CHAPTER I

EXECUTIVE SUMMARY

SUMMARY OF THE PROJECT

Name of the Firm Hug a Mug Coffee Shop

Location Mayor Jaldon St. Canelar, Zamboanga City

Hug a Mug Coffee Shop will provide a friendly,

comfortable atmosphere where the customer can

receive quality food, service and entertainment at a

reasonable price.

Hug a Mug Coffee Shop is an excellent business

opportunity due to the growing demand of coffee

Brief description of the
consumption. It will cater most of the customers in the
project
area without experiencing inconvenience in their part.

People can just stop by and have some refreshing

coffee beverage to help them energized in their daily

activities.
 In terms of marketing aspect, the proposed business

has a strong demand among the market segment of

Marketing Study the project location. It’s 4P’s – product, price, place

and promotional strategies will surely attract the

target customers.

The business is feasible in terms of its technical

aspects because of the project location. It also able to

Technical Study
meet the other technical requirements like equipment,

manpower, raw materials and supplies.

In the management aspects of the business, the

fullest attention to every detail particularly in the

management of funds, expenditures and the dealing

Management Study
with its human resource and its concerns, as well as

the personnel’s salaries and benefits policies and

programs are defined.

In the financial aspects of the business, it

illustrates the comparative statements over a 5-year

Financial Study period

Socio-Economic Study The business is expected to benefit the local

coffee farmers and producer of other raw materials.

This benefit will contribute to the local coffee industry

and to the community. It will also provide jobs to the

personnel of the business and contribute to the

government and the people by paying taxes. Hug a

Mug will provide friendly and comfortable atmosphere

where customer can receive quality fresh brewed

coffee, service and entertainment at a reasonable

price.
 CHAPTER II

BACKGROUND OF THE STUDY

Coffee is considered as one of the most popular beverage in many regions

around the globe. It is a valued commodity and a central element in the economies of

many countries and indeed a primary agricultural export that provides a living for

millions of people involved in its cultivation, processing and distribution. Coffee

cultivation and trade began on the Arabian Peninsula. By 15th century, coffee was being

grown in the Yemeni district of Arabia and by 16th century it was known in Persia, Egypt,

Syria and Turkey. By the 17th century, coffee had made its way to Europe and was

becoming popular across the continent and later on it became popular all over the

world. In the Philippines, coffee has a history as rich as its flavor. The first coffee tree

was introduced in Lipa, Batangasin 1740 by Spanish Franciscan monk. From there,

coffee growing spread to other parts of Batangas and eventually became the coffee

capital of the country.

Coffee beans come in four varieties – Little Robusta, its bigger brothers the

Excelsa and Liberica and the rich Arabica in between. The Philippines grows all of four

varieties. After they have been milled, the beans are taken to the sorting area and

sorted beans leave the farms and mills to cities and coffee establishments where it is

brewed and served.

Coffee industry in the Philippines is coming trend and coffee’s success as a

beverage led to the development of establishments particularly coffee shop and coffee

chains. Coffee shops sometimes take on the purpose as the center of society because it
is a place where you can talk with friends, entertain or simply to just pass some time. It

can also be place for meeting grounds especially for couples and business partners.

Local coffee chains are continuously increasing due also to the increasing

number of demand of coffee. This industrial advancement is bringing opportunities and

benefits not just for the consumer but also to the economic development of the country.

https://philcoffee board.com/philippine-coffee/from bean-to-brew

The researcher motivates to do the research to know the

 Business Location

Hug a Mug Coffee is located at Mayor Jaldon St. Canelar, Zamboanga City. The

location accessible for customers and is surrounded by different establishments, people

working there can be our possible target market and since we’re near at KCC Mall

people can just pass by to have a relax after a stressful shopping.

The location was chosen because of the following:

 Accessible for neighboring barangays

 Surrounded by different establishments were our target market works

 Drive through area

Figure 1. Location Map

Scope and Delimitations of the Study

This study was conducted to determine the preferences of the target market with

regard to taste, customer satisfaction and service quality that the target market wanted.

