Feasibility study on Establishing Coffee Shop in Bulacan

Feasibility Study

Atillo’s Cafe

Submitted by:

Cute
 SECTION I

PROJECT DESCRIPTION

Title

The chosen name of the business is “Atillo's Cafè”.

Type and Category

The “Atillo’s Cafè” is a themed coffee shop providing a place for comfort and

relaxation where customers can post their messages and “hugot lines”on the wall provided.

Coffee is considered as a very healthy beverage because according to reasearch it is loaded

with antioxidant and beneficial nutrients that can improve one’s health.

If this shop will be established in the future, then the demand of coffee will get high.

Location and Coverage

The Atillo’s Cafè will be commenced at “Location is unkown yet”

Duration

The business enterprise will operate in five years in serving coffee as it will reach the

stage II of Product Life Cycle (PLC) wherein the period of rapid acceptance for the product

as earnings increase due to substantial improvement of sales. However, as a result of

obsolescence, the sales will be declining after five years of operation.

Funding Requirement

In starting a business like coffee shop, the first thing to do is to provide the capital to

finance all the operation costs on the project. The money should be enough to supply the

needed equipment for the project. Though, the owners of the project got their money from
their own savings and from their own relatives and friends. The owners agreed upon that the

will spend the money they save from starting a coffee shop project. However, some of the

capital will be coming from the bank loan.

Justification and Objectives

The study aims to assess the feasibility of establishing a coffee shop in B and serves

as a venue for socialization and at the same time provides employment for the Bulakenyo

people. Also, the study aims to promote the native delicacies in the province.

 To be able to provide the customers with the best coffee.

 To be able to make the price of coffee affordable for the customers.

 To deal with honesty and fairness

 To ensure that our customers get the best service from us.

Brief Description

The Atillo's Coffee is envisioned to be the first class coffee shop serving the best

coffee in Bulacan. Its mission is to make Atillo’s Cafè to be competitive and well-known

coffee shop in the North. Its objective includes the improvement of quality of life by offering

the Bulakenyo employment opportunities. It also aspires to promote the native delicacies of

the Bulakenyo.

In putting up a coffee shop that reflects the culture of Bulacan greatly influenced the

student proponents to conduct the aforementioned study. The vending machines and any

convenient store in Bulacan can provide coffee but cannot accommodate the increasing

number of coffee drinkers. Thus, the Atillo’s Cafè will surely be the one that will provide the

service that they can’t get from the said coffee distributors.
 SECTION II

MARKETING ASPECT

Existing Market Information

1. Product/Service Description

The chosen name of the business is “Atillo's Cafè”. The owners chose to put

up a coffee shop because of the rapid popularity of this business in the market. Coffee is also

known for its antioxidant which is beneficially good for the human health. The name “Atillo's

Cafè” was formulated from the word “cafe” which means coffee and “Atillo's” that describe

the feeling of the costumers as they taste the coffee being served in the cafè.

2. Target Market

The major costumers of the Coffee Shop will be workers, people residing in

the community, local and even foreign tourists, and most especially students who want to

drink delicious coffee as they do their assignments while relaxing.

3. Supply and Demand Trends

Coffee shop is considered as a “third place”. It is the social surroundings separate

from the two usual social environments of home and the workplace. Coffee shop emphasizes

on providing a free place for social interaction which is highly accessible, offers inexpensive

foods and drinks and brings about a welcoming and comfortable environment.

The Philippines Graphic 2018 consumer report say eight out of 10 adults in the

Philippines. Philippines consumption of coffee continues to increase. Experts predict that the

level of consumption will follow population growth.

 24-hour service coffee shops are expected to capitalize on the predicted stronger

economic performance in the Philippines. Increasing number of students and professionals

employed in Bulacan is projected to provide a fertile ground for establishing a coffee shop. It

is also expected that as the pool of higher income consumer widens, sales from this channel

will grow.

The project’s primary source of supply is the Umali Coffee Store located in Baguio

City which remained as the number one source of coffee beans, not only in the city, but of the

entire province and most parts of Northern Luzon.

However, if the supplies coming from this company are not enough to provide for the

existing demand, the project alternative sources of supply are the Rocky Mountain Arabica

Coffee Company (RMACC) which is found in Tuba, Benguet, and other local growers of

coffee.

