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The Uptown Coffee House

This is a presentation created to make business recommendations for a fictional coffee house as part of a business capstone class.
by

Emmanuel Canaan

on 10 August 2013

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Transcript of The Uptown Coffee House

The Uptown Coffee House
Strengths
Weaknesses
No guarantee of success
Labor and overhead
Late night bar competition/saturation
Competitive marketplace
Unpredictable food/beverage market
Economic conditions
Opportunities
Reposition and reinvent the UCH
Improve customer service
Increase revenue
Attract and retain new customers
Threats
Theft- both internal and external
Vandalism- to the interior or exterior
Product waste- mistakes affect bottom line
Absenteeism- lessens productivity and increases overtime
Liability- increased by selling alcohol
In Conclusion...
Operational Recommendations
Restructured coffee house
New menu with beer and wine
Revised hours of operation
New promotional nights
Corporate social responsibility programs

Human Resources Recommendations
Increase employee engagement
Improve compensation
Educate employees on new programs and menu
Address personnel conflicts
Improve customer service
Recognition and Reward programs
Current State
Prices too low
Growth flatlined
Unreasonable rent
Unclear pricing strategy
You aren't paid enough!
Pricing Recommendations
Psychological and Market-oriented pricing
Raise drink prices 20%
Higher increases for select drinks
Hot Chocolate (75%)
Tea (20-40%)
Espresso (40%)
Premium drinks (30%)
Cut prices on caps, & shirts
Raise price for roasted beans by $1.00
Effect of Price Changes on Revenue
With no increase in sales:
Coffee revenue up

$53,270
Food revenue up

$37,680
Flat change for cups, caps, & shirts
Unique and active location
Unique atmosphere
On-site coffee roasting
Best coffee in town
Owners' music backgrounds
In business since late 1980s
Effect of Increased Sales with New Pricing
Coffee up
$92,500
; Food up
$66,500
10% Weekdays, 15% on Weekends
Coffee up
$82,500,
Food up
$57,000
15% Weekdays, 20% on Weekends
Coffee up

$95,700,
Food up
$66,700
20% Weekdays, 25% on Weekends
Coffee up

$108,800,
Food up
$76,400
Financial Recommendations
Sample of Drink Menu Price Changes
Medium Coffee was $1.90

Now

$2.29

Medium Espresso was $1.75

Now

$2.49

Medium Calhoun was $3.25

Now

$4.29

Medium Hot Chocolate was $1.90
Now

$3.39

Sample of Food Menu Price Changes
Breakfast sandwiches were $3.50

Now

$3.49

Lunch sandwiches were $3.75

Now

$3.99

Scones and muffins were $2.00

Now

$2.29

Various types of cookies were $2.00
Now
$1.49

Changes to Costs
Increases sales and switch to fair trade coffee
Coffee production costs up approx. $20,000
Materials costs unchanged
Increased advertising budget
Doubles from $400 per month to $800 per month
Depreciation changes
2014 is the final year for depreciation of current assets
Save $18,000 per year after 2014
Utilities and Insurance Increases
Each up approximately $2400 annually
Potential Rent Reduction
New house for sale
Ideal location
Listed for $320,000
$80,000 in renovations needed
Could disrupt customers
Save $1384 in rent payments
Offer to buy current house
Valued at $400,000
No disruption
Owner may not accept
Saves
$16,600
per year!
Pay off mortgage in just 13 years!
Personnel Recommendations
Increased wages
10% raise for full-time to $18.70 per hour
10% raise for part-time to $8.80 per hour
Total wage expenditure increases by $49,570

Personnel changes
Increase part-time hours from 15.6 to 24 per employee

Over $121,000 more in your pocket!
New Revenue Streams
Beer and wine sales
Average beer price is $4.9
9
Average wine price is $6.99
Liquor license cost of $4435 annually

Rent from third floor
Additional $12,000 in annual revenue

Further offsets new costs like liquor license, salaries, fair trade

Profit of $49,425 annually with 310 units sold per week
Two part-time are $25,400 cheaper than full-time
Coverage for 194 hours not covered by full-time staff

Marketing Recommendations
Reposition the coffee house as BHG
Promote corporate social responsibility
Highlight new features such as art sales
Increase and diversify advertising
Add showcase events

Finance Recommendations
Raise prices to reflect premium coffee and experience
Offer to buy current house to reduce rent
Raise wages, and consider future increases
Find new revenue streams
Use profits to build reserves and increase quality of life
...In Conclusion
By New Beginnings Consulting
Welcome to the

New

Uptown Coffee House
Beth Underwood, Director of Human Resources
SWOT Analysis
Extensive HR experience
Human Resources Recommendations
Increase employee engagement
Improve compensation
Educate employees on new programs and menu
Address personnel conflicts
Improve customer service
Recognition and Reward programs
Welcome to the

