BusinessPlan: Tony’s Teahouse
Tony’sTea House is a private company business owned by two investors eachcontributing 51% and 49% of the initial capital required for startingthe business. The business is a sit-down tea and coffee house thathas taken the Asian culture and traditions in developing an ambientenvironment where people can meet and talk over a cup of tea andcoffee. The business serves fresh tea and coffee together with otherbeverages and accompaniments with multidimensional cultural approachspecifically inclined to the Asian cultures. The business introducesa rare trend of an emerging tea and coffee culture in the modernworld, a trend gaining popularity among the young people especiallycollege students and the young working class age groups. The businessaim is to provide an alternative way of socializing while enjoyingAsian delicacies in a good environment.
Tony’sTea House provides an opportunity to set up a unique business in anuntapped area where the nearest tea and coffee shop is more than 5miles away. The business strength will be based on fresh productsserved in a unique relaxed environment linking to different Asianculture and customs. This shields the business from immediatecompetition from existing fast foods businesses. The business alsoprovides employment opportunity to the youth in the locality as wellas a market for suppliers of fresh coffee and tea. An experiencedmanagement team in the fast food industry and Asian cousins backs thebusiness. The concept of the business is sustainable and has minimalrisks despite the high competition in the industry. A marketing andfinancial plan will help to illustrate the business opportunities andsuccess factors for the restaurant.
Executive Summary 2
1.0 The Business Concept 6
1.1 Mission statement 6
1.2 Goals and Objectives 7
1.2.1 Objectives 7
1.2.3 Goals 7
2.0 Management Team 7
2.1 Management Team SWOT Analysis 8
2.1.1 Strengths 8
2.1.2 Weaknesses 8
2.1.3 Opportunities 9
2.1.4 Threats 9
3.0 Environmental Position 9
4.0 Industry Analysis 10
4.1 Industry Description 10
4.1.1 Industry competitive structure 10
4.2 Environment analysis 11
4.2.1 Porters Five Competitive Forces Analysis 11
4.2.2 PESTLE Analysis 12
4.3 Micro Environment Analysis 13
4.3.1 Geographical area of the business 13
4.3.2 Type of competition and relative size 14
5.0 Market Analysis 15
5.1 Macro Market (national level) 15
5.1.1 Target Market 15
5.2 Micro Market Analysis 16
5.2.1 Potential direct customers 16
6.0 The Marketing 17
6.1 Marketing strategy (5 Ps of Marketing) 17
6.1.1 Product and Customer benefits 18
6.1.2 Place 18
6.1.3 Promotion 18
6.1.4 Price 19
6.1.5 Profit 19
6.2 Marketing Budget 19
7.0 The Product and Service Plan 19
7.1 How the benefits are better than competitors options 20
7.2 Product Features 20
7.3 Stage of Production life cycle of the products 20
7.4 Unique selling proposition 20
7.5 Competitive advantage 21
7.6 Customer service plan 21
8.0 The Production / Operation Plan 22
8.1 Location 22
8.2 Operation hours 22
8.3 Daily operations schedule 22
8.3 Quality control 23
8.4 Inventory level 23
8.5 Business and Technical Advisors 23
8.6 Government regulations 23
9.0 The Financial Plan 24
9.1 Financial Summary and assumptions 24
9.2 Projected estimated costs 24
9.2.1 Sales determination breakpoint 24
9.2.2 Projected cash flow analysis 25
9.2.4 Cash flow analysis 29
9.2.5 Ratio Analysis 29
9.3 The Human Resource Plan 31
9.4 The Company Structure 31
9.5 The Legal Form 32
9.6 Risk and Reward 32
9.7 Funds required 32
Appendixes I 33
BusinessPlan Tony’s Tea House
The Business Concept
Tony’sTea House is a small sized business enterprise to be established inNorth America. The business is a fast food restaurant with aspecialty in serving tea and coffee as the main beverages and manylight foods as snacks as accompaniments. The business is a startupbusiness that will be developed from a new idea to satisfy anexisting market in the local area. Tony’s Teahouse will beregistered as a limited company with shares owned by two investors.The business will be set up in a local urban town as a sit-down housewhere residents can enjoy a cup of tea or coffee with accompanimentin a private setting while discussing. Tony’s Teahouse will providethe local community with an opportunity to access a tea and coffeedrinking culture especially students and the working class of thelocal town. There is a market need for such an establishment tosatisfy specifically the increasing population of the Asian communityin the area (Leibtag, Nakamura, Nakamura, & Zerom, 2007). Theculture of taking tea and coffee with a snack in a relaxed andcomfortable atmosphere is a growing trend among the young generationas well as the older people (Wang, 2011). Many people prefer todiscuss and meet over a cup of coffee at different times of the day.Many other cultures are borrowing from the Asian culture regardinghow tea and coffee houses are set up and how the menus are preparedand presented.
