business plan

INDUS UNIVERSITY
DEPARTMENT
OF
BUSINESS ADMINISTRATION

ENTERPRENEURSHIP

“BUSINESS PLAN OF

Café Classic

Business Plan of CAFE CLASSIC
Page 1

This is to certify that the

ALI JIBRAN

Have successfully completed their Business plan named

“CAFE CLASSIC”

Café Classic

Mr.SYED QAMAR ALI ZAIDI
(Professor/Advisor)

Page 2

INDUS UNIVERSITY
TABLE OF CONTENTS
Executive Summary…………………………………………………………… 4
Product / Service Plan………………………………………………………. 6
Marketing Plan………………………………………………………………….. 9
Strategy & Implementation………………………………………………… 11
H.R.M Plan………………………………………………………………...........16
Financial Plan……………………………………………………………………. 17

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CAFÉ CLASSIC
EXECUTIVE SUMMARY

Name and location:
Cafe classic will launch first sheesha plus coffee house located in Defense
Phase ll. It also provides Expresso, tea, Kava, juices and Cigars. Cafe classicwill offer
residents and visitors a totally new style of sheesha and coffee house - one offering a
uniquely flavorful sheesha and coffee drink in a comfortable, upscale Arabian
environment at which to socialize, relax or work.
Introduction
Café classic will be starting a sheesha and coffee house located in Defense phase ll
Karachi. Along with sheesha and coffee different varieties of Expresso, tea, juices, Kava,
Starters would also be served. Cafe classic will expect to catch the interest of a regular
loyal customer base with its broad variety of coffee, Expresso, tea, Kava, juices, Cigar
and sheesha varieties. The company plans to build a strong market position in the town,
due to the mild competitive climate in the area.
The Cafe classic will hired staff members who prepare the coffee, Expresso, tea, juices,
Kava, Starters and sheesha varieties are highly trained and experienced. They know how
to prepare an excellent Arabian and different coffee, Expresso, tea, juices and sheesha
varieties. We use the highest quality equipment and ingredients to deliver a noticeably
superior product.
Our design style is different from all other coffeehouses and sheesha parlors, an upscale
"Arabian" look. It features stained glass decorations, art glasswork, Arabian style
furnishings and outdoor dining.
Cafe classic aims to offer its products at a competitive price to meet the demand of the
middle-to upper middle-income local market area residents.
Cafe Classic is a specialty for varieties of sheesha and beverage retailer. Cafe classic uses
a system that is new to the beverage and food service industry to provide hot and cold
beverages in a convenient and time-efficient way. Cafe classic provides its customers the
ability to drive up and order (from a trained Barista) their choice of a custom-blended
espresso drink, freshly brewed coffee, or other beverage.
Cafe classic offers its patrons the finest hot and cold beverages, specializing in specialty
coffees, blended teas, and other custom drinks. In addition, cafe classic will offer soft
drinks, fresh-baked pastries and other confections. Seasonally, cafe classic will add
beverages such as hot apple cider, hot chocolate, frozen coffees, and more.

Company Ownership
Café classic is incorporated in Defense phase ll Karachi. Its sole proprietor.

Page 4

Products and Services
Cafe classic offers a broad range of coffee, Expresso, tea, Kava, juices, Cigar and sheesha
varieties. Coffee beverages are all from high quality Columbian and Arabian grown
imported coffee beans. Cafe classiccaters to all of its customers by providing each
customer coffee and Sheesha products made to suit the customer, down to the smallest
detail.
The sheesha provides freshly prepared sheesha of different flavors products at all times
during business operations.
The Market
Cafe classicwants to establish a large regular customer base, and will therefore
concentrate its business and marketing on local residents, which will be the dominant
target market. This will establish a healthy, consistent revenue base to ensure stability of
the business. High visibility and competitive products and service are critical to capture
this segment of the market.

Financial Considerations
Cafe classic will expect to raise 15, 00000 of its own capital, and to borrow 15, 00000 by
the tameer Bank as a ten-year loan. This provides the bulk of the current financing
required.
Cafe classic anticipates sales of about 4500000 in the first year, 5500000 in the second
year, and 7000000 in the third year of the plan. Cafe classic should break even by the
fourth month of its operation as it steadily increases its sales. Profits for this time period
are expected to be approximately 805000 in year 1, 1097000 by year 2, and 1807000 by
year 3. The company does not anticipate any cash flow problems.

