BUSINESS PLAN

ON

“COFFEE CAFE”

Under The Supervision Of : Submitted To:

Dr. Mohd. Arif Abhay Soni

(Assistant Professor) B.Com (NEP) 6th Sem.

Roll No: 2110182010004

SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT

FOR THE AWARD OF DEGREE OF

BACHELOR OF COMMERCE (B.COM)

CITY ACADEMY DEGREE COLLEGE, CHINHAT,

LUCKNOW

Affiliated To

UNIVERSITY OF LUCKNOW, LUCKNOW

 CERTIFICATE

This is to certify that Abhay Soni a student of BACHELOR OF COMMERCE

(B.Com) Session (2023-2024) at City Academy Degree College, Chinhat,

Lucknow has conducted mini project titled “COFFEE CAFE” during 6th

semester.

The student has also made a presentation before a panel of experts

at the Institute.

Date: Dr. Mohd. Arif

(Assistant Professor)

Dept. of Commerce

City Academy Degree College

 DECLARATION

I Abhay Soni, student of BACHELOR OF COMMERCE (B.COM) Programme at the

City Academy Degree College, Chinhat, Lucknow hereby declare that all the information

,facts and figures used in this Business Plan titled “COFFEE CAFE” have been collected by

me. I also declare that this project report has been prepared by me and the same has never

been submitted by the undersigned either in part or in full to any other University or Institute

or published earliaer.

I confirm that this project report is my own original work and that I have not copied anything

from other published or unpublished work without their permission.

This information is true to the best of my knowledge and belief.

Date: Abhay Soni

Roll No. – 2110182010004
B.Com (NEP) 6th Sem.
 ACKNOWLEDGEMENTS

I owe many thanks to many people who have helped and supported me during the writing of

this project.

I would like to express my deep sense of gratitude to Dr. Mohd. Arif (Assistant Professor)

and Mr. Alok Singh (Professor) of City Academy Degree College, Chinhat, Lucknow, for

their valuable support and guidance for the completion of my mini project.

I would like to thank all faculty members for their support and guidance, thanks and

appreciation to the helpful people at City Academy Degree College, Chinhat, Lucknow for

their support.

I extend my heartfelt thanks to my family and well wishers as well.

Abhay Soni
Roll No. – 2110182010004
B.Com (NEP) 6th Sem.
 PREFACE

We feel very happy to bring our " COFFEE CAFE " to Lucknow, to share the

immense flavour and delicious delicacies with everyone.

This business plan is a result of long study of consumer behaviour, market

segment and othere elements. We have taken a lot of efforts to make our shop

more interesting by including new items in our menu and our interior. We are

sure that people visiting our shop will be really happy and satisfied with our

products and services.

While devising this business plan , we referred several books and websites and

we are grateful to our mentor for helping us with our business plan. The project

has been made by my own efforts, that I have learned in our project period
 Executive Summary

Koffee Klatch 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 your friends or to read a book, all in one. With the

growing demand for high-quality gourmet coffee and great service, The Koffee

Klatch will capitalize on its proximity to the Sahara Mall, Hazratganj to build a

core group of repeat customers. The Cafe will offer its customers the best

prepared coffee in the area that will be complimented with cookies and cakes.

The company will operate a 500 square foot coffee bar within a walking distance

from the Sahara Mall, Hazratganj. The owner has secured this location on a lease

contract with an option toextend up to three years.

The USP of Koffee Klatch is, it will provide a complete experience to the

visitors, the ambience of the café would provide as a soothing and relaxing effect

to the mind of the visitors.

We at Koffee Klatch believe in providing quality offering at budget pricing. So

our visitors don’t have to spend big to experience our services.

Our offering at Koffee Klatch include different variants of coffee beit black

coffee, lattes, mochas and many other. We also offer different variety of tea at

cafe namely white tea, black tea, lemon tea, and green tea.
There are three partner in the firm each have contributed 600000each as their

contribution to capital.

Total of six people are employed at cafe including one manager, one accountant,

three waiters and one cleaner.

With a initial investment of rupees 1800000 the company is expected to generate

revenue of Rs 1303900 in the financial year 2019-2020 which will shoot up to Rs

2113761 in the financial year2020-21and further go up to Rs 2457033.It is

expected that company will generate gross profit ratio of 38% in 1yr.It is well

supported by NPV as it is coming in positive.

 TABLE OF CONTENTS

SL. NO. PARTICULARS

1 Executive Summary
2 Introduction
3 Company Summary
4 Company Ownership
5 Start-up Summary
6 Company location and facilities
7 Products
8 Market Analysis Summary
9 Marketing and sales strategy
10 Strategy and Implementation Summary
11 Management Summary
12 Human Resource Plan
13 Financial Plan
14 Exit Plan
16 References
16 Questionnaire
 Introduction

COFFEE CAFE

“KOFFEE KLATCH”

The Koffee Klatch is a full-service cafe located near Sahara mall Hazratgan Lucknow. The
cafe features a full menu of moderately priced coffees, teas, cookies and cakes.

