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MOCHA INTERNATIONAL
2008-2010
Mocha Café Chain
Business Plan Blue Print
Sherif Afifi
2
Table of Contents
1.0 Executive Summary
1.1 Goals/Objectives
1.2 Vision, Mission and Core values
1.3 Keys to Success
2.0 Company Summary
2.1 Company Ownership
2.2 Start-up Plan
2.3 Company Locations and Facilities
3.0 Products
3.1 Product Description
3.2 Competitive Comparison
3.3 Sourcing
3.4 Technology
3.5 Future products
4.0 Market Analysis Summary
4.1 Market Segmentation
4.2 Target Market Segment Strategy
4.2.1 Market Needs
4.2.2 Market Trends
4.2.3 Market Growth
4.3 Industry Analysis
4.3.1 Industry Participants
4.3.2 Competition and Buying Patterns
4.3.4 Main Competitors
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5.0 Strategy and Implementation Summary
5.1 Strategy
5.2 Value Proposition
5.3 Competitive Edge
5.4 Marketing Strategy
5.4.1 Positioning Statements
5.4.2 Pricing Strategy
5.4.3 Promotion Strategy
5.4.4 Distribution Strategy
5.4.5 Marketing Programs
5.5 Sales Strategy
5.5.1 Sales Forecast
5.5.2 Sales Programs
5.6 Strategic Alliances
5.7 Milestones
6.0 Management Summary
6.1 Organizational Structure
6.2 Management Team
6.3 Management Team Gaps
6.4 Personnel Plan
7.0 Financial Plan
7.1 Important Assumptions
7.2 Key Financial Indicators
7.3 Break-even Analysis
7.4 Projected Profit and Loss
7.5 Projected Cash Flow
7.6 Business Ratios
7.7 Exit-Strategy
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1. Executive Summary
1.0 Executive Summary
A Drive- Thru Cafes in the most logical and accessible locations. The Drive-thru facilities are designed to
handle two-sided traffic and dispense customer-designed, specially ordered cups of premium coffees in
less time than required for a visit to the locally owned cafe or one of the international chains.
In addition to providing a quality product and an extensive menu of delicious items, to ensure customer
awareness and loyalty.
Mocha financial picture will be quite promising. Since Mocha is operating a cash business, the initial cost
is significantly less than many start-ups these days. The process is labor intensive and Mocha recognizes
that a higher level of talent is required. The financial investment in its employees will be one of the greatest
differentiators between it and Mocha`s competition. There will be minimum inventory on hand so as to
keep the product fresh and to take advantage of price drops, when and if they should occur.
Mocha chooses to become the local Drive-thru virgin of Starbucks
Highlights
(5,000,000)
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
FY 2008 FY 2009 FY 2010
Sales
Gross Margin
Net Profit
5
1.1 Goals/Objectives
strategic goals
1. To expand and diversify aggressively and offer above-average returns to shareholders
2. To become the leading company within the Food Service market segments
Mocha has established three firm objectives it wishes to achieve in the next three years:
1. Twenty five Drive-thru ,Three In-Line and Seven Mall locations by the end of the year 2010.
2. Gross Margin of 55% or more.
3. Net -Profit above 10% of Sales.
1.2 Vision
“In five years, Mocha Café International will be well established in Saudi Arabia , Known
throughout the KSA and expansion plans will be developed for company owned and
franchise locations in other GCC countries”
Company Mission
Mocha Mission is three-fold, with each being as integral to our success.
Provide customers the finest quality beverage in the most efficient time.
.Operate and grow at a profitable rate through sound economic decisions.
The high quality of attitude, fairness, understanding, and generosity between management, staff,
customers, and vendors. Awareness of all these factors and the responsible actions that result will give
our efforts a sense of purpose and meaning beyond our basic financial goals.
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Core Values
Integrity - We act with honesty and sincerity in everything we do. We say what we mean, do what we say and build confidence in our team.
Teamwork - We work towards common goals through open communication, mutual support and win-win attitudes. We respect our differences and build upon
our strengths.
Recognition - We ensure that people's individual needs and successes are
supported and recognized.
Innovation - We are open minded, challenging conventional thinking, improving
our processes and implementing new ideas faster than our competitors.
Continuous Growth - We provide an environment where our colleagues and our
business can flourish and grow.
People Focus - We focus on our colleagues, customers and business associates
and they acknowledge us as preferred partners.
1.3 Keys to Success
There are four keys to success in this business.
1. The greatest locations - visibility, high traffic pattern, convenient access.
2. The best products - freshest coffee beans, cleanest equipment, premium serving containers,
consistent flavor.