The researcher used survey questionnaire as tool and personally interviewed some of

the respondents.

The survey was done by the researcher by distributing the questionnaires at

Canelar, Zamboanga City in which the target market is mostly employedon the different

establishment surrounding the area

The researcher entertains respondents who are only on their free time and willing

to answer the questionnaire to avoid inconvenience on their part so they can evaluate

the questions carefully to ensure validity of the result.

The sample market size used is four hundred (400) by using the Slovin’s Formula

with .5% as the Margin Error. The N or the total population is 113,097

𝑁
n = 1+n(𝑒)2 Barangay Total Population

Canelar 11,160
113097
n=
1 + 113097(0.5)2 Sta. Maria 21, 926

113097 Tumaga 25,184

n=
1 + 113097(.0025)
Baliwasan 25, 042
113097
n= Tetuan 29, 785
1 + 282.7425

113097
n=
283.7425 TOTAL 113,097

n = 398.59 𝑜𝑟 400
 Operational Definition of Terms

1. Barista – the person who prepares coffee on a coffee shop

2. Espresso – full-flavored, concentrated form of coffee that is served in “shots.” It is

made by forcing pressurized, hot water through very finely ground coffee beans.

3. Cappuccino – is a coffee drink that today is composed of double espresso and hot milk

with the surface topped with foamed milk. Cappuccinos are most often prepared with an

espresso machine.

4. Latte - type of coffee made with espresso and hot steamed milk, milkier than a

cappuccino.

5. Macchiato – espresso topped with a dab of foamed steamed milk.

6. Mocha - espresso mixed with chocolate syrup and steamed milk.

 CHAPTER III

MARKETING STUDY

Marketing is the act of facilitating the exchange of a given commodity for goods,

services, and/or money to deliver maximum value to the consumer. From a societal

point of view, marketing is the link between a society’s material requirements and its

economic patterns of response. Marketing satisfies these needs and wants through both

the exchange processes and building long-term relationships.

Marketing can be viewed as an organizational function and a set of processes for

creating, delivering, and communicating value to customers, and managing customer

relationships in ways that benefit the organization and its shareholders. Marketing is the

science of choosing target markets through market analysis and market segmentation,

as well as understanding consumer buying behavior and providing superior customer

value.

Marketing Objectives

Hug a Mug Coffee Shop’s main marketing objective is to be a center of society

that serves high quality coffee related products and services. Aiming to become one of

the top coffee establishment by gaining the loyalty of the customers who will patronize

our product and to be known in the whole city of Zamboanga.

The following objectives are design:

 To delight customers by meeting their expectation and to guarantee satisfaction.

 To established a convenient way to cater the most of the customer in the campus.

 To increase the sale of our product to maintain high quality products and services.

Methodology of the Study

The study was carried out through interviews and researchesand with a survey,

done by personally distributing questionnaires at Canelar, Zamboanga City and it is also

the location where the business will be established. Aside from barangay Canelar as

our main location we also consider nearby barangays like Baliwasan, Sta Maria,

Tumaga and Tetuan as part of our target market.

Market Demand

The growing demand of coffee is a great business opportunity and the

researcher makes it as a subject for strategic planning. The rapid growth of coffee

consumption is due to the health benefits that the consumer may get. Coffee is rich in

powerful antioxidants, more than the antioxidants from coffee than from fruits and

vegetables combined. Studies have shown that daily intake of coffee lower the risk of

diabetes, Parkinson's disease, and liver disease, including liver cancer.

Major Consumers of the Product/Service

Hug a Mug Coffee’s target market is the residents of BarangayCanelar and its

neighbouring barangays like Tumaga, Sta Maria, Baliwasan andTetuan but it’s not

limited to them because walk in customers from other barangays are also welcome

disregarding their age, gender and status in life. The customer’s willingness to patronize
our product and influencing them to others to do the same, confirms a big scope on our

part. It is very essential to know the demand of our product to answer our customer

preferences. Knowing the demand thoroughly will give the projection of the total number

of quantity of each product that we are going to produce. The data below consist of the

information regarding with the research conducted.