Providea high quality and wide variety of tea beverages at an affordableprice to meet the market demand of the middle and high-incomeresidents, while providing a comfortable, relaxing atmosphere.
Thebusiness intends to present different varieties of tea and coffeebeverages accompanied with light foods. The focus will be to borrowfrom the Asian culture on how the environment will be set up to beambient and relaxing to the customers. This will favor clients tohave meetings and discussions over a cup of tea or coffee in anenvironment they can associate with culturally. Once the trend isestablished, other restaurants with similar concepts will also beopened in other small towns within the area to increase access andcustomer base.
Goals and Objectives Objectives
To operate a profitable tea and coffee house in a strategic location in the neighborhood
To provide the best services to customers by training employee to provide the best
To obtain a minimum of 100 daily regular customers from the local market in the first quarter of operation
To increase the business employees number gradually as demand increases
To implement customers recommendations and comments to increase quality in production and service delivery
To establish strong ties with suppliers and stakeholders in the market to ensure continuity
To develop and implement a marketing strategy that is based on increasing customer loyalty
To ensure continuous growth in sales and revenue for the business in every quarter
To create a comfortable environment for meetings while taking tea and coffee for customers
Establish a conducive environment to suit different customers’ needs
Ensure privacy and convenience for our customers
Provide high-quality flight foods as accompaniments to the beverages served
To expand and open other branches in different parts of the state
Twopeople will own Tony`s tea house company. The main partner who willalso be directly involved in setting up the business and runningdaily operations will contribute 51% of the needed investment. Theother partner will own 49% of the shares and will only be aninvesting partner. The owner has a good background in food andbeverage and hotel management from India and has a good experience ofAsian cousins and lifestyles. This experience will be useful in thebusiness as it will help in developing new concepts and new productsfor customers in the area.
Thebusiness will, however, employ a team of workers to be led by amanager. The manager to be employed will have to be from within thelocality but from an Asian background. This will enable knowledge tobe transferred to other employees from different backgrounds. Theowners of the business will be the CEO of the company, and the mainresponsibility will be to guide the company into profitability, thisincludes setting the business goals and objectives. The manager, onthe other hand, shall directly control the daily operations of thebusiness, managing orders to suppliers and ensuring productionmaintains the required quality. The CEO will be entitled a salary ofUS $12,850 per year while the business manager will earn US $11,974per year.
