BSBMGT617 development and implement a business plan

Available/required resources

Performance measures and/or benchmarks

Benchmarking is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies. Dimensions typically measured are quality, time and cost.

• Calder dry cleaner

All of our service will be done onsite. Route orders will be delivered at customers’ homes and businesses.

The Dry Cleaning and Laundry business provides a service which is in demand at all times

Our philosophy is to offer neither discount prices nor high prices.

The product transaction will be handled by credit cards, cash and checks. We will have sales people for the route and they will earn a percentage for each new customer they add. We will survey our customers by asking them how they heard about our business. This way helps us improve and develop our sales strategy.

• 1845 Steakhouse

The 1845 Steakhouse's average customer will be a middle to upper middle class man or woman living in the Company's targeted market. Common traits among clients will include:

• Annual household income exceeding $40,000
• Lives or works no more than 20 miles from 1845 Steakhouse
• Will spend $25 to $35 per visit (per person)

There are approximately 1 million people living within Erie County. Among these people, median family income is $48,522. Given the very high population density of the area, 1845 Steakhouse should be able to remain profitable in most economic climates.

Assessment Task 2: Develop a Business Plan (G3 Café in Hobart)

1. Executive summary

Australia’s reputation for world class dining is well known. The G3 café is determined to become a daily necessity for local coffee addicts, a place to dream of as you try to escape the daily stresses of life and just a comfortable place to meet friends or to read a book, all in one. With the growing demand for high-quality gourmet coffee and great service in Hobart, the café will capitalize on its proximity to the University of Tasmania campus to build a core group of repeat customers. The G3 café will offer its customers the best prepared coffee in the area that will be complimented with pastries, as well as free books that its patrons can read to enjoy their visit.

2. Business Overview

Management structure

Xiaoting, Mila and Qiushi are experienced Café owners/managers having successfully operated restaurants and cafes in China and Australia. Mila has previously worked for the Sofitel groups. Qiushi has a degree in Accounting and Xiaoting, with degrees in design and business has worked for the Hilton group of companies.

Xiaoting and Mila will work full-time in the business as two team leaders to maintain the continuity of relationships with customers during the transition, and will employ an additional four staff. Two of those staff will work on a part-time basis. Qiushi will work as the accounting manager and take care of all the financial work.

Legal considerations

The preparation and service of food and drink comes with significant responsibilities and cannot be taken lightly. The potential for loss of the café business and more tragically the loss of life is very real for operators who do not comply with health and safety regulations that apply to the food industry.

Food safety legislation is designed to safeguard community health, increase community confidence and awareness of food safety and ensure Tasmania meets national standards.

The following legislation applies to all food business in Tasmania:

• The Food Act 2001
• Food Regulations 2002
• Food Safety Standards.

The three food safety standards used Australia wide set down the rules of how food must be handled and how premises and equipment must be appropriate for maintaining food safety.

These are:

• Standard 3.1.1 Interpretation and Application
• Standard 3.2.2 Food Safety Practices and General Requirements
• Standard 3.2.3 Premises and Equipment.

Building legislation should also be considered as there is renovation.

• National Construction Code 2016
• Building Act 2016

SWOT analysis

3. Business Concept

Core concept

The main mission G3 Café sets itself is to provide cheaper versions of fine coffee and a wider range of food served in a unique and conducive environment near the Campus of the University of Tasmania in Sandy Bay where clients can relax and socialize with each other. G3 aims to ensure that its customers have a comfortable place where they can enjoy the quality coffee served in the friendliest way to help relieve their daily stress.

Goals and objectives

The firm’s goals in the initial year of operations are:

1. Maintain a 60% gross margin,
2. Break-even in the fifth month of operation
3. Become selected as the "Best New Coffee Bar in the area" by the local restaurant guide.

Products and Service

1. Food

A large variety of healthy and light meals are the key point of differentiation for the business because the Café has the capabilities and flexibility to develop new menu lines to meet the changing needs and tastes of customers.

2. Coffee

The G3 café will offer coffee with excellent ‘value for money’ in order to fill the price points between the high and low ends of the other coffee and café businesses in Hobart.

3. Services

The G3 café will provide the relaxed and friendly environment that our customers seek when searching for fine coffee, ‘dine in’ meals, beverages and cakes and desserts that offers excellent value for money. The G3 café will extend the working hours to 20:00 or even later to meet the demand of the university students.

