8Bit Caf

GTA Venue
Business Plan
Mike Assaad
Victoria Markowski
Adam Mawer
Poorva Misra
Cecilia Setiawan
Timothy Wong
MKPD 500 01
17/04/2014

Contents
Executive Summary......................................................................................................................... 3
Objectives .................................................................................................................................... 3
Mission ........................................................................................................................................ 3
Keys to Success ............................................................................................................................ 4
Company Summary ......................................................................................................................... 4
Company Ownership ................................................................................................................... 5
Company Location ....................................................................................................................... 5
Products and Services ..................................................................................................................... 5
Offering Description .................................................................................................................... 5
Sourcing ....................................................................................................................................... 6
Future Products and Services ...................................................................................................... 7
Market Analysis Summary .............................................................................................................. 8
Market Segmentation ................................................................................................................. 8
Target Market Segment Strategy ................................................................................................ 8
Market Needs ............................................................................................................................ 10
Market Trends ........................................................................................................................... 10
Market Growth .......................................................................................................................... 11
Industry Analysis ....................................................................................................................... 11
Competitive Comparison........................................................................................................... 11
Main Competitors ..................................................................................................................... 13
Marketing Strategy and Implementation Summary ..................................................................... 15
Value Proposition ...................................................................................................................... 15
Competitive Edge Unique Selling Point ................................................................................ 15
Positioning Statement ............................................................................................................... 15
Pricing Strategy ......................................................................................................................... 16
Promotion Strategy ................................................................................................................... 16
Marketing and Sales Programs ................................................................................................. 19
Management Summary ................................................................................................................ 20
Organizational Structure ........................................................................................................... 20
Personnel Plan ........................................................................................................................... 20
Management Team ................................................................................................................... 20
Management Team Gaps .......................................................................................................... 20
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Financial Plan ................................................................................................................................ 21

Important Assumptions............................................................................................................. 21
Capital Costs .............................................................................................................................. 23
Venture Capital Investment Request ........................................................................................ 23
Key Financial Indicators............................................................................................................. 24
Projected Income Statements ................................................................................................... 24
Break-Even Analysis .................................................................................................................. 25
Projected Balance Sheets .......................................................................................................... 26
Appendix ....................................................................................................................................... 27
Appendix A 8Bit Caf Menu and Prices .................................................................................. 27
Appendix B Detailed 8Bit Caf Capital Costs .......................................................................... 28
Appendix C Projected Income Statements ............................................................................ 29
Appendix D 8Bit Caf Balance Sheets .................................................................................... 30
References .................................................................................................................................... 32

Executive Summary
8Bit Caf, located on Yonge Street in the heart of downtown Toronto, is a video game caf
featuring caf products and services in addition to a communal entertainment space where
patrons are invited to play video games as part of a welcoming, social atmosphere. The caf
name is a tribute to classic game designs which featured the 8-bit colour graphics method of
storing image information and resulted in a distinctive pixelated aesthetic quality.
Demonstrating a unique sense of pride in the video game medium and its ability to please,
challenge, and entertain, 8Bit desires to bring together those with an interest in video games,
regardless of skill or previous exposure level.
The caf will be owned and operated by Mohammad Assaad, Victoria Markowski, Adam
Mawer, Poorva Misra, Cecilia Setiawan, and Timothy Wong, who have combined their
considerable project skills to outline a mission and objectives for their business and who believe
in the companys strong potential and future success.
This business plan offers potential investors an opportunity to review our vision and strategic
focus. It also provides a step-by-step plan for the business start-up, establishing favourable
financial numbers, gross margin, and profitability.
This plan includes sections on the company, products and services, market focus, marketing
strategy, management team, and financial plan.
Objectives
1.
2.
3.
4.

Sales approaching or surpassing $850,000 by the end of the second or third fiscal years
Fostering and contributing to a community of like-minded gamers regardless of skill
Offer quality and profitable caf products within a welcoming social atmosphere
To break-even within the first twelve months of operations with a net income over
$375,000

Mission
The 8Bit Caf concept is built upon the success stories of Torontos many casual gaming and
coffeehouse venues. Located in the Yonge-Dundas BIA at the heart of the downtown core, 8Bit
will provide accessible and affordable caf food, coffee-based products, and entertainment to
the thousands of residents, commuters, and visitors who move through its 3km radius. In time,
8Bit will establish itself as a destination of choice for many of the citys youth and young
professionals, as well as for out-of-town visitors.
The establishment will provide a complete, high-quality, and casual entertainment experience
for those searching for something that is rapidly increasing in popularity in the mainstream
market. Not only will patrons be able to enjoy traditional caf fare in the form of delicious
sandwiches, fresh salads, and satisfying snack bowls, they will do so in a facility containing
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ample lounge space for a favourite niche segment-turn-common pastime. Patrons will also
have the option of enjoying coffee beverages, desserts, and an inviting environment where they
can relax with friends and benefit from the kindness and experience of knowledgeable staff.
The cafs aim is simple: it will provide a completely modern, yet casual and comfortable caf
and game lounge experience for the many young Torontonians and visitors who frequent the
citys casual caf haunts and entertainment venues. It will be an affordable venture for
patrons, one that will encourage them to return on numerous occasions.
Finally, and quite significantly, 8Bit Caf will provide a unique point of connectivity for members
of the gamer community in Toronto and related fandom segments a need that has not yet
been specifically filled.
Keys to Success
The keys to success in this business are:
1. Product Quality: Food, coffee-based beverages, desserts, and entertainment are our
products. They must be of high quality and value.
2. Service: Our patrons are paying to have a good time. Their experience will suffer if
service is not of the highest caliber. Each member of the staff will be courteous,
efficient, and attentive to the needs of our patrons.
3. Marketing: We will need to target our audience early and often. While the business is
located in a central and accessible location, people must be made aware of its existence
and offering.
4. Management: We will need to have a firm grasp on food, beverage, and labour costs.
The caf/game lounge experience must be delivered in a fashion that will, not only
inspire repeat business, but encourage word-of-mouth recommendations to others.
Proper supply management, inventory management, employee management, and
quality control are vital.

Company Summary
8Bit is Torontos premier video game caf providing a comfortable atmosphere and social
environment for those wanting to experience console gaming. Emulating the popular board
game caf business model that has seen great success within the city, 8Bit will offer a caf
experience that features a simple caf-style meal menu (including game-inspired snacks and
beverages) and individual console lounge areas for social engagement. Patrons will pay a fee
(see Pricing Strategy) in order to spend time at the caf and utilize in-house gaming equipment.
Meal and beverage menu items will be available for order at an additional cost. Time spent at
the caf will include full access to the console lounge areas for group use based on availability.
Patrons will sign out controllers (based on group numbers) and choose from a library of games
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available for each console (the majority of which will be preloaded digitally onto each console
with the possibility of select titles available in disc format at the front counter). In addition,
patrons will have access to play-through manuals, game literature and magazines, as well as
gameplay guidance offered by knowledgeable and friendly staff members.
Company Ownership
8Bit is a general partnership operating under common law in the City of Toronto. The general
partners are Mohammad Assaad, Victoria Markowski, Adam Mawer, Poorva Misra, Cecilia
Setiawan, and Timothy Wong who participate in the management and oversight of their
Toronto business.
Company Location
Our concept is a single venue enterprise in the Greater Toronto Area (GTA).
8Bit will be located in a newly renovated commercial space in downtown Toronto. The facility
will be equally divided between a caf/coffeehouse function and an entertainment/lounge
function. The caf will feature lounge-style seating (on the main floor and basement levels) for
100 patrons and a modest dining area with flexible seating for approximately 20 patrons. Food
and beverages may be consumed throughout the caf space regardless of seating option. The
caf will feature a front counter area for sign-in and for the order of caf products.