As for the food products, the ingredients are bought in supermarket in Robinsons Mall

in San Nicolas or in SMs in Bulacan.

4. Competitor’s Current Marketing Arrangement

As the enterprise’s sale will reach its high peak, there’s no way to avoid the

fact that in business, there is always a competition.

Supply and Demand Analysis

 Unforeseeable conditions such as calamities may alter the production of coffee beans.

Agricultural sectors will have a problem on meeting the expected demand of the public.

Coffee shop industries will experience shortage on their products since the ingredients to be

used are not supplied on its expected amount.

Prices can also affect the product supply of coffee shop industries. If there is a sudden

increase in prices of raw materials and the price is high, the buying power of the coffee shop

will decrease causing them to buy lesser than what is required. This will greatly affect the

business through shortage on their product supply thereby not meeting the expected demand

of their customers. Product supply is directly affected by prices of raw materials since

fluctuations of prices cannot be avoided.

On the other hand, if the prices of these raw materials increased with a corresponding

increase in income, their buying power will not be affected that much since their income will

be sufficient to buy these commodities.

However, if the prices of raw materials decreased, food industries will take advantage

of buying more goods in order to meet the increasing demand. But the disadvantage of having

low prices is that suppliers and producers tend to be discouraged to market their goods

because they will not earn back the expenses they incurred during the production/planting

process. Therefore, the supply of the raw materials will decrease.

Also, the number of producers in the market can affect the supply of products. If there

are too many producers in the market, product supply will also increase. Prices will also

decrease, and consumers will go to the one who offers the lowest price.

The number of competitors is also affected by the supply of raw materials. If there are

too many competing coffee shops in the market and a limited number of suppliers, there is
tendency that supply of the raw materials would not be met for each competing shop. It may

also lead to the increase of prices relative to the increase of demand for the product and will

lead to a lower income for the coffee shop.

Projected Sales/Revenues

1. Volumes

Servings of Coffee

Coffee Servings per week = 14,382

Annual Demand (Y1) = 517,752

(Y2-Y5) = 690,336

YEAR COFFEE DRINKS

Percentage Servings

1 45% 258,876

2 60% 414,202

3 70% 483,235

4 75% 517,752

5 75% 517,752

COFFEE PERCENTAGE Y1 Y2 Y3 Y4-Y5

Espresso 25%* 60,719 89,551 112,809 129,438

Macchiato 15%* 34,831 52,131 72,485 77,663

Americano 7%* 18,121 28,994 33,826 36,243

Affogato 10%* 22,888 41,420 48,324 51,775

Cappuccino 13%* 31,654 53,846 62,820 67,308

Servings of Pastries/Delicacies

Food Product Servings per week (50% of A.D of Coffee) = 7,191

A. D. (Y1) = 258,876

(Y2-Y5)= 345,168

YEAR PASTRIES

Percentage Servings

1 25% 64719

2 30% 103550

3 40% 138067

4 45% 155326

5 45% 155326
 FOOD PERCENTAGE Y1 Y2 Y3 Y4-Y5

Choco Fudge 12%* 7,766 12,426 16,568 18 ,639

Cheese Cake 11%* 7,119 11,390 15,187 17,086

Doughnut 20%* 10,944 20,710 27,614 31,065

Bibingka 10%* 8,472 10,355 13,807 15,533

Puto 5%* 3,236 5,177 6,903 7,766

Kutsinta 3%* 1,941 3,106 4,142 4,660

Maja Blanca 7%* 4,530 7,249 9,665 10,873

Proposed Marketing Strategy

1. Channels of Distribution/Delivery System

The products of the coffee shop will be distributed only within the premises of the

locality.
 2. Product /Service Quality and Packaging

With respect to the designs to be made and containers to be produced, our product

will be packaged through an intermediate containers such as cups for coffee and plates for the

native delicacies.

3. Promotion

To enhance customer awareness, the coffee shop will distribute brochures which will

show the services and products offered by the business. Also, included in it are the promos

that the coffee shop is willing to give to their customers.

If possible, TV and radio advertisements will be made in order for the public to know

more about this and for customer acceptance as well.