License

We’ll first start by listing possibly needed licences, which could have already been provided if we purchased an existing business.

• Business License
• Employer Identification Number
• Certificate of Occupancy
• Food Service License
• Sign Permit
• Resale Permit
• Building Health Permit
• Employee Health Permit
• Seller’s Permit

USP

In general, the USP of the G3 cafe is ‘cheaper, fresher, and with more varieties of food which is cooked under our strict supervision’ and provide unique friendly services in a relaxing and spacious environment.

4. Environmental Scan

Industry environment and trends

Increasingly Australians are eating more meals out of the home. Work and lifestyle pressures often do not allow sufficient time for more and more people to prepare their own cuisine. They therefore rely on the nation’s cafe’s, take-aways and restaurants to help cater for their dietary needs. The biggest winner in this emerging trend is the casual / cafe market.

The figures below are from the Restaurant and Catering Australia 2015 Industry Benchmarking Report:

• Average turnover of small businesses is $1 million
• The national average floor space per business is 361m2
• On average 40.7% of turnover is wages, salaries and associated payroll costs (staff training adds a further 1.5%)
• On average food cost of sales was 34.9%
• On average 13.4% of turnover is spent on rent, rates and taxes.

Competitor analysis

The Competitor Matrix below shows the G3 Café in comparison to its competitors:

Table 2. The Competitor Matrix

5. Marketing Strategy

Market size and trends

Coffee consumption in Australia has shown steady growth, with gourmet coffee having the strongest growth. Coffee drinkers in Hobart are among the most demanding ones due to the typical Tassie lifestyle and population growth in recent years in Hobart. They favor well-brewed gourmet coffee drinks and demand great service. Hobart, OR, with its liberal and outgoing populace and long cold winter, has traditionally been a great place for coffee establishments.

G3 will strive to build a loyal customer base by offering a great tasting coffee in a relaxing environment of its coffee bar located close to the bustling University of Tasmania campus and Sandy Bay Road.

Customer profiles and target markets

There is substantial population growth in Sandy Bay as residential development continues and commercial development commences. The master planned community attracts a high socio-economic demographic with high employment and higher than average per capita income.

The G3 café customers are the passing shoppers of all ages who enjoy a fine coffee (dine-in, or take away) and a healthy, value-for-money meal. The majority of the general public in the area are elderly people, families, oversea students. The cafe will make it particularly easy for youngsters to enjoy a meal by providing a range of fast and healthy food. Our take away beverages will also appeal to this group and the segments made up largely of singles between the ages of 18 – 40 who shop, study or live within the Sandy Bay precinct.

The majority of customers who purchase coffee from the G3 café are ‘social drinkers’, followed by customers who want their daily fix or a pick me up. They are wanting a convenient, friendly and relaxing environment to ‘recharge their batteries’ or socialise over a fine coffee, choice of beverages and quality fresh, light and healthy meals that provide an alternative to fast food options. The market need being satisfied is based on convenience, quality and value for the coffee drinkers as well the health conscious consumer who is concerned about what they eat.

Storage and transport of goods

All stock at this stage will be stored ‘on site’ at the café. Fresh produce such as vegetables are purchased in vacuum sealed bags or cartons and meat in vacuum sealed packs. These will be stored in a small commercial refrigerator. Other items such as coffee beans, canned and packaged products will be kept in the storage cupboards. Other perishables including cakes and cheese cakes will be kept in refrigerated display cabinets and will be stored for a maximum of three days. On average, we expect to turn stock over once per week. Stock will be controlled using our stock control system, which is a module of the accounting software package.

Pricing policy

We propose to offer high quality food and service at a price comparative to our major competitors – we will meet the market on price to retain market share if we need to. Our clientele (oversea students and local residents in Sandy Bay) have a medium to high disposable income and seek high quality products and good service, pricing will reflect the value of our products and services.

Packaging

Packaging will mainly used for takeaway food and drinks. We will use paper-based packaging and wood folks to enhance the sense of healthy food and minimize the environmental impacts of plastic packaging.

Sales promotions and sales strategy

According to the research, prices have not been discounted in the market. There is no intention to discount to buy market share and we intend to increase our market through product and services.

Advertising strategy

Our regular advertising will consist of shopfront A-frame advertising boards, weekly newspaper advertising. As most of our business will be passing trade, shop front signage will be bright and appealing. We will develop and offer a loyalty card scheme to increase repeat business. Word of mouth advertising is very important and the best advertising we will be providing is the quality of our products and service.

