The management skills that are required for the finance professional are based on accounting skills where the efficient use of the software is denoted. The cafe business has been one of the most profitable and feasible businesses that have been detected. There has been a bloom in the cafe culture in London, UK where the traditional culture meets the modern market that is enjoyed by all age demographics.
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The name of the cafe is "Harry's Cafe" after the owner of the cafe decided to open a cafe that sells both coffee and tea. The origin is that Harry Smith wanted to open a cafe that had the highest quality of coffee and tea where the tea culture should be celebrated in the UK. There are also the introduction of traditional tea and snacks along with the modern-day requirements but also demonstrates the importance of tea in British Culture to the newer generations.
Geographic location
The business is based in London, United Kingdom where it will operate from different parts of the world
Consumer Market
The traditional cafe or "caff" has a different place among the consumers of the UK where there is a total profit generation of £4 billion over 7470 coffee shops (bbc.com ,2023). The quality of coffee, tea and food is important but also the ambience of the shop is also a primary feature that is sought by potential consumers.
The concept of the cafe will be both coffee and tea that will be from local farmers and suppliers. The products will be organic and chemical free which supports the overall enthusiasm of the potential consumers and the increasing trend in organic produce from the locals. There will also be assorted snacks and food that will be homemade and traditional snacks that support the traditional culture.
Logistics for input and output of product
The inputs of the cafe shop are the coffee beans and the tea leaves that are supplied by the local suppliers as well as raw materials for the snacks and food. The input will also be the equipment that is required for making coffee and tea, the coffee machines, the cooking hob, the refrigerator, the microwave and display shelves (Prokopenko et al. 2020). There is also the furniture that is considered under the input along with the investment of £50000.
The output of the products is stated to be the different types of coffee and teas that are produced from the raw materials as well as the food. The coffee machine also helped in the preparation of the tea and other food items that will be served in the cafe (Mihalopoulos et al. 2020). The profits from the selling of the items in the cafe will be compared with the expenses that have been incurred. Furthermore, wages and salaries are important outputs on the basis of the services and tasks that are carried out in the cafe.
Cost
Figure 1: Cost of cafe
The above Figure consists of the cafe costs that are on the basis of the fixed costs and the variable costs that will incur during the operation of the business. This can be denoted that the variable costs have been based on the weekly consumption and the fixed costs are on the yearly basis (Lloyd and Payne, 2021). The costing is conducted on the estimation where the requirement for the total number of quantities for the ingredients that are used.
The labour that has been considered for the operation of the cafe is the chef for preparing the food, Barista for making the coffee as well as two servers. The job of the waiter is required to serve the food and complete the payment process in situations when it is necessary.
Capital breakdown( personal and bank loan)
The capital breakdown is the total number of funds that are allotted for the operational activities that are required for the cafe to function. There are two ways the funds can be derived where one is personal and the other one is the bank loan which is deemed to be profitable.
Market
The market which has been targeted for the establishment of the cafe is the local and potential consumers that are interested in traditional coffee and teas. The cafe fulfils the local or domestic requirements and preferences that are mainly for the cafe that has a good atmosphere to spend time with friends and family as well as for studying or working.
Product Type
The product type that has been denoted to be for the cafe is a new type of product that is comprised of different types of coffee and tea. There is also a new type of coffee that is prepared on the basis of the market research conducted on the potential consumers.
Competition
The competition is also required to be analyzed that are from the major coffee chains and local cafes that are already existing in the market. London is one of the biggest places to have a small and big cafe where a thorough analysis is required to under the market and determine competitive pricing for the products.
Figure 2: Competitions in the cafe industry in the UK
The above figure consists of the graph of the three major coffee chains in the UK that can help understand the level of competition in the market. The three major coffee chains are "Costa coffee", "Greggs" and "Starbucks" which are all throughout the UK (statista.com, 2023).
Statistical Data
The market opportunities and the consumer market of cafe culture that is analyzed to help understand the feasibility of the cafe shop. There is also the use of fresh, local and organic produce that goes into the food and beverages that has helped in the success of the British cafe.
Figure 3: Consumption of instant coffee and roasted coffee
The above figure contains the number of selling units of instant coffee and roast coffee in the UK that can help determine the benefits of the cafe business. This can be inferred from the cafe that there is a projection of increased consumption of roasted coffee where the cafes mostly prepare the coffee using roasted coffee beans (statista.com, 2023). There has been a significant increase in the consumption of roasted coffee in comparison to instant coffee which indicates an increase and the profitability of the cafes.
Figure 4: Consumption of tea in the UK
The above figure contains the graph that denotes the average consumption of tea by the British in a day which can help state the profitability factor. This can be seen that there is a consumption of tea 2 to 3 times per day which can detect the popularity of the beverage (statista.com, 2023). Furthermore, the second ranking is the consumption of this beverage that has been seen for 4 or more times which can support the advantages of opening a cafe business.