ManagementTeam SWOT Analysis
Prior experience in food and beverage and hotel management that can be applied to the same business to ensure profitability
Able to finance the business from their resources which will ensure financial stability of the business
Ability to develop unique products to make the business competitive through product differentiation
Direct interest in business and stronger relationship with other stakeholders in the business
High initial capital investment which may require financial assistance from banks
No previous experience in operating a similar business in the region
The new experience will provide an opportunity for learning and improving over time
Development of new products and food combinations and beverage blends
Favorable cultural shift in the business for the team to experiment with
Over liability on change in product ideas and service delivery
Changing economic conditions in the environment
Prior working experience in the industry
Ability to contribute significant initial startup capital
Product development and innovation
Direct interest in the business
Strong relationship with stakeholders
High initial capital
Low awareness of the business to customers in the region
Learning and improvement in service delivery
Favorable cultural shift in the society
High reliance on product differentiation
Economic dynamics directly affecting customers
Tony’steahouse operations are environmentally responsive as the businessemissions to the environment are minimal. The concept is based on aneco-friendly friendly business plan where the restaurant will useenvironmental friendly items in construction and decoration. Thisincludes using flowers from local flower suppliers, planting treesaround the restaurant, disposing of waste material such as plasticsand food responsibly. Fraser, Edwards, Cade and Clarke (2010) opinethat an eco-friendly environment can contribute significantly to thesuccess of a restaurant especially where people will spend time atthe restaurant. The business will also ensure minimum wastes willintroduce water recycling to reuse wastewater in other areas. Wastefood will also be packed to be disposed of the nearest farms asmanure. A green ecology will help the business brand to attractenvironmental conscious clientele especially
Thebusiness will provide employment to local youths and promotesuppliers and other service providing business, which will have apositive socio-economic impact on the immediate community in thearea. The business will promote socialization within the community asdifferent people will have a chance to enjoy the hospitality of theAsian culture and get to enjoy tea and coffee the Asian way. Hence,this will promote social structure of the area.
Byidentifying the business micro and macro trends in the industry,there is a likelihood of identifying relative success of the conceptof special tea and coffee house establishment (Samnani, 2014). Thus,the industry analysis provides an overview of the Tea House industryacross the US and specifically in the State of Nevada. The approachfocuses on both macro and micro factors that shape the industry.
Teabusiness falls under the nonalcoholic beverages and fast-foodrestaurants industry. Teahouse and coffee restaurants establishmentsprovide a relaxed environment for customers to enjoy quality tea andcoffee drinks with accompaniments. Different cultural specs ofvarious cultures globally characterize the teahouse industry(American Botanical Council, 2014). Every race across the world hasdifferent ways in which they enjoy tea including how the beveragesare prepared and served.
Industry competitive structure
Retailbusinesses in the Teahouse business mainly operate as a large globaland regional brand run and owned by corporates. Most of the companiesthat have established across the USA serve as retail restaurantsthrough franchising. These include Starbucks coffee, Tenance, MiroTea, Caribou Coffee, Nescafe and Peet’s. The raw products used inthe Teahouse shall be sourced from countries that grow tea and coffeesuch as Indonesia, Africa, and South America. American BotanicalCouncil (2014) asserts that industry’s structure consist ofretailers, wholesalers, distributors, suppliers, and supply chainprocesses. As such, it is imperative to evaluate the competitivestructure of the industry and the main players in the market such asStarbucks and Miro Tea.
Industry phase in the production life cycle
Aproduct life cycle refers to the stage through which a productdevelops from design to obsolesce. The Teahouse business conceptstarts at the introduction stage of product life cycle. The mainreason to this includes high startup costs, small market size, lowsales, a high cost of research and development, consumer testingcosts, and product launch costs are high.
Environment analysisPorter`s Five Competitive Forces Analysisa. Supplier power
Vendorsin the Teahouse industry have weak bargaining powers. This is mainlydue to the high number of suppliers in the market, low forwardvertical integration amongst suppliers and high overall supply. Rawmaterials for Teahouse production are readily available and aredistributed by many suppliers.
b. Buyer power
Customersin the business have a high bargaining power. Customers highlyinfluence the trends that emerge in the industry. Customers have highbargaining power in the industry due to low switching costs, asignificant number of providers and high availability of substitutes.Customers can easily go to other restaurants and order similarproducts at no cost.
