Cafe XXXXXX

Caf Cuisine with a Mediterranean twist

BUSINESS PLAN
Proprietors:
XXXXXX
XXXXXX
27/08/09

Details of Business
Owners
XXXX & XXXXXX
Location

XXXXXXXXXXXXX

Contact Telephone Numbers

Cafe XXXXXX: (02) 9999 9999
XXXX & XXXXXX: (02) 9999 9999
XXXX (Mobile): XXXXXXXXXX
XXXX (Mobile): XXXXXXX
E- Mail

XXXX@xxx.com

-2-

1. BUSINESS PROFILE/ CONCEPT

Description of Business
Place
Cafe XXXXXX is situated on XXXX St, XXXX, one of the busiest streets in XXXX which bisects the
main road, XXXXX Street. XXXX Street attracts good levels of footfall due to the surrounding
businesses such as the video shop, florist, gift shops and the North XXXX Hotel.
Due to the density of residential housing within the surrounding area, there is a significant market
right at the doorstep. Also, as Cafe XXXXXX is located within a strata complex it is in easy reach of
all of the residents of the strata block.
There are also many businesses within the area who use Cafe XXXXXX for take away coffees and
associated products.
Product Interior
Cafe XXXXXX is a 40 seat caf, with 18 seats outside on a patio area with 22 seats inside. It has been
custom designed, with minimalist, trendy dcor inside and out. Cafe XXXXXX faces North, thereby
receiving a large amount of morning and afternoon sun, even in winter. This provides warmth to what
is a very popular exterior seating area. As the pavement in this area is very wide, there is only
moderate disturbance from passing traffic.
The large glass paneled interior is also kept pleasantly warm in winter by the prevailing sunshine. An
emphasis is placed on relaxation, with an ample supply of newspapers and international magazines
which encourage the customer to spend longer in the caf.
It is significantly different to other caf competitors within the area, who focus more on take away food
Cafes. Cafe XXXXXX is a sophisticated caf that appeals to an upmarket market segment with high
levels of disposable income and increasing leisure time.
Product Lease
The lease term is 5 years with a 5 year option. Increases are 4% per annum.

-3-

Product - Menu
The menu can be described as Caf cuisine with a Mediterranean twist.
Core caf food products such as Chicken burgers, Caesar Salads & Focaccias are served together
with more innovative dishes such as Risottos & Crepes. Thus, the menu attracts both those customers
looking for caf food that they know they will like as well as more adventurous customers who wish to
try something a little bit different. We cater for those customers who like fresh, high quality food. We
are the antithesis of the greasy, hot food Cafe caf.
The menu is not extensive, but provides a good range of options for the customer. The size of the
menu is very much in keeping with the size of the operation and the facilities at our disposal. The food
we sell has to satisfy three components: 1. High Margin 2. Easy to prepare 3. High quality. It is critical
that we have menu items that are easy to prepare as this allows us to reduce the chefs time taken to
prep ingredients as well as reducing the time that the food takes to be cooked and served.
Coffee also plays an important part in our business as it is both a feeder for cross sales and an
extremely profitable product (approximately 80% profit). Coffee brings people in and chances are they
will buy another product to go with their coffee.
Product Service

At Cafe XXXXXX , fast friendly service is part of the product. There is no room for glum faces or bad
days. Staff are actors and their job is the stage. Not only do staff have to be actors, they have to be
salespeople too!
In all aspects of our service we appreciate the empirical need for staff to be themselves, and to
express their individuality. We are not McDonalds. We dont want Robots.
Product Eat-in / Take Away
We do not encourage take away for food , (with the exception of items such as cakes to go with
coffee). We wish to be recognised as a stylish, sit-in caf. Whilst take away sales with coffees, etc
represent a good potential growth area, we will not seek to grow the area of mainstream take away
food sales. The reasons for this are two-fold:

1.
2.
3.

There is a limited market (e.g. Business people) in the area

Adding take away food sales would cheapen the look of Cafe XXXXXX
Catering for this market would put is in direct competition with other take away retailers in the
area

However we have good take-away coffee sales and will be seeking to grow this market.

