Group 3 Case Study

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TasTe and see…
April 21, 2010

Teacher: David Kampmann

By: Trevor Thielke, Chris Christensen!

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Trevor Thielke and Chris Christensen David Kampmann CIS 105 3C April 21, 2010 Taste and See… “Taste and See…” is a vision for a small Christian business serving espresso, specialty drinks, and teas, and also selling books. The name of our business comes from the Psalm 34 verse 8 “Taste and see that the Lord is good; blessed is the man who takes refuge in Him.”
(Biblegateway.com).

We want to connect to our customers and by doing so show them the love of

Christ. We want the store to feel like a home away from home, so the look of the building inside and out will be that of a house. With big open windows, wood floors, and a big stone fire place, we will create an atmosphere of warmth and love. Location is one of the biggest factors to a business’ success. Knowing how small towns lack a place just to hang out, or meet up with friends or family, we decided to open in Tea, SD. There is virtually no competition, and although Tea is small, it is growing rapidly. In just the last two years Tea’s population has almost doubled in size (City Data.com). Our target market is young families with children, which is the majority of Tea. Young parents love to get away from the home, even for just a few minutes, and spend time with friends, or relax by themselves. If our store can offer not only a place to do that, but also a place where their children want to go, then we will be a very busy place. We want to be established and well known before Tea does grow, and be ready for when the competition comes. After scoping out the hot spots of Tea, and finding out which road has the most traffic, we decided to purchase land on the corner of 272nd St. and Tea Ellis RD. This is the busiest intersection, because not only is it the quickest

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highway to get to Sioux Falls, it is also the main road to get to the Interstate. More specifically on the Southeastern corner, because according to “talkaboutcoffee.com” in order to have a successful coffee shop, it must be on the side of the road that people drive to work, not home (Talk about Coffee). The reason being, people usually buy coffee in the morning, and aren’t looking to stop on their way home. This position will force us to construct a new building, but that means that it will be exactly what we want it to be.
Once our location is chosen, the question arises: “How do we plan on purchasing the land, and paying for the contractor to build this new building?” According to “FabJob Guide to Becoming a Coffee House Owner”, contractors will usually take a 20% down payment and semi-weekly or monthly payments thereafter (Hennessy). The majority of the finances that fund any small business are personal. Everything from personal savings, investors, help from friends and family, and possibly even a second job will be going into the funding of this business. Lastly you would look to taking out a loan, because debt is never a smart idea. Opening costs for a 50 seat coffee house were estimated at $96,711. This includes: the cost of renovating a pre-owned restaurant, cost of equipment, cost of inventories, the cost of hiring a lawyer and an accountant, licensing fees, marketing costs, the cost of training employees, and some extra capital (Hennessy). Considering the fact that we would like to construct a new facility, and will have very few employees, this budget doesn’t accurately reflect the one that will be ours. However, it does help us to understand the costs of equipment, maintenance, insurances, legal counsel, and financial counsel. By creating a budget sheet (Profit and Loss), we will keep track of our net income, cost of goods (merchandise), cost of labor, and uncontrollable and controllable expenses. Here is an example of the total numbers for a monthly cash flow plan for a coffee house:

4 Income Total Cost of Sales Total Cost of Controllable Expenses Total Cost of Non-controllable Expenses Net Cash Flow $ 36,000 $ 9,486 $ 14,425 $ 8,704 $ 3,385

(Hennessy). Doing this will help us keep financially on track and help us to see what the future will look like, starting with a budget for every month, then an annual budget, and then a long term budget (5 year goals). Planning so far in advance for our financial future is what will help us to reach our goals and stay in business. On the opening cost sheet there is money specifically set aside for hiring a lawyer; more specifically a corporate lawyer, to help protect us from getting sued by an angry customer. The attorney will help to find the right insurance for “Taste and See…” We will need liability insurance, disability insurance, property insurance, and business interruption insurance. Liability insurance will protect us from getting sued over accidents that happen at the store. Disability insurance will be helpful if one of us gets injured and can no longer work for a period of time. If that may happen, there will still be an income for that person. Purchasing property insurance protects our facility from fires, and other forms of damage. Finally business interruption insurance gives us income if something were to happen to disrupt business (the store catching fire) until it is fixed. They will also work closely with the accountant that we hire to help ensure that our company is both legally and financially secure. The accountant will be responsible for year-end and quarterly taxes, and a monthly profit and loss statement. Some of these things we could do ourselves, but it will free up important time by having an accountant do them. The look of “Taste and See…” on the outside of the building will be that of an old house straight out of Italy. Walking up to the building, customers will see a big wooden door, big windows, and old,