The Koffee klatch will be owned by Jafar and Co. It is basically a partnership firm with equal
share distributed between Jafar, Prakash and Arpan Singh.

Mission

Koffee Klatch make its best effort to create a unique place where customers can socialize
with each other in a comfortable and relaxing environment while enjoying the best brewed
coffee or espresso and pastries in town. We will be in the business of helping our customers
to relieve their daily stresses by providing piece of mind through great ambience, convenient
location, friendly customer service, and products of consistently high quality. The Koffee
Klatch will invest its profits to increase the employee satisfaction.

Objectives

1
The Koffee Klatch Cafe's objectives for the first year of operations are:

 Become selected as the "Best New Coffee Bar in the area" by the local restaurant
guide.

 Turn in profits from the first month of operations.

 Maintain a 20% gross margin in first year.

Keys to Success

The keys to success will be:

 Store design that will be both visually attractive to customers, and designed for fast
and efficient operations.

 Employee training to insure the best coffee preparation techniques.

 Marketing strategies aimed to build a solid base of loyal customers, as well as

maximizing the sales of high margin products, such as espresso drinks.

Company Summary

The Koffee Klatch Cafe, limited liability Company, sells coffee, other beverages and cookies
and cakes in its 500 square feet premium coffee bar located near the Sahara Mall in
Hazratganj, Lucknow.

2
 Company Ownership

The Koffee Klatch is a Start-up Partnership Firm registered under Indian Partnership Act,
1932.There are three partners in the firm namely –

JafarMohsinZaidi

Arpan Singh

Chandra Prakash Singh

Each partner will contribute 600000 each as contribution to capital. The profit will be
distributed equally amongst the partners. The firm is governed by partnership deed which
provides 10% interest on capital and each partner is entitled to draw monthly salary of
Rs.10,000 in the 1st year and Rs.15,000 in subsequent years. The partners will share
profit/loss equally in thefirm. The partners are also entitled to draw Rs.10,000 p.m. for their
personal expense and no interest will be charged on it.

The firm is registered under Start UP India initiative so it is granted tax holiday of three

years.

Start-up Summary

The start-up expenses include:

 Legal expenses for obtaining licenses and permits as well as the accounting services
totaling Rs. 25000.

 Marketing promotion expenses for the grand opening of Koffee Klatch in the amount
of Rs.160000 in the start.

 Insurance (general liability, workers' compensation and property casualty) coverage at

a total premium of Rs.10000.

 Pre-paid rent expenses for three month is RS 90000 @ 30000 per month.

3
  Other start-up expenses including stationery and phone and utility deposits amount Rs
30000.

The required start-up assets of Rs.800000 include:

 Furniture & false ceiling

 CCTV camera

 Espresso Machine.

 Coffee Grinder & maker

 Computer

 Air conditioner and Billing Machine.

The following table summarizes the start-up assumptions.

Particulars Amount (in Rs.)

Start Up Expenses

Legal expenses 25000

Insurance 10000
Miscellaneous Expenses 30000
Advertisement 160000
Total start up expenses 225000

Start Up Assets

Furniture & false ceiling 500000

Espresso machine 50000
Coffee Grinder 10000
Coffee maker 150000
Computer 40000
Air conditioner 100000
Billing Machine 9500
Total Start Up Assets 859500

4
 Cash Reserve# 200000
Total start Up Costs A+B+C 1284500

#Cash Reserve (in Rs.)

Utilizes 8000 3 24000
salaries* 9000 4 36000
Rent 30000 3 90000
supply cost 20000 3 60000
Emergencies 10000 - 10000
Total 220000

Company Locations and Facilities

The Koffee Klatch, coffee bar will be located on the ground floor of the commercial place
near Sahara Ganj Mall in Hajratganj.The company has secured a one-year lease of the vacant
500 square feet.

The lease contract has an option of renewal for three years at a fixed rate that will execute
depending on the financial strength of its business.

The floor plan will include a 280(20*14) square feet setting area or coffee bar which include
a setting area of 15 tables and a 100 square feet(10*10) of kitchen, storage area would be of
48(6*8) square feet and two washrooms 20 square feet each(5*4) . The billing counter or
5
cash counter will be of 25 square feet (5*5).More than 55% of the total carpet area is devoted
to the sitting zone of café.