Products and Services

Offering Description
Hours
Mon Closed
Tues Thurs: 11am to 12am
Fri Sun: 11am to 2am
8Bit Caf does not currently facilitate reservations. All seating is on a first come, first serve
basis pending availability. Wait times will vary based on the time of day and the day of the
week (expect longer wait times during peak service on weekends). Individual lounges have
patron seating for five people, though most consoles accommodate four players. Group
members may take turns and exceptions may be made for larger groups on low traffic days.
We will be closed Mondays as, traditionally, this is a slow day for similar-style cafs. Also, as we
are using a large amount of electronic equipment, we will use Mondays to ensure that all of our
equipment is in working order (i.e. charged) and that our caf is well stocked for the week
ahead.
Caf Services
The caf will feature a small dining area and a communal gaming area. Patrons wishing to
purchase food or beverages may do so at any point during their stay at the front counter. The
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front counter area will feature a prominently displayed menu board, food and beverage
production area (behind the counter and operated by staff), refrigerated display unit with
desserts and commercial beverage products, and payment services.
Caf menu items come at an additional cost and will include (seasonal and management
modifications notwithstanding):
- Food items: sandwiches, salads, snack bowls, assorted candy
- Drinks: juices, Perrier, soft drinks, energy drinks, coconut water, bottled water
- Caf: drip coffee, Americano, espresso, cappuccinos, lattes, mocha, hot chocolate, tea,
milkshakes, smoothies
- Desserts: cookies, brownies, cake slices, pie slices, Belgian waffles
Gaming Services
Console lounges will be available for individual and group use including comfortable seating,
small coffee table, flat screen television, and choice of console (Sony PS3 and PS4, Microsoft
Xbox360, Nintendo Wii and WiiU). Patrons entering the caf will sign-in at which time they will
be offered controllers for their choice of console. Controllers may be exchanged at any time for
those of other consoles pending their availability.
8Bit Caf will feature a main level and a basement level. The main level will comprise the small
dining area and communal gaming area. The basement level will feature an extension of the
communal gaming space. Five round tables (each seats 4) will be located in the small dining
area near the front section of the main floor (beyond the entrance and main counter, but
before the communal gaming area). Twelve lounges will be located on the main floor and eight
lounges will be located on the basement level. Of the lounges on the main level, two will
feature PS4 consoles, five other lounges will feature Xbox 360s, and three more still will be
equipped with PS3s. Similarly, the basement level will include two lounges that have a PS3,
three lounges with Xbox 360, and one lounge with PS4. All twenty of our lounge spaces will be
equipped with a television, Wii console, and WiiU console. The caf will acquire 56 game
console units for patron use: twenty Wii systems (all lounges), twenty WiiU systems (all
lounges), eight Xbox 360s (only select lounges), five PlayStation 3s (only select lounges), and
three PlayStation 4s (only select lounges). Total patron capacity will be 120 persons (20 in the
dining area, and 100 in the communal gaming area on both levels).
All patrons will have access to in-house game literature, magazines, and game guides (to be
returned prior to leaving). In addition, new magazines and game guides will be stocked and
offered for purchase at cover price.
Sourcing
Caf Products
8Bit will buy from a select group of Greater Toronto Area suppliers. A direct sales relationship
will be established with food wholesaler and distributor Magnum Food Brokers based in
Markham for the majority of our baked goods, and Sysco Canada for the remainder of our
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menu needs. Delivery frequency will be determined by consumer demand, the cost of which
has been estimated within our budget.
The caf will appeal to partnering suppliers and artisans for discounts on signature pieces of
furniture and lighting to be featured at 8Bit. As part of a marketing agreement with these
merchants, the business will prominently feature their products in exchange for a discount on
fixtures and equipment. However, our budget considers the possibility that no such discount is
given at start-up.
Gaming Technology and Accessories
All console gaming equipment, computers, technical equipment, and electronic cables and
accessories will be acquired from general and specialty retailers in Toronto or through online
merchants. Select consoles will be purchased used or refurbished.
Future Products and Services
Our business offers great potential for expansion, both in services offered and in the creation of
spin-off venue locations throughout the city. As part of our long-term business plan
(dependent upon the financial success and community growth of our business) we will review
the viability of creating a network of franchise locations throughout the GTA and, potentially,
across other cities in Canada.
Commensurate with our growth margins, we will reassess our menu offering to determine if it
may be expanded. We will consider expanding our original business location through the
purchase of neighbouring businesses.
In addition to caf and gaming services, 8Bit will feature video game and geek merchandise (at
an additional cost), including: t-shirts, mugs, key chains, hats, bags, and other paraphernalia.
The structure of our business allows for the possibility of contracting merchandiser and
distributor partnerships and cross-promotions. We will explore the option of becoming a fullservice games vendor in addition to our envisioned caf and gaming services. Consideration
will be given to expanding our in-house offering in order to create an online store. In the event
that our merchandising capability is expanded, the use of a storage or warehouse facility will be
considered.
8Bit will host occasional artist alley and craft sales similar to popular fandom conventions in
which fantasy, sci-fi, comic, and game artists are able to sell prints of their artwork and small
crafts. In doing so, 8Bit hopes to further engage with the strong artist community within the
GTA and encourage the creation and sale of local artwork. We also hope to display artists
works as part of our in-house decor.