5 light color stone, with a vine climbing the chimney side of the building. Inside, the customers are greeted with the musky smell of a roaring fire and the smell of freshly brewed coffee. Book shelves line the wall of one side of the room, with oversized couches around the fireplace. Clusters of small tables are spread throughout, while the coffee bar is tucked away in the back. The idea is that when someone walks in they will see that the focus isn’t on the making of coffee; rather it is on people and relationships. A dark oak floor with subdued lighting above brings the homey feeling that we desire our customers to enjoy. In one corner of “Taste and See…” there will be a children’s area, complete with children’s books, bean bags, and games. There will also be a special menu for children including decaf options, cookies and milk, and juice varieties. The menu that will be offered in our shop will vary daily, with main food items and coffees remaining throughout the week. Everything will be made in the store from scratch: pastries, baked goods, creamers, and breakfast and lunch sandwiches. As for drinks we will have lattes, espresso, brewed coffees, teas, smoothies, homemade sodas, and a variety of natural juices.

Tea is a very family oriented town, with a median age of about 29 years old (City Data.com). Our marketing techniques will be focused on the young adults with families. One year before the grand opening of the coffee shop we will begin marketing. To begin our marketing strategy, “Coming Soon!” fliers will be released as soon as construction is commenced. Tea hosts its own holiday of sorts, called Teapot Days. On the Teapot Day before we open, we will set up a kiosk, allowing customers to sample our drinks and pastries. Word of mouth will also be vital and very effective because of Tea’s small town atmosphere. On the day of our grand opening, we will offer many different samples for people to get a small taste of what we are about. “Taste and See…” will allow the families of Tea and Sioux Falls, to get away from the stresses of life, and find a place to relax and enjoy the company of friends.

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Works Cited
Biblegateway.com. 1993. 24 March 2010 <http://www.biblegateway.com/quicksearch/?quicksearch=Taste+and+see&x=0&y=0>. City Data.com. 20 March 2010 <http://www.city-data.com/city/Tea-South-Dakota.html>>. Hennessy, Tom. FabJob A Guide to Becoming a Coffee House Owner. FabJob.Inc., 2008. Talk about Coffee. 2010. 22 March 2010 <http://www.talkaboutcoffee.com/coffee-shop.html>.

Cost Analysis Table ID Item 1 Legal 2 Accounting 3 Architect 4 Rent Deposits 5 License Fees 6 Insurance Deposit 7 Dues 8 Food Inventory 9 Beverage Inventory 10 Supplies Inventory 11 Training Costs 12 Working Capital 13 Plumbing 14 Electrical 15 Framing and Cabinetry 16 Miscellaneous 17 Tables 18 Table Bases 19 Portable Coffee bar 20 Chairs and Bar Stools 21 Artwork 22 Booster Chairs 23 High Chairs $ 500 500 1,500 3,000 500 100 100 2,500 1,500 1,500 8,000 10,000 5,000 5,000 15,000 4,000 940 250 655 2,540 1,000 36 88 Category Coffee House Setup Coffee House Setup Coffee House Setup Coffee House Setup Coffee House Setup Coffee House Setup Coffee House Setup Coffee House Setup Coffee House Setup Coffee House Setup Coffee House Setup Coffee House Setup Construction Construction Construction Construction Furniture and Fixtures Furniture and Fixtures Furniture and Fixtures Furniture and Fixtures Furniture and Fixtures Furniture and Fixtures Furniture and Fixtures

4/20/2010

Page 1

Trevor Thielke

110 W. High Pointe St., Tea, SD 57064 * Phone: 605-951-2134 * E-mail: [email protected] April 21, 2010

Mr. Scott Holmes 534 S. Charlotte Ave. Sioux Falls, SD 57104

Dear Mr. Holmes:

I am contacting you in regards to the opening of my new business Taste and See…. It is going to be Christ focused coffee/espresso shop located in Tea, SD. Tea is a small town that is growing fast, and by focusing on relationships and people is how we plan on creating long lasting customer relationships. To aid us in engaging with the customers we have chosen a more homey feeling for the design of the store. This will help customers feel more open, and hopefully they will want to stay and spend some time with us. You mentioned that you are looking to makes some investments and seemed interested in Taste and See... so I was wanted to let you know that we would love to have you on our team! Please give me a call anytime if you are still interested.