-4-

Profitability

1. The profitability of Cafe XXXXXX is based on two factors. The first being that the cost of good
is very low (approx. 27%) whilst the menu items themselves are mid-priced. Cafe XXXXXX is
not expensive (we are in Cheapeats, for example)

2. We are not a volume business, but neither are we high margin, low sales.
3. Revenue is spread widely across the menu. Everything sells.
4. Our pricing strategy is that we are upmarket if you compare us to takeaways, but reasonably
priced compared to similar trendy cafes.

5. Our concept is simple, enjoyable and inexpensive to maintain.

6. There are potential profit growth areas in the addition of a liquor license, menu redesign,
acceptance of Credit Cards and Increased opening hours / days

7. Our competitive advantage is our style of caf, our location and the outdoor seating area.
People

1. Our staff should always be smart, well presented and be dressed in an approved uniform. We
encourage individuality, but within the boundaries of what we deem to be an acceptable
standard of presentation.

2. Our main target market is 16-40 year old males and females from upmarket demographics.
They are likely to be residents of the area. These types of people represent the modern
Sydney "Caf Society. They are generally affluent, do not wish to spend time cooking (in their
spare time) and have high levels of discretionary income.

3. Customers will generally come from the residential areas within a 1km distance of Cafe
XXXXXX. However, some may also originate from the surrounding businesses on XXXX &
Johnson Sts.

-5-

1.1 Vision
Our vision is to be recognised by our customers and critics as one of finest cafes in the Inner West of
Sydney. We aim to exceed expectations in all respects. However an emphasis will be placed on our
core values:
Innovativeness - Menu, Processes & Procedures
Quality and presentation - food & beverages
Service - Speed, friendliness, product knowledge & Individuality
Fun We believe in having fun at work and it is our belief that it will positively influence our customers
attitudes towards us.
At all times it will be to remember why we are in business, and that reason is to make money. All staff
should be aware of this fact and encouraged to increase the efficiency of the business.
However, we do not measure our success purely based on financial aspects. We believe that a
business is not a success without happy staff and happy customers and that this should be
maintained as an ongoing goal of the business.

1.2 Background and History

Cafe XXXXXX was started by XXXXXX in 1998. It has gained a strong reputation for innovative caf
cuisine, in particular being recognised for its outstanding breakfast menu. Cafe XXXXXX was named
as one of the top 10 breakfast cafes in Sydney in the 2001 edition of Cheapeats (See Appendix A).

1.3 Ownership
Cafe XXXXXX is owned by XXXXXX HOLDINGS PTY LTD which trades as Cafe XXXXXX. The sole
director and 100% shareholder is XXXXXX.

-6-

2. BUSINESS MODEL
All monies obtained from Cafe XXXXXX are passed through to XXXXXX HOLDINGS PTY LTD which
acts as a feeder account for the XXXXXXXX.

3. STRATEGY AND OBJECTIVES

Whilst Cafe XXXXXX is performing well as a business, we believe that there is room for further growth.
We believe that this requires the implementation of both short and long-term marketing strategies, with
the key aims of increasing customer numbers and increasing spend per customer.

3.1 Objectives
Our number 1 objective is an increase in net profit.
There are 6 main areas that we will be concentrating on in order to increase sales and profits. It should
be noted that these are not the only areas that we will be seeking to increase sales via, but as they all
represent new initiatives it is important to set goals for these areas from the outset. Not all of these
initiatives will be started immediately, but will be staggered over the first year of operation, with trial
periods being undertaken for each initiative. All of the initiatives will have been trialed and accepted or
rejected by the end of the financial year (30th June 2003).