3. The friendliest servers - cheerful, skilled, professional, articulate.
4. The finest reputation - word-of-mouth advertising.
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2. Company Summary
2.0 Company Summary
Mocha is a specialty beverage retailer. Mocha provides hot and cold beverages in a convenient and time-
efficient way. Mocha provides its customers the ability to drive up and order from a trained Barista their
choice of a custom blended Latte drink, freshly brewed coffee, or other beverage. Mocha is offering a high
quality option to the fast-food and International Café.
2.1 Company Ownership
Mocha Café International is a Limited Liability Corporation. membership shares are currently owned by
Mr. Omar Sulaiman Al-Rajhi 35%
Mr. Abd Allah Al Fawzan 27.5%
Mr. Mahar Al-Rajhi 10%
Mr. Mohamed Salah El Khalil 27.5%
2.2 Start-up Summary
Mocha's start-up expenses total just SR 1,277,700. The majority of these expenses--will be used to build
the first facility, pay deposits, and provide capital for six months of operating expenses, initial inventory and
other one-time expenses.
Start-up Expenses
Cash for Invent.& Operating .Exp. .011,111ر.س
11,,,,ر.س. .Pre-Opening Exp
011,111ر.س. Concept development
311,111ر.س. Salaries
311,111ر.س. Land Lease
11,,,,0,7ر.س. Total
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2.3 Company Locations and Facilities
Mocha Café International will open ten-eleven drive-thru facilities, two- three mall facilities and
one in- line facility on Riyadh over the first year. Twenty five or more drive-thru facilities will be
placed throughout KSA over the next three years.
The demographic and physical requirements for a location are:
Traffic of 40,000+ on store side.
Traffic of 20,000 + for the malls.
Visible from roadway {Drive –Thru, In-Line}.
Easy access with light if less than 30,000 {Drive –Thru, In-Line}.
Suitable capacity for customers {In-Line }
Established retail shops in area.
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3.Products
3.0 Products
Mocha International provides its patrons the finest hot and cold beverages, specializing in
specialty coffees and blended teas. In addition, Mocha will offer select domestic soft drinks,
Italian sodas, fresh-baked pastries and cold cuts sandwiches. Mocha will add beverages such
as hot chocolate, frozen coffees, and more.
3.1 Product Description
Mocha provides its customers, whether at a Drive-thru facility or other facility, the ability to
custom order a coffee beverage that will be blended to their exact specifications. Each of
Mocha's Baristas will be trained in the fine art of brewing, blending, and serving the highest
quality hot and cold beverages, with exceptional attention to detail.
Besides coffees, Mocha will offer teas, Italian sodas, frozen coffee beverages, pastries, cold
cuts sandwiches and other baked goods. Mocha will market premium items such as coffee
mugs, T-shirts and sweatshirts, ball caps, and more.
3.2 Competitive Comparison
Mocha considers itself to be a player in the retail coffee house industry. However, it knows that
competition for its products range from soft drinks to other beverages.
Mocha primary competition will come from three sources:
1. International coffee houses such as Starbucks, Costa Café and Dunkin Donuts.
2. Locally owned and operated cafes as Dr. Café, Coffee Day and Coffee Time etc….
3. Fast food chains and convenience stores.
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What will make Mocha Cafe stand out from all its competitors is:
Mocha Café will be providing products in the most convenient and efficient way available--ei at
one of Drive-thru shops. This separates Mocha from the competition in that its customers won't
need to find a parking place, wait in a long line, wait for a seat, and clean up the mess left by a
previous patron. Mocha customers can drive or walk up, order their beverage, receive and pay for
the beverage, and drive off.
3.3 Sourcing
Mocha purchases its coffees from LAWEIN. Mocha also has wholesale purchasing
agreements for other products with Major Brands.
Fulfillment equipment suppliers include Rezaza , joetrade and other suppliers.
Mocha's computer equipment is provided by Digicom
3.4 Technology
Mocha will be using state-of-the-art, two-sided, Drive-thru facilities to provide
convenience and efficiency for its clientele.
3.5 Future Products
As seasons change, Mocha will be offering products that will enhance sales and satisfy its
customers' desires. During summer months, Mocha will subsidize lower hot beverage sales
with frozen coffee drinks, as well as soft drinks, and other cold beverages such as
FCB{carbonated slush beverage}and FUB{uncarbonated slush beverage} . Mocha will also
have special beverages during seasons, such as Karkada, Qamar el din during Ramadan
period.
Mocha`s primary desire will be to listen to its customers to ascertain what they are looking for
most, and provide it.
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4.Market Analysis Summary
4.0 Market Analysis Summary
Mocha International will focus on two markets:
1. The Daily Commuter- someone traveling to or from work, out shopping, looks for a
place to hangout, delivering goods or services, or just out for a drive.
2. The Captive Consumer- someone who is in a restricted environment that does not allow
convenient departure and return while searching for refreshments, or where refreshments
stands are an integral part of the environment.