Sincerely,

Trevor Thielke

Trevor Thielke Chris Christensen

Total Opening Costs
Small Wares 6% Coffee House Setup 30%

Equipment 28%

Furniture and fixures 6% Construction 30%

Total Cost of: Coffee House Setup Construction Furniture and fixures Equipment Small Wares Total Cost: =SUM('Estimated Cost'!B4:B15) =SUM('Estimated Cost'!B19:B22) =SUM('Estimated Cost'!B26:B32) =SUM('Estimated Cost'!D4:D31) =SUM('Estimated Cost'!F4:F35,'Estimated Cost'!H35:H36,'Estimated Cost'!H35,'Estimated Cost'!H35,'Estimated Cost'!H35,'Estimated Cost'!H35,'Estimated Cost'!H35,'Estimated Cost'!H4:H35) =SUM(B18:B22)

Information found from Fabjob.com

Minimum Cost Maximum Cost Average Cost

=MIN('3-D Pie Chart'!B18:B22) =MAX(B18:B22) =AVERAGE(B18:B22)

=NOW()

Chris Christensen
409 W HARRISON ST LUVERNE MN, 56156 507-449 9598

Objective: Skills

open a Coffee Shop

Hard worker and great with people Management and problem solving skills

Education/Training
Southeast Technical Institute, South Dakota Expected Graduation Date: May 14, 2011 Major: Business Administration

Work Experience
May 2007-Current Starbucks Sioux Falls, South Dakota

Shift Supervisor: June 2009-Current
Organizing the employees on the shift Counting the tills Helping during a rush Dealing with customer problems Ensure the policies are kept

Barista: (crew) May 2007-June 2009
Coffee brewing Making Lattes Customer services

Community Services
Volunteer at Second Chance animal rescue

Trevor Thielke Chris Christensen

Estimated Cost for a 50-Seat Coffee House
Coffee House Setup
Item Legal Accounting Architect Rent Deposits License Fees Insurance Deposit Dues Food Inventory Beverage Inventory Supplies Inventory Training Costs Working Capital $ 500 500 1500 3000 500 100 100 2500 1500 1500 8000 10000

Equipment
Item Espresso Machine Water Filter 2 Espresso Grinders Coffee Brewer Ice Bin Reach-in Cooler Sandwhich Prep Table Stove w/ Oven Hood and Make-Up Air Fire Suppression System Prep Tables Three-Compartment Sink Dish Tables $ 2640 155 1230 1160 365 1420 1670 2325 795 1740 530 750 810 205 0 3625 1290 2295 1185 530 528 0 420 695 120 495 180 610

Small Wares
Item 4 Vacuum Pots 4 Sheet Pans 6 Pie Pans 4 Muffin Pans 2 Chef Knives Sharpening Steel 2 Chef Spoons Perforated Chef Spoon China Cap Strainer 12 Insert Pans 6 Bus Tubs 4 Spring Form Pans Can Opener Ice Scoop Flour Scoop 2 Flour Bins Ounce Scale Pound Scale Hand-Held Thermometer 4 Metal Tongs 4 Large Stainless Bowls Wire Wisk 4 Large Rubber Spatulas Cake/Pie Marker 6 Dishwasher Racks 5 Rubber Mats 3 White Cutting Boards Pastry Bag Pastry Tips 2 Measuring Cups Measuring Spoons 1-oz. Ladle $ 216 20 31 172 20 24 6 6 34 163 86 38 80 5 7 144 53 57 7 11 56 7 7 5 110 275 63 4 13 16 6 2

Small Wares Continued
Item 6-oz Ladle 2 Timers Stock Pot Brazier 2 Saucepans Saute Pan Colander 4 Hotel Pans 2 Flatware Holders All-Purpose Shelf Slim Trash Can Conversion Dolly Large Trash Can Mop Bucket 60 Large Plates 60 Small Plates 36 Bowls 36 Espresso Cups 36 Espresso Saucers 36 Cappucino, Latte Cups 36 Cappucino, Latte Saucers 24 Creamers 12 Sugar Caddies 12 Tea Pots 72 Pint Glasses 36 Small Glasses Salt and Pepper Shakers 72 Forks 72 Teaspoons 36 Soup Spoons 72 Ice Tea Spoons 72 Knives $ 4 14 87 120 55 44 61 52 17 59 32 29 32 40 350 173 219 166 100 330 110 100 52 170 111 43 18 76 60 38 80 150

Construction
Item Plumbing Electrical Framing and Cabinetry Miscellaneous 5000 5000 15000 4000

Pre-rinse Dishwasher 30 Qt. Mixer One-Door Freezer Walk-In Cooler Ice Machine Microwave Oven

Furniture and Fixtures
Item Tables Table Bases Portable Coffee bar Chairs and Bar Stools Artwork Booster Chairs High Chairs 940 250 655 2540 1000 36 88

Metro Shelves Soda Dispenser Kitchen Aid Mixer Food Processor Bus Cart Power Mixer Mop Sink Grease Trap