This property is located in a commercial area within a walking distance from the most

happening mall in the town The Sahara Mall. The commercially zoned premises have the

necessary water and electricity hookups and will require only minor remodeling to

accommodate the espresso bar, kitchen and storage area. The coffee bar's open and clean

interior design with modern wooden decor will convey the quality of the served beverages

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.

Products

The Koffee Klatch will offer its customers the best tasting coffee beverages in the area. This
will be achieved by using high-quality ingredients and strictly following preparation
guidelines. The store layout, menu listings and marketing activities will be focused on
maximizing the sales of higher margin espresso drinks. Along with the espresso drinks,
brewed coffee and teas including various variety of tea including black tea, green tea ,lemon
tea, white tea, as well as some refreshment beverages, will be sold in the coffee bar
accompanied with cookies and cakes. For the gourmet clientele that prefers to prepare its
coffee at home, The Koffee Klatch will also be selling coffee powder.

6
 Classic Cappuccino, Café Americano, café
latte, Café Mocha, Cold coffee (Iced
COFFEE
cappuccino).

Green Tea, Lemon Tea, Black Tea, WHITE

Tea, Masala Chai.
TEA

Biscotti, Peanut Butter Cookies, Short bread,

Garlic Bread, Brown Bread, White Bread
COKKIES
Bun.

Cream cupcake, Chocolate cake, Mocha

Cupcake.
CAKES

Product Description

The menu of The Koffee Klatch, coffee bar will be built around espresso-based coffee drinks
such as lattes, mochas, cappuccinos, etc. Each of the espresso-based drinks will be offered
with whole, skimmed, or soy milk. Each of these coffee beverages is based on a 'shot' of
espresso, which is prepared in the espresso machine by forcing heated water through ground
coffee at high pressure. Such espresso shots are 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 of coffee in the shot, the size of the coffee particles, the temperature of milk, etc.,
can negatively affect the quality of the prepared drink.

Sales Literature

Two thousand flyers will be distributed in the adjacent neighborhood, the Sahara Mall, at the
colleges near by like National College and in the selected office buildings within two weeks
prior to the opening of The Koffee Klatch. Subsequently, pamphlet of The Koffee Klatch
endorsement will be printed to increase the company visibility among the patrons.

7
 Market Analysis Summary

Coffee consumption has shown steady growth, with gourmet coffee having the strongest
growth. Coffee drinkers in that area are among the most demanding ones. They favor well-
brewed gourmet coffee drinks and demand great service. The Koffee Klatch 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 Sahara Mall.

Other than the Sahara Mall there are lots of government offices nearby and some big colleges
as well.

SWOT Analysis

Before opening a coffee shop, it is wise to do a SWOT analysis (Strengths, Weaknesses,

Opportunities and Threats). This is a few things that I could think of:

Strengths:
 It’s a youth oriented brand, hence huge potential since 40 % population is below 20.

 Strong management

 Located in City’s most happening place.

 Superior quality.

 Offerings in budget pricing.

Weaknesses:
 Small Staff

 Growing Operation without enough space

 Weak Brand

Opportunities:

8
  Coffee cafe industry is one of the fastest growing industry in India.
 More people like to visit coffee cafe for informal meetings.

Threats:

 Competition with local coffee cafes and cafeteria of college.

PESTEL Analysis

With the help of PESTEL analysis we try do analysis of business on bases of six elements i.e.

Political, Economic, Environmental, Social, Technological and legal aspect.

We discuss each separately –

 Political – The government policies are in favor of new ventures as they are
promoting new Start up’s and are encouraging new entrepreneurs as well.

 Economic -Economic factors have a significant impact on how an organization does

business and also how profitable they are. Factors include – economic growth, interest
rates, exchange rates, inflation, disposable income of consumers and businesses and so
on. . The projected growth rate of Indian Café market is projected to grow at 11%
according to CAGR. So this industry has growth prospects.

 Social -Also known as socio-cultural factors are the areas that involve the shared
belief and attitudes of the population. These factors include – population growth, age
distribution, health consciousness, and career attitudes and so on. These factors are of
particular interest as they have a direct effect on how marketers understand customers
and what drives them.

The café would serve as platform for people not only to coffee but also to socialize
with friends and peers.

9
  Technological Factors – As in this industry the technology does not change very
fast so it would give some time to a new business set up like ours to settle down.

 Environmental Factors - These factors have only really come to the forefront in
the last fifteen years or so. They have become important due to the increasing scarcity
of raw materials, pollution targets, doing business as an ethical and sustainable
company, carbon footprint targets set by governments (this is a good example were
one factor could be classes as political and environmental at the same time). These are
justsome of the issues marketers are facing within this factor. More andmore
consumers are demanding that the products they buy are sourced ethically and if
possible from a sustainable source.