Options for
Improvement
Open Monday
Open Thu / Fri / Sat
nights
Open 50 weeks / year
Merchant Facilities
Alcohol
Menu improvement

Sales
Increase

Sales Increase

10.0%
10.0%

700
700

4.0%
2.0%
10.0%
2.0%
38.0%

300
140
700
140
2,680

We will also be seeking to achieve the following non-financial objectives:

Improvement in customer service

Improvement in links with the business community
Establishment of customer database
Improvement in statistical operational data
Increased customer awareness of brand and services offered
Documentation of policies & procedures

-7-

Profit
Increase

Annual
Profit
Increas
e
350
16,800
350
16,800

150
84
420
70
1,424

7,200
4,032
20,160
3,360
68,352

3.2 Strategies
How will we achieve these objectives?
Financial Strategy
Monday Opening:
Currently, Monday is the only day of the week in which Cafe XXXXXX is not open. This is because the
current owner works 6 days a week and does not wish to take on extra work of opening 7 days.
However, we believe that there is a market for Monday opening (evidenced by the high levels of trade
on Tuesdays) and it would represent a missed opportunity not to open on this day.
However, it is not possible for the owner of Cafe XXXXXX to work 7 days a week. To open on a
Monday will require that a responsible person can adequately manage the business in the absence of
the owner. In the short term it is envisioned that this will be one of the current employees (who will
require training), but in the long term it will be an aim to recruit a permanent Manager.
Extended Opening Hours
Cafe XXXXXX has council approval to open until 9pm Monday to Saturday and until 6pm on Sundays.
Again, due to the business reliance on the presence of the owner, opening hours have been
restricted. Again, as with the intention to open on a Monday, opening later hours will require that a
responsible person can adequately manage the business in the absence of the owner.
It is envisaged that there would be adequate customers to enable Cafe XXXXXX to open on Thursday,
Friday & Saturday evenings until 9pm, with food being served until 8pm. However these extended
hours would only be in operation during the summer months from November to April due to the fact
that customers would not sit in either dark or cold conditions. The limited indoor seating would not
make opening on winter evenings cost effective.
Xmas Closing
Currently, Cafe XXXXXX is closed at Christmas for 4 weeks - again due to the reliance on the owner,
who takes holidays at this time of year. This will be reduced to two weeks from 25 th December to 7th
January, thereby providing an extra two weeks of revenue.
Trainee / Assistant Manager
To enable extended hours / days & weeks it will be a requirement to recruit a permanent employee. It
is expected that this person will be a suitably qualified Hospitality Management Graduate, who will
start in a trainee Manager capacity. After 1 years full employment he or she will be promoted to
Assistant Manager (subject to previous performance).
The appointment of a permanent employee will also help to reduce staff costs, by reducing the amount
of casual staff employed.
**It will be a pre-requisite that any changes to opening days & hours are adequately promoted to our
target markets and current customers before commencing any trial period**
Merchant facilities
Currently only cash is accepted as payment at Cafe XXXXXX. Whilst this represents a certain degree
of convenience for the owner, it is inconvenient for the customer. We plan to bring in Merchant facilities
immediately as it represents an added service to the customer and also will bring in extra revenue on
a long-term basis. Customers who use cards rather than cash are more likely to spend more and be
less worried about adding up costs for purchases. The convenience of Credit cards / EFTPOS