Market Analysis Summary

Market Segmentation
8Bit will appeal to youth and young professionals residing in targeted in-town neighbourhoods,
as well as those within the target demographic that frequently travel to the downtown core for
shopping, entertainment, school, and work. The caf will be in proximity to commercial
enterprises within the Downtown Yonge BIA. The caf will provide a unique experience for the
more than 52 million people who travel annually to the area via three subway stations that
serve Downtown Yonge Queen, Dundas, and College. In addition, the area features some of
the highest pedestrian counts in Canada (Resources 2014). The Downtown Yonge BIA
features the busiest intersection in downtown Toronto (at Yonge and Dundas), is in close
proximity to Ryerson University (one of Canadas largest universities by student population)
("News & Events 2014), the Eaton Centre, Yonge-Dundas Square, and numerous other popular
retail and commercial venues.
Condo residents, commuters, and students will provide primary support for the business.
Secondary support will come from visitors to the city.
Caf services will be positioned to fill a niche demand for people interested in video games,
computer games, and geek fandom. Cross-selling opportunities exist with beverages and
magazines.
The immediate market area is a two kilometer radius that includes the University of Toronto St.
George campus, OCADU, Garden District, Downtown Toronto, Old Toronto, Church and
Wellesley, Baldwin Village, Chinatown, and Queen Street West.
Target Market Segment Strategy
Primary Group
Age Range: 20 34 year olds,
Gender: Male and Female; Male-leaning
Education: Undergraduate and above
Income Range: $9,000 (part-time), $20,000 - $35,000
Race and Ethnicity: All races
Geographic Location: Urban areas (downtown residents and commuters)
Primary Group Psychographics
Perception: Casual, modern entertainment hub that provides an enjoyable social gaming
experience
Awareness: Friends, siblings, colleagues, social networking, promotions, events
Motivation and Needs: Desire for a comfortable, trendy social space and novel gaming
experience
Attitude and Personality: Youthful, trendy, in-the-know, sociable
Lifestyle: Casual, active, busy
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Secondary Group
Age Range: 15 20 year olds
Gender: Male and Female; Male-leaning
Education: High school, Undergraduate
Income Range: $8,500.00+ (part-time)
Race and Ethnicity: All races
Geographic Location: Urban areas (downtown residents and commuters)
Secondary Group Psychographics
Perception: Recognition that 8Bit is an entertaining and friendly place for individual gameplay
and group gatherings
Awareness: Friends, siblings, peers, social networking, promotions, events
Motivation and Needs: Desire for a comfortable, trendy hang-out space that provides access to
the latest games
Attitude and Personality: Youthful, trendy, peer-influenced, having pop culture awareness
Lifestyle: Casual, active, busy
Niche Market
- gamers (game aficionados, enthusiasts, and casual gamers including those who love
classic gaming and those who love modern console gaming)
Niche Market Bleed-Through
- geek culture and fandom
o The use of iconic characters for the caf menu names as well as a social
environment celebrating geek and gamer culture, will draw those with curiosity
about video games and those who have game playing friends.
8Bit engages with the growing Mainstream Geek community. As popularity in geek culture
continues to rise (including fandom specific interests), so too does popularity in video games.
8Bit offers a welcoming environment for game enthusiasts, casual gamers, and those wanting
to experience gaming without the commitment of having to purchase a console and games.
We hope to create a social atmosphere that offers both beginners and advanced players a
chance to enjoy themselves.
We believe that video games play a distinct and fundamentally significant role in facilitating
social interaction, engaging individuals both mentally and physically, and providing a unique
avenue for entertainment across different age groups. We also believe in the potential for our
business to attract patrons of different interest and skill levels and aim to build a community
that values enjoyment, learning, and inclusivity. A 2013 article by the American Psychological
Association states that more than 70 percent of gamers play with a friend, with millions of
people worldwide participating in massive virtual social communities through video and
computer game usage (Granic 2013). Noting the benefit of mental stimulation, the article also
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highlights the ability of video games to enhance problem-solving, spatial reasoning, critical
thinking, multitasking, and collaboration amongst children and adolescents. In coping with
ongoing failures in games, individuals are able to ward off anxiety and build an emotional
resilience that they can rely upon in their everyday lives (Granic 2013). Following studies at UC
San Francisco, scientists have posited that some functional elements of video game play may
improve cognitive control in adult participants (Kurtzman 2013).
In addition to embracing these potential benefits, 8Bit hopes to offer a viable, engaging social
venue alternative to those currently within the GTA market. Our relaxed caf-style venue and
lounges promote an environment free of intimidation and one that encourages social
gatherings and active participation without prejudice or dismissal. Our strength lies in our
value offering and company vision. We strive for quality in service, a welcoming environment,
and an ethos that celebrates the rise of video game popularity in mainstream culture. With the
global market for video games projected to grow from $67 billion in 2012 to $82 billion by 2017
(DFC Intelligence), there is little doubt that entertainment seekers will continue to explore
gaming as an activity meant to relax, connect, and challenge individuals in new and exciting
ways.
Market Needs
Our patrons entertainment needs are critical to the success of 8Bit. As a supplier of a unique
social venue, 8Bit must appeal to those who are interested in the novelty of integrating a caf
and lounge experience into their social and video game entertainment activities (regardless of
exposure to video games or skill level). Moreover, we must also appeal to those customers
who enjoy gaming and regularly take advantage of Torontos bustling social scenes, primarily
during weekends and evenings.
Our customers are well-educated and interested in partaking of new experiences. Keeping
menu and entertainment offerings fresh will remain a constant challenge to the business.
Segments of the target market tend to enjoy gaming activities with friends, dine-out, visit
coffee shops, and seek out weekend and evening entertainment frequently. They tend to
choose comfortable, affordable venues, and repeatedly visit those places that offer familiar
scenery with new twists.
Market Trends
Variants of the gaming caf business model have been in existence for many years in the form
of internet (net) cafs, and more recently, board game cafs throughout the GTA and cities
around the world. What differentiates 8Bit is its firm focus on the social and interactive aspects
of gaming, clearly demonstrated by its console game environment. Cafs combining internet
LAN gaming and console gaming have begun to appear throughout North America. The
ascendance of the video game industry in Canada provides a clear indication of the increasing
consumer reliance on technology for entertainment. According to a 2012 study by the
Entertainment Software Association of Canada, approximately 58% of Canadians are gamers
(54% male, 45% female), with 31 as the average age of gamers in the country (the majority
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being adolescents and young adults) (Facts & Research, Essential Facts 2012). Despite the
dramatic rise in mobile device usage in recent years (placing it third on the list), consoles are
second only to computer use in frequency at 33% of the population using consoles to play
games and 61% of households (about 3 in 5) owning at least one video game console. It has
been suggested that 45% of gamers in Canada play a few times per week (Facts & Research,
Essential Facts 2012). Evidence of increased gameplay and social gameplay can be found in
online and print news sources, blogs, and in city events such as video game and fandom
conventions which features thousands of fans in costume dressed as their favourite video game
characters and hundreds of distributors and game merchandisers.
The citys burgeoning youth culture scene interested in board games, tech, video games, and
geek fandom continues to grow. These niche markets are inclusive by nature and are rapidly
expanding. However, strong communities have formed within these niche markets composed
of individuals and groups who are passionate about their interests.
The market opportunity for food and beverage establishments in this area of Toronto has never
been better. The immediate area surrounding the business venue continues to draw millions of
commuters and visitors from other areas annually for destination shopping and entertainment.
Market Growth
The City of Toronto continues to grow, both in commercial and residential building expansion
and population. Young individuals living in the suburbs frequently commute to the downtown
core, while others (students and those within the upper age bracket of the target demographic)
have rejected long commutes in favour of living closer to their school, work, and recreational
venues. In either case, human traffic within the city core has increased. Living in a vibrant
growing metropolis, city dwellers continue to seek out entertainment spots to suit their
individualized tastes.
Industry Analysis
Given the nature of the industry, its growth, and the demonstrated success of businesses in the
city featuring a similar social gameplay vision, there exists a significant demand for the service
8Bit offers. The coffee houses, internet cafs, board game cafs, and arcades that make up the
community of establishments in the area surrounding 8Bit are significantly diverse. Their
concepts range from generic and low-key, to modern and chic, to young and fresh. However,
the predominant nature of competitor establishments is casual, open, and dynamic.
Competitive Comparison
8Bit will provide an alternative, inclusive environment that extends beyond typical internet caf
and board game caf models in order to engage a growing community of casual gamers, game
aficionados, and casual interest patrons within the GTA. 8Bit will effectively combine the social
atmosphere of a caf setting with that of the social and participatory aspects of gaming. It is
this level of inclusivity, service, and accessibility that will satisfy 8Bits clientele enabling us to
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build strong customer loyalty and ultimately providing the target market with an enjoyable and
memorable experience.
The following is a competitive analysis using famed consultant Michael Porters Five Forces
approach:
Threat of New Entrants (moderate to high)
Given the popularity of the video game industry and the role of local cafs as social hubs, we
expect a growth of new entrants in the market (both direct and indirect competition). The
electronic hardware used, namely video game consoles and televisions, are widely available
meaning that we have little protection over our business service structure. Despite this, we
believe the threat of new entrants to be moderate due to the high upfront costs associated
with our business model and complexity of gaining the loyalty of the target market. In
employing a differentiation strategy, 8Bit must rely on its solid market positioning by leveraging
its key benefits and experience. Given our first-to-market advantage within the GTA, we are
confident that, once established, competitors will find it a challenge to appeal as strongly to the
target market and to match our services and offering.
Bargaining Power of Buyers (low increasing to moderate)
While we are providing a unique service to our customers, 8Bits buying power will remain
relatively low. Within the GTA market, there are a number of key suppliers with which 8Bit may
conduct business. As a start-up, negotiating the key terms of supplier agreements will be
crucial to 8Bits growth and success. Establishing mutually beneficial and resilient relationships
to fulfill our operational needs will pose a challenge where, as a soliciting business, 8Bit will be
one of many clients these suppliers service. Given our position as a start-up appealing to
specialty food suppliers within the city our bargaining power will be on the low end. Once 8Bit
has established solid customer base and reached a healthy level of profitability, suppliers may
be more willing to lower their prices based on expected exposure and revenue.
Bargaining Power of Suppliers (moderate to high)
As a business that relies heavily on both technology and the food and beverage industries, we
assess the bargaining power of suppliers as being moderate to high. Game console retailers,
appliance manufacturers, and food suppliers may be in a position to dictate our initial business
relationship. Consoles and video games sold by both commercial and private dealers may be
difficult to locate at desired prices, though we are committed to meeting our supply targets.
Where supplier relationships are concerned, it is possible that 8Bit will absorb premium pricing
per unit on some items unless bulk purchase deals are successfully negotiated. We anticipate
that the bargaining power of our caf menu suppliers will be manageable based on the terms
outlined in our contract agreements. Canvassing the GTA for suitable suppliers who offer
business relationship incentives will ensure that 8Bit receives the best deal on its food and
beverage goods. As 8Bit Caf continues to grow, so too will our buying and bargaining power.
Threat of Substitutes (moderate to high)
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The threat of substitutes is moderate to high as other entrepreneurs in the city could launch
their own variations on our business model. In addition, existing businesses operating in
complimentary industries that offer similar benefits to consumers of the same target market
increase the risk of potential marketplace substitution. For example, instead of going to 8Bit a
customer or group of customers may choose to go to a board game caf, internet caf, arcade,
dessert caf, coffee shop, restaurant, or even the movie theatre. Any venue that provides a
social context and atmosphere for a particular activity demonstrates the potential of being a
substitute for our business, thereby potentially affecting our profitability if patrons choose to
frequent the locations of other businesses. However, the growth of gaming culture and
emerging trends indicate a demand for a relaxed and social gaming environment. Through
8Bits caf and entertainment offering, we aim to tap into these trends and leverage
community demand to create a stable and profitable business.
Competitive Rivalry (moderate to high)
Our caf is faced with both direct and indirect competition from local businesses and
entertainment ventures throughout the city. Despite lacking a direct analogue in the
marketplace, it can be said that 8Bit Cafs direct competition includes existing GTA board game
cafs such as Snakes & Lattes, Snakes & Lagers, Castle Board Game Caf and Role Play Caf.
Classic arcades, vintage game stores, and internet cafs are also direct competitors. All of these
businesses provide a potential sit down gaming experience. Indirect competitors in the
market include coffee houses and coffee shops, such as giants Tim Hortons, Starbucks and
McDonalds, and numerous other independent businesses. Perhaps our most challenging form
of indirect competition is the at-home gaming experience. Individual and social gamers have
traditionally enjoyed gaming activities within the comfort of their own homes. The concept of
bringing this activity outside of the home and imbuing it with a social context is relatively new
in the current market. Thus, it is important to appeal to this niche market directly and facilitate
a sense of community and novelty surrounding our business. We must reach a collaborative
agreement with our suppliers in order to ensure a streamlined offering for our patrons. As
mentioned previously, there is no business within the GTA that offers what 8Bit does. This will
be our competitive strength in our patrons and suppliers minds.
Main Competitors
Though 8Bit lacks a direct equivalent in the marketplace as it utilizes a main business strategy of
differentiation, it has many indirect competitors in the form of coffee houses, coffee shops,
dessert cafs, board game cafs, and internet cafs. These establishments cater to a similar
target market demographic and some maintain a similar social gameplay vision.
Coffee Houses and Coffee Shops
There are dozens of coffee house and coffee shop establishments of various styles and price
points throughout the downtown core. These include, among numerous others: Starbucks,
Tim Hortons, McDonalds, Balzacs, Dark Horse Espresso Bar, Golden Mint Coffee and Tea
Company.