As we are dealing in completely natural product it would not do any damage to the
environment on contrary it would be in benefit of the society.

 Legal Factor – Legal factors include - health and safety, equal opportunities,
advertising standards, consumer rights and laws, product labeling and product safety.
All licenses and legal formalities have taken care of before setting up this business.

Marketing Strategy

Marketing plays a vital role in successful business ventures. How well we market our
business, along with a few other considerations, will ultimately determine our success or
failure. The key elements of our marketing plans have been identified through the need gap
analysis.

The set up will be made very attractive through eye catching interior, mouthwatering visuals
and high quality furniture. We shall have a shake of the day wherein a particular shake (say
chocolate shake on Mondays) will be served at discounted prices. Promotional literature,
informing in depth about various offerings at the café and their prices would be distributed.

10
Eye-catching billboards and hording would be put in nearby location so that more and more
customers can be attracted.

Promotion would also be done with the help of social media through search engine
optimization. Family discount and combo offers would be there to attract more and more
customers.

Market STP Strategies

Market Segmentation

The Koffee Klatch will focus its marketing activities on reaching the College students and
faculty, people working in offices located close to the coffee bar and on sophisticated
teenagers ,and people who doing Ganjing. Our market research shows that these are the
customer groups that are most likely to buy gourmet coffee products. Since gourmet coffee
has great demand in elite class and people in age bracket of 20-45.Other than coffee we at
The Koffee Klatch are offering different varieties of tea which has a universal demand across
age group and economic class.

The chart and table below outline the total market potential (in number of customers) of
gourmet coffee and tea drinkers in Lucknow.

11
Target Market Segment Strategies

The Koffee Klatch will cater to people who want to get their daily cup of great-tasting coffee
in a relaxing atmosphere. Such customers vary in age, although our location close to the
Sahara Mall and National college means that most of our clientele will be college students,
faculty, and visitor of mall. Our market research shows that these are discerning customers
that gravitate towards better tasting coffee. Furthermore, a lot of college students consider
coffee bars to be a convenient studying or meeting location, where they can read or meet with
peers without the necessity to pay cover charges. For us, this will provide a unique possibility
for building a loyal client base.

Market Needs

General trend toward quality among consumers definitely plays an important role in the
recent growth in gourmet coffee. Additionally, such factors as desire for small indulgencies,
for something more exotic and unique, provide a good selling opportunity for coffee bars.

12
 Competition and Buying Patterns

Competition

The Koffee Klatch direct competitors will be other coffee bars located near the SaharaMall
and cafeteria of National College.The Koffee Klatch will position itself as a unique coffee bar
that not only offers the best tasting coffee, cakes and cookie but also provides home-like,
cozy and comfortable environment, which established corporate establishments lack. We will
cater to customers' bodies and minds, which will help us grow our market share in this
competitive market.

Buying Patterns

 The major reason for the customers to return to a specific coffee bar is a great tasting
coffee, quick service and pleasant atmosphere. Although, as stated before, coffee
consumption is uniform across different income segments, The Koffee Klatch will
price its product offerings competitively. We strongly believe that selling coffee with
a great service in a nice setting will help us build a strong base of loyal clientele.

Competitive Edge

The Koffee Klatch will position itself as unique coffee bar where its patrons can not
only enjoy a cup of perfectly brewed coffee but also spend their time in an ambient
environment. Comfortable sofas and chairs, dimmed light and quiet relaxing music
will help the customers to relax from the daily stresses and will differentiate. The
Koffee Klatch from incumbent competitors.

Sales Strategy

The Koffee Klatch baristas will handle the sales transactions. To speed up the customer
service, at least five employees will be servicing clients while two employees will be
preparing the customer's order, two waiters and the other one will be taking care of the sales
13
 transaction. All sales data logged on the computerized point-of-sale terminal will be later
analyzed for marketing purposes.

In order to build up its client base, The Koffee Klatch will use banners and fliers, utilize
customer referrals and cross-promotions with other businesses in the community. At the same
time, customer retention programs will be used to make sure the customers are coming back
and spending more at the coffee bar.

Sales Forecast

Food costs are assumed at 25% for coffee beverages and for retail cookie and cakes.
Proximity to the Sahara Mall and National College campus will dictate certain sales
seasonality with revenues slightly decreasing during the school vacation periods.

The chart and table below outline our projected sales forecast for the First years.

FORECASTED SALES
COFFEE/TEA CAKE COOKIE

Price per Unit 150 200 250 200 250 400 100 150 200
(IN Rs.)
Forecasted sales 30 20 10 20 15 10 20 10 5
(in Units)
Total sale p/d 4500 4000 2500 4000 3750 4000 2000 1500 1000
Days in month 25 25 25 25 25 25 25 25 25
Total sale p/m 112500 100000 62500 100000 93750 100000 50000 37500 25000
No. of months 12 12 12 12 12 12 12 12 12
Total sales for 1350000 1200000 750000 1200000 1125000 1200000 600000 450000 300000
12 months
SALE 8175000
(in Rs.)