Public relations

A strong public relations/publicity program uses as its primary "hook" these three main points:

1. G3 café is Hobart’s first true gourmet coffee house
2. A wider range of food variety for all ages
3. Our unique great-value products
4. Our distinctive latte "art"

The goal of the PR/publicity is to achieve local market awareness and establish the brand on a wider scale to set the stage for future expansion. Local market awareness is vital because more than 50% of sales will come from people living within a 5-mile radius of the store.

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.

6. Financial Forecasts

Start‐up costs

Table 3. Start-up cost

Sales forecast

Our sales analysis has revealed that we can expect on average 5,000 transactions per month with a general mix of customers buying only coffee, usually ‘take away’ and those ‘dining in’ buying a light meal and coffee. Our sales forecast is based on an average industry selling price of $3.50 per cup for coffee and average light meal selling price of $14.00. We expect that the mix of coffee to meals will be approximately 1.5:1 and have based this on the cafés current figures. On this basis we have projected sales of $536,650 for the first year and $580,000 for the second year.

Sales will spike in the build-up to Christmas and at times of seasonal celebration e.g. Mother’s and Father’s days, Easter etc. there will be a decrease in sales during university holidays and an increase in the period of local festivals.

Cash flow forecast

The Cash Flow Forecast projects a very healthy cash surplus on trading for each month with the end-of-year ‘cash from operations’ calculated at $105,847 and an ending cash balance of $145,657. Qiushi needs to negotiate very favourable credit terms of 30 days from all suppliers for the first 12 months. If all suppliers reduced their terms to 7 days cash flow for two trading months, the peak cash shortfall would be approximately $1,200 for about 2 months. The three owners have significant liquid assets to call upon should this eventuate. On the figures provided and the arrangements negotiated, the business has a strong and positive cash flow.

Figure 1. Projected cash flow by quarter

Balance sheet forecast

Table 4. Projected opening balance sheet and year-end balance sheet

7. Break-Even Analysis

The Break-Even point has been calculated at 4138 transactions at an average selling price of $7.46. This equates to a contribution margin of $6.38 per transaction and a Break-even sales point of $30,869 per month. The projected level of sales for each month is well above the Break-even level (approximately 30% above).

Figure 2. Break-even chart.

8. Performance and Controls

Performance measures

We can use a list of KPIs use to measure the performance and control the operation of the G3. When we know what the numbers are (and what they really mean) we can use them to make decisions when it matters, rather than leaving it until it’s too late. These indicators are:

• weekly break-even turnover
• the number of covers you need each week to reach minimum turnover
• the average amount each customer spends
• target gross profit margin
• wages as a percentage of your turnover
• Social mediagoals such as number of engagements with a post
• Average review scoreson sites such as Googlemap, Tripadvisor, Zomato and Yelp

Quality objectives

From the quality perspective, we need to maintain continuity of customer relationships during the changeover by:

• retaining two key highly experienced staff members
• providing constant quality of food and drinks.
• maintain the existing price levels

Quality measures and performance evaluation

1. Kitchen

The kitchen is the main place where we can reduce costs and increase throughput. Keeping close tabs on what’s going into and out of the kitchen will allow us to laser focus on ways to reduce waste and costs. We can evaluate their performance through:

• Cost of goods sold
• Menu item profit and popularity
• Production time per dish
• the amount of wasted ingredients
• Food wasted per food purchased
• Food and beverage sales per guest

1. Front of house and staff

The customers are the most important part of G3. Ability to keep staff costs in check and staff turnover low will impact service levels. We can evaluate their performance through:

• RevPASH: Revenue per available seat per hour
• Total labor cost percentage
• Wage cost percentage
• Total labor hours
• Average hourly pay
• Staff turnover

Assessment Task 3: Develop an Implementation Plan (G3 Café in Hobart)

1. Business goals and objectives

The firm’s goals in the initial year of operations are:

1. a) Maintain a 60% gross margin,
2. b) Break-even in the fifth month of operation
3. c) Become selected as the "Best New Coffee Bar in the area" by the local restaurant guide.

2. Tasks and priorities

a) Employee training and retention

We should make the employee training and retention the top priority. After all, if we don't have an awesome staff, we won't have a business for very long . The employees are the eyes and ears and front-line soldiers in the war on failure. They'll be the hands, an extension of us and our vision for G3.

