Crepes= cross between tortilla & pancake, French origin, although many other cultures have something similar. Studied twice in France and fell in love with these. How many of you have had crepes?
Crepes can be sweet or salty and served for breakfast, lunch, dinner, snack or dessert with a wide range of toppings. They are best fresh and very quick to make so they will be:
Now I’m going to talk about the really exciting stuff. I didn’t print off a copy of my spreadsheets for each of you because that’s pretty unsustainable, but I will give you a brief summary of my financial analysis.
I projected sales to begin in January of 2010 and did my financial analysis through 2014
Business Description<br />Just Crêpes will be a local crêperie and café based in Laramie, Wyoming focusing on sustainable business practices. <br />
Products/Services<br />Made-to-order crêpes made with Fair Trade, organic and locally-sourced ingredients<br />Healthy, affordable, and versatile<br />Fair Trade coffees and teas<br />Casual dining/studying atmosphere<br />Wireless internet available<br />Resources for learning about sustainable business practices<br />
Benefits to the Customer<br />Fast<br />less than five minutes per customer. <br />Convenient<br />near the University of Wyoming campus<br />Healthy<br />lower-fat, lower-calorie, and lower-cholesterol alternative to tortillas <br />all toppings locally-sourced and/or organic<br />Unique<br />Crêpes resemble a cross between a pancake and a tortilla<br />Learn about sustainable business practices and see them in action<br />Nearest crêperie to Laramie is in Fort Collins, CO<br />Inexpensive<br />Cost of producing crêpes is very low, both for sourcing ingredients and for energy inputs necessary for production <br />competitive with other fast food options <br />Coffee and tea prices will be comparable to other local cafés. <br />Sustainable<br />Survey: potential consumers highly value sustainable business practices<br />
Incorporating Sustainability<br />Sourcing local, Fair Trade, organic<br />Minimize energy consumption<br />Source energy from renewable resources<br />Energy-efficient appliances<br />Minimize waste<br />Reusable dishes<br />Recyclable/compostable/biodegradable to-go packaging<br />Recycling/compost in café<br />Food donations<br />
Market<br />Fast-casual café style restaurant <br />According to www.fastcasual.com this style of restaurant has double-digit growth rates while the rest of the food industry is in decline<br />No Laramie competition that offers crepes to go<br />Creperies are very popular in Europe (esp. France) but have yet to boom in America<br />Healthy option in food served fast<br />
Competition<br />Fast food: Taco Johns, Taco Bell, Wendy’s, McDonald’s, Arby’s, Burger King, Subway, and Quizno’s<br />Local cafes and restaurants: Sweet Melissa’s, Home Bakery, Teriyaki Bowl, The Grounds, Turtle Rock, Coal Creek Coffee, Elements, and Rolling Mills Café<br />
Competitive Advantage<br />Sustainable business practices<br />Fair Trade, energy efficiency, waste reduction, recycling, composting, local sourcing, supporting social and environmental causes<br />Crêpes<br />Unique, delicious, inexpensive, healthy<br />Location<br />Close to campus<br />Hours of operation<br />Late night<br />
Concept Test & Customer Reaction<br />91 Laramie residents <br />44% dissatisfied with restaurant options near the UW campus <br />40% dissatisfied with café options near the UW campus. <br />Over 60% feel current options near campus are somewhat unhealthy or very unhealthy <br />Almost 75% feel they are also fairly expensive or very expensive <br />Over 75% spend $5.00 or more on lunch on average<br />High level of concern for furthering social causes (60%) and minimizing environmental impact (80%) through their purchases<br />Most feel that current restaurant options in Laramie are unsustainable (75%) as well as café options (61%) <br />When asked if they would patronize a new café focused on sustainability at comparable price points, 88% said yes. <br />Of those that had eaten crêpes before (85%), 94% of respondents liked them fairly well or very much. <br />
