A Business Plan

presented to:

MS. LOREEN GUERRERO

(Instructor in Franchising)

By:

Ambrocio C. Capinding Jr.

Fritzie D. Mina
Evelyn Angeles

BSE 4th Year

-MAY 2023-
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 TABLE OF CONTENTS

Page

Table of Contents

I. Abstract-------------------------------------------------------------------------------------------------------------2

II. Business Summary----------------------------------------------------------------------------------------------3

III. Franchise Overview ------------------------------------------------------------------------------------------ 4

 Legal Form of Ownership
 Mission Statement
 Vision Statement
 Goals and Objectives
 Business Philosophy
 Industry
 Strengths and Core Competencies

VI. Marketing Plan------------------------------------------------------------------------------------------------ 5

 Product
 SWOT Analysis
 Features and Benefits
 Customers
 Competition
 Promotion
 Pricing
 Sales Strategy
 Location and Facilities
 Distribution Channel

V. Operational Plan------------------------------------------------------------------------------------------------ 8
 Production
 Location
 Personnel

VI. Management and Organization---------------------------------------------------------------------------- 9

 Organizational Structure
 Management Team
 Management Team Gaps
 Personnel Plan

VII. Financial Plan-------------------------------------------------------------------------------------------------10

 Financial Plan
 Important Assumptions
 Projected Profit and Loss
 Projected Cash Flow

Startup Expenses and Capitalization

 Start-Up Costs
 Source and Use of Funds
Personal Financial Statement
 Projected Balance Sheet

Budget Plan

VIII. Refining the Plan--------------------------------------------------------------------------------------------17

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 I. ABSTRACT

ARA Café is one of the newly business café here in our town, this business is a franchise business
own and partnership by a young Entrepreneur a students of CATMAN Inc. The business
established because the owner loves coffee. This is a labor intensive business that will provide also
a healthy and fresh cuisine to the public as well as a lounging area to relax in between classes and
a place for the students to socialized and express their creativity through music, art, and poetry all
in one. ARA Café will capitalize on its proximity to near schools to build a core group of repeat
customers

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 II. BUSINESS SUMMARY

An example company-“ARA Café” bar is determined to become a daily necessity for local coffee addicts,
a place to dream of as you try to escape the daily stress of life and just a comfortable place to meet your
friends. This is a labor intensive business that will provide also a healthy and fresh cuisine to the public as
well as a lounging area to relax in between classes and a place for the students to socialized and express
their creativity through music, art, and poetry all in one. With the growing demand for high-quality gourmet
coffee and great service, ARA Café will capitalize on its proximity to near schools to build a core group of
repeat customers. This company offers the best prepared coffee in the area that will be complimented with
pastries, as well as free books that its patrons can read and enjoy the visit. The company will operate a 2,100
square foot coffee bar with a walking distance from the CATMAN Inc. campus and operated by Mr.
Ambrocio Capinding Jr, Fritzie Mina and Evelyn Angeles an Entrepreneur students of CATMAN Inc.

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 III. FRANCHISE OVERVIEW
Legal Form of Ownership:
The ARA Café is organized as a FRANCHISE business formed in Guimba, Nueva Ecija.
Mr. Pedro Lim is a franchisor gives his business name to Mr. Capinding, Mrs. Angeles and Mina for them
to easily operate. Franchisor offers the ff: an agreement between the two parties, franchisor offers the
business model, brand and name an intellectual property to the franchisee. Franchisee use this resources
to start their business according to the existing system.

Mission Statement
ARA Café works to provide our customers with a comfortable, and relaxing environment while enjoying
quality food, services and entertainment at reasonable price.

Vision Statement
To be one of the top leading coffee shop in the Philippines by the year 2030

Goals and Objectives

For the first year of operations are:

 Become selected as the “best new café in the area” by the local restaurant guide.
 Turn in profits from the first month of operations.
 Maintain a 65% gross margin.

In addition, as an alternative to the College’s cafeteria, our main goal is to serve the staff and students and
other near schools and establishments by offering healthy, fare at affordable prices.

Business Philosophy

“Doing right thing all of the time to the best of ability” Environmentally conscious. ARA Café purchases
roasts high-quality whole bean coffees and sell them. The outlets offer coffee drinks and food items, as
well as soy milk and pastries. We definitely make sure that each customer would be able to enjoy and
relax their time while they are in our shop.

