Start-up Cost



Yejing Tang

Yiwen Tu

Jiefan Yang

Duan Zhang

Andrew Leung

Nov.19, 2007

Coffee Shop Business Plan

Start-up Cost

Yejing Tang

We set up our coffee shop in the area of new heaven and earth. At that place rent about $38 per square meter. We plan our coffee shop about 150 square meters, so the total rent about one month is $5700.

Our coffee shop wants to provide a comfortable environment. The flooring in the coffee shop would be dark wood floor. The atmosphere in the coffee shop should be romantic and warm, and the dark wood is a good choice to express the mood. The light in our coffee shop sent out gentle beam. In our wall we will put some painting on it. We also provide the light music to let our costumers relax themselves. Coffee fragrance revolves around you to let our costumers stay here. In order to build a tranquility and cozy environment to make guests feel at home, we spend $160 per square meter about remodeling fee. The whole decoration fee is $24000. The furniture is also important for our coffee shop. Good furniture can upgrade our coffee shop’s pattern. Sofas, tables, chairs and bar counter are provided in our coffee shop. We will buy the high-quality furniture, also the furniture will coordinate with our whole coffee shop mood. The total prices about the furniture about $8000.

Equipment fee is almost $10667. Equipment includes two coffee machines, two coffee-mills, air conditionings, stereo, cash registers and water treatment. . .

We need to buy our coffee and snake. Coffee cups, napkin, knives and folks are necessary. One kilogram coffee bean costs $54. Snake is very cheap in China. We estimating spend about $4000 for the supplies fee. We want our coffee shop works well we also need to think about the utensils fee. In Shanghai the electronic fee is divided two parts: from 6am to 10pm is 0.6170RMB per kilowatt and 10pm to 6am is 0.3070RMB per kilowatt. The water fee is 1.2RMB per ton. We calculate the whole supplies fee about $2000.

At the beginning of our business, promotion is so important. We will create the beautiful circular pages and coupons. In China most people like try the free things so we will provide the free taste in the front of our coffee shop. In the beginning we also send small gifts to the costumers. So we will appropriated a little bit more money about advertisings.

Thinking about all of above, we estimate that our start-up cost is about $52817.

Operating Costs:

Andrew Leung (absent)

The total operating costs is estimate to be $17666 per month, which included the payment for utilities, rent, wages, insurance, supply materials and advertisements.

For our utilities costs, we will have to pay for the fuel, water and electricity charges. They are estimate to be around $2000 each month total. The rent for our coffee shop is $5700 per month and insurance about $1800 a year. The wages for our employees is $5280 per month, which included the salaries for our managers, cashiers and waiters.

We will have to fill up our supply material each month, each pack of our coffee beans will cost 50RMB and can use up to 150 cups of coffee and will sell for 25RMB each. For our snacks, which included cookies, cakes and others, are costing 5-10 RMB for average. They are making a 15RMB of gross profits. We will also need cups and napkins for replacement, they are estimate to be around $4000 monthly.

For our coupons and other advertisements propaganda, we are having a printing cost, which is about $5000 a year.

Employee Training

Yiwen Tu

Our employees need to receive our training, so that we can make sure our waiters and waitresses always provide the best service as we promised. We separate our training program into two parts: so-called “physical training”, and “skill training”. Physical training mainly teaches our employees those things can be trained in certain ways; Skill training, however, requires more about abilities of each own. This program especially focuses on our waiters and waitress.

There’s no need to explain how important smiles and manners are in service. Also, our waiters and waitresses have to keep good posture for a long time. What’s more, it’s not just kidding that we have to emphasize that how important body balance is during serving the customers. Waiters and waitresses often lift lots of cups and plates in their hand. Once if they fall down, it will be a disaster. During their service, they cannot avoid talking to our customers. Thus, talking skills become one of the measurements of good waiters or waitresses. In this training part, the only thing for our coffee makers is to learn how to operation of the coffee machines.