Page 5

Highlights:

7000000

6000000

5000000

4000000 Sales
3000000 Gross Margin
Net Profit
2000000

1000000

0
1st Year 2nd Year 3rd Year

Mission
Cafe classic aims to offer high quality coffee, Expresso, tea, Kava, juices, Cigar and
sheesha varieties at a competitive price to meet the demand of the middle- to higher-
income local market area residents
Keys to Success
Keys to success for Cafe classic will include:

1. Providing the highest quality product with personal customer service.
2. A relaxing, upscale interior Arabian design.
3. Competitive pricing.
4. Highly trained and friendly staff

Products and/or Services Plan:

Products
Cafe classic will sell high-quality specialty coffee, Expresso, tea, Kava, juices, Cigar and
sheesha varieties. Despite being an upscale coffeehouse, our prices are in line with the
leading national chains.

Page 6

The Cafe classicMenu

The Cafe classic menu sets us apart from other coffee and sheesha houses, giving us a
competitive edge.

Cafe classic offer 4 four groups of drinks - coffee, tea, Expresso, juice - with several
choices within each group. This enables us to provide more variety than our competitors
while keeping the preparation of the drinks easy to execute. We are taking advantage of
the immense popularity of flavored drinks and Chai tea by offering a product mix that
includes items the other coffeehouses don't carry as well as more familiar drinks. Cafe
classic offers several smoothie drinks. We carry the highest quality fresh juices.

Cafe classic also offers a wide variety of sheesha including flavored sheesha.

Prices have been determined after a thorough analysis of all food costs for every item in
each drink. In some cases, an average price has been calculated and applied to all similar
drinks and sheesha varieties in order to keep the menu from confusing the customer.

Sheesha Varieties

Name Prices in Rs
Mint 200
Wild berry 200
Double apple 200
Peach 200
Grape 200

Expresso Drinks

NAME Regular in Rs Large in Rs
Expresso 20 30
Cappuccino 25 35
Café Latte 30 40
Café Mocha 35 45

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Flavored Expresso Drinks

Name Regular in Rs Large in Rs
Vanilla Cappuccino 30 40
Vanilla Latte 35 45
White Chocolate Latte 35 45
The 50/50 Latte 30 40
The Raspberry Mocha Latte 32 40

Coffee Drinks

Name Regular Large
The Banana Nut Java 20 30
The Cafe Milano 22 30
Coffee of the day 15 25
De cafe 17 27

Tea

Iced Tea Rs.15 small Rs 20 medium Rs 25 large

Hot Tea Rs 17 regular

• Peppermint
• Herb Apricot
• Earl Grey Lavender
• Darjeeling (Rs 35 regular)
• Golden Flowers Herbal
• Herbal Lemon
• Tropical Green

Juices

Name Regular in Rs Large in Rs
Fresh squeezed orange juice 25 35
Old-fashioned Lemonade 15 20
Genesis Juice 30 40
Crystal Geyser Juice Squeeze 25 32

Page 8

Cigar

Name Price
Cuban 200 - 5000
Romeo & Juliet 1000 - 15000

Kava

Name Price
Kava 20
Kava ( cardmon) 25

Marketing Plan:
Market Analysis
Cafe classic will focus on meeting the demand of a regular local resident customer base,
as well as a significant level of students, travelers passing through and local business
people.
Market Segmentation
Cafe classic will focus on the middle- and upper-income markets. These market segments
consume the majority of coffee and Sheesha Varieties.
Cafe classic customer base in Defense phase ll Karachi is comprised of two target
groups.

1. Affluent local residents
2. Students

These groups are all potentially strong customer segments. The benefit of this mix of
customers is that it helps maintain consistent business throughout the year.
The other customer segments (local residents, local business and pass-through traffic)
provide a consistent foundation all year long.
Also, by appealing to several market segments, Cafe classic will not become overly
dependent on any single consumer group. For example, several local coffeehouses with
primarily student customers do poorly during the non-school months. They must also
market themselves a new each year to the incoming students. Cafe classic will avoid
these peaks and valleys in business with a mix of customers.