Part of their promo is to provide loyalty card for each regular customer to earn points

in order for them to receive a reward, discount, or an incentive.

SECTION III

TECHNICAL ASPECT

Product/Service Technical Description

 The project will establish a coffee shop that will serve the best coffee and native

delicacies of Bulacan. Its mission is to make Café Lava to be competitive and well-known

coffee shop in the North. The consumers will buy coffee and consume it inside or out the

shop.

Product/Service-Provision Processes

Operations Flow Chart

Purchasing

Receiving

Storing

Baking and Cooking

Serving

Collecting
 Clearing and Cleaning

Washing and Sanitizing

Purchasing

Purchasing is the buying of materials of the right quality and quantity at the

right time from the right source at the right price. It requires the application of the

food buying policies of the foodservice organization based on the food budget. This is

influenced by laws governing the buying of food, by the availability and kind of

storage space and by available sources of food supply.

Receiving

Receiving part of the purchasing function which ensures what has been

purchased is the same quality and quantity with what is being delivered. This step

should not be done during the busiest production time so that there would be plenty of

time for thorough inspection and the operations need not be interrupted.

Storing

The goods received must now be judged according to the type of storage

needed. Foods can be divided into perishables and non-perishables. Perishable foods

are those must be stored under refrigerated or freezing conditions. Non-perishable

foods are stored at room temperature. Proper maintenance of proper storage

temperature, humidity, air circulation and sanitation would preserve the quality and

quantity value of food.

Baking and Cooking

The proposed coffee shop offers pastries and native delicacies. These products

are therefore produced, baked, and cooked by the professional chefs. Cooking and

baking is any process of applying heat to food for the following purposes: 1) To

ensure food safety, 2) For increased digestibility and aid in chewing and swallowing,

3) To enhance flavor and related palatability factors, 4) To retain or add nutrients, and

5) For aesthetic appeal by attaining the desired texture, form, or shape and color.

Serving

Proper delivery and service of safe foods and coffee to eat and drink after it

has been prepared are major aspects of the total food service system. Delivery,

sometimes called distribution, refers to the transportation of prepared foods from the

place of production to the place of serving them. Service includes activities of

assembling the foods delivered in bulk to individual trays or covers.

Collecting

Payments are received from customers after the orders are given to customers.

Clearing and Cleaning

Clearing means getting all the leftover and the used dishes, glasses, cups and

other table wares when customers leave. After which, the table should be cleaned by a

clean cloth.
 Washing and Sanitizing

This process involves washing and sanitizing the dishes. It also involves

wiping the dishes to become very dry and be ready again in the next process.

Product/Service-Provision Schedules

The coffee and native delicacies will be produce in the shop. The daily production

size of coffee is estimated to be 2397 serving based on the demand of coffee near the

proposed location. Daily food production size is 50% of the servings of coffee which is 1199

servings.

Building/Facility/Equipment Requirement

The project proposes to build a coffee shop with an area of 1669 sq. meters. The

building is to be constructed.

Qt Uni Unit Total Useful

y t Cost Cost Life

(Years

Land and

Building

Land - - - - -
Building 1 Unit 2,263,17 2,263,17 20

8 8

Subtotal 2,263,17

Machinery and

Equipment

Mixer 2 Unit 3,999 7,998 10

Oven 2 Unit 9,495 18,990 5

Food Processor 2 Unit 2,000 4,000 5

Kitchen Timer 1 Unit 225 225 5

Kitchen Scale 1 Unit 500 500 5

Freezer 1 Unit 13,495 13,495 15

Refrigerator 2 Unit 10,995 21,990 15

Coffee Machines 5 Unit 49,000 245,000 20

Air conditioning 4 Unit 10,000 40,000 10

Unit

Subtotal

352,198
Labor/Utility Requirement

The utilities like electricity must be checked daily to avoid accidents like fire on the

facility. The water should be also clean and adequate for the product.

The workers or laborers must be skilled on the designated work they are assigned.