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Internet Cafs
Though internet cafs were once a booming business throughout Toronto, the growth of both
home computing and smartphone technology has led to a number of closures within the
internet caf segment. However, based on our research, those still operating within the GTA
include ING DIRECT Caf, Netconnect, Internet Dot Com and Net Effect Internet Lounge. None
have embraced an explicit social gaming structure.
Board Game Cafs
These businesses warrant a more detailed overview. While they are not our direct competition
they offer both a caf environment and social gaming experience. On Friday March 21st, 2014
8Bit managers visited and researched the following board game cafs currently operating in the
City of Toronto:
Snakes & Lattes Snakes & Lattes was the first dedicated board game caf in Toronto. Located
at 600 Bloor Street West, guests pay a $5.00 cover charge for access to a table and the cafs
extensive board game collection. Currently, the caf does not offer Wi-Fi service in order to
encourage patrons to focus on the social and interactive experience of playing games.
Operating as a caf, Snakes & Lattes offers a diverse array of refreshments including drip
coffee, tea, espresso-based drinks, milkshakes and smoothies. In addition, the business offers a
modest menu including sandwiches ($8 - $9), salads ($5 - $7), snack bowls ($3 - $4), and
desserts ($6.50 - $7.95).
Snakes & Lagers Snakes & Lagers Board Game Bar is a gastro-pub located in downtown
Toronto and is the spin-off location of the popular Snakes & Lattes Board Game Caf. Offering
alcoholic beverages, the establishment serves a variety of draft beers, wines, and spirits in
addition to its pub-style menu. The business features a similar board game selection and
atmosphere to its sister store. The majority of the beers offered are sourced from local craft
breweries capitalizing on the growing artisan and craft beer trend. Draught beer ($7), wine
($6.50 - $8), cocktails ($10 - $12), bar nuts ($4), sliders ($15 for 3), and desserts ($1.25 - $5)
comprise a significant portion of the menu.
Castle Board Game Caf Castle Board Game Caf operates as both a caf and retail board
game vendor. Located on Spadina Avenue just south of College Street in Toronto, guests pay a
$2.50 hourly rate for their stay allowing them access to any game from the cafs extensive
selection. If customers find a game particularly enjoyable they may purchase it through Castles
online store. Offering a basic, yet upscale beverage menu, Castles features espresso-based
drinks, specialty drinks, and tea. Their food offering includes sandwiches, cakes, pies, and
Belgian waffles. A price list was unavailable.
Roll Play Caf Role Play Caf is located at 10A Edward Street. Of the major board game cafs
in the city, Role Play is closest in proximity to 8Bits desired location within the Downtown
Yonge BIA. Role Play promotes the use of their space for social and corporate events provided
that 48 hours notice is given. Their menu prices are significantly higher than those of
competitors with an offering that includes: pizzas ($13 - $16), sandwiches ($8.50 - $10.50),
14

salads ($7.50), hot dogs ($10 - $13), nachos ($12.50 - $16.50), and other standard bar foods.
Roll Play Caf is also licenced to serve alcohol.

Marketing Strategy and Implementation Summary

The following marketing mix delineates the value of our offering for our customers, as well as
the channels, communication strategies, and costs associated with our business.
Value Proposition
We believe our value proposition is quite clear and easily distinguishable from most others in
the market. We offer good quality accessible menu items and entertainment as measured by
their inherently natural value, at an affordable price that will encourage regular visits and bring
together a community.
Competitive Edge Unique Selling Point
8Bit Caf maintains a competitive edge in several significant areas:
-

The caf is located in a central location within Torontos downtown core in close
proximity to notable businesses, schools, and landmarks with heavy pedestrian traffic
and busy commuter hubs.
The caf offers a unique, first-to-market patron experience that combines caf services
with a game lounge atmosphere.
The owners are educated and work professionally within the marketing field managing
significant budgets and overseeing major projects. They share a passion for creating top
quality customer service experiences and video game technology. Through business,
academic, and community activities, the owners maintain a substantial network of
professionals in multiple industries.
The nature of the business fosters connectivity within niche communities, primarily in
the gaming community, as well as in overlapping geek sub-cultures (i.e. comics, sci-fi,
horror, etc.).
The facilitys layout will allow for flexible caf and entertainment options making it
attractive to the target market, overlapping niche segments, and newcomers.
Merchant partnerships provide significant discounts mitigating some operational
expenses.

Positioning Statement
For our most important target market, Toronto residents who crave new and engaging caf
entertainment options, 8Bit satisfies the need for a casual and modern gaming and caf space.
Unlike our competition, 8Bit is designed to handle this need from its inception, starting with the
15

general structure of its facility. General food programming, coupled with up-to-date
entertainment programming and a friendly, knowledgeable staff will offer the customer an
experience unlike anything that is currently available in the market. This space is meant to
unite those new to gaming, casual gamers, and enthusiasts alike.
Pricing Strategy
The price point for our menu items and gaming services will be an important determinant of
success. We seek to find a happy and profitable medium in how much people are willing to pay
for playing video games outside of their home as part of an entertainment experience. Many of
our patrons own console systems and play at home, both on an individual basis and in social
groups. Other patrons have little to no experience with gaming or lack the means to purchase
their own equipment.
Our food, drinks, and entertainment options are priced to give us an attractive margin while at
the same time offering value to the consumer (See Appendix A for Menu & Prices). We want
repeat business, but we also want the experience to remain fresh. This goal will be met by
ensuring high quality product and service standards, and by continuously updating our game
library.
A small hourly fee of $6 will give patrons continued access to a specific lounge in the gaming
area. A start time will be recorded in the computer system as the patron enters the venue.
Patrons will enter their name and be asked to accept an agreement (via checkbox) outlining the
terms and conditions of participation in caf activities, specifically those regarding gaming and
console equipment. By accepting this agreement, patrons agree to protect all equipment or be
liable for the cost of replacing it. 8Bits damage and behaviour policies will be clearly displayed
in a highly visibility location inside the caf. Each lounge area will feature a small themed
whiteboard upon which the time of the individual or groups entry (and session end time) will
be written. To avoid discrepancies, the time will also be recorded within the cafs computer
system. The whiteboard simply serves as a visual reminder for the patrons.
Patrons are subject to a four hour time limit so as to reduce wait times and overcrowding.
Promotion Strategy
Objectives and Tactics
1. Soft and Grand Opening Objectives
a. Generate awareness and encourage pledge activity for Indiegogo crowdfunding
campaign
b. Soft Opening a month prior to Fan Expo Canada in Toronto (taking place between
August 27-30, 2015)
c. Build momentum by distributing promotional materials during the month of August
(outlined under Secondary Strategy; see below)
d. Grand Opening on the Saturday, August 29, 2015 (during Fan Expo Canada)

