Accounting essay on: Coco Choco House
The “Coco Choco House” would be referred to as a specialty coffee house which would be located on the Dempsey Road in Singapore. Dempsey road has been referred to as one of the most hip places located in Singapore. Dempsey Road is a longest road which is located in Singapore catering to high end restaurants & bars. This road is mainly known for its finest quality of food & relaxed drinks offered in the high end bars. The place is referred to as one of the best places in Singapore. This road attracts more large number of people & is good for a splendid evening experience. Coco Choco House would be referred to as a place where in people will try to escape from the daily stress of life & offers a comfortable way of living place to dine, meet friends, talk, read a book, etc.
Coco Choco House is not a novel business idea but this specialty coffee house will be portrayed in a different manner to the target audience of Singapore. Being one of the specialty coffee houses, it will serve various food items such as grilled sandwiches, light snacks, packets of coffee, coffee makers, gift sets wide range of eatables in its menu. The company is expected to maintain 65% of profit margin so that high levels of growth in the profits can be seen which would act as a competitive advantage for the organization.
1.1 Goals & Potential of Business
The potential goals & objectives of the business i.e. Coco Choco House have been mentioned as follows:
Þ To be ranked as one of the market leaders amongst the specialty coffee house located in Singapore.
Þ The second main goal for Coco Choco House would be turn high levels of profits from the first month of its operation
Þ Employee training to the employees or other staff members to provide its customer with best coffee
Þ The store design at Coco Choco House shall be highly attractive. This shall be designed in order to practice highly effective & efficient operations
Þ The marketing strategies shall be formulated in a manner which would help to attract more number of customers & serve coffee to the customers at reasonable prices.
Þ The marketing strategies shall be aimed to build highly loyal customers as well as maximize the levels of sales for the espresso coffee, latte, cappuccino, etc.
Þ Lastly, maintain 65% of profit margin
1.2 Milestone Schedule
| Commence the Project | 15th February, 2013 |
| Research the feasibility of the market i.e. Singapore | 16th February, 2013 |
| Collect the information | 18th February, 2013 |
| Fix up meeting with the owner or sponsor | 1st March, 2013 |
| Design of the project | 1st April 2013 |
| Execution of the project | 2nd October, 2013 |
| Estimation & financials of the project | 1st March, 2014 |
| Marketing | 10th June, 2014 |
| Controlling | 25th June, 2014 |
| Close of the Project: “Coco Choco House” | 30th June, 2014 |
- Research Analysis
2.1 Target MarketCoco Choco House will cater to the needs of the people who want to get a tasty cup of coffee on daily basis in a relaxing atmosphere. The customers at Coco Choco House will be from various age groups & income groups. The main target market for Coco Choco House will be the students studying in the nearest university, faculty members, people working in the nearby offices located on the Dempsey road & the teenagers. Based upon the research it has been seen that, the market for gourmet products is quite high in the Singaporean market. It has been seen that, there is fierce competition amongst the coffee market situated in Singapore. The gourmet coffee consumption is universal irrespective of the income categories people cater too. The unique selling product (USP) of Coco Choco House would be a place where in people can come sit, talk to their peers, study or read without paying any cover charges. This will provide Coco Choco House an opportunity to build a loyal client base.
2.2 Market Size & Trends
Based upon the market research it has been said that, the total growth volume of coffee in Singapore has been reported to be 5%. The same trend was noticed in the year 2010, due a steady economic growth in the Singapore. It has been seen that, with an increase in the number of local as well as western coffee chains the culture of drinking coffee is on a rise in the Singaporean market. The manufactures have launched high quality products opting the off trade channel. The total volume of growth in the coffee products is expected to increase by 2% over the years. The expected growth rate of coffee is conservative in nature & reflects the economic condition of the Singaporean economy as a whole. The local consumers situated in the Singaporean market are quite affluent & possess high levels of disposable income. The consumption pattern of coffee is likely to follow the economic outlook in Singapore which might affect the growth of the coffee in the years to come.
2.3 SWOT Analysis
The Strength Weakness Opportunities & Threat (SWOT) Analysis for coffee industry in Singapore has been discussed in this section of the report. It is as follows:
| Strengths |
Þ The first strength associated with coffee industry is in regards to the health benefits which are connected by drinking coffee.