COST OF FORCASTED SALES

COFFEE/TEA CAKE COOKIE

Cost per Unit (IN Rs.) 80 110 170 130 170 240 60 110 140
Forecasted sales (in 30 20 10 20 15 10 20 10 5
Units)

14
Total Cost of sale p/d 2400 2200 1700 2600 2550 2400 1200 1100 700
Days in month 25 25 25 25 25 25 25 25 25

Total Cost p/m 60000 55000 42500 65000 63750 60000 30000 27500 17500
No. of months 12 12 12 12 12 12 12 12 12
Total Cost for 12 720000 660000 510000 780000 765000 720000 360000 330000 210000
months
COST (in Rs.) 5055000

Strategy and Implementation Summary

The Koffee Klatch's marketing strategy will be focused at getting new customers, retaining
the existing customers, getting customers to spend more and come back more often.
Establishing a loyal customer base is of a paramount importance since such customer core
will not only generate most of the sales but also will provide favorable referrals.

Getting new customers-

 Doing tie up with mobile based food order companies like Swiggy, Uber Eats,
Zomato.
 Online promotions of The Koffee Klatch

 Special Discounts to new customers

Retaining Existing Customers

 Special discount to premium customers.

 Giving preference to loyal and regular customers by giving them special treatment.

Encouraging Customers to spend more

 Special Combos
 Family combos

15
 Management Summary

The Koffee Klatch is owned by the owner holds a Master Degree in Business Administration
from the Department of Business Administration, University of Lucknow.

However, because of various activities and functions there will be need to hire some
employee who can perform these activities. An Accountant (Rs.120000/yr) will be hired who
will oversee all the coffee bar operations. Three other employees (Rs.108000/yr each) will be
in charge of coffee preparation and serving. These four employees will be hired to fulfill the
staffing needs on part time basis. In the second and third year of operation, salary will
increase by 10%.

Management Team

A full-time accountant will be hired to oversee the daily operations at The Koffee Klatch. The
candidate (who's name is withheld due to his current employment commitment) has had three
years of experience in accounting. This person's responsibilities will include managing the
staff, ordering inventory, dealing with suppliers, developing a marketing strategy and perform
other daily duties. We believe that our candidate has the right experience for this role.

HUMAN RESOURCE PLANNING

Human resource management (HRM) is the strategic and coherent approach to the
management of an organization’s most valued assets - the people working there who
individually and collectively contributes to the achievement of the objectives of the
business.The terms "human resource management" and "human resources" (HR) have largely
replaced the term "personnel management" as a description of the processes involved in
managing people in organizations. Human Resource management is evolving ra. As such,
HRM techniques, when properly practiced, are expressive of the goals and operating
practices of the enterprise overall. HRM is also seen by many to have a key role in risk
reduction.

Synonyms such as personnel management are often used in a more restricted sense to
describe activities that are necessary in the recruiting of a workforce, providing its members
16
with payroll and benefits, and administrating their work-life needs. So if we move to actual
definitions, Torrington and Hall (1987) define personnel management as being rapidly “a
series of activities which: first enable working people and their employing organizations to
agree about the objectives and nature of their working relationship and, secondly, ensures that
the agreement is fulfilled".

While Miller (1987) suggests that HRM relates to:

".......those decisions and actions which concern the management of employees at all levels in
the business and which are related to the implementation of strategies directed towards
creating and sustaining competitive advantage"

Human resources management comprises several processes. Together they are supposed to
achieve the above mentioned goal. These processes can be performed in an HR department,
but some tasks can also be outsourced or performed by line-managers or other departments.

• Human Resources Planning (HRP)

• Design of Organization and Job
• Selection and Staffing
• Training and Development
• Organization Development (OD)
• Compensation and Benefits
• Employee Assistance

 Nature of HRM
Simply put, Human Resource Management (HRM) is a management function that helps
managers to recruit, select, train and develop members for an organization. Obviously, HRM
is concerned with the people's dimension in organizations. Following are few definitions of
HRM:

1. HRM is a series of integrated decisions that form the employment relationship; their quality
contributes to the ability of the organizations and the employees to achieve their objective.

2. HRM is concerned with the people dimension in management. Since every organization is
made up of people, acquiring their services, developing their skills, motivating them to
17
higher levels of performance and ensuring that they continue to maintain their commitment to
the organization are essential to achieving organizational objectives. This is true, regardless of
the type of organization- government, business, education, health, recreation, or social action.