Industry

ARA café lounge centrally located near CATMAN College in Guimba will be an establishment whose
goal is to satisfy the needs of the students, staff, and other consumers through offering healthy fare at
affordable prices. Our Café will offer entertainment and relaxation for the students.

Strengths and Core Competencies

 ARA Café is a unique café with a lounge area located near our target customers.
 It is a welcoming and non-judgmental environment to grow
 As business leaders we inspire our team to achieve greatness

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 IV. MARKETING PLAN

PRODUCT
The main menu of ARA Café will be built around espresso-based coffee drinks such as lattes, mochas,
cappuccinos, etc. each of espresso-based drinks will offered with whole, skimmed, or soy milk. Each of
this coffee beverages is based on a ‘shot’ of espresso, which is ground coffee at high pressure. It
combined with steamed milk and/or other additives like cocoa, caramel, etc. to prepare the espresso-based
beverages. Proper preparation techniques are of paramount importance for such drinks. A minor deviation
from the amount coffee in the shot, the size of the coffee particles, the temperature of milk, etc. can
negatively affect the quality of the prepared drink.

SWOT ANALYSIS

STRENGTHS
 ARA Café a unique Café with a lounge
area located near our target customer
 It’s a welcoming and non-judgmental
environment to grow
 As a business leaders we inspire our team
to achieve greatness
OPPORTUNITIES
 We depend our supplies to be delivered
on a daily basis
 Inspire our customers to go Green
WEAKNESSES
 Limited amount of space in the Café
compared to the population in the area
 Our target customers will always be
revolving since most of them are College
students
THREATS
 We depend on our business to have a high
quality service, but it may be harder to
attract and keep good customers
 The funding budget, making sure the
funds are available for events

FEATURES AND BENEFITS

ARA Café served a great coffee taste together with our low sugar pastries. This sounds rather obvious,
but what some coffee shops have to offer can a bitter taste in your mouth. Benefit to that is to earn money
other that just through the sale of coffee. Having a coffee business that you love and that you find
successfully rewarding is a great benefit, and it’s one that continuous to drive many coffee entrepreneurs
together.

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 Teenagers
CUSTOMERS

Our Target
Customer/
Market

Corporate Middle-
Sector Class Family

COMPETITION
 Local restaurants and Fast food chains such as:
 Mc. Donalds


PROMOTION
Activity Promotion
1. VIP Card- the VIP card will make the customers feel that they are so important
2. Gift- Give the old customers some samples or tokens when they have consumed to a certain
amount.

PRICING
The ARA Café primarily utilizes competition based pricing. The Café does not utilize coupons and
discounts (other than opening promotion) because they believe that the most valuable customer
demographic of daily coffee consumers is not influenced by discount programs or coupons.

SALES STRATEGY

The ARA Café will use the following methods to increase sales revenue:
 The menu will focus the most profitable products sold. The café will always draw customer
attention to the most profitable products.
 As warranted, the Café will raise prices to bolster brand image. Prices communicate a perceived
value of a product; so if set too long, the customers might assume that the beverages are inferior
compared to the competition.
 Monitor flavoring inventory- excess flavoring inventory ties up capital and valuable back room
space for storage. The Café will utilize 3-4 varieties, including sugar free offerings.
 Control waste and theft- audit sales and inventory reports to evaluate ingredient waste due to
inefficient preparation, returned drinks and employee consumption.

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[Type here]

LOCATION AND FACILITIES

We are located on the ground floor of the commercial building at the corner of Saranay
Gymnasium, Saranay, Guimba. The company has secured a half-year leases of the vacant 2,100,
square feet premises previously occupied by a furniture and textile store. The lease contract has an
option of renewal for 2years at a fixed rate that ARA Café will execute depending on the financial
strength of its business. the floor plan will include 150 square feet back office and a 1,950 square
feet bar, which will include a seating area with 15 tables, a kitchen, storage area, and 1 bathroom.
This property is located in a commercial area within a walking distance from CATMAN campus.
The store open and clean interior design with modern wooden décor will convey the quality of the
served beverage and snacks, and will be in-line with the establishment’s positioning as an eclectic
place where people can relax and enjoy their cup of coffee. The clear window displays, through
which passerby will be able to see customers enjoying their beverages, and outside electric signs
will be aimed to grab the attention of the customer traffic.

DISTRICUTION CHANNEL

ARA Café distributes products directly to customers without using any intermediaries. As a
small business, it is good for ARA Café to manage costs.