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Affluent locals. Within five miles of Cafe classic are of the most affluent people in
Karachi. Key influencers, trendsetters, artists, writers and celebrities have homes in
Defense Karachi.

Students. Karachi is home to a major branch of the State University as well as dozens of
other schools, including many prestigious private schools and academies. To reach
students we offer special student discount cards, pass out free coffee coupons at student
events and offer entertainment on weekends.
Students represent an excellent customer segment for several reasons:

• Students bring an energy and youth to the coffeehouse.
• By attracting students we generate excellent word-of-mouth.
• Students represent a large base of potential part-time employees.
• Often under the drinking age, students need an affordable place to hang out with their
friends.

Market Needs

Because Karachi has a cool climate for three to four months out of the year, hot coffee
products are very much in demand. During the remaining warmer seven to eight months
of the year, iced coffee products are in significantly high demand, along with a slower but
consistent demand for hot coffee products. Much of the day's activity occurs in the
morning hours before ten a.m., with a relatively steady flow for the remainder of the day.
Service Business Analysis
The retail coffee industry in the Pakistan has recently experienced growth. The cool
marine climate in Karachi for four to five months stimulates consumption of hot
beverages in these months. During the remaining warmer seven to eight months of the
year, iced coffee products are in significantly high demand, along with a slower but
consistent demand for hot coffee products. Coffee drinkers in the Karachi are finicky
about the quality of beverages offered at the numerous coffee bars across the region.
Despite of low competition in the immediate area, Café classic will position itself as a
place where customers can enjoy delicious coffee beverages with a fresh pastry, tea, juice,
soft drinks, chocolates in a relaxing environment.

Competition and Buying Patterns
Competition in the local area is somewhat sparse and does not provide nearly the level of
product quality and customer service as Café classic. Local customers are looking for a
high quality product in a relaxing atmosphere. They desire a unique, classy experience.
Leading competitors purchase and roast high quality, whole-bean coffees and, along with
Italian-style espresso beverages, cold-blended beverages, a variety of pastries and
confections, coffee-related accessories and equipment, and a line of premium teas, sell

Page 10

these items primarily through company-operated retail stores. In addition to sales through
company-operated retail stores, leading competitors sell coffee and tea products through
other channels of distribution (specialty operations).
Lifestyle factors converge to make the coffee industry strong at all times. The stimulant
effect of coffee is an important reason why many hard-working, fast-paced Pakistanis
consider a stop at their local coffeehouse a necessary part of their day. Conversely,
coffeehouses provide a calm, inviting environment for people to socialize, relax or catch
up on work.
Young people under the legal drinking age are one of the fastest-growing segments of the
coffee drinking market. Coffeehouses provide them with a much-needed place to meet
with their friends.
Entertainment on weekend nights draws a young group of enthusiastic customers. The
surge in interest in coffee drinking among young people assures a diverse, receptive,
sophisticated customer base now and in the future.
Older adults also enjoy the fact that for the relatively modest price of a cup of coffee and
snack, they can meet with their friends, relax or work. Instead of going to a bar and
paying for an alcoholic drink or a restaurant where a meal usually comes with a hefty
price tag, the coffeehouse is an intimate yet inexpensive venue.
Coffee drinking is now an all-day activity.
Once concentrated in the early morning hours or mid-afternoon, in recent years coffee
drinking has become an all-day activity. Even late at night, many coffeehouses are packed
with patrons. It's not unusual for a well located coffeehouse to exceed a daily average of
900 customers.

Strategy and Implementation

Strategy and Implementation Summary:
The Cafe classic will use a strategy of total quality - in product and service. Our promise
is in our Location, the products we sell, the people we attract and the atmosphere we
create.

Strategic Assumptions:
• People want better-tasting coffee Expresso, tea, juice, Snacks & pastries, and
sheesha varieties. Coffee drinkers and sheesha users want a more inviting
coffeehouse environment.
• Coffee drinks and sheesha users are considered an affordable luxury.
• The coffee and sheesha house industry is largely unaffected by the economy and
world events.

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• Cafe classic will offer several unique advantages over all other coffee plus
sheesha houses.