Forty two (42) workers are needed for the project:

Labor Costs

No. of Salaries Total Total Total

Worker per Salaries Salaries Salaries

s Worker per Day per in Year 1

Month

Barista 4 500 2,000 56000 672,000

Cooks 4 250 1,000 26,000 234,000

Pastry Chef 4 300 1,200 31,200 288,000

Manager 1 350 350 10,500 126,000

Cashiers 3 230 690 17,940 161,460

Service Crews 8 200 1,600 44800 537,600

Security Guards 3 24,000 216,000

Dishwashers 6 200 1,200 31,200 280,800

Total 31 2,515,860
 Utilities Expense

LPG 38,400.00

Electricity 571,608.55

Total 610,008.55

LPG

No. of Gas per month 4

Price per gas 800

Cost per month 3,200

Cost for year 1 38,400

Electricity

Cost per month 47,634

Cost for year 571,608.55

Quality Control System

 The FDA and DOH has the authority to monitor the quality of the process products.

The ingredients to be use should be ensure fresh and of good quality to produce the best

products.

Waste Disposal System

The waste disposal area of the facility will locate 50 meters away from the main

building. Proper waste disposal should be practiced to keep the products clean and avoid any

unnecessary events. Waste materials will be segregated according classification

(biodegradable and non-biodegradable).

Coffee Classics: Selling Price

Product/Service 1. Espresso Php 55 Cost per unit

2. Macchiato 50

3. Americano 45

4. Cappuccino 40

5. Affogato 50

Pastries:

6. Chocolate Fudge 40

7. Doughnut 15

8. Cheesecake 35

Ilocos Delicacies

9. Bibingka 35

11. Puto 12

13. Maja Blanca 35

 SECTION IV

ORGANIZATIONAL ASPECT

Legal form of Business

Our legal form of business is “partnership” because in this situation we can easily get

information and other aspects that can affect our business. In putting up any business many

problems will be encounter. In this context, partnership is in advantage because these

problems and risk are shared among the partners. Problems will be solved as much as

possible and improvements can be achieved through more suggestions. In partnership, more

“heads” contribute to the success of the business.

Organizational Structure

Organizational Chart
 Managing Partner

Accountant

Assistant Managing Assistant Managing

Partner for Partner for
Production & Maintenance &
Operations Security

Pastry Service Security

Cook Barista Cashier
Chef Crew Guard

Usually in partnership, management is headed by the managing partners. One partner

is appointed as General Manager whose duties and responsibilities are to plan, to organize, to

direct and to control the over-all operation of the business and creates long-term plans for the

whole organization. He is further assisted by the managing partners for Production and

Operations, and Maintenance and Security.

The Manager for Production and Operations is involved with the planning,

coordination and control of the production processes. They ensure that coffees are produced

efficiently and that the correct and perfect blend is achieved. Their typical works involved

overseeing the production process and ensuring that the production is cost effective, being

responsible for the selection and maintenance of equipment, and ensuring that health and

safety guidelines are followed.

Under the Manager for Production and Operations is the Cook who is responsible in

cooking the delicacies offered by the coffee shop. The Pastry Chef is responsible in baking

the pastries. The Baristas are the ones who prepare the different varieties of coffees.
 The Manager for Maintenance and Security oversees the non-production activities.

Under him is the Cashiers who are responsible in the counter to get payments from the

customers. Service crews are the ones in charge in clearing and cleaning the tables, as well as

maintain the cleanliness and orderliness of the coffee shop. Security guard assures the safety

and security of the coffee shop.

The Accountant who is also directly responsible to the Managing Partner does the

accounting, reporting, administrative work, providing operations feedback, establishing order

in the office, and prepares Financial Statements.

SECTION V

FINANCIAL ASPECT

Modifiable Data
Land 2,503,500
Storage Building 2,263,178
Tools and Equipment 352,108
Furniture and fixtures 237,000
Salaries 2,515,060
Utilities Expenses 457,571.55
Fixed Expenditures(Years 1-5) 20,000
Production cost(year1) 6,521,435.69
10,665,729.4
Production cost(years 2-5)
6
Espresso sold(year 1) 60,719
Espresso sold(year 2) 89,551
Espresso sold(year 3) 122,809