16

i. Fan Expo Canadas attendees include Torontonians but also of people from
all over Canada and abroad. It is the third largest pop culture event in North
America and the largest event of its kind in Canada (ABOUT US 2014).
2. Key Tactics
(initiated during the development stages of the business and concentrated during the
immediate lead up to our multiple launch with the potential of continuous and varied use)
a. Use of social media (Facebook, Twitter, Yelp, Foursquare, Urbanspoon)
b. Asking prominent bloggers and vloggers from the Toronto online and pop culture
scene to promote our caf
c. The 8Bit management team and collaborators will attend Fan Expo Canada as
normal visitors to network with attendees while distributing caf flyers and
spreading the word about the business
d. Advertising in local campus newspapers and through poster use at institutions that
are in close proximity to our business location
e. Cross-promotion with independent comic book stores, game stores, and hobby
shops in the downtown core
Strategy Summary
We have selected a strategy to build momentum prior to and during the launch of our business
to promote the 8Bit Caf crowdfunding campaign and business. To synchronise this strategy
with 8Bits general concept, a multiple launch will take place during the month of August in
2015 culminating with a Grand Opening event that will take place during Canadas largest
annual multi-genre fan convention, Fan Expo Canada. This four day event (Thursday to Sunday)
is typically held the weekend before Labour Day during the summer at the Metro Toronto
Convention Centre (MTCC) (Fan Expo Canada 2014). We have chosen August 2015 as our
year of launch as it will not only coincide with the convention and take advantage of summer
season commuter and pedestrian traffic in the city, but will allow us approximately fifteen
months of preparation time to complete all necessary crowdfunding initiatives, renovations,
and fine-tuning of legal and technical requirements.
Originally showcasing comic books, science fiction/fantasy and film/television and related
popular arts, Fan Expo Canada has since expanded to include a larger range of pop culture and
fandom elements, such as video games, web entertainment, horror, anime, manga, animation,
toys, and collectible card games. Attendance for the 2013 convention was estimated at over
100,000 (Fan Expo Canada 2014). As the site of all things geek featuring comic book
professionals, panels, seminars, workshops, and video game company sponsored events, Fan
Expo Canada has an unprecedented ability to draw comic book fans, movie nerds, and lovers of
geek culture from all walks of life throughout the city and abroad. A vast majority of these
individuals are members of the gaming niche market segment and, therefore, members of our
primary and secondary target markets. Those who do not have any specific affiliation with the
gaming community maintain an interest in video games by extension of their respective (and
overlapping) niche market interests.

17

Given the large draw and widespread appeal of Fan Expo Canada, specifically the human traffic
which is funnelled into and surrounding the convention building location, it is not advisable that
8Bit launch its enterprise immediately during the beginning days of the convention. Our
management team has, therefore, decided to systematically generate awareness and move
towards building a client-base prior to the convention weekend by organizing a Soft Opening on
August 1, 2015 nearly four weeks prior to the start of Fan Expo Canada.
During this four week window, 8Bit Caf will aim to generate awareness, excitement, and
conversations about the business both online and offline prior to its Grand Opening near the
end of August.
Our Grand Opening event is scheduled for Saturday, August 29, 2015 and leverages Fan Expo
Canadas event traffic to promote the business. 8Bit Cafs management team and
collaborators will represent the business during the years largest game and geek culture event.
The aim of this initiative is awareness and advocacy we will be meeting and networking with
members of community, as well as distributing flyers to convention attendees and visitors in
the area explaining our cafs mission, vision, and offering. These flyers will provide potential
future patrons with a snapshot of 8Bits key benefits and experience and will include a coupon
for a free medium coffee with a purchase of 2 hours of gameplay (as well as standard contact
and location information). This coupon will be valid from August 29, 2015 to September 30,
2015 (a one month period) in order to incite immediacy in consumer traffic and spur word-ofmouth interest. The aim of this initiative is to engage with our target audience and encourage
them to visit our caf.
In the lead up to Fan Expo Canada, promotions utilizing social media as an engaging and farreaching tool for communication will be conducted on networking sites including Facebook,
Twitter, Yelp, Foursquare, and Urbanspoon, coinciding with the launch of the cafs official
website. These social media outlets will be used to generate awareness and interest in 8Bit and
will be supported by the sharing of information about the business on local community blogs,
online new sites, tech blogs, and game blogs. To encourage the creation of a dialogue about
our business, we will invite local game community bloggers and vloggers to visit our caf and
document their experience. Added incentives, such as a free meal or beverages, may be
employed to appeal to these community ambassadors. Popular Canadian YouTube
personalities will be invited to attend a Meet and Greet at 8Bit with fans where YouTubers
and visitors alike may engage in networking and social gaming. The use of these tactics will
garner much needed local exposure for the caf and its services.
In addition to the aforementioned marketing efforts, we hope to target the younger age
bracket of our target demographic by engaging with them at local college campuses in
downtown Toronto (within a 3km radius of the caf location). Poster campaigns and campus
newspaper advertisements will help us reach this segment of our demographic.
8Bit Caf will also partner with existing comic book stores, hobby shops, and independent game
stores in Toronto as a means of reaching our target market through a niche overlap. Though
gamers, comic book fans, and hobbyists comprise their own distinct sub-cultures and many do
not actively participate in all other geek cultures and interests (demonstrating a lack of
18

correlation), there exists a significant overlap. Many distinctions exist between groups but so
too does the potential for a multilateral integration of interests and a desire to experience
other areas of geek fandom. In partnering with independent retailers, 8Bit will demonstrate a
more devoted community approach. Partnering business may include: The Beguiling, Labyrinth
Comics, Silver Snail Comics, and Hairy Tarantula. Customers who shop at one of these partner
locations can show their receipt when visiting 8Bit to gain their first hour of play (as part of a
three hour stay) free of charge. Similarly, patrons of 8Bit can display one of their caf receipts
when they shop at any of the partnering stores to receive a 15% discount off of a regularly
priced item (limitations on quantity of usage will apply).
Marketing and Sales Programs
To increase sales, drive brand equity and promote the business as an entertaining and social
venue, 8Bit intends to offer the following events at various times throughout the year:
Game Release Nights
8Bit will host game release nights in celebration of new games entering the market. Themed
specials on entrance fees and caf products may be offered.
Game Competition Nights
8Bit will host game competition and tournament nights. All are welcome though interested
parties must sign-up and pay a small fee. We believe that hosting such events will appeal to
game aficionados more so than casual gamers, but will give our business the ability to
effectively engage with game enthusiasts wanting to demonstrate their skills. Prizes, including
caf vouchers and free game time, will be offered.
Holiday Events
Theme events will take place for Halloween, Christmas, Valentines Day, and other occasions
throughout the year.
Corporate Events
Two weeks advance notice is required to properly schedule and facilitate corporate events up
to a maximum of approximately 100-120 guests. 8Bit Caf provides companies with an
opportunity to reward its employees for their performance and to engage in gaming activities
as a team building exercise to increase productivity.
Discount Days
During periods of less traffic (i.e. during the day on weekdays), 8Bit will offer a discount on its
price rate. An 8% discount will be offered to patrons for gaming services on Tuesdays.

19

Management Summary
Organizational Structure
8Bit Caf is owned by general partners Mohammad Assaad, Victoria Markowski, Adam Mawer,
Poorva Misra, Cecilia Setiawan, and Timothy Wong.
Part-time personnel with game knowledge and expertise will be hired to handle customer
inquiries and conduct food and beverage preparation, serving, and dishwashing duties.
Personnel Plan
The personnel plan calls for hiring 5-6 part-time employees at start-up. Part-time caf staff will
manage approximately 112 hours of operations per week and servers/game reps will be hired
for approximately 95 hours of operations per week.
Any additional hires will be part-time and devoted to expanded operations, as well as increased
capacity or operation of private party functions. Part-time personnel will be paid at the
minimum wage level for the Province of Ontario with the possibility of wage increases with the
success of the business.
Management Team
Victoria Markowski, General Manager
Timothy Wong, Finance and Logistics
Poorva Misra, Accounts Manager
Adam Mawer, Marketing Manager
Cecilia Setiawan, Operations Manager
Mohammad Assaad, Sales Manager and Staff Development
Management Team Gaps
The management team will have to partially rely upon outside contractors and consultants to
carry out any additional IT, web, marketing, and accounting functions.
The management team is still in the early stages of formation. IT services may be fully
outsourced to a third party consultancy. Adam Mawer is currently working as a consultant on
many issues facing the establishment of the 8Bit Caf.

20

Financial Plan
Important Assumptions
The financial plan depends on important assumptions. The key underlying assumptions are:
-

We assume the continued upward trajectory of gaming interests and activities.

We assume a slow-growth economy, without major recession.
We assume a competitive market with low barriers to entry.
We assume that there are no unforeseen changes in technology and that equipment will
not immediately become obsolete.
We assume access to equity capital and financing is sufficient to maintain our financial
plan.