Competitive Edge
Our competitive edge, compared to the other coffee plus Sheesha houses in the greater
area includes the following.
• A significantly higher quality better tasting coffee, Expresso, tea, Kava, juices,
Cigar and sheesha varieties.
• Our location can arguably be considered the best in the market.
• An ambiance superior to all other coffeehouses in the area with upscale "Arabian"
look.
• It features stained glass decorations, art glasswork, Arabian style furnishings and
outdoor dining.
• The only coffee plus Sheesha house to provide regular weekend evening
entertainment.
• A wider variety of popular drinks than our competitors, including flavored coffee
and Expresso drink, tea, and juice. We have several drink options for people who
don't drink coffee.

Marketing Strategy
Other coffee or Sheesha houses rely almost entirely on word-of-mouth marketing to
generate business. We will engage in an ongoing aggressive marketing program that will
help us establish profitability quickly and set the stage for continual growth.
Our strategy will be to position Cafe classic as the "Lexus" of coffeehouses, offering a
high quality product and superb service in a superior environment.

Launch Marketing
Most coffeehouse chains do little or no marketing and advertising. For example,
Starbucks' philosophy is that their ubiquity in the marketplace is all they need to sustain
and grow their customer base. They spend less than 1% of gross revenues on advertising,
and when they do spend, it is usually to introduce a new product.
The retail coffee industry is a sales-oriented business with historically very little
experience in marketing and advertising. This is likely why little is done. As yet, the
major players have not been taken over by sophisticated companies, where marketing is
viewed as essential to gaining market share.
An element of our differentiation from other coffeehouse chains will be our use of
advertising and marketing to gain awareness, build customer traffic and establish a strong
brand image. We intend to create immediate customer awareness and not wait for word-
of-mouth. We will also building customer traffic immediately with an aggressive Launch
Marketing Plan.
Launch marketing will promote awareness, build immediate traffic and establish our
brand image via several methods.

• Public relations/publicity
• Direct Mail

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• Local Print and Broadcast Media
• Design & Packaging
• Community Involvement
• Sampling
• Superior Location

National awareness will help drive the expansion by generating opportunities created
by the media buzz and familiarizing people with our brand name. It will help set the
stage for future brand identification.

Local Media

• FM 107
• FM 96
• FM 91
• FM 89
• FM 106
• FM 100
• FM 101
• Spider magazines.

National Broadcast Media

• Feature programming (e.g. MTV, THE MUSIC, AAG)
• Radio stations nationwide

Trendsetters

Defense Phase ll is the home to thousands of individuals who can be important to the
successful positioning of Café classic. One mention on a TV talk program or in a
'lifestyle' magazine can (and has) launched many successful careers and businesses.

With literally hundreds of celebrities and wealthy business people as local residents,
the word-of-mouth recommendations from these people can drive significant business
to us as well as generate favorable publicity.

Celebrities in Karachi are also actively involved in the community, many supporting
several local charities. Our involvement in the community will enable us to garner
exposure for Cafe classicamong an important group of local residents.

Key individuals will be targeted with gift baskets from Cafe classic containing
samples of our products to entice them to visit Cafe classic and talk about us with
their friends.

Page 13

Design style

The interior design of Cafe classic will be unlike any other coffeehouse chain. While
there will some upscale designs, the entire modern Italian or Starbucks look. Our
upscale stylized "Arabian Look" design, featuring stained glass decorations, art
glasswork, differentiates us from all others.
Community Involvement

We will make ourselves an integral part of the local and world community. This will
generate goodwill, create opportunities to forge important contacts with key people
and live up to our company Mission Statement.

Some of these community involvement goals include:

• Take an active role in the Chamber of Commerce
• Supply complementary product to local charities for fund-raising activities
• Sponsor local sports teams
• Purchase fair trade coffee whenever possible
• Support Fair Trade, organic, sustainable farming

Portable Kiosk
Within 6 to 8 months we will create a portable Cafe classickiosk to sell and market
our products at special events and community activities. Karachi has many such
events every year. It will be an excellent way to publicize Café classic.
The kiosk will be highly visible and fun. It will also potentially be very profitable,
although it's hard to determine how profitable with any accuracy until the local
response is measured.