Table 1: Frequency on how often respondents visit a coffee shop

Indicator Respondents Percentage

Daily 102 25.5%

Weekly 169 42.25%

Monthly 129 32.25%

Total 400 100%

The table above indicates how often the respondent visits a coffee shop. Having one

hundred two answered they visit coffee shop daily, one hundred sixty nine weekly and

one hundred twenty nine visited coffee shop monthly. It shows that most of the

respondents visited a coffee shop weekly.

 Table 2: Respondents consider when visiting a coffee shop.

Indicator Respondents Percentage

Ambience 166 41.5%

Customer Service 176 44%

Location 58 14.5%

Total 400 100%

The table above shows the factors that respondent consider when visiting a coffee

shop. Having one hundred sixty six replied they prefer the price, one hundred seventy

six prefers the ambience of the coffee shop and fifty-eight prefers the location. It shows

that most of the respondent considered customer service as an important factor when

visiting a coffee shop. We will focus on this factor to attract more customers when the

business is implemented
 Table 3: Respondents usually with when visiting a coffee shop.

Indicator Respondents Percentage

Alone 115 28.75%

Friends 187 46.75%

Relatives 98 24.5%

Total 400 100%

The table above shows with whom the respondents usually with when visiting a coffee

shop. Having one hundred fifteen answered they prefer going alone while one hundred

eighty-seven prefer to go with friends and ninety eight usually go with relatives. It shows

that most of the respondents usually go with friends when visiting a coffee shop and by

the word of mouth they can help spread and promote the business will be implemented.

Table 4: Frequency of times respondents drink a cup of coffee in a day

Indicator Respondents Percentage

1 cup a day 212 53%

2-3 cups a day 177 44.25%

4 cups and above 11 2.75%

Total 400 100%

Table above indicates how many cups of coffee a respondent drink in a day. Two

hundred twelve answered they drink one cup of coffee a day, one hundred seventy-

seven answered two to three cups a day and eleven said they drink 4 cups and above.

It shows that most respondents drink two to three cups of coffee a day and can be

considered as the target customer to the proposed business.

Table 5: Respondents preferred to drink coffee in a day

Indicator Respondents Percentage

Morning 177 44.25%

Afternoon 175 43.75%

Evening 48 12%

Total 400 100%

Table 3 shows when the respondents prefer to drink coffee. Most of the

respondents prefer to drink coffee in the morning showing one hundred seventy seven

while one hundred seventy five answered they prefer on the afternoon and forty eight in

the evening. It shows that most of the respondents prefer to drink coffee in the morning.
 Table 6: Respondents reason why they drink coffee.

Indicator Respondents Percentage

To keep them focused 157 39.25%

To keep them awake and

175 43.75%
alert

When they need a break 68 17%

Total 400 100%

Table above indicates the reasons why respondents drink coffee. Having one

hundred fifty seven answered they drink coffee to keep them focused while one hundred

seventy-five replied to keep them awake and alert and sixty-eight answered they drink

coffee when they need a break during the day. It shows that most of the respondents’

drink coffee to keep them awake and alert.

Table 7: Factors respondents prefer when buying coffee.

Indicator Respondents Percentage

Quality 151 37.75%

Price 106 26.50%

Taste 136 34%

Brand 7 1.75%

Total 400 100%

 Table 5 shows the factors that respondents prefer when buying coffee. Having one

hundred fifty-one answered they prefer the quality of the coffee, one hundred six replied

the they for the price, one hundred thirty-six for the taste and seven for the brand of the

coffee. It shows that most of the respondents prefer the quality when buying a coffee.

Table 8: Respondents willing to spend for a cup of coffee.

Indicator Respondents Percentage

51-100 pesos 240 60%

101-150 pesos 107 27%

151-200 pesos 53 13%

Total 400 100%

Table 6 indicates how much the respondents spend when buying a cup of coffee.

Having two hundred forty answered they spend 51 to 100 pesos while one hundred

seven replied they spend 101-150 pesos and fifty-three are willing to spend 151 to 200

pesos. It shows that most of the respondents wants cheaper price when buying a cup of

coffee.