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 V. OPERATIONAL PLAN

Production Planning
INDUSTRIAL RAW MATERIALS

UNPROCESSED UNPROCESSED
FOOD
PROCESSING BEVERAGE
UNIT

DISTRIBUTION UNIT ROCESSED DISTRIBUTION UNIT

FOOD PREPARING BEVERAGE PREPARING

PREPARED PRODUCTS

Personnel:
1- General Manager
1- Barista
2- Service and Production Crew

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 VI. MANAGEMENT AND ORGANIZATION

ORGANIZATIONAL STRUCTURE

The ARA Café is formed FRANCHISE BUSINESS owned by Ambrocio Capinding Jr., Fritzie
Mina and Evelyn Angeles.

MANAGEMENT TEAM

The ARA Café will be owned 70% by Mr. Capinding Jr. Mrs. Mina and Angeles, students of
Colleges of Advance Technology and Management of the Phils., Inc, have an undergraduate
degree in Entrepreneurship. Another 30% in profit will go to the Franchisor the Real owner of
the Business Franchise.

MANAGEMENT TEAM GAPS

The ARA Café will rely on its POS (Point of Sale) system to generate daily accounting and cost
activity reports. They will supply these to an outside bookkeeper for preparation of annual
income taxes.

PERSONNEL PLAN

The table below outlines the personnel needs of ARA Café

Table 1.1
PERSONNEL PLAN YEAR 1 YEAR 2 YEAR 3
Manager 65,000 65,000 72,000
Barista 50,000 50,000 50,000
Employees 21,500 21,500 21,500
TOTAL PEOPLE 4 4 4
TOTAL PERSONNEL COSTS 136,500 144,000 144,000

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 VII. FINANCIAL PLAN

FINANCIAL PLAN

The company will capitalize on the strong demand for high quality gourmet coffee.
The owners have provided the company with sufficient start-up capital. With successful management
aimed at establishing and growing a loyal customer base, the company will see its net worth doubling in
two years. ARA Café will maintain a healthy 65% gross margin, which combined with reasonable
operating expenses, will provide enough cash to finance further growth.

The financial plan will cover the following projections:

 Profit and Loss
 Cash Flow

IMPORTANT ASSUMPTIONS
 The sales forecast is conservative and assumes a 5% increase in Year2, and a 10% in Year3.
 The analysis accounts for economic seasonality- wherein some months revenues peak (such as
holidays) and wane in slower months.
 The analysis assumes the owner will take a much smaller salary compared to his baristas; at any
time it is assumed that owner’s withdrawal is available at their desertion.
 Sales are cash basis-nonaccrual accounting
 Moderate ramp-up in staff over 3 years forecast
 The average barista salary in 2019 is 50,000
 In general, most cafés have an 65% gross profit margin
 In general, most cafés have a 3% net profit margin

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PROJECTED PROFIT AND LOSS

The estimated profit and loss for the ARA Café are as follows:

Table 1.4 Profit and Loss

PROFIT AND LOSS YEAR1 YEAR2 YEAR3

INCOM
Total Income 675,400 711,500 784,500
Total Cost of Sales - - -
Gross Margin 675,400 711,500 784,500
EXPENSES
Total Salaries and Wages - - -
Business Expenses - - -
Advertising 8,800 9,600 3,600
Car and Truck Expense - - -
Credit Card Charges - - -
Insurance 3,600 3,600 3,600
Legal and Accounting 816 816 816
Office Expenses - - -
Postage and Shipping - - -
Rent on Business Property 24,900 24,900 24,900
Rent on Equipment
Repairs 2,200 2,400 2,400
Supplies 9,548 10,416 10,416
Telephone 4,800 4,800 4,800
Travel - - -
Utilities 14,400 14,400 14,400
Miscellaneous Expenses - - -
Amortize Start-Up Expenses - - -
Depreciation 18,514 18,514 18,514
TOTAL BUSINESS EXPENSES 87,578 89,446 89,446
Total Interest Expense - - -
Net Operating Income 587,822 622,054 695,054
Less Income Taxes - - -
NET PROFIT (LOSS) 587,822 622,054 695,054

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PROJECTED CASH FLOW

The statement of cash flows shows the incoming and outgoing cash of the business.

