Submitted By: Group-2, BM-Section-B, XIMB

u111067 u111108 u111082 u111081 u111083 u111072 Ankur Agrawal Shilpi Jain Khusboo Sinha Abhijeet Pattnaik Lakshay Katyal Braj Sundar Das

Flow y Introduction to X Café Business y Introduction to Data Collected y Methodology for Data Analysis y Major Hurdles in Revenue Growth y Suggestions y References 2 .

3 . y Operations are shut down during summer holidays for close to two months.Introduction to X Café Business y X-café caters to the needs of the residents of XIMB via two Operations: y Restaurant Business y Groceries y There are provisions of room delivery within the campus for food items y Most of the accounts run on credit to the residents with a monthly payment routine y Food is served from lunch onwards and the store operates from 11 AM to 11 PM on all days.

000 per month (including electricity) for all the 12 months in the year.Introduction to X Café Business y About 40% of its revenues are contributed by the groceries business and the rest 60% from the restaurant business (2011 Data) y X Café employs 14 workers and pays them for 12 months in the year. 4 . y X Café runs on a contract mode and also pays rent @Rs 10.

y We have selected a spectrum of 39 SKU s from the approximate 50 SKU s on the basis of representing majority revenue sources of the grocery items in X Café.8% of 40 % expected revenue from Grocery business. 5 . y Revenue from the 39 SKU s selected = 38.Introduction to Data Collected (Grocery) y Data has been collected as per the template attached in the spread sheet.

paneer.Introduction of Data Collected (Restaurant) y Fixed Cost y Rent paid for the infrastructure y Electricity y Variable Cost y Raw materials for daily consumption (perishable items like chicken. pulses etc) y Labor (Accountant. Chefs and workers) 6 . etc) y Raw materials for monthly consumption (Cooking gas. edible oil. vegetables.

Methodology for Data Analysis y Most of the preliminary data has been collected by checking the products details available at the store and exhaustive inputs from the X café contractor. price (1/1-Dist. Margin) y Transportation & handling costs born by the distributor. 7 . Margin)(1/1-Ret. y Landed Cost estimation using Margins y Landed cost for retailer = MRP (1-retailer Margin) y MRP = Mfg.

Methodology for Data Analysis y Inventory Model y All the ordering happens based on a fixed order Quantity model 8 .

Methodology for Data Analysis y Order Quantity per period = Q y Stock left at reorder point (S) = Q Sales during the period y Average inventory level during the period = (Q/2 + S) y Lead time is 1 2 days for most SKU s y Reorder done weekly. bi-monthly and monthly based on the sales pattern of respective SKU. 9 .

Man Power Allocation Cost Head Restaurant Groceries Allocation 3 Ch + 2 Ac + 7 W 1 Ac + 1 W Costs (Monthly) Annual Cost 35000 6000 420000 72000 10 .Methodology for Data Analysis y Human Resource Allocation between Grocery and Restaurant business: y Ch Chef. Ac Accountant. W Worker.

Unit Variable Cost (V) Contribution Margin Ratio = (P-V)/P = (Total Contribution Margin)/ (Total Revenue) We have used this profit indicator to determine contribution of Restaurant and Grocery business separately to offset the fixed costs and further contribution in gross profit.Retailer Margin) y Contribution Margin Ratio Unit Contribution Margin = Unit price (P) .Methodology for Data Analysis y COGS COGS for grocery items = sales revenue (1. 11 .

we can comment like which business is more profitable. As per calculations results are as following: Restaurant contribution margin Ratio = [Restaurant revenue (Raw material + Labor Cost)]/Restaurant Revenue Grocery contribution margin Ratio = [Grocery revenue (COGS + Labor Cost)]/Grocery revenue y Restaurant -> 26. 12 .80% Groceries -> 4.29% Which shows Restaurant business profit margin is much higher than grocery business.Methodology for Data Analysis By this ratio.

y 7 Days credit on certain items only if purchase is over Rs 25000-30000 13 .Major Hurdles in Revenue Growth Working Capital Constraints: y Credit Period from Suppliers y Market Credit = 7-8 days (on most goods and cash borrowed from lenders) y Advance payment needed for chocolates. deodorants and some cosmetics.

14 . y Accrued due payments to the order of 8 lakhs y Bad debt / default happens due to students dropping out of the course untimely.Major Hurdles in Revenue Growth Payment from Debtors (Customers) y As per standard mode of operation consumers are expected to pay at the end of the month routinely as per the bills published by X Café. y Actual on-time receipts of payments = 20-30% every month.

..Major Hurdles in Revenue Growth Implications due to payment irregularity and so the working capital constraints.   Regular stock-outs of products in demand Unable to expand to more product categories despite existing demand Growth opportunities in restaurant business    Unable to extend breakfast services as workers end the day at 1-2 AM every morning Breakfast services were started but could not be sustained as menu was limited resulting in uncertain demand Losses were high as perishable items like bread had to be disposed due to fluctuating demand 15 .

16 . y Competition in grocery business is more due to shops just outside the campus but single player in restaurant business as mess serves only routine items.Suggestions y More robust mechanism to collect payments on-time to counter the major issue of working capital constraint.10/day after 10th of month y Account closure after 2 month default y More focus should be laid on the expansion of restaurant business as returns are much higher than grocery business. y Currently no late fine till 1 month y Levy Late fine of Rs.

y More focus should be laid on efficient human resource allocation for seamless start of further services like breakfast with a complete menu. y Introduction of happy hours where-in food can be served at attractive discounted prices and quicker services but these benefits can be availed only on cash payment. cold coffee and lassi in summers 17 . This would boost collections. bhel puri y different from mess y displayed for impulse buying from 5-6 pm y Sandwich offering..Suggestions contd. kachori.invest in griller y Bakery items: puffs. flavoured shakes. patties. y Introduce Snacks special menu: samosa. mini pizza: invest in OTG/ Microwave y Invest in mixer grinder: mango shake. bread roll.

mattresses.Suggestions contd. y Brand building: pamphlets on notice boards of GR and MTR at the beginning of session communicating to new students the list of attractive items with phone numbers for room/hostel's and tomorrow's y Offerings at beginning of session: pillow. mirror. buckets. racks. y Pamphlets for new additions in menu and everyday's special. mugs etc.. 18 . y http://www.rumelt/D ocs/Notes/101_margins.pdf 19 .edu/faculty/dick.References y Workers and Owner of X Café y http://en.ucla.

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