Rs.30, Rs.17 Rs.17 Rs22, Rs.22 Rs.32 Rs.33 Rs.35 Rs.20 Rs.20 Rs.20Sales 367 367 ,800 ,800 800 ,800 ,800 ,766 ,150 ,250 ,250 ,250Gross Rs.11 Rs.11 Rs.82, Rs.82, Rs.97, Rs.97, Rs.13 Rs.13 Rs.14 Rs.,94 Rs.94, Rs.94,Margin 8,333 8,333 900 900 200 200 2,200 2,200 9,850 ,950 950 950GrossMargin 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00% % % % % % % % % % % % %Expenses Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68,Payroll 000 000 000 000 000 000 000 000 000 000 000 000SalesandMarketing andOtherExpense Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1s 50 50 50 50 50 50 50 50 50 50 50 50Depreci Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45
  19. 19. ation 0 0 0 0 0 0 0 0 0 0 0 0 Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15,Rent Rs.0 000 000 000 000 000 000 000 000 000 000 000Mainten Rs.40 Rs.45 Rs.48 Rs.48 Rs.48 Rs.48 Rs.48 Rs.48 Rs.49 Rs.52 Rs.55 Rs.55ance 0 0 0 0 0 0 0 0 0 0 0 0Utilities Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75/Phone 0 0 0 0 0 0 0 0 0 0 0 0Payroll 15 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5Taxes % 58 58 58 58 58 58 58 58 58 58 58 58Other Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0TotalOperatingExpens Rs.16, Rs.20, Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20es 191 641 ,671 ,671 ,671 ,671 ,671 ,671 ,681 ,711 ,741 ,741ProfitBeforeInterestand Rs.9,8 Rs.8,6 Rs.10, Rs.10, Rs.10, Rs.10, Rs.10, Rs.10, Rs.11, Rs.13, Rs.15, Rs.15,Taxes 09 09 529 529 529 529 529 529 169 089 009 009EBITD Rs.10, Rs.9,0 Rs.10, Rs.10, Rs.10, Rs.10, Rs.10, Rs.10, Rs.11, Rs.13, Rs.15, Rs.15,A 259 59 979 979 979 979 979 979 619 539 459 459Interest Rs.24 Rs.24 Rs.24 Rs.24 Rs.23 Rs.23 Rs.23 Rs.23 Rs.22 Rs.22 Rs.22 Rs.22Expense 8 5 3 1 9 6 4 2 9 7 5 3Taxes Rs.2,8 Rs.2,0 Rs.2,5 Rs.2,5 Rs.2,5 Rs.2,5 Rs.2,5 Rs.2,5 Rs.2,7 Rs.3,2 Rs.3,6 Rs.3,6Incurred 68 91 72 72 73 73 74 74 35 16 96 97Net Rs.6,6 Rs.6,2 Rs.7, Rs.7, Rs.7, Rs.7, Rs.7, Rs.7, Rs.8, Rs.9, Rs.11 Rs.11Profit 93 73 715 716 718 720 721 723 205 647 ,088 ,090NetProfit/S 16.73 13.94 16.07 16.08 16.08 16.08 16.09 16.09 16.74 18.55 20.16 20.16ales % % % % % % % % % % % %Pro Forma Cash Flow Mon Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont th 1 h 2 h 3 h 4 h 5 h 6 h 7 h 8 h 9 h 10 h 11 h 12CashReceivedCashfromOperationsCash $40, $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0Sales 000 00 00 00 00 00 00 00 00 00 00 00
  20. 20. SubtotalCashfromOperatio $40, $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0ns 000 00 00 00 00 00 00 00 00 00 00 00Additional CashReceivedSalesTax,VAT,HST/GST 0.00Received % $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0NewCurrentBorrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0NewOtherLiabilities(interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0NewLong-termLiabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales ofOtherCurrentAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales ofLong-termAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0NewInvestmentReceived $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0SubtotalCash $40, $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0Received 000 00 00 00 00 00 00 00 00 00 00 00
  21. 21. Expendi Mon Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Monttures th 1 h 2 h 3 h 4 h 5 h 6 h 7 h 8 h 9 h 10 h 11 h 12Expenditures fromOperationsCash $10, $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3Spending 383 83 83 83 83 83 83 83 83 83 83 83BillPayment $22,1 $29,8 $30,5 $29,4 $29,4 $29,4 $29,4 $29,4 $30,4 $32,7 $34,1s $728 12 45 69 50 49 47 45 74 24 27 95SubtotalSpent onOperatio $11, $32,4 $40,2 $40,9 $39,8 $39,8 $39,8 $39,8 $39,8 $40,8 $43,1 $44,5ns 112 96 28 52 34 32 30 29 57 08 10 78Additional CashSpentSalesTax,VAT,HST/GST PaidOut $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0PrincipalRepayment ofCurrentBorrowing $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275OtherLiabilitiesPrincipalRepayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-termLiabilitiesPrincipalRepayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