-8-

should increase the average spend per head (currently $15) even though Merchant services attract a
percentage fee (Westpacs current discounted rate for NSW Catering Associate members is 1.49%
excluding GST).
Alcohol
Cafe XXXXXX does not have a liquor license, and it is our immediate aim to obtain this. With profit
margins on Alcoholic products in excess of 100% this represents a great area for revenue and profit
expansion, without any significant added expense. It is planned that premium bottled beers and low to
mid priced wines will be stocked. These will be priced at approximately $6 per beer & glass of wine,
with bottles of wine starting at around the $15 mark.
Menu Improvement
Currently the physical layout of the menu is poor. It is difficult to read, cluttered and disorganised.
Prices are not round numbers and high profit items are not marketed correctly.
The menu will be redesigned to meet the following criteria:
Easy to Read
All prices will be round numbers (except Beverages)
High Profit items will be arranged at the top and bottom of menu areas
Special menu items will be highlighted to increase sales
Menu will feature new branding / logo
It is more important at this stage in the plan to increase numbers of customers through the door and to
increase the average spend per customer rather than significantly altering price structures.
A beer and wine menu will also be created when the liquor license is obtained.
A menu will also be placed at the entrance to Cafe XXXXXX, allowing passing trade to view the menu
prior to entering.
One of the main problems with the menu at Cafe XXXXXX is that customers order one main food item,
a couple of drinks, but very little else. The menu redesign will seek to gain profitability by increasing
the average spend per head. This will be done by the creation of entree items as well as a Drinks &
Deserts menu to encourage customers to spend more during their visit.
Drinks & Deserts Menu
Currently, food is served until approximately 3pm. After this, the customer does not receive a menu
when they enter the cafe. Thus, most customers entering the cafe after 3pm only purchase drinks as
they are not given any options.
The Creation of a drinks and Desserts menu will allow these customers to have a bigger choice in a
format that will encourage them to purchase more. As a result we will be seeking to expand our range
of cakes and dessert items for a trial period. We will also be training our serving staff to upsell cakes &
other items when a customer asks for a hot drink.
In order to capture additional sales from takeaways we will be looking to purchase a more suitable
cake fridge, with an emphasis on displaying the cakes, muffins etc attractively. Currently the cake
fridge utilised is poor as it is almost impossible for the customer to view the items in the fridge. A new
cake display area will also allow us to free up space that is needed at the Cafe area.
Mothers with Children
At present many mothers with young children frequent the gallery caf as it is spacious and they
provide toys for young children. Space is an issue at Cafe XXXXXX, but we can still cater for this
market by providing large sheets of paper and packs of Crayons to keep children entertained (so that
the paper can be used as a table cloth & kids can draw on it). This has proven to be a successful

-9-

concept at many cafes and restaurants across the world. The concept also allows us to overcome the
issue of space and helps to keep kids sat at the table where they will not cause disturbance to other
diners e.g. as they potentially would when playing with toys on the ground.
Non-financial Strategy
In this case, non-financial strategy relates to the increase of current revenue, rather than the
generation of new revenue as specified in the previous section. This area of strategy details what we
will be doing to boost our current sources of income.
POS System
Currently the POS system is a basic cash register. It does not provide any statistical information. The
introduction of a state of the art POS system will allow us to more accurately monitor what items sell
and when. This will allow us to continually keep the menu fresh by removing low selling items and
replacing them with new menu ideas. It will also allow us to track the performance of our serving staff,
particularly with reference to cross selling.
Processes & Procedures
As Cafe XXXXXX has been run exclusively by the present owner i.e. no one else manages the caf in
his absence, there has never been the need for any processes and procedures to be documented.
However with extended opening hours / days and the future switch to having another manager, it will
be necessary for all processes, procedures, recipes, job descriptions, etc to be documented.
Two main documents will be created.

1. Cafe XXXXXX Operational Policies & Procedures

This document will contain all the information required to operate the caf in the absence of the
owner. It will detail opening & closing procedures, recipes, recipe cards, supplier details,
insurances, licenses and operational instructions for equipment.

2. Cafe XXXXXX Staff Handbook

This will detail the rules and regulations when working at Cafe XXXXXX. It will define what is
expected of an employee, what is acceptable and not acceptable, responsibilities and details of
weekly staff meetings. It will also contain job descriptions for each staff member.
Coffee
Segafredo is currently used as the Coffee Brand. As there is no current contract, the news owners are
free to negotiate a deal with other coffee brands. This may lead to savings in the price of coffee and
other added benefits, such as free merchandise.
There is also scope to better promote the Coffee loyalty cards. Although Cafe XXXXXX does not have
a direct competitor in a demographics sense, take away coffee is fair game for any caf whether
they are upmarket or not. This is why promotion of our coffee cards is important. The cards will offer 1
free coffee for every 9 purchased (i.e. tenth coffee free). This increases customer loyalty. Any
discounts given can be made up by effective cross selling of Muffins, etc with coffee. The important
factor is to keep the customer coming through the door on a regular basis.

- 10 -

3.3 Target Markets

Two different strategies will be employed to increase sales. These will target two markets: Existing
Customers and Businesses and residential customers within a 1km radius.