Þ Earlier it was regarded that, drinking coffee might be harmful in some ways. But based upon the results from the 19, 000 surveys it has been concluded that drinking coffee is not harmful whereas it is healthy.
Þ Based upon the various studies conducted Health Universities, it has been reported that more coffee you drink less are the chances of being diagnosed with the problem of stroke.
Þ It has been reported that, coffee consumption reduces the risks of Type 2 diabetes in women. Taking 6+ cups of coffee on daily basis reduces the risk of Type 2 Diabetes in men by 54% & 20% in women.
Þ Coffee leads to an increase in metabolic rates which would help to keep in pace with the level of diabetes.
Þ There are positive health risks attached with the consumption of coffee. Therefore, it is good news for coffee franchise agency.
Þ It has been seen that, in today’s environment there is an overall rise in the number of caffeine drinkers.
Þ More people these days think that, drinking coffee adds to the healthy lifestyle of the consumers.
Þ Based upon the researchers it can be said that, very little negative aspects are attached along coffee drinking but positive impacts are attached along the same.Weaknesses
Þ One of the major weaknesses refers to the growth of coffee beans or crop. The growth of coffee crop has been referred to as one of the most unpredictable crops. Therefore, the cost attached along the price of coffee and coffee franchisee is also quite unpredictable.
Þ The coffee trees are unable to tolerate the wide variations in the weather i.e. too hot or too cold, too wet or too dry, etc. Climatic condition plays one of the major roles in plantation of this crop.
Þ Because of the recent economic downturn, people are not willing to pay $5 for a cup of coffee.
Þ Consumers are more alert regarding where to spend & how much to spend. They look for better deals so as to save money.
Þ To remain successful & be in the trend coffee house shall be willing to change its business with respect to consumer trend.
Opportunities
Þ The coffee industry has been referred to as one of the fastest growing industries with approximately 54% of American population drinking coffee.
Þ The coffee house provides the visitors a warm as well as a cam environment to sit, relax, talk to peers, read books, etc.
Þ The sustained growth in the coffee industry provides high levels of opportunity to the people who offer coffee franchise industry.
Þ The coffee industry has been regarded as one of the developed as well as competitive industries. The demand for specialty coffee is on rise.
Þ It has been seen that, with an approximate population of 290 million there are 24,500 coffee houses which serve the population with specialty coffee. Therefore, it can be said that there are high levels of opportunities for the new coffee outlets.
Þ It has been estimated that, the sales of the coffee is expected to rise by 125% which shows huge levels of opportunity for the coffee houses.
Þ New techniques such as drive way, kiosks at the metro station, gas stations, etc plays an important role in offering coffee to the consumer on a large scale.
Þ There have been high levels of changes within the coffee industry. The old style of coffee has been replaced with the new styles of coffee. The new variants in coffee are espresso, mocha, cappuccino, latte, etc.
Þ Based upon the various surveys it has been stated that, with more number of coffee houses opportunities for book store have also increased.Threats
Þ One of the major threats to the coffee industry can be seen with respect to the rise in the prices of milk & dairy products.
Þ Increase in the prices of the dairy products would be referred to as unforeseen circumstances and will have an impact on the coffee industry.
Þ Recession leads to a decline in the levels of revenue earned by the enterprise.
Þ The major threat to the coffee industry is with respect to the economic recession which leads to a decline in the number of consumers.
- Marketing Plan
3.1 Product: The products offered by Coco Choco House would be to serve their customers with tasty beverages within that area. This would be achieved with the help of high quality ingredients & make the coffee as per the specific guidelines. Some of the things which shall be kept in mind by Coco Choco House would be the design of the store, range of products in the menu as well as the marketing activities so as to increase the levels of sales. Some of the variants which would be offered at Coco Choco House would be espresso, coffee blended with rich creame, mochas, latte, cappuccino, etc. Apart from the range of coffee, different types of food items such as pastries, grilled sandwiches, light snacks, grilled canopies, salads, burgers, hot dogs, etc will also be made available in the coffee house. The coffee would be made either with soya milk or skimmed milk or whole milk. The beverage is prepared in the espresso machine by generating heat in the coffee machine by placing more pressure on the machine.