Thecompetition is high as the market is already saturated with many fastfood restaurants offering same experience and similar products. Theindustry largest competitors are the established large chain storeswith national, regional and global brands.
d. Threat toSubstitution
Thethreat of substitution in the products is very high. This is mainlydue to high substitute availability of the same products within thesame location. The cost of switching to alternative products is alsolow while there is a high performance to cost ratio in the industryproducts.
e. Threat to newentry
Thethreat to new entry is low in the industry. New brands andestablishments can easily set up shop in Nevada without any majorchallenge from competition or regulations. The region provides afavorable environment for any business to thrive. The availablemarket provides positive growth opportunities for new businesses.
Macroanalysis refers to the external factors that influence the businessin the region. These include political, economic, social andtechnological (Burke van Stel & Thurik, 2010).
TheUSA has maintained a strong egalitarian setup and the operationalrule of law for over two centuries. Elections are consideredopen-minded and transparent. The nation has an efficientsocio-economic and political influences over national, regional, andglobal policymaking and is the current leading superpower in theworld. The USA, however, continues to face international reproach forits controversial international strategies on the war on terror andforeign relationships that continue to increase the countriesinsecurity.
TheUnited States has the largest and technological advancements as wellas one of the most diverse economies in the world. The countrycontributes a significant portion of the world GDP. The US economygrows at an average of 3-4 percent per year and has managed tomaintain its unemployment rate below 8 percent. Despite tremendoussetbacks in the 2008 global economic crisis, the US stock market hasremained profitable and competitive globally.
Theaverage annual household income level of the USA reached $51,938 in2013, with Asians-Americans netting roughly $74,000 andAfrican-Americans netting $35,000 annually (Samnani, 2014). In thestate of Nevada where the proposed Tony’s Teahouse business is tobe set up, the state average annual household income as at 2013 was$53,105 and the unemployment rate of 9.9% in the same year. The datareflects the social restructuring of the location thus, the businessmay profit from the buying power of the middle-class.
Inthe USA, technology and innovation are the cornerstone of thecountry’s economy. The country continues to lead in producingleading technology and innovation across all sectors of the economy.The US remains a leader in technological breakthroughs such as innon-technology, biotechnology, and environmental technology. Theimpact of these technologies affects the general business environmentacross all industries in the country (Mashhadi & Rehman, 2012).As such, technology will be a main factor and aspect that will affectthe activities of the business.
Environmentalconcerns in the USA are highly taken into consideration especially inthe major developments and structures. The USA Division ofEnvironmental Protection strictly regulates how businesses and homesuse energy, manage wastes, and water. This has transformed theconcepts of establishing businesses where environmental impact isprioritized in design and operation processes.
Micro EnvironmentAnalysisGeographical area of the business
Tony’sTea House location will be in Clark County in the State of Nevada.The business shop will be within the city of Las Vegas outskirts. Thearea is dominated by a mix of rural and urban populations, many ofthem working in Las Vegas while others live a rural life influencedby the farming ranches surrounding Clark County (Clark County, 2015).
Type of competition and relative size
Thearea does not have many high-end fast food restaurants compared tothe ones in Las Vegas city. The main restaurant in Clark Countyincludes Sishi Takashi, Artisanal Foods Café’, La maison deMaggie, The Tangerine Café and Tiabi Coffee & Waffle (ClarkCounty, 2015).
Table1.1 Competitive analysis table
Brew Tea Bar
Managed by Mrs. Tamara who also owns the restaurant
Employs over 450,000 globally
Employs 75 in its 8 branches in the USA
3.4 million Worth of capital in investment in the 7 branches in Japan and 2 in the USA
2014 reported $16.4 billion with capital investment worth $80.6 billion.
Investment worth $1.5 million
Sales, Distribution, and Pricing
Direct production within the restaurants, low cost Japanese Dishes and beverages as low as $11.00
Chain stores operating 22,500 stores globally in 65 countries and 12,800 in the USA.