Owners Equity
Partner capital in the amount of $25, 160 per partner will be invested to facilitate the launch of
the business.
Bank Loans
No bank loans will be taken out, thereby reducing pressure on accounts payable with the
central focus being on caf inventory and other business related accounts.
Crowdfunding
Crowdfunding provides an alternate (or in some cases, supplementary) form of financing for
start-ups in the early stages of developing their products or services. A successful
crowdfunding round not only provides businesses with needed cash, but creates a base of
customers who feel as though they have a stake in the business success.
After a careful comparison of popular crowdfunding sites, Kickstarter and Indiegogo, the 8Bit
Caf management team has chosen to launch its crowdfunding campaign using the Indiegogo
service. The target amount is $126,152 and will be put towards the purchase of gaming
equipment (consoles and televisions), building of a game library, and caf appliances.
Despite its recognisability, high online traffic count, and the level of exposure it would afford
our caf, we have chosen to abstain from utilizing Kickstarters high risk, high reward
campaign structure. Users of Kickstarter must fully reach their target goal in order to receive
funding for their projects. If successful, Kickstarter deducts a 5% platform fee and an additional
payment fee of 3% is deducted by Kickstarter transaction partner, Amazon (Kickstarter versus
IndieGoGo 2014). In additional to an existing publicity push, Kickstarter offers numerous
resources for new campaign creators looking to find success in their approach. Kickstarter
tends to fund creative projects that focus on a specific product or service, such as a film, book,
music album, etc.
21

In contrast, Indiegogo follows an alternate model of operation and maintains a large Canadian
presence due to its early availability in the Canadian market (predating the launch of Kickstarter
in Canada). The Indiegogo model allows for Flexible Funding which enables users to retain any
funds raised regardless if the target goal is met. A 4% platform fee is deducted if the campaign
funding goal is met, and a 9% platform fee is deducted on campaigns that do not meet their
funding goal. A 3% transaction fee is also deducted (Indiegogo Help Center 2014). Despite
lacking the presence of its competitor, Indiegogo has been covered in various media sources
and remains a popular choice for artists and working professionals. Unlike Kickstarter,
Indiegogo allows users to retain any funding they receive, deducts a lower platform fee than its
competitor, and features a robust entrepreneurial and business section that Kickstarter notably
lacks.
The Kickstarter platform also poses a problem for offline campaign funding. Any funds raised
offline during the pledge drive cannot be added towards a Kickstarter campaign without the
intervention of a willing and trustworthy third-party who will agree to pledge offline funds on
behalf of those running the campaign. A person cannot pledge towards their own project.
This also means that offline donors (those who donated in person during other fundraising
events) will not be recognized for their contribution on the Kickstarter website.
For these reasons, the management team at 8Bit will launch its campaign on the Indiegogo
platform and will account for any lack in public presence using an emphatic promotional
strategy (outlined previously; see Promotional Strategy). 8Bit will provide limited edition
branded and geek merchandise, such as hats, mugs, t-shirts, keychains, and pins, as well as caf
vouchers, finite memberships for periods of unlimited play, gaming products, and artwork, the
value of which will increase at each progressive pledge level. Doing so will highlight the
mutually beneficial nature of the pledge relationship and will begin to foster a sense of loyalty
and pride among our campaign backers.
Factors that will ensure the success of our campaign:
- A campaign that emphasizes our vision and dedication to supporters and members of
our community.
- A network of enthusiastic friends, family, and colleagues who will urge others to give.
- Word-of-mouth, local neighbourhood marketing, and an appeal to local bloggers,
vloggers, and game gurus to spread the word about our business.
- Different rewards and perks for different levels of giving so that community members
can contribute based on their means and receive something in return for their support.
- Clear objectives, strategies, and a refined business plan and budget.
- Demonstrated commitment to the growth and success of the business through personal
investment and management.
- Creative promotional strategy and video pitch featuring a call to action.
- Staying active online and engaging with the community regularly and directly.
22

Capital Costs
Initially, 8Bit Cafs capital costs were decided by assigning items determined to be essential to
the business to three categories: Game Consoles, Establishment Costs, and Food and Caf
Equipment. Recognizing the existence of additional costs including legal fees (i.e. permits),
insurance and marketing, a fourth category entitled Additional Fees was created. A fifth
category entitled Monthly Costs was established to include fixed costs including rent, staff
wages, hydro, and cleaning supplies. Finally, a sixth category, Staff Costs, was created
specifically to budget for staff pay. After calculating the cost of items within each category (See
Appendix B), management has determined that the capital costs for 8Bit Caf will be
$375,450.00 (Figure A).
Figure A: 8Bit Caf Capital Costs per Category

8Bit Caf Capital Costs

Game Consoles
Establishment Costs
Food and Cafe Equipment
Operating Costs*
Staff Pay (Annual)
Additional Fees

$
$
$
$
$
$
Total $
*11 Months after initial starting month

58,410.00
96,469.00
21,922.00
110,209.00
73,440.00
15,000.00
375,450.00

Venture Capital Investment Request

Based on the above capital costs, the management of 8Bit Caf requests the following venture
capital investment:
We are seeking an investment of $112,635.00 for a 30% equity stake in 8Bit Caf.
The remainder of our funding strategy includes the following:
Venture Capital Investment
Crowdfunding Indiegogo
Owner/Managerial Investment
TOTAL

$112,635.00
$126,152.00*

30% Equity Stake

30% Equity Stake

$150,180.00^
$388,967.00

40% Equity Stake

* Includes an extra 12% to cover Indiegogo fees

^ Each manager would contribute $25,030 of their personal finances
The management team of 8Bit Caf will be contributing personal capital while engaging in
crowdfunding and fundraising initiatives over a 15 month period to finance the business. Each
of our six managers will contribute to $20,000 of personal finances to the business at start-up,
23

thereby reducing the amount of venture capital needed. The following projected statements
should also serve to reduce investment risk.
Key Financial Indicators
The most important income indicators for 8Bit Caf are the number of hours spent gaming (1,
2, 3 or the maximum of 4) and caf sales numbers. We must also make sure that we are
turning our inventory at a reasonable rate so as to avoid food spoilage and money lost in
inventory.
Projected Income Statements
Due to the nature of our business, our projected income will depend on the number of hours a
patron spends at 8Bit as well as their caf purchases during this time. Therefore, to display both
our passion and interest in our business, we have created a scenario analysis with projected
income statements for the first three fiscal years (August 1st July 31st) of our business. Each
fiscal year has a series of four projected income statements based on the number of gaming
hours purchased by the patron at $6 per hour. This cost is then combined with the average caf
purchase (ACP) amount of $6.11 based on the purchase of one beverage ($3.24 avg.) and one
food item ($3.77 avg.). Thus, for example, the expected minimum average cost for a patron
who stays for 1 hour and purchases one beverage and one food item would be $12.11.
Within our first fiscal year, our ideal number of daily customers is approximately 66-67. Thus,
based on an average 30-day month, 8Bit seeks to engage with and profit from approximately
2000 customers a month. With these sales and attendance figures, our business will make
$24,220/monthly and $290,640/year in net sales (Figure B- 3rd Row).
Figure B Projected Income Statement Based on 1-Hour of Game Play & ACP
8Bit Caf Income Statement -- Year 1 (2015-2016)
Based on 1 Hour of Game Play & Average Caf Purchase
Net Sales
$
290,640.00
Cost of Goods Sold
$
54,000.00
Deprecation
$
14,476.00
EBIT
$
222,164.00
Interest Paid
$
750.90
Taxable Income
$
221,413.10
Taxes
$
10,940.38
Net Income
$
210,472.72

Cost of goods sold (COGS), as calculated above, is based on our initial food stuffs capital cost of
$15,000 with $3,000 allocated for food items in the proceeding 11 months after the initial
order. An additional $3,000 has been budgeted for the cost of transportation and damaged
24

goods. The figure of $54,000 has been used as the COGS throughout the Year 1 (2015-2016)
projected income statements. As we project customer increases of 23% in Year 2 (2016-2017)
and 20% (2017-2018), the COSG has been increased in these years to reflect our growth.
As 8Bit will be using a large number of technological devices in its daily operations, we
understand that the gradual depreciation of our consoles and monitors is a harsh reality. This is
particularly true when the latest and greatest in gaming consoles and technology debuts on a
yearly basis fostering increased consumer demand for these new gaming innovations. Based on
our capital expenditures on gaming consoles, monitors, espresso machine and computer
equipment, we will be spending $43,428. Following the trends in the gaming industry, we
predict that our current consoles will have updated versions within a 3-year period. Thus, we
have chosen to depreciate our consoles and other key equipment following straight line
depreciation over a 3-year period. As such, an expense of $14,476 has been included in each
projected income statement regardless of the fiscal year or hours of game play. With retained
income projected to be available after two-three years (See Projected Balance Sheets), we will
purchase new consoles to keep our loyal patrons happy, entertained and engaged.
In Figure B above, our EBIT (Earnings Before Interest and Taxes) is $222,164. To calculate our
annual interest payment, we referred to our investment request of $112, 956 for a 30% equity
stake in our company. Specifically, we would be requesting $37,545 over a period of 3 years
from venture capitalists. To pay back the loan, we assume that a modest 2% interest payment
would be included. Therefore, we would be expected to pay an additional $750.90 in interest
each of the next three fiscal years regardless of hours of game play.
With interest paid deducted, our taxable income is $221,413.10. Currently, the Province of
Ontario has their small business tax rate set at 4.5%. Therefore, after deducting $10,940.38,
8Bit Cafs net annual income based on 1 hour of game play and average caf purchase is
$210,472. 72.
The same steps were followed when calculating the projected income statements for the hours
of available game time within each of the three projected fiscal years (See Appendix C). Our net
sales and cost of goods sold increase in each fiscal year as we project daily customer counts of
90 in Year 2 (2016 - 2017) and 110 in Year 3 (2017 2018).
Break-Even Analysis
The Break-Even Analysis shows that 8Bit Caf has a good balance of fixed costs and sufficient
sales strength to remain healthy. However, due to 8Bits pricing strategy, our Break-Even point
may occur at various times within our first and second fiscal years. Depending on 8Bits
popularity, we project that it could reach its earliest Break-Even point within the first two
weeks of April 2016 (Year 1) based on 3 hours of game play and average caf purchase
($24.11/patron). A second, and perhaps more realistic point occurs in April 2017 (Year 2) based
on 2 hours of game play and average caf purchase ($18.11/patron)