Figure 5: Number of cafes in the UK
The above figure contains the number of cafes and coffee shops that are already existing in the UK where the size of the market can support the opening of this business. This can be seen that the size of this market is £5,9 billion which has been estimated for the end of 2023 and there is an anticipation of a 4.5% increase in 2023 (ibisworld.com, 2023). The only thing that has been affecting the business is that it is very easy to open a cafe but the sustenance of the cafe is the primary factor that can easily be conducted with the proper allocation of funds. Therefore, the immense amount of consumption of the two major beverages of the cafe and the market size make this a feasible project.
Analysis of the Investment
a)Summary of the business plan
The summary of the business plan comprises facts and statements that can help serve as the basis of the investment in the business. This can be seen that the investment in the cafe shop is deemed to be profitable due to the growing number of traditional cafe cultures and the consumption of beverages outside the house. There is a demographic of consumers of a certain age that has embraced meeting and relaxing at the cafes due to the easy-going ambience as well as the price of the items. Cafes usually have lower prices for the food offered which makes it an attractive deal for the consumers along with the cafe owners. There is always an increased demand for cheap food with a good atmosphere that is always welcomed by all the potential consumers in the cafe.
Figure 6: Forecasted Income statement
The above figure contains the forecasted income statement that can support the investment in the cafe business where the net income is estimated to be beneficial. This can be stated that there has been a significant amount of increase that has been seen in the total revenue on a monthly basis (Arvidsson, 2019). The calculated value of the total revenue amount is £201181 and the net income is £146191 annually.
b)Return on investment
Table 2: Return on Investment calculation
The return on investment helps in the understanding of the overall return on the initial investment in the business that can ascertain the benefits. This can be stated that the calculated amount of ROI is 292% which is deemed to be a profitable gain on the initial investment. The formula for the calculation is "net income divided by the initial investment amount x100".
Investment Utilization
The investment amount will be utilized for the purchase of items like furniture and display cabinets as well as for the deposit amount on the shop. This will also be used for the purchasing of raw materials, coffee beans and teas, cutlery, and the materials that can help build the cafe. The funds will also be used for the promotion and marketing activities required for the advertising of the cafe to attract potential consumers.
Conclusion and Summary
The business plan can be concluded that this is deemed to be a beneficial start-up that can attract investment and also be profitable at the same time. There is statistical data that has shown that this is a booming business in the UK along with the popularity of coffee and teas among the British. The forecasted statement has also shown the net income on the monthly basis and the ROI value has also denoted the benefits that will be gained on the initial investment. The cafe shop is one of the booming businesses which is mostly due to the pleasant ambience to spending time along with the food which is much cheaper than the restaurants.
References
Arvidsson, S., 2019. An exposé of the challenging practice development of sustainability reporting: From the first wave to the EU Directive (2014/95/EU). Challenges in managing sustainable business: Reporting, taxation, ethics and governance, pp.3-24.
bbc.com ,(2023). Popularity of cafe culture. Available at: https://www.bbc.com/news/uk-england-london-30879406 [Accessed on 24th January, 2023]
ibisworld.com, (2023). Coffee and cafe shops in the UK. Available at: https://www.ibisworld.com/united-kingdom/market-size/cafes-coffee-shops/ [Accessed on 24th January, 2023]
Lloyd, C. and Payne, J., 2021. Hard times in latte land? Analysing pay and working time in the café industry in France, Norway and the UK. Economic and Industrial Democracy, 42(3), pp.805-827.
Mihalopoulos, C., Le, L.K.D., Chatterton, M.L., Bucholc, J., Holt-Lunstad, J., Lim, M.H. and Engel, L., 2020. The economic costs of loneliness: a review of cost-of-illness and economic evaluation studies. Social psychiatry and psychiatric epidemiology, 55, pp.823-836.
Prokopenko, O., Dikiy, A., Butenko, N., Naumenko, M., Dedilova, T. and Miroshnyk, R., 2020. Business process optimization based on logistics concepts and technologies. International Journal of Advanced Research in Engineering and Technology, 11(6).
statista.com , (2023). Competition in the UK for coffee shop. Available at: https://www.statista.com/statistics/297863/leading-coffee-shop-chains-in-the-united-kingdom-uk-store-number/ [Accessed on 24th January, 2023]
statista.com , (2023). Tea consumption in the UK. Available at: https://www.statista.com/statistics/302046/tea-usage-frequency-in-the-uk/ [Accessed on 24th January, 2023]
statista.com , (2023).Coffee consumption in the UK . Available at: https://www.statista.com/outlook/cmo/hot-drinks/coffee/united-kingdom#revenue [Accessed on 24th January, 2023]