7 Branches in the USA
Product and service
Hakushika Junmai Ginjo is the main beverage
Coffee, Cappuccino, Tea, pastries and sandwiches
Tea blends, boba drinks, savory crepes, mango slush and light meals
Scaled assessment of product/ services
Good Japanese environment set up, excellent product quality and service delivery
Focused on fast food service and no specific cuisine
High quality with a Mexican and Native Indian American cuisine approach
Comparison of Tony’s Tea House Rating to competitors
3-star restaurant, with a single line cuisine
Tony’s tea has an opportunity to compete with product differentiation and environment
A similar approach to the market but has an advantage due to experience and established a customer base.
Market AnalysisMacro Market (national level)
Themain customers are residents mainly from Asian communities living inNevada and frequenting Clark County. The main reliable source ofinformation is the internet and social media platforms throughdirectly communicating with customers. This enables businesses toaccumulate information on customers favorite meals, the frequency ofvisiting, preferred visiting hours and the meals they take willprovide the business with critical information to analyze.
Thetarget market is the local population mainly Asians and otherindividuals who appreciate Asian cuisines, culture and traditions orwould like to experience the same. The Clark County has over 250,000Asian population majority living within the area the business will belocated. The main buyers of Asian Tea blends in Teahouse includestudents from local colleges, working and business class young andold in Clark County. Students and the working class prefer a naturalenvironment where they can relax and meet with others in a relaxedenvironment (Clark County, 2015). The business will target the saidmarket to create a niche and perhaps extend to other populations.
Amajority of the population highly appreciates environmentalconservation thus, they will prefer to associate with the businesstheme. Students spend at least $45 every day for mid-morning, lunchor evening tea every weekday while working class individuals spend upto $150 every day for meetings, lunch and evening tea. The retiredpopulation the veterans like to spend evenings in social gatheringssuch as Teahouse with friends to share a cup of tea or coffee and canspend 50$ daily. The market presents an opportunity to access salesof up to 82,500 cups of tea and coffee per day, and over 4.6 millionunit sells yearly.
Theyoung population in Clark County in Nevada is growing with moreyouths entering college and joining employment. The Teahouse businessis therefore expected to continue having 5% more customers every fourmonths in the first two years between 2016 and 2016, and at least 12%annual growth after 2018. With an opportunity to access 250,000Asians and many other locals in the area interested in enjoying Asianculture experience, the business has an opportunity to create itsunique customer base from its product differentiation strategy.
Micro Market AnalysisPotential direct customers
Tony’sTea House primary target customers are the Asian locals living inClark County, Nevada. College students, middle-aged working class andolder members of the surrounding community will be frequent clientsof the Teahouse. College students and middle-aged working classcouscous about the environment and nature will be the directcustomers of the business. These people like relaxed, naturalenvironment and enjoy natural food and beverages.
Currently,the only available teahouses in the area are high-class hotels andcafes specifically meant for business class and corporate classmembers of the community. Other alternatives are fast foods, whichoffer low nutrient foods crowded environments.
Tony’sTeahouse will provide an opportunity for customers focused on lowprices and the Asian culture experience. Most of the collegesstudents are aged between 18 years to 27 years, and middle-agedworking class are aged 25 years to 45 years other older age membersof the surrounding community are aged above 50 years. Most of thecustomers are residents of Clark County. The number of young peoplejoining colleges continues to grow at 5% per year and those enteringemployment increases by 12% yearly in Clarks County (Clark County,2015). This presents the business with a possibility to grow evenafter the first three years of operations.
Themarket is still underserved especially by Teahouse business conceptsin the county. There is an opportunity for companies to exploitdifferent tastes of customers in the areas considering the populationcultural diversity. Asian culture is only one of the possibilitiesfor many others that need to be capitalized. There is enough room fornew competitors, and the market can sustain a long-term healthygrowth. Tony’s Tea House target share market is 5% in three years.The Asian community is highly underserved yet offers the biggestmarket opportunity mainly through product specialty anddifferentiation. The Asian population in the state of Nevada issteadily growing at 2.25% per year, the local community interested inaccessing, and experiencing Asian cultures is growing at 15% peryear.