25

Projected Balance Sheets

On opening day (August 1st, 2015), we project that 8Bit Caf will have a minimal amount of
cash in the bank as a significant portion of our money will go towards capital costs. However,
$73,400 has been allocated for both unforeseen events and staff payroll for at least the first 812 months depending on how many part-time staff are required (See Appendix D). Our
inventory reflects our initial $15,000 order plus a bit extra to account for one-time purchases.
Fixed assets, including game consoles (and controllers), technology (i.e. POS system, office
computers, etc.), furniture and caf equipment have an assigned value based on our capital
costs. As we do not plan to replace any of this equipment during the first 3 years, these costs
will remain constant across our projected balance sheets.
8Bits current liabilities are limited to accounts payable and our short term venture capital loan
(if successful). Our Accounts Manager will actively work to manage our accounts payable
including payments to food distributors and other frequent costs associated with running a
business. We project our accounts payable will remain relatively consistent at approximately
$44-48,000 in the first year of operations. With an increase in customers, 8Bit will need to keep
more caf inventory on-hand in later years. This is accounted for in the projected balance
sheets for the 2nd and 3rd fiscal years.
Finally, the venture capital loan of $112,635 will be paid back in-full plus interest by the end of
the 2nd fiscal year. This is based on the assumption that we will be making three payments of
$37,545/year plus 2% interest. Divided between all six managers, we will be paying $6,257.50
each year. In our 3rd fiscal year, as we do not need to pay off any short or long term debt,
money will be put back into the business in preparation for new gaming consoles as discussed
above.

26

Appendix
Appendix A 8Bit Caf Menu and Prices
Food Menu
Product
Biscotti
Cookie (regular)
Cookie (super)
Cake slice
brownie
tarts
Muffins
Sandwiches
Salads
Waffles
Pie
Snack Bowl

Price
$
$
$
$
$
$
$
$
$
$
$
$

1.50
1.75
2.25
5.00
2.50
2.00
2.25
6.00
6.00
7.00
5.00
4.00

8Bit Caf Menu

Drinks Menu
Product
Coffee
Specialty Coffee
Tea
Pop Can/Bottle
Bottled Water OS

27

Small
$
$
$
$
$

1.60
3.50
1.60
1.50
1.50

Medium
$
1.75
$
3.75
$
$
2.25
$
-

Large
$
1.90
$
4.00
$
$
$
-

Appendix B Detailed 8Bit Caf Capital Costs

8Bit Caf Detailed Capital Costs
Game Consoles
Items
Wii
WiiU
Xbox 360
PS4
PS3 (500 GB)
Wii Controller/nunchuk
WiiU Controllers
Xbox Controllers
PS4 Controller
PS3 controllers
TVs
Memory Cards (32 GB)
Games (Wii)
Games (WiiU)
Games (Xbox)
Games (PS4)
Games (PS3)
Charging Cables
Xbox charger
AA Batteries
Wii Charging

Number
20
20
8
3
5
90
90
44
12
30
22
40
160
100
40
15
25
30
24
90
50

MSRP Cost
$
80.00
$
300.00
$
210.00
$
400.00
$
230.00
$
60.00
$
55.00
$
50.00
$
65.00
$
55.00
$
400.00
$
23.00
$
50.00
$
60.00
$
60.00
$
70.00
$
60.00
$
6.00
$
30.00
$
17.00
$
14.00
Total

Operating Costs (Max.)

Food
Bathroom
Detergent
Napkins
Hydro

$ 3,000.00 Communications
$ 150.00 Rent
$ 250.00 Cleaning supplies
$
80.00 Staff Pay
$ 500.00 Total

Staff Costs
Monthly Staff Cost
Annual Staff Cost

$ 6,120.00
$ 73,440.00

Combined (Cost)
$
1,600.00
$
6,000.00
$
1,680.00
$
1,200.00
$
1,150.00
$
5,400.00
$
4,950.00
$
2,200.00
$
780.00
$
1,650.00
$
8,800.00
$
920.00
$
8,000.00
$
6,000.00
$
2,400.00
$
1,050.00
$
1,500.00
$
180.00
$
720.00
$
1,530.00
$
700.00
$
58,410.00

$
$
$
$
$

289.00
5,600.00
150.00
83,540.00

TOTAL CAPITAL COSTS = $375,450.00

28

Establishment Costs
Items
Rent (Annual)
Fixtures and renovations
Furniture
Communications
Permit
Hydro (Potential)
POS Systems
Office Goods
Website
Computer w/accesories
Total

Cost
$
$
$
$
$
$
$
$
$
$
$

67,200.00
12,000.00
8,000.00
3,000.00
300.00
500.00
2,700.00
1,000.00
750.00
1,019.00
96,469.00

Food and Cafe Equipment

Items
Foodstuffs (initial)
Coffee Mugs
Dishes
Glassware
Utensils
Napkins
Espresso Machine
Coffee Grinder
Coffee Maker
Detergent (4L)
Cleaning supplies
Total

Cost
$
$
$
$
$
$
$
$
$
$
$
$

15,000.00
200.00
200.00
200.00
300.00
80.00
2,200.00
850.00
2,100.00
592.00
200.00
21,922.00

Additional Fees
Legal
Insurance
Marketing
Total

$
$
$
$

5,000.00
5,000.00
5,000.00
15,000.00

Appendix C Projected Income Statements

Year 1 (2015-2016)
8Bit Caf Income Statement -- Year 1 (2015-2016)
Based on 1 Hour of Game Play & Average Caf Purchase
Net Sales
$
290,640.00
Cost of Goods Sold
$
54,000.00
Deprecation
$
14,476.00
EBIT
$
222,164.00
Interest Paid
$
750.90
Taxable Income
$
221,413.10
Taxes
$
10,940.38
Net Income
$
210,472.72
8Bit Caf Income Statement -- Year 1 (2015-2016)
Based on 2 Hours of Game Play & Average Caf Purchase
Net Sales
$
434,640.00
Cost of Goods Sold
$
54,000.00
Deprecation
$
14,476.00
EBIT
$
366,164.00
Interest Paid
$
750.90
Taxable Income
$
365,413.10
Taxes
$
18,011.63
Net Income
$
347,401.47

8Bit Caf Income Statement -- Year 1 (2015-2016)

Based on 3 Hours of Game Play & Average Caf Purchase
Net Sales
$
578,640.00
Cost of Goods Sold
$
54,000.00
Deprecation
$
14,476.00
EBIT
$
510,164.00
Interest Paid
$
750.90
Taxable Income
$
509,413.10
Taxes
$
26,668.60
Net Income
$
482,744.50
8Bit Caf Income Statement -- Year 1 (2015-2016)
Based on 4 Hours of Game Play & Average Caf Purchase
Net Sales
$
722,640.00
Cost of Goods Sold
$
54,000.00
Deprecation
$
14,476.00
EBIT
$
654,164.00
Interest Paid
$
750.90
Taxable Income
$
653,413.10
Taxes
$
40,437.35
Net Income
$
612,975.75

Year 2 (2016-2017)
8Bit Caf Income Statement -- Year 2 (2016-2017)
Based on 1 Hour of Game Play & Average Caf Purchase
Net Sales
$
392,364.00
Cost of Goods Sold
$
66,420.00
Deprecation
$
14,476.00
EBIT
$
311,468.00
Interest Paid
$
750.90
Taxable Income
$
310,717.10
Taxes
$
13,813.89
Net Income
$
296,903.21
8Bit Caf Income Statement -- Year 2 (2016-2017)
Based on 2 Hours of Game Play & Average Caf Purchase
Net Sales
$
586,764.00
Cost of Goods Sold
$
66,420.00
Deprecation
$
14,476.00
EBIT
$
505,868.00
Interest Paid
$
750.90
Taxable Income
$
505,117.10
Taxes
$
22,483.14
Net Income
$
482,633.96

