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Cafe au Lait Coffee Shop

Presentation based on results of BizCafe coffee shop online simulation.

Frankie Kate

on 9 January 2015

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Transcript of Cafe au Lait Coffee Shop

Cafe au Lait Presentation
Best Quarter based on Profits
Worst Quarter based on Profits
1st quarter – ($4160.50)
Gross Margin - $2762.63
Expenses - $6923.13
Wages - higher than the local labour.
Prices - higher than local market.
Cafe au Lait
Best Coffee in College Town!
Coffee House
Unlike any other!
Departments don’t work in isolation; every aspect in the business is interrelated.

If re-done
Review labour market before setting wages.
Current State
Prices too low
Growth flatlined
Unreasonable rent
Unclear pricing strategy
You aren't paid enough!
Income Statement
Effect of Price Changes on Revenue
With no increase in sales:
Coffee revenue up

Food revenue up

Flat change for cups, caps, & shirts
Period 8 - $21,138.00
Increased price of medium cups.
Only 1 lb emergency purchase of coffee.
Advertising & promotion remained constant.
Success of Radio Show.
Effect of Increased Sales with New Pricing
Coffee up
; Food up
10% Weekdays, 15% on Weekends
Coffee up
Food up
15% Weekdays, 20% on Weekends
Coffee up

Food up
20% Weekdays, 25% on Weekends
Coffee up

Food up
Financial Statements
Sample of Drink Menu Price Changes
Medium Coffee was $1.90



Medium Espresso was $1.75



Medium Calhoun was $3.25



Medium Hot Chocolate was $1.90


Sample of Food Menu Price Changes
Breakfast sandwiches were $3.50



Lunch sandwiches were $3.75



Scones and muffins were $2.00



Various types of cookies were $2.00

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
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!
Balance Sheet

Two part-time are $25,400 cheaper than full-time
Coverage for 194 hours not covered by full-time staff

Be competitive from the start; don't operate a business as if you are testing the waters.

If re-done
Look at competitors’ prices to make appropriate decisions.
By Melissa De Four, Kathleen Francis, Jennieville R. Thompson
To provide excellent customer service to patrons.

To offer remuneration packages that were above labour market wages.
Great tasting, high quality coffee at an affordable price!

To increase public & brand awareness of Café au Lait.

Keep coffee wastage to a minimum.

Maintain a minimum stock level.

Avoid rush ordering.
Important to purchase the right amount of coffee.

Review inventory.
Amounted to $31,513.76

Deducted total expenses of $92,642.38 from gross margin figure of $124,156.14
Cash balance reflected as $45,320.37
Salary of employees & managers, total amount paid to date was $48,162.38

Advertising / promotions, second highest expense reflected as $35,000.00
Promoting organic fair trade coffee
Recycling programs
Giving back to our local community

Beth Underwood
Human Resource Recommendations
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

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

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
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
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
Artists of Wall Art
Beer & Pretzel Night
Wine & Cheese Night
Showcase Events
Review of Financial Projections
Each situation must be carefully analyzed independently.

If re-done
Take greater risk in the area of the special decisions.
Review customer ratings and increased staff accordingly.

Constant review of labour market to ensure staff pay was above minimum.
Price should not be as high as competitors but also not too low.

Wanted the customers to constantly be aware of the café.
Full transcript