3.2 Place: Place plays a crucial role in determining the sales of the coffee house. There are many aspects which shall be kept in mind while opening a coffee house. The major consideration is in regards to the place or location where the coffee house is located. Coco Choco House is situated on the Dempsey Road in Singapore. This will have a great impact on the success of the coffee house. Dempsey has been referred to as one of the most chic places in Singapore. Since Coco Choco House is a specialty coffee house, Dempsey would be regarded as one of the best locations for its operations. The major advantage for Coco Choco House is to attract more number of customers as this road is known for world class food & food joints providing wide variety of offerings in terms of good food, ambience, customer services, etc. The design of the coffee house i.e. Coco Choco House would be unique in terms of ambience & layout. The ambience at Coco Choco House would be to induce the spirit along with ambience of growing coffee seekers in Singapore. Live band performance, designing in the tables & chairs will help to provide benefits to the customer.
3.3 Price: It shall be taken into consideration that, the quality of coffee shall be at par to the price attached for the same. Majority of the revenues within the coffee shop will depend upon the quality as well as taste of the coffee offered to the customers. Since, Coco Choco House is a specialty coffee house therefore it will offer one of the tastiest coffee to its customers. The price charged for a cup of coffee will be either at par or below to its competitors. Apart from the prices charged for a cup of coffee there are various other expenses which add to the cost while starting a coffee house. Some of the expenses attached along the starting of the coffee house would be the cost of the building, interiors within the enterprise (tables, chairs, stools, couches, flooring, telephone connections, lighting, furniture & fixtures, paint, miscellaneous, etc). The cost of implementation of the equipment within the newly opened coffee house will also add to the overall cost of the coffee chain. Some of the equipments which would be sued at Coco Choco House would be an ice maker with water filter, 3-comp sink, hand sink, drop in sink, dipper well, splash guard, sandwich preparatory equipment, dishwasher, crepes maker, juicer for fresh juice, toaster, blender, coffee making machine, wine cooler, toaster bagel, slicing machine, microwave, office equipments & miscellaneous. The initial inventory which would be done in order to open a coffee house on one of the chic locations in Singapore $109,231 (or $122,821 including $3,590 as the cost of labor). The cost of the cooking equipment will be estimated to be approximately $40, 000 & the non recurring expenses can be calculated as $15, 000.
3.4 Promotional Activities: The challenge which is being faced by any organization is in regards to the opening of a new restaurant or coffee unit is the recognition of the same in the market. It shall be kept in mind that, high end market research shall be conducted which would help to provide relevant information regarding the business unit. In order to attract more customers, various promotional activities shall be implemented. The main aim of implementing the promotional activities will be to acquire more customers, the customers will be able to buy more products, the customers will buy expensive products & each customer will buy products which are profitable in nature. In its initial days, Coco Choco House will offer buy one get one free offer so as to attract customers.
- Organization
4.1 Legal Structure & Business
Coco Choco House would be referred to as a limited liability company (LLC) which will enjoy the advantages of both corporation & partnership. This type of legal structure has been referred to as one of the most popular structures. The major advantage which is attained by this type of legal structure is that profits as well as loss can be passed through the owners without paying any taxes. LLC is referred to as a hybrid entity which amalgamates the features of both partnership & a corporation. LLC provides the owners with the liability of protection & get relief from double taxation. In spite of the various advantages, there are various dis-advantages attached along the same. The concept of LLC is quite new; therefore it shall be taken into consideration that how the tax treatment is done & treated in various states.
LLC will provide Coco Choco House the following advantages such as:
Þ Flexibility in terms of management
Þ Flexibility in terms of distribution
Þ Limited liability
Þ Tax Simplicity
4.2 Personnel requirements & Perceived Gaps
It shall be seen that, in order to control the day to day operations within the newly opened coffee shop i.e. Coco Choco House a full time manager would be recruited. Coco Choco House will opt for a person who is well qualified as well as have fair knowledge regarding the work to be done at the coffee house. The major responsibilities which the full time management would be required to accomplish will be to manage the staff personnel, check the inventory, perform the duties, deal with the supplies & develop a marketing strategy which will suit the requirements of the coffee house. The owners at Coco Choco House are highly experienced people in the coffee industry. In order to recruit & retain more people, Coco Choco House will hire a consultant who will develop the business idea for the same. Consultants will use intensive market research to satisfy the customers as well as provide additional inputs to evaluate the business opportunities.