The Future

The number of Cafe classic locations could easily reach 7 to 10 within five years.
While the financials in this Business Plan only address the Karachi location, we can
extrapolate from the store's performance (which will be carefully monitored and
tracked) to get a general idea of the chain's projected profitability.

With ten coffeehouses the gross revenues, when fully realized, would be more than
30000000 using the third year performance figures. Even factoring in the cost of
additional staff and other resources, a 10-store chain would likely generate a
minimum of 7500000 in profits annually.

Café classic’s start-up, implementation and operation in Karachi will be the
"blueprint" for future efficient expansion. Our new Mount Hill location will
incorporate the knowledge we gain with our first store as well as new creative ideas,
and become our "flagship" operation.

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Sales Strategy
Our sales strategy will include:

• Staff salaries will be above the industry average in order to attract the best people

• We will hiring for attitude so that we will always have a friendly, enthusiastic
staff to make customers feel welcome and appreciated; constant staff training to
assure the best quality possible

• State-of-the-art sales/inventory system to

(A) Reduce customer waiting time
(B) Create efficient product ordering

• Create a mobile kiosk to take Café classic into the community at special events,
farmer's markets, art shows, etc.
• Establish coffee service at local businesses
• Sell gift cards, frequency cards, pre-paid cards, and offer discounts to key groups
• Create an ongoing sampling program
• Conduct a consistent, aggressive marketing program
• Be an active member of the community; be visible at charitable functions
• Solicit customer feedback to constantly improve and streamline our operation
• Key Strategy: an advanced and expandable point-of-sales system

Page 15

H.R.Management Plan:

Personnel Team:
The personnel plan is included in the following table. It shows the monthly salaries for
every year of all employees.
Per month salary Per month salary Per month salary
Employees No of Employees
for FY 2012 in Rs for FY 2013 in Rs for FY 2014 in Rs
Coffee Maker 1 12000 14000 15500
Expresso Maker 1 14000 16000 17000
Sheesha Maker 1 15000 16500 17500
Tea Maker 1 11000 13000 14000
Cook 1 10000 12000 13500
Juice Maker 1 10000 12000 13000
Cashier 1 8000 10000 11000
Sweepers 2 4000 each 5000 each 5000 each
Guard 1 7000 8000 8000
Waiters 2 5000 each 5500 each 6000 each
Cigar Sales 1 5000 5500 6000
Person
Total 13 110000 128000 137500

Physical” Training:
Physical” Training Smile Manners Good posture for long time Balance Talking Skill
Operation of the coffee machine

Skill Training:
Skill Training Familiar with our product Coffee culture Proper reaction Inner decoration
Never judge a person by his appearance Cooperation & Leadership.

Page 16

Financial Plan

Cafe classic will expect to raise 15, 00000 of its own capital, and to borrow 15, 00000 by
the Tameer Bank as a ten-year loan. This provides the bulk of the current financing
required.
Projected Profit and Loss:
We will expect to be profitable in the first year, with profits increasing over the next two
years, as we establish a loyal customer base.

Pro Forma Profit and loss Statement
FY 2012 FY2013 FY2014
Sales 4500000 5500000 7000000
CGS 700000 800000 1000000
Gross Margin 3800000 4700000 6000000
Expenses
Payroll 1320000 1536000 1650000
Sales & 1000000 1200000 1500000
Other Expenses
Depreciation 500000 600000 700000
Utilities 25000 27000 28000
Payroll Taxes 100000 150000 200000
Total Operating 2920000 3513000 4078000
Profit before 880000 1187000 1922000
Interest Expense 50000 60000 75000
Taxes Incurred 25000 30000 40000
Net Profit 805000 1097000 1807000

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Net Profit Yearly

2000000
1800000
1600000
1400000
1200000
1000000 FY 2012
FY 2008
2
800000
600000
400000
200000
0
FY 2008 FY 2009 FY 2010
FY 2012 FY 2013 FY 2014

Gross Margin Yearly

7000000

6000000

5000000

4000000
FY 2012
FY 2008
3000000

2000000

1000000

0
FY 2008
FY 2012 FY 2013
FY 2009 FY 2010
FY 2014

Page 18

Net Profit Monthly

120000

100000

80000

60000 FY 2012
FY 2008

40000

20000

0
DEC FEB APR JUN AUG OCT DEC

Gross Margin Monthly

700000

600000

500000

400000
FY 2012
FY 2008
300000

200000

100000

0
DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV

Projected Cash Flow

Page 19

The cash flow projection shows that provisions for ongoing expenses are adequate to
meet Cafe classicneeds as the business generates cash flow sufficient to support operations.