3.HRM is the planning, organizing, directing and controlling of the procurement,

development, compensation, integration, maintenance and separation of human resources to
the end that individual, organizational, and social objectives are accomplished.

HR ACTIVITES

1. RECRUITMENT/SELECTION

2. TRAINING AND DEVELEPMENT

3. PERFORMANCE APPRAISAL

4. RECLOCATION

5. INDUCTION

6. DOMESTIC TRAVEL POLICY

7. SEPARATION

8. EXIT INTERVIEWS

9. ATTENDENCE/AWARD/REWARD

10. CONFIRMATION PROCESS

In Human resource management is a process of bringing people and organizations together so

that the goals of each are met. It is that part of the management process which is concerned
with the management of human resources in an organization. It tries to secure the best from
people by winning their whole hearted cooperation. In short, it may be defined, as the art of
procuring, developing and maintaining competent workforce to achieve the goals of an
organization in an efficient and effective manner.

18
  Human Resource Development
At PBPL the main activities undertaken by HRD department are recruitment, performance ap

praisal Training and development, welfare activities, personal growth & promotion.

Performance Appraisal

To achieve this objective the company carries out performance appraisal of its employees so
as to assess their weaknesses& strengths& to take measures accordingly like providing
training or giving rewards or incentives

Recruitment
Recruitment at OPEN AIR RESTAURENT is carried out in close co-ordination with the
department requiring the personnel. It is a process where the qualification and other skills
needed for the job are taken into account & based on this the incumbent is selected after
proper screening & interviewing. He is then inducted & provided training if needed.

Training and Development

Training & development is an important aspect. Coffee shop believes in training and
development of its employees so as to help them taken higher responsibilities & to
prepare to meet the challenging business environment. Coffee shop believes in
training and development of its employees so as to help them taken higher
responsibilities & to prepare to meet the challenging business environment.

HR Techniques Will Adopt By coffee shop

 KAIZENS
 Total Quality Management(TQM)

19
 Financial Plan

The Koffee Klatch 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. The Koffee Klatch will maintain a healthy 40% gross
margin average, which combined with reasonable operating expenses, will provide enough
cash to finance further growth.

7.1 Projected Cash Flow

As the table below present, the company will maintain a healthy cash flow position, which
will allow for timely debt servicing and funds available for future development.

Operating Budget for the 1 st year2019-2020 :-

A. Operating Expenses:-

Materials 5000000

Carriage Inward 55000

Rent 3,60000

Salaries 500000

Electricity and Lighting 1,92,000

Telephone expenses 12,000

Newspaper & magazines 6,000

Advertisement 1,60,000

Depreciation on Machines @ 15 % 27,000

20
Depreciation on Furniture @ 15 % 37,500

Depreciation on Television @ 15% 6,000

Depreciation on music sdy @ 20 % 2,000

Rental charges for Generator 48,000

Water tax 4,000

License fee 1,600

Repairs and Maintenance 10,000

Total Operating cost 6421100

Net sales 8175000

Less : Cost of Goods Sold :

Opening inventory Nil

Purchase of raw- materials 5000000

Add: Carriage inward 55000

Less: Sale of Scrap 10,000

Less: closing inventory 15,000 5030000

Gross margin 3145000

Less : Operating Expenses :

Salary of employees 500000

21
 Rent(30000*12) 360000

Electricity and lighting 1,92,000

Advertisement 200000

Depreciation (27,000 + 37,500 + 6,000 + 2,000 ) 72,500

Telephone 12,000

Newspapers & Magazines 6,000

Water tax 4000

License 1600

Rental charges for Generator 48000

Repairs & maintenance 10000

Interest on capital 90000

Salary to partners’ 360000 1856100

Operating income 1288900

Non - Operating Income 15,000

----------------

Net Income for the year 1303900

Less: Tax @ 0 %(3 years tax holiday) 0

Divisible Profit (PAT) 1303900

Share of each partner –

CHANDRA PRAKASH SINGH 1/3rd 434633

ARPAN SINGH 1/3rd 434633

22
 Jafar 1/3 rd 434633

Partner’s Capital Accounts

Particulars CP Arpan Jafar Particulars CP Arpan Jafar

To Drawings 1,20,000 1,20,000 1,20,000 By Bal. b/d 6,00,000 6,00,000 6,00,000

To Balance c/d 1094633 1094633 1094633 By Int. on Cap. 60,000 60,000 60,000

By Salaries 1,20,000 1,20,000 1,20,000

By PAT
434633 434633 434633

1214633 1214633 1214633 1214633 1214633 1214633

Balance-Sheet (as at 31st March 2020)

Liabilities Amount Assets Amount

Capital: Call money (Security) 2,00,000

CP Singh 1094633 Machinery Less Dep. 1,53,000

Television Less Dep. 34,000

Arpan 1094633 Furniture and Fixtures 2,12,500

Glossory(-)Dep 8000

Jafar 1094633 Advertisement(-) dep 100000

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 Legal Expenses 10000

Closing Inventory 15000

Cash & Bank balance 2551399

3283899 3283899

7.2 Break-even Analysis

Break Even Sales:-

For calculating Break – even sales total operating cost will be segregated into 2 parts Vis.
Fixed Cost and Variable cost. Variable cost includes Cost of Raw material less closing
inventory and carriage remaining would be treated as fixed cost.