The personnel requirements while opening a coffee house has been discussed in this section of the report. They are as follows:
|
Personnel Plan |
Year 1 |
Year 2 |
Year 3 |
| Coffee Shop Manager |
$40,000 |
$41,000 |
$43,270 |
| Baristas |
$50,000 |
$56,000 |
$62,700 |
| Coffee Shop Assistant |
$16,000 |
$18,500 |
$24,000 |
| Coffee Shop Team Leader |
$8,000 |
$11,000 |
$12,500 |
| Coffee Shop Supervisor |
$5,000 |
$8,000 |
$10,000 |
| Kitchen Staff |
$3,000 |
$5,000 |
$6,500 |
| Employees |
$39,600 |
$45,000 |
$51,000 |
| Payroll (in $) |
$1,61,600 |
$1,79,500 |
$2,09,970 |
- Financial Analysis
5.1 Projection for Financial Statements
5.1.1 Income Statement
The income statement for 3 years has been listed as follows:
|
YEAR1 |
|
|
Particulars |
Amount ($) |
| Sales |
602,000 |
| Direct Cost of Sales |
208,600 |
| Others |
0 |
| Total Cost of Sales |
208,600 |
| Expenses | |
| Payroll |
150,000 |
| Sales & Marketing |
48,000 |
| Depreciation |
6,000 |
| Rent |
38,400 |
| Maintenance |
6,480 |
| Utilities |
7,000 |
| Payroll Tax |
20,000 |
| Total Operating Expenses |
275,880 |
| Profit before Interest & Taxes |
117,520 |
|
Year 2: Quarterly Basis |
||||
| Particulars | Quarter1 | Quarter2 | Quarter3 | Quarter4 |
| Sales |
100,000 |
140,000 |
210,000 |
250,000 |
| Direct Cost of Sales |
60,000 |
75,000 |
82,500 |
82,500 |
| Others |
0 |
0 |
0 |
0 |
| Total Cost of Sales |
60,000 |
75,000 |
82,500 |
82,500 |
| Expenses |
|
|
|
|
| Payroll |
35,000 |
40,000 |
50,000 |
75,000 |
| Sales & Marketing |
8,000 |
13,000 |
13,000 |
16,000 |
| Depreciation |
6000 |
6000 |
6000 |
6000 |
| Rent |
40,000 |
40,000 |
40,000 |
40,000 |
| Maintenance |
1,000 |
1,750 |
1,750 |
2,500 |
| Utilities |
1,500 |
1,500 |
2,000 |
2,000 |
| Payroll Tax |
5500 |
7000 |
8000 |
1500 |
| Total Operating Expenses |
97,000 |
109,250 |
120,750 |
143,000 |
| Profit before Interest & Taxes |
(57,000) |
(44,250) |
6,750 |
24,500 |
|
Year 3: Quarterly Basis |
||||
| Particulars | Quarter1 | Quarter2 | Quarter3 | Quarter4 |
| Sales |
100,000 |
140,000 |
210,000 |
250,000 |
| Direct Cost of Sales |
60,000 |
75,000 |
82,500 |
82,500 |
| Others |
0 |
0 |
0 |
0 |
| Total Cost of Sales |
60,000 |
75,000 |
82,500 |
82,500 |
| Expenses |
|
|
|
|
| Payroll |
35,000 |
40,000 |
50,000 |
75,000 |
| Sales & Marketing |
8,000 |
13,000 |
13,000 |
16,000 |
| Depreciation |
6000 |
6000 |
6000 |
6000 |
| Rent |
40,000 |
40,000 |
40,000 |
40,000 |
| Maintenance |
1,000 |
1,750 |
1,750 |
2,500 |
| Utilities |
1,500 |
1,500 |
2,000 |
2,000 |
| Payroll Tax |
5500 |
7000 |
8000 |
1500 |
| Total Operating Expenses |
97,000 |
109,250 |
120,750 |
143,000 |
| Profit before Interest & Taxes (PBIT) |
(57,000) |
(44,250) |
6,750 |
24,500 |
5.1.2 Cash Flow
CASH FLOW STATEMENTS:
Cash Flow Statements for 1st year: (end of 1st quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 12,500,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 10,500,000
——————
Cash Flow Statements for 1st year: (end of 2nd quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 25,00,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 5,00,000
——————
Cash Flow Statements for 1st year: (end of 3rd quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 37,500,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 35,500,000
——————-
Cash Flow Statements for 1st year: (end of 4th quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 25,000,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 23,000,000
——————-
Cash Flow Statements for 2nd year: (end of 1st quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 64,000,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 62,000,000
——————-
Cash Flow Statements for 2nd year: (end of 2nd quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 80,000,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 78,000,000
——————-