Table 1.5 Cash flow

CASH FLOW YEAR1 YEAR2 YEAR3

Beginning Cash Balance 8,000 39,891 120,553
Cash Inflows - - -
Income from Sales 675,400 711,500 784,500
Accounts Receivables - - -
Total Inflows 675,400 711,500 784,500
Total Cash Outflows 643,509 630,838 737,574
Operating Cash Balance 39,891 120,553 167,479

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STARTUP EXPENSES AND CAPITALIZATION
START-UP COSTS
The following are the needed start-up costs associated with the ARA Café:
Table 1.2 Start-Up Costs
START-UP EXPENSES AMOUNT
Operating Capital -
Salaries and Wages -
Insurance Premium 4,800
Beginning Inventory -
Legal and Accounting Fees -
Rent Deposits 2,075
Utility Deposits -
Supplies 2,000
Advertising and Promotions 4,000
Licenses -
Other Initial Costs 8,000
Working Capital (Cash on Hand) 8,000
TOTAL START-UP EXPENSES 28,875

START-UP ASSETS AMOUNT

Real Estate -
Buildings -
Leasehold Improvements 71,725
Equipment 38,275
Furniture and Fixtures 14,000
Vehicles -
Other Fixed Assets -

TOTAL START-UP ASSETS 124,000

TOTAL REQUIRED START-UP COSTS 152,875

SOURCE AND USE OF FUNDS

Table 1.3 Sources of Funds

SOURCES OF FUNDS AMOUNT
Owner’s Injection 22,875
Commercial Loan 130,000
Commercial Mortgage -
Line of Credit -
TOTAL SOURCE OF FUNDS 152,875

USE OF FUNDS AMOUNT

Fixed Assets 124,000
Operating Capital 28,875
TOTAL USE OF FUNDS 152,875

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PERSONAL FINANCIAL STATEMENT
PROJECTED BALANCE SHEET
Lists of specific account balances on a business assets, liabilities and equity (specified future time)

Table 1.6 Balance Sheet

BALANCE SHEET YEAR1 YEAR2 YEAR3
Assets
Current Assets
Cash 39,891 120,553 167,479
Accounts Receivable - - -
Inventory - - -
Prepaid Expenses 12,875 12,875 12,875
Other Current 8,000 8,000 8,000
TOTAL CURRENT ASSETS 60,766 141,428 188,354
Fixed Assets
Improvements 71,725 71,725 71,725
Furniture and Fixtures 14,000 14,000 14,000
Equipment 38,275 38,275 38,275
Real Estate - - -
Buildings - - -
Other Fixed - - -
TOTAL FIXED ASSETS 124,000 124,000 124,000
Less Accumulated Depreciation 18,514 37,029 55,543
TOTAL ASSETS 166,252 228,399 256,811
Liabilities and Owner’s Equity
Accounts Payable - - -
Notes Payable 109,362 86,336 60,645
Mortgage Payable - - -
Line of Credit Balance - - -
TOTAL LIABILITIES 109,362 86,336 60,645
Owner’s Equity - - -
Common Stock 22,875 22,875 22,875
Retained Earnings 34,015 119,189 173,291
TOTAL OWNER’S EQUITY 56,890 142,064 196.166
TOTAL LIABILITIES & OWNER’S EQUITY 39,891 120,553 167,479

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BUDGET PLAN

BUDGET PLANNING

ARA Café spend budget includes both the expenses portion of profit and loss and additional spending that
does not show up in profit and loss but does impact the cash flow and balance sheet. ARA Café budget
exactly the same as forecast.

Figure 1.1

Sales, costs depreciation

Profit
and loss
CASH Balance
sheet

Expenses interest Starting

Balances

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ASSUMPTIONS
Depreciation
FIXED ASSETS
Improvements/ Building 350,000 3 years
Equipment 114,000 3 years
Computers/Equipment/POS 70,000 2 years
Signage 25,000 1 year
Other Fixed Assets 80,000 1 year
INCOME EXPENSES

Year 2 Expenses Year 3 Expenses

15% 20%
Cost of Sales

100%
34% Food
55% Other drinks
11% Miscellaneous/ others
Fixed Expenses Increase

Year 2 Year 3
5% 5%

Expressed Equity Ownership

Franchisor- 30%
Franchisee- 70%

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 VIII. REFINING THE PLAN
EXHIBITS
Overall, ARA Café meets the needs of its prior customers. They are the business people, who uses take
away, students, who want to hang out but do not want to spend a lot of money, and people waiting for
their works during break time. It offers a quick, fine service and provides the high-quality products for the
low prices.

A FINAL THOUGHT

We increase our capitals because we are open for investors, in this programs we can expand business
without thinking where to get some capitals. Our milestone in our 1st quarter-half of the year it was
getting better as we gets more than 20% increase from last year which is excellent impact that lots of
people liked our products or services.

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