4. THE MARKETING PLAN

4.1 Marketing Strategy
Logo / Signage
Cafe XXXXXX currently has a recognisable font, but we will be complementing this with a Logo which
will be created by a Graphic designer. This logo (together with the name) will be placed on all
Marketing materials e.g. flyers, advertisements, business cards, etc. Our aim is for the logo to become
synonymous with the business.
The Logo and name will also be placed on a new sign that will be erected above the terrace area. This
sign will be large enough to be comfortably read from the opposite side of the street, but it will be
designed so that it complements the strata complex and is not an eyesore. The sign will be of a stylish
design, to fit in with the style of the caf, and will be illuminated. At present there is no illuminated sign,
but the Cafe XXXXXX name is displayed on the cafs central windows.
Customer Research
Two types of research will be performed on an ongoing basis:
1.Initial Market research has been employed prior to the take-over of the caf. This focussed on
gaining knowledge of the strengths and weaknesses of local competitors, as well as gaining
knowledge of strengths and weaknesses of Cafe XXXXXX. Research was undertaken in the local area
using qualitative research techniques.
2. Customer Feedback forms will be created to capture opinions on the customers immediate
experience. These will be named Whine & Dine to lighten the experience of complaining and to draw
attention to the feedback cards.
Results of Initial Survey
Survey Results indicated the following factors:
Service:
Positive Take away customers perceived the cafe as friendly (regular customers)
Negative - Perceived as efficient but not very friendly (Non smiling) and sometimes slow or slack.
Food: Food almost universally perceived as being good.
Coffee: Coffee perceived as good. No negative reviews of coffee.
Ambiance / Decor:
Positive: Trendy Decor, nice to look at. Sunshine.
Negative: Perceived as Clinical, Cold, Noisy and Cramped
Unfriendly service was the main comment that arose from the survey.

- 11 -

Website
A website will be created and communicated to customers www.CafeXXXXXX.com. This website
will serve as a source of information about the caf, including menus, profiles of staff, photos of the
caf and details of upcoming events. There will also be an opportunity to join the e-mail news list.
Newsletter
Cafe XXXXXX News will be distributed to local businesses and residences every three months. It will
highlight what has been going on at the caf, new menu items and upcoming events. There will also
be competitions which will be used to increase interaction with the community.
Promotion of special events
This will be run in conjunction with the Marketing Calendar. The Marketing Calendar will serve as the
roadmap for all promotional activity throughout the year. For example, the Marketing Calendar will
specify a key date such as Fathers Day and will have milestones which need to be achieved at set
dates e.g. Look at advertising costs 3 weeks prior to event, Create special menu two weeks prior,
Advertise one weeks prior to event, etc.
Promotions will be run for every key hospitality date in the Calendar including, Xmas, Mothers Day,
Fathers Day, Valentines day and special sporting events. Local businesses will be encouraged to
have Birthdays and special events at Cafe XXXXXX by building up Rapport with owners and key
employees. This will be done by the owner personally introducing himself to key business owners in
the area.
Sales Strategies
As Cafe XXXXXX already has a good level of custom an opportunity is present to increase the
average spend per head. Staff will be required to meet certain sales standards as part of their job
descriptions. They will be required to actively cross sell items and their knowledge of the menu must
be exceptional to be able to do this effectively.
Training will be provided so that staff are experts in their knowledge of menu items. This will allow
them to be able to recommend suitable items to go with other menu items. For example, a good
waiter/ess should always recommend herb or garlic bread or a salad to those customers having a
main meal.
Another area that will be stressed is cross selling to coffee drinkers. There is always an opportunity to
sell add-on items with coffee, such as Cake & Muffins.
Furthermore staff will be trained to recommend a beer or type of wine to complement dishes on the
menu.
Fundamentally the customer should not be asked if he or she would like something else items
should be recommended. The Customer should not be asked if they would like to see a menu, they
should be politely given one. Every opportunity should be provided to tempt the customer.