Therefore,BEP = Fixed cost * sales / [Sales – variable cost]

= 1856100*8175000/(8175000-5030000)

= 4821728

Margin of safety = Sales- BEP

=8175000-481728

= 3353272

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INTERPRETATION OF ABOVE 2 RATIOS

It is clear from the above analysis that present level of operation is fully safe and profitable,
as present sale exceeds Rs. 3353272(MOS) over Break – Even Sales. It means that if our sale
decreases upto Rs. 4821728 there will be no chance of loss but below this point the firm will
suffer loss.

25
Projected Business results for subsequent 2 years i.e. 2020-21&2021-22

Income statement:

Particulars 2020-2021 2021-22

A. Sales(Est increase of 15%) 9401250 10811437

B. Cost of sales :

Opening Inventory 15,000 20,000

Materials purchased 5500000 6050000

Carriage Inward 60000 90,000

Closing inventory (20,000) (30,000)

Sale of scrap 10,000 20,000

55,65,000 6150000
C. Gross Margin (A - B) 3836250 4661437

D. Operating Expenses :

Audit fee 25,000 30,000

Interest on bank Loan -- -

Salaries to workers 550000 605000

Rent 396000 435600

Elec. & lighting 2,00,000 2,50,000

Telephone Exp. 6,000 8,000

Advertising w/o 50,000 50,000

Advertising expenses 50,000 50,000

Dep. 73,500 1,00,000

Generator rental 48,000 54,000

26
Water tax 4,000 8,000

License fee 1,600 3,200

Repairs and maintenance 15,000 25,000

Int. on cap. 328389 590604

Total Operating cost

1747489 2209404

Operating Income (C - D)
2088761 2452033
Non- Opertaing Income
25,000 5,000

Total Net Income of the firm

2113761 2457033
Less: tax @ 0 %

Profit after tax (PAT)

2113761 2457033

Share of each partner :

CHANDRA PRAKASH SINGH

704587 819011
ARPAN SINGH
704587 819011
JAFAR MOHSIN ZAIDI
704587 819011

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Capital account:

PARTICULARS CP Arpan Jafar

2020-21

Opening Capital 1094633 1094633 1094633

Add: Int. on Cap. 109463 109463 109463

Add: Salaries to partners 1,80,000 1,80,000 1,80,000

Profit 704587 704587 704587

Less: Drawings (1,20,000) (1,20,000) (1,20,000)

Closing Capital 1968683 1968683 1968683

2021-22

Opening Cap. 1968683 1968683 1968683

Add: Int. on Cap. 196868 196868 196868

Salaries to partners 1,80,000 1,80,000 1,80,000

Net Profit 819011 819011 819011

Less: Drawings (1,20,000) (1,20,000) (1,20,000)

Closing Cap. 3164562 3164562 3164562

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 Liabilities 2020-21 2021-22 Assets 2020-21 2021-22

Capital:

C.P SINGH 996650 3164562 Call Money 2,00,000 3,00,000

ARPAN 996650 3164562 Mach. Less Dep. 1,26,000 2,69,000

Jafar 996650 3164562 Television Less Dep. 28,000 70,500

- Glossary less Dep. 10,000 15,000

Time deposits in banks 2,00,000 --

Furniture 1,75,000 3,92,500

Advertisement 50,000 --

Legal expenses 10,000 10,000

Closing inventory 20,000 30,000

Cash & bank Bal. 2170950 8406686

2989950 9493686 2989950 9493686

BUSINESS RATIOS’s:
The following are some of the important ratios calculated from the above financial
statements. These ratios can be used to determine the financial health and operational
efficiency of the organization.

Gross Profit Ratio

Gross Profit Ratio = Gross Profit/ Sales *100

2019 - 20 = 3145000 / 8175000* 100 = 38.47 %

2020 - 21 = 3836250/ 9401250 * 100 = 40.80 %

2021 – 22 = 4661437 / 10811437 * 100 = 43.11 %

29
The GP ratio indicates an increasing trend. There is a slight decrease in the year
2018-19 due to the reason that firm has opened two new outlets which pulled down
the gross profit in their first year of operation.