4.1 Market Segmentation
Mocha will focus on two different market segments: Commuters and Captive Consumers. To
access both of these markets, Mocha has two different delivery systems. For the commuters,
Mocha has the Drive-thru and Mall coffee house. For the captive consumer, Mocha has the
Mobile Cafe.
Commuters are defined as any one or more individuals in a motorized vehicle traveling from
point "A" to point "B." Mocha's greatest concentration will be on commuters heading to or from
work, out shopping, looking for a place to hangout, or those out on their lunch break.
Captive Consumers would include those who are tethered to a campus environment, or in a
restricted entry environment that does not allow free movement to and from. Examples would
include high school and college campuses, where there is limited time between classes, and
corporate campuses where the same time constraints are involved.
4.2 Target Market Segment Strategy
Mocha's target market is the mobile individual who has more money than time, and excellent
taste in a choice of beverage, but no time to linger in a cafe. By locating the Drive-Thrus in high
traffic/high visibility areas, this unique--and abundant--consumer will seek Mocha out and
become a regular guest.
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4.2.1 Market Needs
Islamic Legislation Continues To Impact Eating-out Habits
Saudi Arabia is a very strict Islamic country and is governed according to Islamic rules and
legislation. Consumption of alcohol is forbidden in the country, which has resulted in the non-
existence of bars and pubs in the country. Furthermore, cinemas, entertainment clubs and other
activity related clubs are illegal therefore dining out is the only source of entertainment outside of
the home. However, the separation of men and women has a detrimental effect on the
performance of some types of consumer foodservice outlets, for example women are not
allowed to consume meals in full-service restaurant outlets unless accompanied by a male
member of their family, which limits their ability to eat in such an outlet to either the evening or
weekend.
Outlook
Despite anticipation of legal reform in Saudi Arabia and the implementation of more liberal
legislation, it is not expected that such reform will take place in the near future, thus eating out
and for example frequenting coffee shops outlets is expected to remain as one of the only
sources of entertainment over the forecast period. This is expected to have a positive effect on
the expansion of shopping centers in Saudi Arabia, as people will choose to gather in shopping
centers and spend time with their friends and family.
Impact
The restrictions on various types of entertainment and the strict Islamic legislation in Saudi
Arabia have a positive impact on consumer foodservice overall, as the lack of cinemas, night
clubs, recreational parks and other such entertainment related establishments has increased the
popularity of consumer foodservice outlets such as cafés outlets, fast food outlets and full-
service restaurants outlets.
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Changes to Lifestyles Drive Growth
Similarly to in other parts of the world, consumer lifestyles in Saudi Arabia have undergone
change, from traditional to modern. Increased exposure to expatriates, predominantly from the
Western world, has led to changes in lifestyle among the local population, with people adopting a
more westernized lifestyle.
The number of expatriates in the kingdom exceeds six million people comprised of Asian
expatriates, Arab expatriates and Western expatriates from Europe and the US. The diversity of
the community in Saudi Arabia has contributed to the increase in popularity of sectors such as
full-service restaurants, for example outlets that serve Indian, Indonesian and other types of
Asian food, cafés/bars, fast food and 100% home delivery/take away.
Outlook
Despite the trend in Saudi Arabia towards nationalization, the economy of Saudi Arabia is
expected to remain dependent on foreign labor and therefore the change in lifestyles, towards
modern lifestyles, is expected to accelerate over the forecast period.
Impact
The impact of the change in lifestyles of local consumers and the continued steady influx of
expatriates are expected to be most obvious in certain sectors of consumer foodservice, such as
fast food and full-service restaurants. Demand for food from such channels will come mainly
from Asian and Western expatriates and local consumers with high incomes.
It is also expected that 100% home delivery/take away will witness much stronger growth over
the forecast period as a result of the change in lifestyles of local people who are expected to
increasingly favor freshly prepared meals from this channel.
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Demographic Changes Boost Value Sales of Consumer Foodservice
In 2005 Saudi Arabia experienced the second strongest demographic growth among the
countries in the Middle East. Since 1980 it has witnessed average annual growth in its
population of over 4%, so that in 2006 the total population was approximately 24,891 million.
Saudi Arabia has a young population, as around 52% of the total population is comprised of 15-
to-64-year-old citizens, many of whom work. This and the strong expatriate community in Saudi
Arabia are demographic factors that have contributed to the strong growth of fast food. Chained
fast food outlets are popular with young citizens, especially students, as they offer rapidly
served, inexpensive meals and they provide an informal location in which young people can
spend time with their friends. Most fast food outlets also contain a play area, which encourages
families with children to visit fast food outlets rather than other types of consumer foodservice
outlets such as full-service restaurants outlets.