Cash Flow Statements for 2nd year: (end of 3rd quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 142,500,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 140,500,000
——————-
Cash Flow Statements for 2nd year: (end of 4th quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 150,000,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 148,000,000 ——————-
Cash Flow Statements for 3rd year: (end of 1st quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 88,000,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 86,000,000
——————-
Cash Flow Statements for 3rd year: (end of 2nd quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 168,000,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 166,000,000 ——————-
Cash Flow Statements for 3rd year: (end of 4th quarter)
Cash flow Statement (Direct Method)
Cash Flow from Operating Expenses Amount (Rs)
Cash Inflows:
From sales of goods & services 168,000,000
Cash Outflows:
Employment for Services (100*20,000) (2,000,000)
——————
Cash Flows from operating expenses 166,000,000
——————-
5.1.3 Balance Sheet
- Investment Proposal
6.1 Sources of Fund
6.2 Expected Financial Returns
6.3 Total capital required from Angel Investors
- Critical Risks
7.1 Potential obstacles & risks
Some of the potential obstacles or risks which might lead to high levels of loss for the newly opened coffee house i.e. Coco Choco House. They are as follows:
Þ Bad business idea: The competition in the coffee industry in the Singaporean market has been on peak. This might portray wide levels of threats to the Coco Choco House. Opening a coffee house in Singapore could be regarded as a bad business idea if it is unable to generate revenue as expected.
Þ Unable to handle future growth: It has been regarded that, an increase in the levels of sales will have a positive impact over the enterprise. But, at the same time it shall be noticed that when an organization grows the role of owner changes. The owner shall delegate the work in order to live up to the growth of the organization. Most of the times, the owner of the organization become overwhelmed & they do not delegate the work to others. In this way, the owners are unable to take up the work load which leaves the customers unhappy. Hence, it leads to high levels of threats for the Coco Choco House.
Þ Cash Problems: The second potential risk or obstacle which might occur in case of Coco Choco House would be cash problems. Coco Choco House would be referred to as a new store which deals in serving specialty coffee to the customers. Initially, the enterprise will not be able to generate high levels of cash so as to recover the cost invested.
Þ Lack of customer focus: Lack of customer focus might add as a potential obstacle or risk in case of Coco Choco House. The success of the specialty coffee house i.e. Coco Choco House is to focus upon the needs of the customers. This will help it has been seen that, most of the business houses fail to seize this as a competitive advantage. In this case, the customers will not be able to anticipate the needs of the customer & people will stop coming to this specialty store.
Þ Inexperienced personnel: Inexperienced personnel or managers might act as one of the major threats for the organization. It has been seen that, most of the new managers have limited information regarding how to run a business & they lack the appropriate expertise skills to perform certain tasks. Poor management skills, low leadership skills & incompetency to perform the tasks will act as one of the major threats for the enterprise i.e. Coco Choco House.
If you want Accounting management Assignment Help study samples to help you write professional custom essay’s and essay writing help.
Receive assured help from our talented and expert writers! Did you buy assignment and assignment writing services from our experts in a very affordable price.
To get more information, please contact us or visit www.myassignmenthelp.Com