The first point in skill training part is to get familiar with our product and coffee culture. Only our employees are prepared with the knowledge, they can “chat” with our customers, or answer their questions. In addition, they should have proper reactions and inner decoration so that they won’t annoy our dear customers. As we have some customers, who though don’t dress well are actually very worthy, so our staffs should never judge a person by his or her appearance. The last point of our skill training is the “cooperation and leadership”. There must be some trouble dealing with the cooperation and leadership because we have so many staffs work at the same time. That’s why we put cooperation and leadership at last but the most important. Apart from the first point, we cannot really “train” them how to do. On the other hand, that’s why skill training part is much more difficult and important then the first part.

As we are not big coffee shops, we only hire a manager for human resources. On the other hand, we still need an accountant to deal with money. We revised our strategic plan and cut the occupations of market manager and storage manager. The manager will be responsible for the job which belongs to the market manager and storage manager. Here we need to emphasize that the storage manager is not a real manager. All he needs to do is counting all the stuffs coming and going, so we shift this job to the manager. Besides, as the events of shifting money from companies do happen a lot in China, we have to require the accountant check the amount with the manager. It’s not just the problem about trust the manager or not. It’s considered good for our coffee shop.

By the way, most of our employee pays are counted by hours, but not the numbers of employees we have. For example, we only have one cashier, two coffee makers, and 4 waiters or waitresses worked at same time in one hour. Then we calculate the payment by how much we need to pay in one hour. Therefore, there’s no question about why we have two classes of scheduled people but only hire one cashier at all.

Employee Pay & Price & Revenue

Duan Zhang

The average part-time job in Shanghai pays approximately 6~7 RMB (less than $ 1) per hour. The Waiters and waitress that will be employed in our coffee shop will have a higher skill set than the average worker and thus will be paid 10 RMB ($ 1.3) per hour. Because manager has more duties and is required to possess more skills than the sales associates, they will command a higher salary of 3,500 RMB/month ($ 470). Accountant is dealing with moneys, so we pay a high salary of 2,500 RMB/month ($330). All the employees will have an inventive program. ( we are also the managers)

Total employee pay

39,600 RMB (5,280 USD)

Compare with prices of coffee in Shanghai, we decide to set our coffee price as 25 RMB ($3.3) per cup. Cakes and Cookies are priced acceptable 12 RMB ($ 1.5) and 7.5 RMB ($ 1). According to the people flow rate in Xintaidi is 20,000 to 35,000, we Estimated Sell 250 cups coffee, 30 pieces of cakes and 30 pieces of cookies per day.

So our coffee shop Day Revenue is

$3.3*250 + $1.5*30 + $1*30=$900

Monthly Revenue is

$900 * 30 = $27,000

Government taxes are estimated under the following parameters

Government taxes:

Three main:

1. Sales tax is 5% in China

5% * Revenue = $1,350

2. City planning tax is 1.5% in Shanghai

1.5% * Revenue = $405

3. Education surtax

11% * Total Tax = $193

Total Monthly taxes = $1,350 + $405 + $193 = $1948

Monthly Cost:

$17,666

So our monthly profit will be:

Monthly Profit

TR – TC – Taxes = $27,000 – $ 17,666 – $ 1,948 = $7,368

Funds loan

Jiefan Yang

Bank of China Loan Interest Rate

Short term

6-month interest rate 6.48% 6-12month interest rate 7.29%

Long term

1-3years interest rate 7.47% 3-5years interest rate 7.65%

We will borrow $60,000 from Bank of China. The start up cost is about $53,000. The remain $7,000 will be prepare for imprest cost and salary.

– Total amount $60,000

– 1 year

– Interest rate is 7.29%

– Monthly payment $5,200

Pay for the loan

• Monthly Payment

$5,200

• Monthly Profit

$7,368

• Monthly Remain

$7,368 - $5,200 = $2,168

At the end of each month, we will still have about $2,168 left. This will be prepared for the market fluctuation.

So we will be able to pay the amount at 12 months. Because there will be higher interest rate as we loan for longer time.

12 months later, we will pay off the debt. There will be $7,368 left each month.

Then we will use it for improvement or expansion.

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