Table 9: Respondents usually purchased

Indicator Respondents Percentage

Hot Coffee 184 46%

Cold/Iced Coffee 216 54%

Total 400 100%

Table 7 shows what do the respondents usually purchased. Having one hundred

eighty-four replied they want hot coffee while two hundred sixteen they want iced coffee.

It shows that most of the respondents prefer to buy iced coffee.

Table 10: Respondents who will patronize the business when implemented.

Indicator Respondents Percentage

Yes 347 87%

No 53 13%

Total 400 100%

Table 9 indicates the number of respondent who will patronize the business. Having

three hundred forty-seven answered they will patronize and looking forward to the

implementation of the business and fifty-three replied no. it shows that the proposed

business is feasible and viable.

MARKET SEGMENT

Table 11: Respondents according to age

Age Respondents Percentage

15-20 years’ old 135 34%

 21-25 years’ old 198 49%

26-30 years’ old 67 17%

Total 400 100%

The table above indicates the age of the respondents. Having one hundred thirty-

five are between 15-20 years old, one hundred ninety-eight are between 21-25 years

old and sixty-seven are 26-30 years old. It shows that most of the respondents are

between 21-25 years of age.

Table 12: Respondents according to gender

Gender Respondents Percentage

Male 165 41%

Female 235 59%

Total 400 100%

Table 11 indicates the gender of the respondents. Having one hundred sixty-five males

and two hundred thirty-five females. It shows that regardless of the gender the

researcher still find it positive and advantage to their study.

Projected Demand

Table 13: Projected Demand Schedule

 Percentage of people who
Barangay Total Population
will patronize our product

Canelar 11,160

Sta. Maria 21, 926

87% of 113,097
Tumaga 25,184

Baliwasan 25, 042

Tetuan 29, 785

TOTAL 113,097 98, 394.39

Table 12 shows the projected demand schedule of the customers who drink

coffee and it shows that 87% willing to patronized the business when implemented. The

researcher considers the percentage as the projected demand of the proposal business.

Base on the survey conducted, we identified and acknowledged several

competitors. Some of them offered the same product and considered as direct

competitors while some are indirect competitors yet we were at the same type of

business.

Table 14: List of Competitors in Zamboanga City

Number of capacity to
Name Location
serve a year
Café Tambayan
San Jose Gusu 4, 600
(Direct Competitor)

Jelly Citea
Mayor Jaldon St. 4, 550
(Indirect Competitor)

Dennis Coffee Garden

San Jose 3, 300
(Direct Competitor)

Faundre Coffee Shop

San Jose Gusu 3, 450
(Direct Competitor)

Island Bubble Tea Nunez Ext. 3, 640

Total 19, 540

The table above shows the establishments that will be the possible competitors

of the business based on the survey conducted by the researcher.

Demand – Supply Gap

The gap between the supply and demand of Hug a Mug Coffee will cater the

needs and satisfaction of the customers. The main target market of the proposed

business is shown table below.

Table 15: Projected Demand – Supply Gap

Demand Supply Gap

98, 394 19, 540 78, 854

 The table above shows the computed gap based on the survey conducted and

data gathered by the researcher through personal interview to its direct competitors. It

shows that the market still has a big opportunity for the business to visible.

Market Share

The percentage position for the proposed business for the first year is derived

after a careful study on the number of customer to be served in the market compared to

the projected total unserved customer. The market percentage of Hug a Mug Coffee for

the first year is shown on table below.

Table 16: Projected Market Share (Direct Competitors only)

Name Customer Capacity per Year Market Share

Café Tambayan 4, 600

Dennis Coffee Garden 3, 300

FaundreCofffee Shop 3, 450

Hug a Mug Coffee Shop 4, 500

The table above shows that canteen 1 has 38% from the total market share in

project demand and supply while canteen 2 has 25% and Hug a Mug coffee has 36%. It

shows that Hug a Mug Coffee can still penetrate in the market.

MARKETING STRATEGY

Product

Hug a Mug Coffee Shop offers high quality coffee beverage and pastries.