1. Inventory Counts

Traditional methods were time-consuming and tedious. Employees were bored or stressed, and there were always mistakes somewhere. Solve the tedium by switching to real-time inventory monitoring. When a menu item is ordered, and the chefs begin preparing the inventory app updates. If we run low on something, we get an immediate alert so we can order on the spot. Inventory apps can also track spoilage and help stop thieves.

1. Food safety

Everyone knows they should wash their hands and never cross-contaminate in the kitchen. But there are so many other food safety laws that need to be followed, it's inevitable that some will be forgotten. That kind of forgetfulness can be disastrous to owners and the establishment's reputation. Avoid those food safety fines by using a food safety app that can monitor temperatures, send reminders to check foods, and provide alerts for critical issues before they become costly ones.

3. Delegation of tasks/responsibilities

4. Deadlines/Time allocation

Table 1. Time allocation of activities

5. Required resources

Training is an essential part of the implementation plan. We need to give employees tasks that help them to grow and develop, and offer training that will enable them to do it well. Taking the time to train full-time staff and part-time staff will pay off in the long run. The cost of training is:

Table 2. External or internal on-the-job training courses

6. Internal communications

ICT systems include the computerised EFTPOS system, linked to the accounting system. The EFTPOS system will process Direct Debit, Credit Card, and Cash transactions directly to the bank and the accounting system. The accounting system will process the payroll, stock control, general ledger transactions and maintain the Human Resource records. These systems effectively reduce manual accounting and processing to a minimum. They provide real time reports, thus enhancing productivity and management decision making.

7. Strategies to manage performance issues and problems

Performance management involves the following tasks:

• Setting objectives for employees (kitchen handlers, baristers, front end and etc.)
• Analysing and rating employee performance using key performance indicators
• Providing feedback based on previous discussions
• Offering employee development opportunities
• Linking pay and rewards to employee performance

Accordingly, strategies to performance management include:

• Understand what we expect from them means they’re more able to define what they expect from Our employees.
• Emphasize the importance of regular review sessions to your managers.
• Note how regular reviews help managers to keep track of short-term objectives. 
• Discuss how having a running record of reviews makes it easier to reward employees.
• Develop performance reviews that highlight key discussion topics. 
• Keep the focus on positive actions, even when dealing with the negatives
• Always review and analyse the performance reviews

8. Strategies to mitigate risks and manage contingencies

1. Share offer does not raise sufficient funds

If the funds are between $250,000-350,000 then the business plan will be revised, based on smaller premises. However, if the Board deems that there are no realistic options for the development of a sustainable G3 Cafe they reserve the right under the rules to return funds to investors and cease development of the concept.

1. Premises rent more expensive than expected

We seek a smaller venue that will not require such an excessive rent premium.We have had professional advice on property options and our budget is based upon the middle of the scenarios we explored. We believe that the budgeted costs are realistic.

1. Food and drink sales do not reach our targets

Food and drink is not the only income source but it is critical that we achieve our targets. We are confident that our projections are realistic and we have based the budget upon the middle of the scenarios we explored. Our fund raising target will ensure that the enterprise has sufficient capital to drive marketing effort. We will monitor sales and financial performance weekly and address any variance quickly with the marketing budget available. The use of volunteers reduces our exposure to wage cost. Operational management will be professional with high focus on cost control and quality. Staff will be trained and experienced in managing parameters such as wastage, portion control.

1. Threat of competition from local cafe operators

We are unique and realise that customers will have options for food and drink in our location. We will seek to build customer loyalty through a great product offer alongside our social mission. For a lot of customers, the balance between these will be key to success and we will continuously research customer perceptions and experience as we look to develop income streams in Years 1 and 2.

9. Strategies to monitor and develop the plan on an on‐going basis

It is important to develop a Monitor and Evaluation plan before beginning any monitoring activities. The first step to creating an M&E plan is to identify the goals and objectives. Once the goals and objectives are defined, it is time to define key performance indicators for tracking progress towards achieving those goals as mentioned above.

After creating monitoring indicators, it is time to decide on methods for gathering data and how often various data will be recorded to track indicators. The source of monitoring data depends largely on what each indicator is trying to measure. The next element of is a section on roles and responsibilities. It is important to decide from the early planning stages who is responsible for collecting the data for each indicator.

Once all of the data have been collected, someone will need to compile and analyze it to fill in a results table for internal review and external reporting. This is likely to be an in-house manager or research assistant for the plan. Plan should be redeveloped or improved according to the on-going data analysis.