  22. 22. OtherCurrentAssetsPurchaseLong-termAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0SubtotalCash $11, $32,7 $40,5 $41,2 $40,1 $40,1 $40,1 $40,1 $40,1 $41,0 $43,3 $44,8Spent 387 71 03 27 09 07 05 04 32 83 85 53NetCash $28, $12,2 $7,49 $6,77 $7,89 $7,89 $7,89 $7,89 $8,86 $10,9 $11,6 $10,1Flow 613 29 7 3 1 3 5 6 8 17 15 47Cash $95, $107, $115, $122, $130, $138, $145, $153, $162, $173, $185, $195,Balance 736 966 462 235 127 020 914 811 679 596 211 358Pro Forma Balance Sheet Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont h1 h2 h3 h 4 h 5 h 6 h 7 h 8 h 9 h 10 h 11 h 12 Start ing BalaAssets ncesCurrentAssets $67,1 $95, $107 $115 $122 $130 $138 $145 $153 $162 $173 $185 $195Cash 23 736 ,966 ,462 ,235 ,127 ,020 ,914 ,811 ,679 ,596 ,211 ,358Invento $16,0 $15, $17, $18, $18, $18, $18, $18, $18, $18, $20, $21, $21,ry 27 400 325 480 480 480 480 480 480 865 020 175 175OtherCurrentAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0TotalCurrent $83,1 $111 $125 $133 $140 $148 $156 $164 $172 $181 $193 $206 $216Assets 50 ,136 ,291 ,942 ,715 ,607 ,500 ,394 ,291 ,544 ,616 ,386 ,533Long-termAssetsLong- $59,1 $59, $59, $59, $59, $59, $59, $59, $59, $59, $59, $59, $59,
  23. 23. term 70 170 170 170 170 170 170 170 170 170 170 170 170AssetsAccumulatedDeprec $1,3 $1,8 $2,2 $2,7 $3,1 $3,6 $4,0 $4,5 $4,9 $5,4iation $0 $450 $900 50 00 50 00 50 00 50 00 50 00TotalLong-term $59,1 $58, $58, $57, $57, $56, $56, $56, $55, $55, $54, $54, $53,Assets 70 720 270 820 370 920 470 020 570 120 670 220 770Total $142, $169 $183 $191 $198 $205 $212 $220 $227 $236 $248 $260 $270Assets 320 ,856 ,561 ,762 ,085 ,527 ,970 ,414 ,861 ,664 ,286 ,606 ,303Liabilitiesand Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont MontCapital h 1 h 2 h 3 h 4 h 5 h 6 h 7 h 8 h 9 h 10 h 11 h 12CurrentLiabilitiesAccountsPayabl $21, $28, $29, $28, $28, $28, $28, $28, $29, $31, $33, $31,e $0 118 825 587 469 467 465 464 462 335 586 092 974CurrentBorrow $10,0 $9,7 $9,4 $9,1 $8,9 $8,6 $8,3 $8,0 $7,8 $7,5 $7,2 $6,9 $6,7ing 00 25 50 75 00 25 50 75 00 25 50 75 00OtherCurrentLiabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0SubtotalCurrentLiabilit $10,0 $30, $38, $38, $37, $37, $36, $36, $36, $36, $38, $40, $38,ies 00 843 275 762 369 092 815 539 262 860 836 067 674Long-termLiabiliti $20,0 $20, $20, $20, $20, $20, $20, $20, $20, $20, $20, $20, $20,es 00 000 000 000 000 000 000 000 000 000 000 000 000TotalLiabilit $30,0 $50, $58, $58, $57, $57, $56, $56, $56, $56, $58, $60, $58,ies 00 843 275 762 369 092 815 539 262 860 836 067 674Paid-in $140, $140 $140 $140 $140 $140 $140 $140 $140 $140 $140 $140 $140
  24. 24. Capital 000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000RetainedEarnin ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27,gs 680) 680) 680) 680) 680) 680) 680) 680) 680) 680) 680) 680) 680)Earnin $6,6 $12, $20, $28, $36, $43, $51, $59, $67, $77, $88, $99,gs $0 93 966 680 397 115 834 556 279 484 130 218 308Total $112, $119 $125 $133 $140 $148 $156 $163 $171 $179 $189 $200 $211Capital 320 ,013 ,286 ,000 ,717 ,435 ,154 ,876 ,599 ,804 ,450 ,538 ,628TotalLiabilitiesand $142, $169 $183 $191 $198 $205 $212 $220 $227 $236 $248 $260 $270Capital 320 ,856 ,561 ,762 ,085 ,527 ,970 ,414 ,861 ,664 ,286 ,606 ,303Net $112, $119 $125 $133 $140 $148 $156 $163 $171 $179 $189 $200 $211Worth 320 ,013 ,286 ,000 ,717 ,435 ,154 ,876 ,599 ,804 ,450 ,538 ,628

×