Promotion
 Hug a Mug Coffee Shop will focus its marketing campaign by advertising through

flyers, posters and by the use of social media to create marketing buzz. On the grand

opening of the business, we will be offering free taste for the first 50 customers.

Place

Hug a Mug Coffee Shop’s product distribution will take place in Mayor Jaldon

Street Canelar, Zamboanga City. The business will be aiming to become acenter of

society which is perfect for couple who were spending their time together, business

partners talking business related conversations and families who were celebrating

special occasions.

Price

Prices depends uponthe average various serving sizes. It subject to change

based on the prices of raw materials used for the production.

 CHAPTER IV

TECHNICAL STUDY

Hug a Mug Coffee Shop takes on the purpose as a center of society because it is

a perfect place where you can talk with friends, entertain or simply to just pass some

time. It also serves as a perfect place for meeting grounds especially for couples who

were enjoying their time together, business partners who privately discuss business-

related conversations and family reunion and gatherings.

Hug a Mug Coffee Shop promotes an eco friendlywith relaxing ambience

assuring healthy environment. It also has a perfect view for people who love to take

pictures and posting it on social media platforms like Facebook and Instagram.
 Product Description / Product offered

Iced Coffee

Ingredients:

 1/2 cup sugar

 1/2 teaspoon vanilla extract

 1 cup coffee, at room temperature

 2 tablespoons half and half*, or more, to taste

DIRECTIONS:

To make the simple syrup, combine sugar and 1 cup water in a medium saucepan over

medium heat, stirring until the sugar has dissolved. Let cool completely and stir in

vanilla extract; set aside.

Serve coffee over ice with half and half and simple syrup, to taste
 Cappuccino

Ingredients

2 shots espresso (a double shot)

4 ounces’ milk

DIRECTIONS:

Gather the ingredients.

Pull a double shot of espresso into a cappuccino cup.

Foam the milk to double its original volume.

Top the espresso with foamed milk right after foaming. When initially poured,

cappuccinos are only espresso and foam, but the liquid milk quickly settles out of the

foam to create the (roughly) equal parts foam, steamed milk, and espresso for which

cappuccino is known. Serve immediately.

 Macchiato

Ingredients

Freshly ground espresso

Cold milk

DIRECTIONS:

Brew one shot of fresh espresso with espresso machine.

Steam milk to 160°, and hold the steam wand just below the surface to create foam.

Pour milk into espresso to taste and spoon foam on top. It might take a few tries to get

your personal ratio right!

 CHAPTER V

MANAGEMENT STUDY

Types of Business Organization

Hug Mug Coffee management was rather strict about importance of pleasing

customers. Every employee should undergo trainings so that when it comes to critical

moment, they will act based on right mind and to ensure customers are fully satisfied

and offering them variety of flavors of ice coffee with a quality taste and affordable price

that will satisfy the needs and wants of the peoples in Zamboanga City.

Easy to form

Partnership was easily form compared to corporation, it is a contractual

relationship involving close cooperation between two or more parties having specified

and join rights and responsibilities and to contribute money, property, or industry to a

common fund. To submit an articles of partnership to Securities and Exchange

Commission as one of the requirements needed to be registered.

Resource

As to the partner’s mutual contribution is emphasize partnership cannot be form

without it. Unlike sole proprietorship the capital is a lot higher with the accordance with

each partner’s capability. Considering among the partners there is so called general

partner who is liability can be extended that can be exploited to increase the capital.

Greater Managerial Talent

Since the business coffee shop this means that the partners are enough to make

run of the business with the different roles taken. Division of work at which the partners

are specialized in. Since the partners are mostly in Business Administration then each

of them can simply focus in certain aspects of business, depending to what type of

partners they are. Each one can be manager in one specified area within internal.

Strength of Decision Making

The consensus process is meant to be a comprehensive approach to decision

making, focusing on finding common ground among partners and eventually reaching a

collective decision. This does not mean decisions are made unanimously. Business

partners agree to live with and support a decision based on open and full discussion

surrounding the issue, Final decisions on a proposal are made by majority vote.
Sharing Risk

A general partnership is easy to set up, but it’s also risky because as a general

partner, you and the business are one of the same. You have to incur risk by being

involved in achieving a goal.