8Bit Caf Income Statement -- Year 2 (2016-2017)

Based on 3 Hours of Game Play & Average Caf Purchase
Net Sales
$
781,164.00
Cost of Goods Sold
$
66,420.00
Deprecation
$
14,476.00
EBIT
$
700,268.00
Interest Paid
$
750.90
Taxable Income
$
699,517.10
Taxes
$
32,342.19
Net Income
$
667,174.91
8Bit Caf Income Statement -- Year 2 (2016-2017)
Based on 4 Hours of Game Play & Average Caf Purchase
Net Sales
$
975,564.00
Cost of Goods Sold
$
66,420.00
Deprecation
$
14,476.00
EBIT
$
894,668.00
Interest Paid
$
750.90
Taxable Income
$
893,917.10
Taxes
$
45,823.94
Net Income
$
848,093.16

29

Year 3 (2017-2018)
8Bit Caf Income Statement -- Year 3 (2017-2018)
Based on 1 Hour of Game Play & Average Caf Purchase
Net Sales
$
479,556.00
Cost of Goods Sold
$
79,704.00
Deprecation
$
14,476.00
EBIT
$
385,376.00
Interest Paid
$
750.90
Taxable Income
$
384,625.10
Taxes
$
6,403.35
Net Income
$
378,221.75
8Bit Caf Income Statement -- Year 3 (2017-2018)
Based on 2 Hours of Game Play & Average Caf Purchase
Net Sales
$
717,156.00
Cost of Goods Sold
$
79,704.00
Deprecation
$
14,476.00
EBIT
$
622,976.00
Interest Paid
$
750.90
Taxable Income
$
622,225.10
Taxes
$
10,385.85
Net Income
$
611,839.25

8Bit Caf Income Statement -- Year 3 (2017-2018)

Based on 3 Hours of Game Play & Average Caf Purchase
Net Sales
$
954,756.00
Cost of Goods Sold
$
79,704.00
Deprecation
$
14,476.00
EBIT
$
860,576.00
Interest Paid
$
750.90
Taxable Income
$
859,825.10
Taxes
$
14,368.35
Net Income
$
845,456.75
8Bit Caf Income Statement -- Year 3 (2017-2018)
Based on 4 Hours of Game Play & Average Caf Purchase
Net Sales
$
1,192,356.00
Cost of Goods Sold
$
79,704.00
Deprecation
$
14,476.00
EBIT
$
1,098,176.00
Interest Paid
$
750.90
Taxable Income
$
1,097,425.10
Taxes
$
18,350.85
Net Income
$
1,079,074.25

Appendix D 8Bit Caf Balance Sheets

Opening Day Balance Sheet
Assets
Current Assets
Cash in bank
Accounts Receivable
Inventory
Total
Fixed Assets
Game Consoles
Technology
Furniture
Caf Equipment
Total

$
$
$
$
$
$
$
$
$

Total Assets $

8Bit Caf Balance Sheet -- As of August 1, 2015

Liabilities
Current Liabilities
73,400.00
Accounts Payable
Short Term Loans
16,029.68
Long Term Debt
89,429.68
Long Term Liabilities
55,280.00
Long Term Loans
3,719.00
8,000.00
5,150.00
72,149.00
Owners' Equity
Investment
Retained Earnings
161,578.68

$ 44,772.00
$ 112,635.00
$
Total $ 157,407.00
$
Total $

4,171.68

Total

Total liabilities and Owners Equity

30

$ 161,578.68

Projected Balance Sheet End of Year 1 (2015-2016)

Assets
Current Assets
Cash in bank
Accounts Receivable
Inventory
Total
Fixed Assets
Game Consoles
Technology
Furniture
Caf Equipment
Total

$
$
$
$
$
$
$
$
$

8Bit Caf Balance Sheet -- As of July 31, 2016

Liabilities
Current Liabilities
85,000.00
Accounts Payable
Short Term Loans
16,500.00
Long Term Debt
101,500.00
Long Term Liabilities
55,280.00
Long Term Loans
3,719.00
8,000.00
5,150.00
Owners' Equity
72,149.00
Investment
Retained Earnings

$ 48,498.84
$ 75,090.00
$
Total $ 123,588.84
$
Total $

$ 50,060.16
$
Total $ 50,060.16

Total Assets $ 173,649.00

Total liabilities and Owners Equity

$ 173,649.00

Projected Balance Sheet End of Year 2 (2016-2017)

Assets
Current Assets
Cash in bank
Accounts Receivable
Inventory
Total
Fixed Assets
Game Consoles
Technology
Furniture
Caf Equipment
Total

$
$
$
$
$
$
$
$

8Bit Caf Balance Sheet -- As of July 31, 2017

Liabilities
Current Liabilities
94,842.64
Accounts Payable
Short Term Loans
16,500.00
Long Term Debt
111,342.64
Long Term Liabilities
55,280.00
Long Term Loans
3,719.00
8,000.00
5,150.00
Owners' Equity
72,149.00
Investment
Retained Earnings

$ 50,000.00
$ 37,545.00
Total $ 87,545.00

Total $

$ 95,946.64
Total $ 95,946.64

Total Assets $ 183,491.64

Total liabilities and Owners Equity

31

$ 183,491.64

Projected Balance Sheet End of Year 3 (2017-2018)

Assets
Current Assets
Cash in bank
Accounts Receivable
Inventory
Total
Fixed Assets
Game Consoles
Technology
Furniture
Caf Equipment
Total

$
$
$
$
$
$
$
$

8Bit Caf Balance Sheet -- As of July 31, 2018

Liabilities
Current Liabilities
100,000.00
Accounts Payable
Short Term Loans
17,000.00
Long Term Debt
117,000.00
Long Term Liabilities
55,280.00
Long Term Loans
3,719.00
8,000.00
5,150.00
Owners' Equity
72,149.00
Investment
Retained Earnings

$ 55,000.00
$
Total $ 55,000.00

Total $

$
$ 134,149.00
Total $ 134,149.00

Total Assets $ 189,149.00

Total liabilities and Owners Equity

References
ABOUT US. Fan Expo Canada. N.p., n.d. Web. 24 Mar. 2014.
32

$ 189,149.00

<http://www.fanexpocanada.com/about-us/>.
"Fact & Research, Essential Facts 2012." ESA: Entertainment Software Association of Canada.
Entertainment Software Association of Canada, n.d. Web. 13 Feb. 2014.
<http://theesa.ca/wp-content/uploads/2013/07/ESAC_ESSENTIAL_FACTS_2012_EN.pdf>.
Fan Expo Canada. Wikipedia. Wikimedia Foundation, 15 Mar. 2014. Web. 2 Apr. 2014.
<http://en.wikipedia.org/wiki/Fan_Expo_Canada/>.
Granic, Isabela. "Video Games Play May Provide Learning, Health, Social Benefits, Review
Finds." http://www.apa.org. American Psychological Association, 25 Nov. 2013. Web. 14 Feb.
2014.
<http://www.apa.org/news/press/releases/2013/11/video-games.aspx>.
Indiegogo Help Center. Indiegogo Help Center. N.p., n.d. Web. 11 Apr. 2014.
<http://support.indiegogo.com/hc/en-us/>.
KICKSTARTER. Help Center Kickstarter. N.p., n.d. Web. 10 Apr. 2014.
<https://www.kickstarter.com/help?ref=footer>.
Kickstarter versus IndieGoGo. MindSense. Crowdfunding Journal, 9 Jan. 2012. Web 16 Mar.
2014.
<http://mindsense.co/blog/comparing-crowd-sourced-funding-platforms/>.
Kurtzman, Laura. "Training the Older Brain in 3-D: Video Game Enhances Cognitive Control."
University of California, San Francisco. N.p., 4 Sept. 2013. Web. 14 Feb. 2014.
<https://www.ucsf.edu/news/2013/09/108616/training-older-brain-3-d-video-game-enhancescognitive-control>.
"News & Events." Quick Facts. Ryerson University, n.d. Web. 12 Apr. 2014.
<http://www.ryerson.ca/news/media/quickfacts/>.

Resources. Downtown Yonge. Downtown Yonge Business Improvement Area, n.d. Web. 12
Apr. 2014.
<http://www.downtownyonge.com/media/resources.html>

33