Marketing strategy (5Ps of Marketing)
Marketingstrategy reflects the business marketing goals and packages them intoa single plan. His relies on detailed market research and focuses onthe right product mix to enable the company to achieve the desiredsustainable profitability. Using the 5 Ps of marketing, Tony’s TeaHouse marketing strategy will involve product, place, promotion,price and profit. This will be through helping customers access aneloquent Asian culture and cuisine in a relaxed environment. Thiswill enable customers to enjoy easily Asian blends in tea productionand coffee brewing. Through access to the internet while in theTeahouse, customers will have a chance to access the restaurant’smenu, other customer’s activities on the business website andsocial media platforms. This will enable the customers to talk moreabout the business and spread the word to others.
Product and Customer benefits
Customerswill fulfill their desire to enjoy Asian culture and access asuitable environment to have conversations and enjoy traditionallybrewed tea and coffee. The customers will also have a chance to linkto their culture and traditions without having to travel back toAsia. The business set up will enable customers to share theirtraditions culture with their friends from other cultures. Employeeswill be trained to provide the Asian experience as per theexpectations of the customers. All products will be served at theTeahouse but orders and reservations can be made in advance bytelephone or online on the business website. The business will offerretail services to its customer from its premises.
Thelocation of the firm is within access to the local Asian communityand both urban and rural populations in Nevada. The business premisewill be within the local town in Clerk County, which is frequentlyvisited by the locals throughout the day.
Tony’spromotion strategy will be comprised of the use of the internet. Thecompany website will have all the menus of dishes and cuisinesoffered. The beverages and blends made with offers and discountsbeing given every day. The website will also be linked to thebusiness social media platforms including Twitter and Facebook.Advertisements will be made in the local newspapers, popular sportsand lifestyle magazines and the local TV and Radio stations inEnglish. Tony’s Tea House will also advertise in the local Asianmagazines and newspapers in Nevada. Word of mouth will be the mostefficient mode of communication to spread the word around about thenew Teahouse in Nevada.
Thebusiness products will be affordable to every customer. Collegestudents and the young working class will be able to buy the productsat discounted prices to attract more people to the business. Theprices offered will be lower than the pricing used by competitorsespecially the franchised teahouses that are highly expensive.
Thefirm will maintain relative profitability by balancing its operationand production costs with product unit pricing. Taking into accountall the costs including taxes, the business will ensure that at least14% profit margin. This is to ensure that prices remain competitiveto increase customer base.
Tony’sTea House minimum marketing budget for the first year will be $8,575and to be grown at 14% per year. The amount will be used to pay fordesign and branding, website development and advertising in differentmedia.
The Product andService Plan
Customerswill have an opportunity to enjoy the Asian cultures in a relaxed andnatural environment cost effectively. Asians will be able to showtheir friends their culture and let them experience it in at Tony’sTea House. The restaurant will cater to the needs of different agesand cultures. Asians will also be able to enjoy their preferredbeverages that align to their customs.
How thebenefits are better than competitors options
Competitorsare focuses on Mexican and Native American cultures in the area.Currently, no restaurant in the area is specifically focused onsuperior Middle Asian cultures products. The pricing used bycompetitors is also high for local rural communities in Clerks Countyin Nevada to afford. Tony’s Tea House brings together differentpeople from a different economic background, the cultural backgroundof the same natural environment to share a common culture.
TheTea blends to be served will be produced based on different centralAsian cultures and traditions. The special Chinese teas will be whitetea, yellow tea, and pure type tea. Green tea and flavored tea willalso be served. Black tea and oolong tea specialties will also beprovided. The tea offered will be naturally processed and sourcedfrom Asia, South America, and Africa. The Coffee to be served willmainly consist of Robusta and coffee Arabica brands. Coffee will beserved as Cappuccino and Espresso. Snacks will range from sweets,pastries, burgers, rice dumplings, sandwiches and fruits.