- 12 -

4.2 Competition, Competing Products and Substitutes

Direct Competitors
We have three main direct competitors within the vicinity of Cafe XXXXXX. Whilst these cafes have a
different image to Cafe XXXXXX, we still consider them to be direct competitors as they sell similar
products at a similar price.
XXX Cafe
XXX Caf is an old style caf, traditional caf, which is more of a takeaway than a sit down caf due to
its pricing structure (low price) and quality of product (low quality). It features a very basic menu with
predominantly toasties, foccacia & sandwiches. The quality of the coffee is poor (Jacobs), but the
cafs location (high footfall) ensures that the caf is kept reasonably busy. It attracts a mixture of
clientele, although it is mostly popular with lower socioeconomic groups, such as blue-collar workers.
The XXX Caf
The XXX caf is a dark, grungy, caf that is designed to appeal to artistic types (artworks hung on
the walls, alternative music playing). However at the back of the caf is a pool table and area designed
for kids (kids toys), which helps to appeal to mothers with children. There is space in this area for
children to play in. The XXX is generally quite noisy, messy and poorly cleaned with no outdoor
seating areas.
Service is order and pay at the counter and staff are extremely badly presented.
The menu is fairly diverse, with soups and desserts being popular. A large and eye-catching cake
display promotes a good product range.
Caf on XXX
Caf on XXX is an extremely eye catching caf, situated in an old building. It has been recently
renovated and features bright, attractive dcor and comfortable seating. There are indoor and outdoor
seating areas, both being pleasant environments to eat in. Fresh flowers greet the customer creating a
very nice initial impression.
Like the XXX caf they operate an order and pay at the counter system. This can be frustrating at
peak times when queues form to order even the most basic items.
The menu is basic and features standard caf food such as chicken burgers, sandwiches & focaccias,
etc. Pricing is competitive, but not upmarket.
The clientele is mixed with businessmen, single women and mothers from the nearby day-care centre
frequenting the cafe.
Opening hours are Mon-Fri 7-4, Saturday 8-4 & Sunday 8-2.

- 13 -

4.3 Pricing Strategies

The pricing strategy at Cafe XXXXXX reflects our physical presentation, our standards of service and
the quality of our food.

Our physical presentation and cleanliness are of the highest standard, and are higher than our
competitors.
Our Service is full table service and as such is a higher standard than our competitors
Our food is more diverse and a better quality than our competitors.

Thus, it follows that our prices should be higher. However, our prices are only marginally higher and
still represent good value in line with the product that is offered. As a rough guide our prices should be
10% higher than our competitors.
There is currently scope to increase prices and this will be assessed in line with the redesign of the
menu.

- 14 -

4.4 Advertising, Marketing and Launch Strategies

Currently (and since its launch 3.5 years ago) Cafe XXXXXX has never paid for advertising.
In the short term (3-6 Months) this will not be changed. However, we aim to promote the business to
the local area by other means rather than paid advertising.
Launch Strategy
As the current owner is well known and has a good relationship with the customer base we will not be
drawing attention to the change in ownership (in terms of the general public). However, the new owner
will be promoting the business extensively to local businesses. In the initial stages it is planned to
provide local businesses with a welcome pack including:

Coffee discount cards

Cafe XXXXXX News
Details of upcoming promotion days

The owner will also be personally introducing himself to the owners and key staff of the business. We
believe networking with surrounding businesses is the foundation for continuing success in the area.
Direct Marketing
Coffee Promotions:

Coffee cards will be given out within the vicinity of our competitors to encourage customers to
be more brand loyal to Cafe XXXXXXs coffee.
To boost trials of our coffee with the ultimate aim of building the customer base we will be
giving away free take away coffee vouchers to pull customers down to Cafe XXXXXX and away
from our competitors on Johnson St (who are selling an inferior but equally priced product).

