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Case Study Cafe

Mr. Siddharth wants to open a cafe and needs $55,000 - $25,000 from equity investors and $30,000 from a bank loan. He expects to sell 120 cups of coffee per day, with 40% in large cups at $4 each and 60% in small cups at $3.50 each. Expenses include $1,200 monthly rent, $0.45 per cup for coffee supplies, a barista's $50,000 annual salary plus 25% for other staff, and $100 monthly for utilities. He will create financial statements and a model to analyze the cafe's projected performance.

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Mallikarjun D
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162 views

Case Study Cafe

Mr. Siddharth wants to open a cafe and needs $55,000 - $25,000 from equity investors and $30,000 from a bank loan. He expects to sell 120 cups of coffee per day, with 40% in large cups at $4 each and 60% in small cups at $3.50 each. Expenses include $1,200 monthly rent, $0.45 per cup for coffee supplies, a barista's $50,000 annual salary plus 25% for other staff, and $100 monthly for utilities. He will create financial statements and a model to analyze the cafe's projected performance.

Uploaded by

Mallikarjun D
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Siddharth Cafe

Mr. Siddharth wants to start Café business. The business will need a $10,000 coffee machine,
$35,000 in furniture and fixtures, $5,000 in miscellaneous inventory (such as cups and
coffee), and $5,000 in cash. The total amount of $55,000 is how much money he needs to open
the business, also called “Uses of funds”. In order to raise the required $55,000, he invests

$25,000 in the form of equity (thanks, Ma and Pa and friends) and borrow $30,000 as a bank
loan.

Revenue Assumptions:

Based on the study of other cafes in the area, he expects the following assumptions for his
business’s revenue: » he’ll sell an average of 120 cups of coffee per day throughout the year.
» Forty percent of coffees sold will be in large cups; 60 percent will be in small cups. » he’ll
charge $4 for a large cup of coffee and $3.50 for a small cup of coffee.

Expense Assumptions:

In his analysis, he has also researched the operating costs of running a cafe, which are the
following: » he thinks the rent expense will most likely be $1,200 per month. This is just an
estimate, though — he’ll enter some potential fluctuations into the scenario analysis later on.
» Consumables — including coffee beans, cups, filters, and so on — will cost $0.45 per cup.
This amount has been averaged over both large and small cups, so he won’t need to distinguish
between size for the purpose of this model. » The barista’s salary is $50,000 per year, plus 25%
in other staff costs and benefits. » Monthly utilities, such as electricity, heat, and water, will
cost $100 per month. » The company income tax rate is 30 percent.

Build the components of an integrated financial statement, an income statement, a cash flow
statement, and a balance sheet in a working financial model.

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