Net Profit Ratio

Net profit Ratio = Net Profit/ Sales *100

2019 - 20 = 1303900 / 8175000* 100 = 15.94%

2020 – 21 = 2113761/ 9401250 * 100 = 22.49%
2021– 22 = 2457033 / 10811437 * 100 = 22.73%

ROCE

Return on Gross capital Employed = PBIT/capital employed *100

2019-2020= 1393900 / 3283899 * 100 = 42.44 %

2020-2021 = 2442150 / 2989950 * 100 = 81.6%

2021-2022 = 3047637 / 9493686 * 100 = 32.10%

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Pay Back Period

PBP = Number of completed Years + Balance Amount to be recovered (initial investment -

1yr cum. Inflow)/amount of annual cash flow in the subsequent year of the completed
year*12

Year Inflow Cumulative Inflow

1 1376400 1376400

2 2187261 3563661

3 2557033 6120694

1+423600/2187261*12

PBP= 1 year and 2.32 months

Net Present Value

Year Cash Inflow Present Value CI * PV

@10%

1 1376400 .909 1251147.6

2 2187261 .826 1806677.586

3 2557033 .751 1920331.783

4978156.969

NPV = (cash inflow- cost of investment or cash outflow) 4978156.969-1800000

NPV = 3178156.969

Interpretation of NPV

If NPV is greater than 0 or is in positive than accept the offer otherwise reject the proposal.
31
 Exit Plan

An exit strategy is a contingency plan that is executed by an investor, trader, venture

capitalist or business owner to liquidate a position in a financial asset or dispose of tangible
business assets once certain predetermined criteria for either has been met or exceeded. An
exit strategy may be executed for the purpose of exiting a non-performing investment or
closing a business that is not generating profits. In this case, the purpose of the exit strategy is
to limit losses. An exit strategy may also be executed when an investment or business venture
has met its profit objective. Other reasons for executing an exit strategy may include a
significant change in market conditions due to a catastrophic event; legal reasons, such as
estate planning, liability lawsuits or a divorce; or for the simple reason that a business
owner/investor is retiring and wants to cash out.

In specific case of Coffee Cafe, if we fail to reach the point of Break evensales , which has
been calculated above in four continuous quarter this will ring alarm bells that the industry
might not be favorable for us and if the trend continues for three more quarters then we
would wind up our business as it is a partnership firm and it cannot absorb unlimited losses.
So in that case the partnership firm would be liquidated, the assets which include

 Furniture

 Refrigerators

 Television

 AC
 Machinery

Would be sold to pay to the creditors and the bank balance remaining after paying to all
creditors would be distributed amongst the partners in equal ratio.

32
 References

1. Business Policy and Strategic Management, 4/e AzharKazmi, McGraw Hill.

2. Financial Management, 11/eI. M.Pandey, Vikas Publication.

3. Marketing Management, by Philip Kotler 15th Edition – Pearson Publication.

4. Accounting For Managers, Maheshwari&Maheshwari 2/e Vikas Publishing House.

5. http://www.thebalancemb.com/a-coffee-shop-plan-4153010April 30th ,2019

6. https://www.techsciresearch.com/news/706-india-coffee-shops-caf-233-s-market-set-to-

grow-at-cagr-11.html April 17th ,2019

7. http://www.incometaxindia.gov.in/April 13th ,2019

33
 QUESTIONNAIRE
1)Your Age (in years)
i)<20

ii)20-25
iii)25-35
iv)>35

2)Gender
i)Male

ii)Female

3) Out of these ,what do you prefer to drink?

i) Coffee
ii) Tea
iii) Both

iv) None

4) Frequency of drinking Coffee/Tea?

i) Rarely
ii)1 cup per day
iii)2 cups per day
iv) More than 2 cups per day
v) 2,3 cups per week

5) Where do u prefer to have Coffee/ Tea?

i) Home/Self made
ii) Branded Stores
iii) Small Stores/ Canteen

34
6)Which type of coffee do u prefer to buy?
i) Packaged coffee (Coffee House, Nescafe, etc..)

ii) Ready to drink from Cafe/ shop.

7) What coffee Shop do you usually go to?

i) Nescafe
ii) Cafe Coffee Day
iii) Coffee House
v) Other

8) How often do you visit a coffee shop?

i)Almost daily
ii)2-3 times a week
iii)2-3 times a month
iv) Rarely

9)How much money do you usually spend at a coffee shop?(in INR)

i)0-200

ii)200-500
iii)500-800
iv) 800-1000

10)How much time do you spend usually at a coffee shop?

i)Around 30 mins
ii)30 mins - 1 hour
iii)1 hour - 2 hour
iv) More than 2 hours

35