Ongoing Marketing
We will be implementing customer feedback cards as a way of building a continuous marketing
system. These cards will be titled Whine & Dine and will allow the customer to provide feedback on
his or her dining experience as well as providing a forum to suggest new ideas and potential
improvements. Customers will also be given the option of supplying us with contact details that will be
added to our customer database for future marketing activities.

www.CafeXXXXXX.com will also be used as a means for continually marketing the business, and
will feature all of our marketing ideas in one convenient location. www.CafeXXXXXX.com will be
added to all stationary, signs and marketing material in order to make use of this highly cost effective
medium.

- 15 -

5. Human resources
Our Human resources focus will concentrate on three main areas:

Documenting Procedures, Staff Handbooks, etc for future training needs

Continually training and upskilling
Staff Feedback Forums

Documentation
The following list of processes and procedures will be documented and completed

1. Recruitment procedures
2. Interview questions
3. Application form
4. Job Descriptions
5. Induction Procedures
6. Employee Handbook
7. Wage procedures
8. Pay slips
9. Time sheets
10. Rosters
11. Occupational Health and safety signs and procedures
12. Daily events diary
Continual Training
Staff will receive training as required. Weekly or Monthly meetings will be held, part of which will be
devoted to discussing training needs or carrying out training workshops on a particular topic. We are
committed to increasing the skills of our staff as much as possible. We believe that an investment in
staff is an investment in our business.
Staff Feedback Forums
The weekly or monthly meetings will provide a forum for staff to suggest new ideas or to bring up
issues they are unhappy with. Staff will be encouraged to use their creativity and skills to benefit the
business.

- 16 -

6. FINANCIAL MANAGEMENT PLAN

6.1 Start-up Budget
As there are few changes needed the start-up budget will not be extensive. However, there are some
major expenditure items that will be required to be paid upon completion of the purchase of the
business:

Solicitors Fees: $2-3000

Accountants Fees: $4-5000
Bank Fees $300
Consultancy Fees - $500

Within the first three months of operation it is estimated that expenditure will be necessary for the
following:

Graphic Design - $1000

POS System - $2000
Signage - $2000
Printing $500

6.2 Operating Budget

As Cafe XXXXXX is a relatively small operation operating budgets will be a difficult area to estimate.
However budgeting will be at the owners discretion. Previous years Profit and loss figures and
purchase information will be used as the basis for the next years budget with weighting of 5%.

- 17 -

7. Key Performance Indicators

Customer Satisfaction
As previously mentioned, the Whine & Dine customer comment cards will be a means of continually
tracking customer complaints. These will be kept and logged in a complaints database.
Verbal complaints will also be recorded in the daily events book, and later added to the complaints
database. The database will allow us to track complaints over time, to spot trends of complaints and to
provide solutions to the issues that arise.
Loyalty Systems
Completed Coffee Cards will be kept and tallies will be recorded to assess their effectiveness. Dates
will be written on the cards in order to calculate their effectiveness and frequency of usage when they
are completed.
Follow-up for functions
When corporate events are held at Cafe XXXXXX, the owner will call the groups spokesman in order
to gain feedback on the event held.
New POS System
The POS system will provide valuable data that will allow Cafe XXXXXX to track several key elements:

Sales of Menu Items

Performance of Serving Staff
Peak Times / Slow Periods (useful for staff rostering)
Reduction of use of paper systems
Tracking performance of menu promotions / specials
Tracking performance of new menu items
Tracking of non-profitable times of day
Tracking of staff costs
Tracking of staff timesheets & Staff Information
Reduction in space used by present system

Specifically, the new POS system will be used to target information and cost savings with regard to the
following KPI areas:
Staff

1. Wage Cost % - wage costs as a percentage of sales. This will allow us to identify how we are
tracking with regard to the 25-35% rule.

2. Labour turnover Calculated by dividing the number of people employed over a year by the
number of positions (expressed as a percentage).
Kitchen

3. Food Cost % - can be measured quickly by totaling purchases for the week and assuming that
we are carrying consistent stock levels. This will allow us to identify how we are tracking with
regard to the 25-32% rule.

- 18 -

1. Kitchen Labour % - measure kitchen productivity by comparing kitchen labour against food
sales,
Front of House

1. Total Sales Per Head . Total sales divided by the number of customers. Comparisons will be
made to last week, last month & Last year. Also it will be broken down into sales per head for
food, beverage and desserts (also alcoholic beverages in the future).