Trevor Thielke Chris Christensen

Total Opening Costs
Small Wares 6% Coffee House Setup 30%

Equipment 28%

Furniture and fixures 6% Construction 30%

Total Cost of: Coffee House Setup Construction Furniture and fixures Equipment Small Wares Total Cost: $29,700.00 $29,000.00 $5,509.00 $27,768.00 $5,636.00 $97,613.00

Information found from Fabjob.com

Minimum Cost Maximum Cost Average Cost

$5,509.00 $29,700.00 $19,522.60 4/21/2010

Trevor Thielke Chris Christensen

Estimated Cost for a 50-Seat Coffee House
Coffee House Setup
Item Legal Accounting Architect Rent Deposits License Fees Insurance Deposit Dues Food Inventory Beverage Inventory Supplies Inventory Training Costs Working Capital $ 500 500 1,500 3,000 500 100 100 2,500 1,500 1,500 8,000 10,000

Equipment
Item Espresso Machine Water Filter 2 Espresso Grinders Coffee Brewer Ice Bin Reach-in Cooler Sandwhich Prep Table Stove w/ Oven Hood and Make-Up Air Fire Suppression System Prep Tables Three-Compartment Sink Dish Tables Pre-rinse Dishwasher $ 2,640 155 1,230 1,160 365 1,420 1,670 2,325 795 1,740 530 750 810 205 3,625 1,290 2,295 1,185 530 528 420 695 120 495 180 610

Small Wares
Item 4 Vacuum Pots 4 Sheet Pans 6 Pie Pans 4 Muffin Pans 2 Chef Knives Sharpening Steel 2 Chef Spoons Perforated Chef Spoon China Cap Strainer 12 Insert Pans 6 Bus Tubs 4 Spring Form Pans Can Opener Ice Scoop Flour Scoop 2 Flour Bins Ounce Scale Pound Scale Hand-Held Thermometer 4 Metal Tongs 4 Large Stainless Bowls Wire Wisk 4 Large Rubber Spatulas Cake/Pie Marker 6 Dishwasher Racks 5 Rubber Mats 3 White Cutting Boards Pastry Bag Pastry Tips 2 Measuring Cups Measuring Spoons 1-oz. Ladle $ 216 20 31 172 20 24 6 6 34 163 86 38 80 5 7 144 53 57 7 11 56 7 7 5 110 275 63 4 13 16 6 2

Small Wares Continued
Item 6-oz Ladle 2 Timers Stock Pot Brazier 2 Saucepans Saute Pan Colander 4 Hotel Pans 2 Flatware Holders All-Purpose Shelf Slim Trash Can Conversion Dolly Large Trash Can Mop Bucket 60 Large Plates 60 Small Plates 36 Bowls 36 Espresso Cups 36 Espresso Saucers 36 Cappucino, Latte Cups 36 Cappucino, Latte Saucers 24 Creamers 12 Sugar Caddies 12 Tea Pots 72 Pint Glasses 36 Small Glasses Salt and Pepper Shakers 72 Forks 72 Teaspoons 36 Soup Spoons 72 Ice Tea Spoons 72 Knives $ 4 14 87 120 55 44 61 52 17 59 32 29 32 40 350 173 219 166 100 330 110 100 52 170 111 43 18 76 60 38 80 150

Construction
Item Plumbing Electrical Framing and Cabinetry Miscellaneous 5,000 5,000 15,000 4,000

30 Qt. Mixer One-Door Freezer Walk-In Cooler Ice Machine Microwave Oven Metro Shelves Soda Dispenser Kitchen Aid Mixer Food Processor Bus Cart Power Mixer Mop Sink Grease Trap

Furniture and Fixtures
Item Tables Table Bases Portable Coffee bar Chairs and Bar Stools Artwork Booster Chairs High Chairs 940 250 655 2,540 1,000 36 88

Page 5 of 9

CIS 105 Internet Research PHASE I - Formulation of Research Topic
At a minimum, the following information should be contained in your One-Note notebook pages.

Name: Trevor Thielke and Chris Christensen___________________ Program of Study at STI: Business Administration______________ Due Date: 4/21/2010___________________________________ 20 Points Assigned Based on the Topic Chosen and Efforts Put Into Searching for Information, and Notes Taken in a One-Note notebook or section tab. The notebook should be named Your Name CIS 105 Research Notebook What is the topic you have formulated for your research project? Opening our own business: a coffee shop. • At least 10 URLs should have been researched for your topic, prior to selecting it. List them all in One-Note and highlight those that you will actually use for this report. • Please collect research you have decided to use on pages in One-Note, name these pages Word Report1, Word Report2, etc. Don’t forget to include Excel numeric information on a page named Excel. • Place your related image, on a page called Image when your teacher asks for it.

revised 4/21/2010

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