New

Uptown Coffee House
Matt Wells, Director of Operations
Extensive background in hotel management
Management and Organizational Recommendations
Restructured coffee house
New menu with beer and wine
Revised hours of operation
New promotional nights
Corporate social responsibility programs
Welcome to the

New

Uptown Coffee House
Jill Doherty, Director of Marketing
Extensive marketing experience
Marketing Recommendations
Reposition the coffee house
Promote corporate social responsibility
Highlight new features such as art sales
Increase and diversify advertising
Add showcase events
Welcome to the

New
Uptown Coffee House
Emmanuel Canaan, Director of Finance
Extensive finance experience
Financial Recommendations
Alter pricing
Reduce rent
Adjust salaries and hours
Introduce new revenue streams
Build financial reserves
Matthew Wells
General Management & Organizational Recommendations
Operating supplies and equipment
Coffee house atmosphere and décor
A new direction in customer service
Implementation of new company policies and procedures.
Third floor rental

Restructuring w/ Revised Objectives
Reformation of food and beverage
Forward thinking organic menu
Morning vs. evening food item availability
Wide variation of local beers & a strong collection of coffee stouts
A growing vault of wines



Progressive Menu with Beer and Wine
Restructured hours of operation
New staffing guidelines
Hours of Operation & Staff Structure
Wine and cheese tastings (Thurs)
Beer and homemade pizza/pretzel nights (Wed)
Date night
Food and drink pairings
Artist of the month cover bands
Coffee and chocolate pairings
Promotional Nights
Promoting organic fair trade coffee
Recycling programs
Giving back to our local community

Corporate Social Responsibility
Beth Underwood
Human Resource Recommendations
Emmanuel Canaan
Feel satisfaction with their work
Take pride in their organization
Enjoy and believe in their work
Understand link between job and organization’s mission
Feel valued by their employer
Fully commit to their employer and their role
Exert extra effort to contribute to business success


Define: Employee Engagement According to SHRM
Must align business strategy with employee compensation
Retain top talent and increase employee morale
Set pay scale competitively to at least "meet the market"
Engagement requires recognition and rewards
Compensation strategies should support engagement, not drive it.



Role of Compensation in Engagement
1. Objectives
2. Internal Alignment
3. External Competitiveness
4. Employee Contributions
5. Management


The Compensation Strategy:
Increase sales by educating and empowering employees
Nurture the psychological contract between employees, supervisors and owners.
Education and Gratification
Each week:
One drink
One coffee bean type
One food or merchandise item
Educate, pair with food or beverage, get employees talking with guests

Education
On the spot rewards
Month-end highest dollar per transaction
Creative upselling technique
Most improved month-end sales

Gratification
Employees will be challenged or quizzed on their product knowledge
Merit increases given only if the employee has proven the skills/knowledge necessary to work
Tying Knowledge To Pay
2% increase for TIPS training
2% increase for customer service training
2% increase for product knowledge
2% increase for correct uniform
2% increase for 10% increase in dollar per transaction average
10% Incremental Pay Increase
TIPS training for the sales of alcoholic beverages
Customer service training to redirect thinking
Training for menu changes
Uniforms
Same color polo
Continue to wear jeans
No holes, rips or otherwise inappropriate attire
Provide a safe location away from guests for employees to voice their concern or vent
Training, Redirecting and Relocating
Reduce Turnover + Increase Sales + Improve Culture =
HR's Equation
SUCCESS!
Jill Doherty
Marketing Recommendations
Reposition and Re-launch the Uptown Coffee House
Promote Corporate Social Responsibility Initiative
Highlight New Product Attributes
Increase and Diversity Advertising Tactics
Showcase Events
Marketing Strategy Overview
Re-launch Uptown Coffee House as Coffee and Wine Bistro: “Beans, Hops, & Grapes”
Grand Reopening
Extended Hours
Increase in Menu Items
Beer & Wine
Additional Food Options


Reposition and Re-launch
the Uptown Coffee House
Highlight use of:
Locally Grown/Humanely Raised Products
Locally Brewed Beer
Wine from Local Wineries
Organic and Fair Trade Coffee Beans
Backyard Garden
Promote Corporate Social Responsibility
Rewards Card
Mobile coupons
Facebook Promotions
Same Day Receipt Promotion
Beans Hops Grapes Mug Discount
Movie Ticket Stub Promotion
Print Ads in City Pages
Increase & Diversity Advertising Tactics
Monthly Local Artist Competitions
Musicians
Artists of Wall Art
Beer & Pretzel Night
Wine & Cheese Night
Showcase Events
Review of Financial Projections
Full transcript