Stage ofProduction life cycle of the products
Tony’sTea House products will be produced in the restaurants productionunit and kitchen. The new concept product life cycle will be at theintroduction stage. The new Asian beverages and snacks will at firstbe expensive to produce, and the cost of launching will be high. Themarket size will start small but to gradually grow over time.
Tony’sTea House offer a rare opportunity and experience for Asians livingin Nevada and other communities willing to taste what it feels to beAsian and enjoy tea like Asian. The business offers an opportunityfor every member of the Clerk County community to join the tea andcoffee drinking culture. This experience enables every customer tolearn new customs by embracing food and social etiquette of differentcultures. Tony’s Tea House offers a personalized style and Asianspecial touch of diet and beverage specialty that cannot be foundelsewhere in the United States.
Breakingfrom the traditional way of advertising and marketing will giveTony’s Tea House a competitive edge over its customers. Thebusiness will embrace the use of technology and create a friendlyonline platform in its website and social media presence. Enablingcustomers to access the internet while in the premise will be a plusfor Tony’s Tea House. Consumer loyalty plan where customers whomake direct references earn bonus will also encourage morereferences. Combing detail marketing through the internet with theword of direct mouth marketing will enable Tony’s Tea House accessa broad network of the Asian community and their friends in Nevada.
Tony’sTea House will customize and standardize its production processes toensure customers’ orders are processed and delivered in time. Thiswill rely on the business policies, procedures, store design, andlayout. The company will provide employees with a suitable workingenvironment where they are safe and respected. Embracing diversitywill be the core concept of the way the company will undertake itsbusiness. The company will always work towards ensuring high customersatisfaction through providing highest standards of excellence inproduction and service delivery. The Business Customer Service planwill include online reservation, friendly customer care and serviceand quality products that will be served (de Jongh et al., 2012). Thenew product will be invented regarding finding new flavors, blendsand introducing new setups in the menus, which ensures customers havea wide variety of goods to choose from every day.
The Production /Operation Plan Location
Tony’sTea House will operate from a leased premise where the restaurantshall set up the service arena, kitchen, and production area, sortingand cleaning area and storage. This will require a 700 square feetarea. The premise will be leased, and rent will be paid on a monthlybasis.
Thebusiness will be opened throughout the week including publicholidays. The premise will be opened at 6.00 am and be closed at11.30 pm. Employees will report at 5.30 am and leave work at 12.30am.
Employeeswill work in two shifts starting 5.30 am to 3.30 pm and 3.30 to 1.00a.m. The starting shift will be responsible for setting up breakfastand PR preparing mid-morning dishes and lunch dishes. They will alsobe responsible for washing all equipment’s used before they leaveat 3.30 pm. The second shift will be responsible for preparing andsetting evening dishes, dinner and late night meals. They will alsobe responsible for cleaning up after. Production teams will beresponsible for preparing the food, and the service team will servethe orders to respective customers.
Productionprocedures and kitchen operations will be defined and planned as perthe type of foods being prepared. The manager will be responsible forquality control and will be assisted by the head chef. All employeesare also responsible for cleanliness and ensuring the premise remainsclean at all times.
Freshmaterial will be ordered daily direct from suppliers for to be usedthe next day. Just in time (JIT) production method will be used toensure only items needed in production are purchased to prevent idlestocks.
Businessand Technical Advisors
Thebusiness owner also the CEO and the manager are well experienced inhandling and managing Asian set up restaurants. They will provide themost relevant guidance and leadership needed for daily operations.Financial advice will be sourced from the local banks and leadingNevada insurance firms will give insurance requirements.
Thebusiness will be registered legally with the Nevada Secretary ofState, and relevant health and safety licenses are obtained from theClerks County offices. Employment certificate will also be recordedto validate the business as an equal employer. Required health andhygiene standards and food and poison policy will be followed as perthe guidelines of the law. Employee salaries and wages will beaccording to the state`s regulations and directives on minimal wagesand compensation.