2. Time period Sales. As there is currently little (or ineffective) data on time period sales it will be
necessary to investigate these areas thoroughly. The POS system will play a major part in
providing this data.

3. Front of house labour % - will allow us to track the effectiveness of our serving staff.
Cafe

1. Sales per head. Will also allow us to more effectively track the popularity of our soft drinks,
coffee types and to prepare ourselves more effectively for demand in these areas.
Marketing

1. Numbers of customers will be able to be recorded with the POS the first indicator of success
is the amount of customers coming to Cafe XXXXXX.

2. Sales per head. This will allow data so that we can make decisions with regard to: 1. Bringing
in more customers or 2. Increasing average spend or 3. Reducing the cost base.

3. Recording and tracking of marketing and advertising efficiency will allow us to measure the
cost versus the return.

- 19 -

8. Point of sale/ Accounting

Gross margin Costing
Costing will be done for all food and beverage. The head chef and manager will do this, and be
responsible for the overall cost of goods. Portioning will be defined using implements, photos and
standard recipe cards. The photos and standard recipe cards will be typed collated and printed for the
staff.

Point of Sale
1. The Point of sale is at the heart of this business as it will tell us where we should be heading
and give us in dollar terms how successful our promotions are.

2. The manager and staff need to know exactly how to work the Point of sale both front and back
office with a view to maximising the value of the reports.

3. Reports such as supplier order sheets, Loyalty systems, time period reports need to be easy
to use and not a hassle for the manager to view.

4. Manuals, procedures and recording systems will be set out for maintenance of POS

Accounting Practices
1. Wages will be done weekly (Payments Made on Monday). The POS will provide statistical
data that will be used adjust/ review labour levels.

2. Food purchases should be used as the weekly stock take for food.
3. Breakeven point needs to be established.
4. A budget will be set for marketing and promotions.
5. A budget needs to be set for entertainment (if used at all)
6. A budget P&L should be set and compared to actual figures monthly.

- 20 -

9. SUCCESS & RISK

In summary, there are several Main factors that are critical for the success of Cafe XXXXXX. These
are as follows.
Coffee
The Coffee needs to be kept to an acceptable standard as this is the key to any cafes business. Cafe
XXXXXX is ahead of the field but this needs to be maintained. In the short term we accept that
customers may be lost due to changes in coffee making and speed of service, but that we will make
up for losses in current customers with the substantial market of new customer at our doorstep. Our
research highlighted that most surveyed were not customers of Cafe XXXXXX.
Continuity
Cafe XXXXXX has a very loyal clientele of customers who come in multiple times per week and
multiple times per day. We will be seeking continuity of service and operational standards to aim to
maintain positive links with loyal customers. As such we will not be proactively advertising the change
of ownership to our present customers. In the longer term we will be introducing changes which we
believe will take the business on to greater success.
Competitive Targeting
Our research showed that there is a large market that we have not yet reached. To win customers
from other cafes in the area we need to make our presence known by target marketing initiatives. We
believe that once customers try our product we can significantly increase our market share. Our
marketing initiatives will seek to bring first time customers to Cafe XXXXXX.
Menu Design / Product Offering.
We believe that there is also huge potential within our existing clientele. In this respect we believe that
we can significantly increase the average spend per head. This has been held back by the reliance on
cash and ineffective menu design. The introduction of Merchant facilities, improvement in menu design
& introduction of the drinks & desserts menu should allow us to make significant increases in the
spend per head.

- 21 -

10. Summary
Cafe XXXXXX has a solid basis by which we can grow the business. It is imperative that we make the
ownership transition as seamless as possible in order to maintain our existing, loyal clientele.
Our research has shown that there is great potential for further growth. We aim to achieve this by
improvement in processes, menu, marketing, promotions, service to the customer and by training and
empowering our human resources.
We believe that this is the start of a new era of success for Cafe XXXXXX.

- 22 -