Espresso sold(years 4-5) 129,438

Price per serving(Php) 55

Macchiato sold(year 1) 34,831

Macchiato sold(year 2) 52,131

Macchiato sold(year 3) 72,485

Macchiato sold(years 4-5) 77,663

Price per serving(Php) 50

Americano sold(Year1) 18,121
Americano sold(Year2) 28,994
Americano sold(Year3) 33,826
Americano sold(Years 4-5) 36,243
Price per serving(Php) 45
Cappuccino sold(year 1) 31,654
Cappuccino sold(year 2) 53,846
Cappuccino sold(year 3) 62,820
Cappuccino sold(years 4-5) 67,308
Price per serving(Php) 40
Affogato sold(year 1) 22,888
Affogato sold(year 2) 41,420
Affogato sold(year 3) 48,324
Affogato sold(years 4-5) 51,775
Price per serving(Php) 50
Chocolate Fudge sold(year 1) 7,766
Chocolate Fudge sold(year 2) 12,426
Chocolate Fudge sold(year 3) 16,568
Chocolate Fudge sold(years 4-5) 18,639
Price per serving(Php) 35
Doughnut sold(year 1) 10,944
Doughnut sold(year 2) 20,710
Doughnut sold(year 3) 27,614
Doughnut sold(years 4-5) 31,065
Price per serving(Php) 15
Cheese cake sold(year 1) 7,119
Cheese cake sold(year 2) 11,390
Cheese cake sold(year 3) 15,187
Cheese cake sold(year 4-5) 17,806
Price per serving(Php) 40
Bibingka sold(year 1) 6,472
Bibingka sold(year 2) 10,355
Bibingka sold(year 3) 13,807
Bibingka sold(year 4-5) 15,533
Price per serving(Php) 35
Puto sold(year 1) 3,236
Puto sold(year 2) 5,177
Puto sold(year 3) 6,903
Puto sold(years 4-5) 7,766
Price per serving(Php) 15
Kutsinta sold(year 1) 1,941
Kutsinta sold(year 2) 3,106
Kutsinta sold(year 3) 4,142
Kutsinta sold(years 4-5) 4,660
Price per serving(Php) 10
Maja Blanca sold(year 1) 4,530
Maja Blanca sold(year 2) 7,429
Maja Blanca sold(year 3) 9,665
Maja Blanca sold(years 4-5) 10,873
Price per serving(Php) 35
Discount rate 12%

NPV(12%) 8,318,738.79
IRR 44%
BCR 1.1632311
Based from the above data, the NPV is 8318,738.79, IRR is 44% and the BCR is 1.1632311.

Therefore the coffee shop business is feasible

SECTION VI

Socio-Economic Aspect

The Project will provide an estimated 39 full time jobs. It will employ those living in city

of Batac and neighboring towns of Paoay and Currimao and even from other towns in

Bulacan, subject to qualifications. It is expected that this employment opportunity will result

to job security for people working in the food service industry. In addition, it is hoped that the

coffee shop will help halt the drain in the working force as people prefer to move outside the

province for work in the big cities only to end up as low-paid fast-food servers.
 This was also an issue of logistics. It aims to employ people from within the province

to ensure a steady supply of labor. It will also help the Provincial Government of Bulacan in

eliminating too many jobless Bulakenyo.

As to taxes, the national government will benefit from the payment of taxes by the

coffee shop. As the coffee shop matures and prospers, the Bureau of Internal Revenue will

increase tax collection from the business.

The local government of Bulacan will also benefit through the payment of licenses,

permits and municipal taxes. It is expected that this tax revenue for the national and

municipal governments will lead to the betterment of the lives of the Bulakenyo people and

the general increase in the standard of living.

Furthermore, Atillo's Cafè believes in protecting the environment. It is the

partnership’s policy to ensure that the operations do not pollute the soil and air through

proper disposal of solid and liquid.

References:

H. D. Tacio(2018) Have a cup of coffee. https://philippinesgraphic.net

N. De Castro. Coffee Mate Café Feasibility Study. http://www.academia.edu

Philippines-Agriculture, www.Nations encyvlopedia.com

RUSH: Health Benefits of Coffee. http://www.rush.edu

Coffea: CS&B (2014): https://www.behance.net/gallery/15893679/Coffea-Coffee-Shop-

Bakery-(2014)