JUST CRÊPESCrêperie & Café

Anna Guyton

May 2009

BUSINESS DESCRIPTIONJust Crêpes will be a local crêperie and café based in Laramie, Wyoming focusing on sustainable business practices.

PRODUCTS/SERVICES

Made-to-order crêpes made with Fair Trade, organic and locally-sourced ingredients Healthy, affordable, and versatile

Fair Trade coffees and teas Casual dining/studying atmosphere

Wireless internet available Resources for learning about sustainable

business practices

BENEFITS TO THE CUSTOMER

Fast less than five minutes per customer.

Convenient near the University of Wyoming campus

Healthy lower-fat, lower-calorie, and lower-cholesterol alternative to tortillas all toppings locally-sourced and/or organic

Unique Crêpes resemble a cross between a pancake and a tortilla Learn about sustainable business practices and see them in action Nearest crêperie to Laramie is in Fort Collins, CO

Inexpensive Cost of producing crêpes is very low, both for sourcing ingredients

and for energy inputs necessary for production competitive with other fast food options Coffee and tea prices will be comparable to other local cafés.

Sustainable Survey: potential consumers highly value sustainable business

practices

INCORPORATING SUSTAINABILITY

Sourcing local, Fair Trade, organic Minimize energy consumption Source energy from renewable resources Energy-efficient appliances Minimize waste

Reusable dishes Recyclable/compostable/biodegradable to-go

packaging Recycling/compost in café

Food donations

MARKET

Fast-casual café style restaurant According to www.fastcasual.com this style of

restaurant has double-digit growth rates while the rest of the food industry is in decline

No Laramie competition that offers crepes to go

Creperies are very popular in Europe (esp. France) but have yet to boom in America

Healthy option in food served fast

COMPETITION

Fast food: Taco Johns, Taco Bell, Wendy’s, McDonald’s, Arby’s, Burger King, Subway, and Quizno’s

Local cafes and restaurants: Sweet Melissa’s, Home Bakery, Teriyaki Bowl, The Grounds, Turtle Rock, Coal Creek Coffee, Elements, and Rolling Mills Café

COMPETITIVE ADVANTAGE

Sustainable business practices Fair Trade, energy efficiency, waste reduction,

recycling, composting, local sourcing, supporting social and environmental causes

Crêpes Unique, delicious, inexpensive, healthy

Location Close to campus

Hours of operation Late night

CONCEPT TEST & CUSTOMER REACTION 91 Laramie residents 44% dissatisfied with restaurant options near the UW campus 40% dissatisfied with café options near the UW campus. Over 60% feel current options near campus are somewhat

unhealthy or very unhealthy Almost 75% feel they are also fairly expensive or very

expensive Over 75% spend $5.00 or more on lunch on average High level of concern for furthering social causes (60%) and

minimizing environmental impact (80%) through their purchases

Most feel that current restaurant options in Laramie are unsustainable (75%) as well as café options (61%)

When asked if they would patronize a new café focused on sustainability at comparable price points, 88% said yes.

Of those that had eaten crêpes before (85%), 94% of respondents liked them fairly well or very much.

TARGET MARKET & ADVERTISING

Students and professors Primarily from UW (location)

Consumers looking for “green” and socially-responsible places to do business with

Avoid fliers and postal mailers (unsustainable) Focus on electronic marketing

Opinion polls, surveys Local news outlets

Newspaper, radio On-street signage Samples

ORGANIZATION

Sole proprietorship, low cost of setting up and maintaining the

business lack of a suitable partner at present

Entrepreneur will assume all management roles Spent several months in France eating at

crêperies and learning recipes Undergraduate work in International Business Graduate work in Sustainable Business Practices

FINANCIAL ANALYSIS

PRICING

Penetration pricing strategy preempt competition and gain market Crêpes competitive with other fast food

alternatives ($1.00-$2.00) Coffee and tea prices are also comparable to

local café prices ($1.50-$4.50) Most survey respondents pay more than $5.00

for lunch (76%), so it is expected that customers will be willing to pay $1.00-$2.00 per crêpe for a meal

INTERNAL OPERATING SCHEDULE Estimated the number of

units (crêpes) the crêperie would produce Competitors’ data

Production and sales (in units) estimated to be the same (made-to-order)

Cost of producing crêpes ~$0.34

Cost of one cup liquid coffee ~$0.13

Cost of one cup liquid tea ~$0.11

Labor: $8/hr x 2 employees x 8 hrs/day x 20 days/mo increases

INCOME STATEMENT

$1.50 avg sale price multiplied by estimated unit sales

Estimated marketing expenses ($1500) and administrative expenses ($1200) Both rise with opening of new venue (2012)

Rent estimated at $800/month Doubles with opening of new venue

Depreciation low ($120), small amount of equipment Doubles with opening of new venue

Interest from family loan ($10,000) @ 5% Small net profit every year from 2010-2014

Profit doubles from 2010-2014

BALANCE SHEET

Cash: $5000 personal assets, $10,000 family loan, net profit

No sales made on credit = no receivables Inventories = COGS – labor (made-to-order) Equipment estimated at $6000 Building’s rented, no other long-term capital Payables calculated as 50% of inventories No accrued wages No expected bank loan Credit cards, short-term loans estimated at

$6000

STATEMENT OF CASH FLOWS

Net cash flows from operations negative until April of first year, then gradually rise until new venue opens

By 2014, cash flows are back up to $5030.25 CF from investment = $6000 until opening of

new venue CF from financing = credit cards/short-term

loans

CASH BUDGET

All figures taken from previous worksheets The crêperie is building cash during every

time period besides the first year

FINANCIAL RATIOS

Current ratio is greater than one, indicating that if all current assets could be converted into cash, they would be adequate to pay all current liabilities.

Quick ratio is greater than one, indicating that the venture’s liquid assets are adequate to pay off its current liabilities.

A gross profit margin of 36% indicates that 64% of sales is spent to cover the costs of production.

Crêperie will earn about 11% operating profit margin on its sales after covering production and other operating costs. As long as the venture can also cover interest and taxes, it will experience a net profit.

SURVIVAL BREAKEVEN ANALYSIS In 2010, the crêperie

will need at least $34,934.45 to cover both its variable costs of producing crêpes and its cash fixed costs

At a $1.00 selling price per crêpe, the crêperie will need to produce and sell 34,935 crêpes to produce a zero EBDAT

The projected unit sales for 2010 are 49,500

SENSITIVITY ANALYSIS

Best case scenario: Third venue within first 5 years Reinvest in products/services Pay back debts quicker

Worst case scenario: Inventories reflect sales, so COGS will decrease

as sales decrease Second venue will not open Expand operating hours, products, and/or

services Fairly easy liquidation

Inventory & equipment minimal

EXIT STRATEGY

Continued growth into profitable franchise Incorporation Sold as a small, local venue