The Financial PlanFinancialSummary and assumptions
Tony`sTeahouse shall maintain a proper financial strategy for the firstfive years. The following are tabulations of the business economicdevelopment estimates for five years starting January 2017 toDecember 2021. Tony`s Tea House financials include the businessinitial capital investment of $111,220 to be shared between the twoinvestors at 50% percent contribution each. The cash flow attainedthroughout operations will be injected back to enable to businessgrow its financial status. The business will be able to break even inthe first year of operation. The financial books shall be preparedprofessionally as per the general accounting principles. The companyinventory shall be based on the First out First in (FIFI) model. Thefollowing demonstrate the estimated figures of the business firstfive years financials.
Projectedestimated costsSales determination breakpoint
Thebusiness costs per month will sum up to $237,967 and shall includeoffice expenses, salaries, manager’s salaries and other fixedcosts. The company shall sell at least $780,050 to break even. Thiswill require an average of sales worth 1,742 daily consisting of anaverage of 734 pieces of snacks, 801 cups of tea, 142 cups of coffee,36 glasses of juice daily. This shall represent 51% of the maximumdaily operation capacity of the restaurant.
Table2.0 Break Even Analysis Table
Monthly Revenue Break Even $64,837
Average Sale Per-Unit Revenue
Average Per Unit Variable Cost
Average Sale Per Unit Revenue
Estimated Monthly Fixed Costs $19,831
Projected Pro-formaIncome Statement
Thefirst year of operations will remain profitable and is expected toimprove by 8.5% in the following financial year. The following is thebusiness Pro-forma income statement for the first five years.
Table3.0 Tony’s Tea House Pro-forma Income Statement FY 2017 to 2021
Pro Forma balancesheet
Thebusiness shall grow steadily for the first five years as 8.5% toenable the investors to settle the debts. The following shows theBusiness Projected Balance Sheet for FY 2017-2021.
Table4.0 Tony’s Teahouse projected balance sheet for FY 2017-2021
Cash flow analysis
Thebusiness shall operate with sufficient cash in the cashbook to ensurea smooth running of daily operations while maintaining an activebalance sheet.
Table5.0 Tony’s Teahouse Cash Flow statement
Thecompany rations for the first five years are shown below. Themanagement team is expected to carry out the presented plan toachieve the desired goals and performance objectives. The managerswill monitor key financial performance measures to determineaccurately the direction of the business at any particular time. Thecalculations indicating the ratios are based on the projectionsindicated regarding liquidity, profitability and long-term cash flowadequacy and market specs.
Table6.0 Financial Ratios
Best of Worst Case Scenario
Table7.0 Cash Flow Best Worst case scenario
The Human Resource Plan
Thecompany owners headed by a CEO will run the business. The businesswill hire a manager to manage the daily operations. One accountant,marketing personnel, head chef, six cooks, and eight servicelaborers. Employees will undergo training every month and differentrefresher courses on quality management and customer care forpersonal and career development. Employees will also be evaluatedannually through job evaluation exercises to determine theirperformance, areas of improvement and award good performance.
TheCEO will be the role model of the organization and the controller ofhow the business implements the goals and objectives given everyyear. The manager will be responsible for ensuring the company rulesare followed, daily operations go smooth, and customer satisfactionremains high. The business communication structure will be a top-downmodel as all employees will get instructions from their superior.
TheBusiness is a private limited company to be registered on 1 August2016. The two investors who will provide business leadership andinvestment support financially will act as the main businessadvisors.
Thebiggest risk comes from the low market risks of new entrants. It iseasy for competition to enter the target location of the business,which may reduce dominance. Product differentiation, uniqueenvironment and atmosphere for tea and coffee will enable thebusiness to stand out. The business will also depend on loyalcustomers especially those from an Asian background and those with akeen interest in enjoying Asian culture and traditions.
With$169,897, the investors will manage to set up and begin operationsfor the business. The investors who are also the shareholders will berequired to contribute $84,948 each as an initial capital investmentwhile they will borrow $100,000 from the bank as an investment loan.
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InteriorSetup of Tony’s Tea House