Target Market & Advertising<br />Students and professors<br />Primarily from UW (location)<br />Consumers looking for “green” and socially-responsible places to do business with<br />Avoid fliers and postal mailers (unsustainable) <br />Focus on electronic marketing <br />Opinion polls, surveys<br />Local news outlets<br />Newspaper, radio<br />On-street signage<br />Samples<br />
Organization<br />Sole proprietorship, <br />low cost of setting up and maintaining the business <br />lack of a suitable partner at present <br />Entrepreneur will assume all management roles <br />Spent several months in France eating at crêperies and learning recipes <br />Undergraduate work in International Business<br />Graduate work in Sustainable Business Practices<br />
Pricing<br />Penetration pricing strategy <br />preempt competition and gain market <br />Crêpes competitive with other fast food alternatives ($1.00-$2.00) <br />Coffee and tea prices are also comparable to local café prices ($1.50-$4.50) <br />Most survey respondents pay more than $5.00 for lunch (76%), so it is expected that customers will be willing to pay $1.00-$2.00 per crêpe for a meal<br />
Internal Operating Schedule<br />Estimated the number of units (crêpes) the crêperie would produce<br />Competitors’ data<br />Production and sales (in units) estimated to be the same (made-to-order)<br />Cost of producing crêpes ~$0.34<br />Cost of one cup liquid coffee ~$0.13<br />Cost of one cup liquid tea ~$0.11<br />Labor: $8/hr x 2 employees x 8 hrs/day x 20 days/mo<br />increases<br />
Income Statement<br />$1.50 avg sale price multiplied by estimated unit sales<br />Estimated marketing expenses ($1500) and administrative expenses ($1200)<br />Both rise with opening of new venue (2012)<br />Rent estimated at $800/month<br />Doubles with opening of new venue<br />Depreciation low ($120), small amount of equipment<br />Doubles with opening of new venue<br />Interest from family loan ($10,000) @ 5%<br />Small net profit every year from 2010-2014<br />Profit doubles from 2010-2014<br />
Balance Sheet<br />Cash: $5000 personal assets, $10,000 family loan, net profit<br />No sales made on credit = no receivables<br />Inventories = COGS – labor (made-to-order)<br />Equipment estimated at $6000<br />Building’s rented, no other long-term capital<br />Payables calculated as 50% of inventories<br />No accrued wages<br />No expected bank loan<br />Credit cards, short-term loans estimated at $6000<br />
Statement of Cash Flows<br />Net cash flows from operations negative until April of first year, then gradually rise until new venue opens<br />By 2014, cash flows are back up to $5030.25<br />CF from investment = $6000 until opening of new venue<br />CF from financing = credit cards/short-term loans<br />
Cash Budget<br />All figures taken from previous worksheets<br />The crêperie is building cash during every time period besides the first year<br />
Financial Ratios<br />Current ratio is greater than one, indicating that if all current assets could be converted into cash, they would be adequate to pay all current liabilities. <br />Quick ratio is greater than one, indicating that the venture’s liquid assets are adequate to pay off its current liabilities.<br />A gross profit margin of 36% indicates that 64% of sales is spent to cover the costs of production. <br />Crêperie will earn about 11% operating profit margin on its sales after covering production and other operating costs. As long as the venture can also cover interest and taxes, it will experience a net profit.<br />
Survival Breakeven Analysis<br />In 2010, the crêperie will need at least $34,934.45 to cover both its variable costs of producing crêpes and its cash fixed costs <br />At a $1.00 selling price per crêpe, the crêperie will need to produce and sell 34,935 crêpes to produce a zero EBDAT <br />The projected unit sales for 2010 are 49,500<br />
Sensitivity Analysis<br />Best case scenario: <br />Third venue within first 5 years<br />Reinvest in products/services<br />Pay back debts quicker<br />Worst case scenario: <br />Inventories reflect sales, so COGS will decrease as sales decrease<br />Second venue will not open<br />Expand operating hours, products, and/or services<br />Fairly easy liquidation<br />Inventory & equipment minimal<br />
Exit Strategy<br />Continued growth into profitable franchise<br />Incorporation<br />Sold as a small, local venue<br />
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