You’ll also face the challenge of splitting responsibilities, profits and losses with

the other partners. Sharing is all about commitment. When everyone hires a project’s

risks, it may be more likely to succeed than one where your company bears all risk. In

addition, multiple teams in a partnership can provide opportunities to share resources

and reduce risks.

The risk of business is contributed fairly as to the accordance of agreement. The

employees can also suffer as well. Facing the risk should include everyone, in everyone

accountabilities and responsibilities.

Flexibility of Operation

The business will secure the government regulations and implementing business

flexibility for the adaptation to the changing market and status quo.
 ORGANIZATIONAL CHART

MANAGER

BARISTA PASTRY CHEF

DELIVERY MAN CASHIER SERVICE CREW

Position and Job Description

In order for every employee in the business to be guided and to know their duties

and responsibilities to perform effectively and efficiently all the way as what is expected

to them the employee in the company must have specific job description. This will also

serve as guide for the manager in the assessment and evaluation of the employee’s

performance. Below are the job descriptions

Job Descriptions

Manager  Manage day-to-day operations

 Train employees on drinks preparation and proper use of

coffee equipment.

 Coordinate with vendors and order supplies, as needed

(like takeaway cups, coffee, milk and other ingredients).

 Maintain updated records of daily, weekly and monthly

revenues and expenses

 Advise staff on the best ways to resolve issues with

clients and deliver excellent customer service

 Nurture friendly relationships with customers to increase

loyalty and boost our reputation

Pastry Chef  Operating and managing the pastry section of the kitchen

and liaising with the Executives to ensure a successful

working environment.

 Preparing ingredients and handling baking and other

kitchen equipment.

 Creating pastries, baked goods, and confections, by

following a set recipe.

 Developing new recipes for seasonal menus.

 Decorating pastries and desserts to ensure beautiful and

tasteful presentation.

Barista  Welcoming customers, informing them about specials or

new items, answering questions, and accepting orders

and payments.

 Preparing foods, such as sandwiches or baked goods,

and grinding and blending coffee beans, brewing coffee

and tea, and serving items to customers.

  Selling coffee and tea blends and brewing equipment,

highlighting the differences between items and educating

customers about brewing methods.

 Cleaning and restocking work and dining areas,

emptying trash, and sanitizing equipment and utensils.

 Learning about brewing methods, beverage blends, food

preparation, and presentation techniques to improve

food quality.

Cashier  Welcoming customers, answering their questions,

helping them locate items, and providing advice or

recommendations.

 Operating scanners, scales, cash registers, and other

electronics.

 Balancing the cash register and generating reports for

credit and debit sales.

 Accepting payments, ensuring all prices and quantities

are accurate and proving a receipt to every customer.

  Following all store procedures regarding coupons, gift

cards, or the purchase of specific items, such as alcohol

or cigarettes.

 Maintaining a clean workspace.

Delivery Man  Loading, transporting, and delivering items to clients or

businesses in a safe, timely manner.

 Reviewing orders before and after delivery to ensure that

orders are complete, the charges are correct, and the

customer is satisfied.

 Assisting with loading and unloading items from vehicles.

 Accepting payments for delivered items.

  Providing excellent customer service, answering

questions, and handling complaints from clients.

 Adhering to assigned routes and following time

schedules.

 Abiding by all transportation laws and maintaining a safe

driving record.

 Preparing reports and other documents relating to

deliveries.

 Operating equipment and machines, such as cars,

trucks, forklifts, etc.

Service Crew  Work and communicate effectively with co-workers and

management.

 Respond to questions, concerns and complaints from

customers, vendors or clients.

 Conduct administrative duties and errands as required.

 Escalate any problems or complaints to the relevant

supervisor or manager.

 Prioritize important tasks and manage your time

effectively.

 Man and operate equipment relative to your role.

 Maintain professionalism and a positive attitude

 CHAPTER VI

FINANCIAL STUDY