Pro forma Cash Flow

FY 2012 FY 2013 FY 2014
Cash Received from operations
Cash sales 4000000 5200000 6800000
Additional Cash Received
Sales Tax, VAT,
0 0 0
HST/GST
New current borrowing 0 0 0
New other Liabilities 0 0 0
New Long Term
0 0 0
Liabilities
Sales of other Current
0 0 0
Assets
Sales of long Term Assets 0 0 0
New Investment Received 0 0 0
Sub Total Cash Received 4000000 5200000 6800000
Expenditures from operations
Cash spending 3000000 3500000 5500000
Bill payments 125000 150000 225000
Sub total spent on
3125000 3650000 5725000
operations
Additional Cash Spent
Sales Tax, VAT,
0 0 0
HST/GST
Principle repayment of
0 0 0
current borrowing
Other Liabilities
Principal repayment 0 0 0
Long term liabilities
0 100000 225000
principal repayment
Purchase other Current
0 0 0
Asset
Purchase long term Assets 0 200000 200000
Dividends 0 0 0
Sub Total Cash Spent 3125000 3950000 6150000
Net Cash Flow 875000 1250000 650000
Cash Balance

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Balance Sheet
The following is a projected Balance Sheet of Café CLASSIC.

Pro Forma Balance Sheet

FY 2012 FY 2013 FY 2014
Current Assets
Cash 400000 600000 800000
Other Current
100000 200000 300000
Assets
Long Term Assets
Long Term Assets 250000 300000 350000
Accumulated
50000 60000 80000
Depreciation
Total Assets 800000 1160000 1530000
Current Liabilities
Accounts Payable 50000 60000 80000
Current Borrowing 0 0 0
Others 0 0 0
Long Term
100000 40000 0
Liabilities
Total Liabilities 150000 100000 80000
Paid in Capital 125000 125000 125000
Retained Earnings 45000 57000 63000
Earnings 32000 64000 71000
Total Capital 650000 1060000 1450000
Total Liabilities
800000 1160000 1530000
& Capital
Net Worth 650000 1060000 1450000

Long Term Asset (418000)
Under counter Refrigerator 50000
Service/prep counter 50000
Ice Machines 25000
Large Refrigerators 12000
Milk Coolers 20000
Cash Registers Point of sales system 33000
Expresso Machines 40000
Tea Makers 33000
Coffee Brewer (2) 50000
Counters/Condiments bar/Shelving 50000
Sheeshas 50000

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Short Term Asset (275000)
Tables, Chairs, Furnishings 100000
Arabian Carpets 100000
Lightings Fixtures 75000
Startup Expenses Requirements
CONSTRUCTION
Site Design, Architectural Plan 50000
Demolition/Construction 400000
Electrical, Lighting 75000
Flooring Installation 60000
Bathroom Construction 25000
Plumbing 25000
Fireplace Construction 15000
Painting 20000
City Permits/license/Fees 50000
LEGAL
Accounting 15000
Legal 20000
Insurance 15000
MARKETING
Opening Marketing/Advertising 100000
Graphic design/signage menu board 25000
Frequency card, Brochures 15000
OFFICE
Office Equipment 50000
Computer, Scanner, Printer 100000
Telephone, Fax, Stationary 25000
APPLIANCES
Preparation Equipment 15000
Dishwasher 10000
Blenders 10000
Microwaves 15000
Panini Makers 10000
Storage racks 12000
Music System 100000
Food Display case 25000
Menu board construction 15000
Cups/lids 150000
TOTAL STARTUP EXPENSE 1807000
STARTUP ASSET
Cash required 1000000
Other current asset 275000
Long term asset 418000
TOTAL ASSETS 1693000
TOTAL REQUIRMENTS 3500000

Page 22

Café Classic

THE END

Page 23

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