Outlook
The working age population of Saudi Arabia, namely 15-to-64-year old citizens, is expected to
increase from over 14 million in 2006 to well over 18 million in 2015 at an average annual growth
rate of 3%. The population of Saudi Arabia is expected to remain relatively young and thus to
further drive the growth of consumer foodservice. All sectors of consumer foodservice are
expected to record positive constant value growth over the forecast period owing to these
demographic factors.
Impact
While these demographic factors are expected to continue to have a positive impact on value
sales of consumer food service over the forecast period, they are expected to particularly benefit
fast food and cafés/bars, owing to the popularity of chained fast food outlets and cafés outlets
among the younger generation and citizens of working age, who are keen to mix with different
cultures and adopt a Western lifestyle.
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Innovation and Diversification Play a Central Role in Competition
Competition in consumer foodservice in Saudi Arabia is intense especially among multinational
brands. The ever-increasing popularity of consumer foodservice is placing pressure on all
players. Therefore, marketing and public relations play a major role in helping to increase
awareness of specific brands and to increase their value as a result.
TV advertising and printed marketing alone is not sufficient to maintain a strong position in
consumer foodservice in Saudi Arabia due to the escalating competition. As a result companies
are forced to be more innovative with regard to their product offerings and to focus on the needs
of consumers, for example by using more local ingredients and local flavors, as well as to target
specific consumer groups.
Outlook
Competition between the different players in consumer foodservice is expected to continue and
to increase over the forecast period in line with the growth of consumer foodservice, owing to
expansion in the product portfolios of existing brands and the entrance of new brands.
The number of shopping centers is also expected to increase over the forecast period, mainly
due to the extremely hot climate and this is also expected to affect the level of competition
between leading brands such as Starbucks, Burger King and McDonald’s and between local
brands such as Herfy and Mochachino, as they strive to establish greater presence.
Impact
The impact of competition on consumer foodservice is positive and is expected to be to the
benefit of consumers. As traditional methods of marketing such as TV advertising and printed
advertising is not enough, players are expected to become more innovative. For example,
greater diversification of menu choices, adoption of local products and ingredients and more
generous rewards and promotions will be key. Furthermore, renovation of outlets and the offer of
more facilities such as access to the internet and home delivery will hugely contribute to the
success of a brand.
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4.2.2 Market Trends
Consumer Foodservice Achieves Rapid Growth
Consumer foodservice has grown rapidly in Saudi Arabia, driven by increases in the GDP, which
have been fuelled by rising oil prices and which have led to higher disposable incomes for all
citizens. This growth has also been supported by the strong culture of eating out, which provides
citizens with one of the few sources of entertainment, owing to the absence of bars and pubs in
Saudi Arabia.
Religious Tourism Has A Positive Impact
More than two million people visit Saudi Arabia on an annual basis during the Hajj season. In
addition, approximately another million people visit the country throughout the year to perform
Umrah with the highest number of visitors arriving during the holy month of Ramadan.
The high number of visitors, whether for religious or other reasons, has a large and positive
effect on the performance of consumer foodservice, especially sectors such as fast food, full-
service restaurants and cafés/bars (owing to the popularity of coffee shops).
Increasing Popularity of Shopping Centers
The number of large-scale developments for shopping centers in all regions of Saudi Arabia increased significantly over the review period. This has boosted the popularity of fast food outlets, coffee shop outlets and ice cream parlours in particular. Due to the extremely hot climate, many people tend to stay indoors where there is air-conditioning, for example in shopping centers, which is a major reason for the increasing popularity of shopping centres in Saudi Arabia. The lack of entertainment options has also given shopping centres an edge, as people often opt to socialize in them. A large number of new shopping centers are expected to open in Saudi Arabia over the forecast period
4.2.3 Market Growth
Overall growth was seen throughout the foodservice industry in 2006 with increases in both General value sales for consumer foodservices as well as outlet numbers. Among the different sectors, café are achieving the highest growth rates; however, other sectors Including fast food and full-service restaurants continue to perform well. Strong expansion strategies for chained outlets to expand across the Kingdom has enabled them to capture a Wider market and aided in the growth in value terms.
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Table 1 Units, Transactions and Value Sales in Consumer Foodservice: 2001-2006
2001 2002 2003 2004 2005 2006 Units 11,605.0 12,173.0 12,706.0 13,170.0 14,256.0 14,730.0 Transactions (mn) 1,333.6 1,424.1 1,517.0 1,585.8 1,707.2 1,799.2 SR million current prices 12,689.1 13,504.2 14,423.6 15,332.8 16,758.9 17,683.5 SR million constant 12,689.1 13,473.2 14,306.6 15,158.3 16,450.4 17,186.2 prices Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor
International estimates
Table 2 Units, Transactions and Value Sales in Consumer Foodservice: % Growth 2001-2006
% growth 2005/06 2001-06 CAGR 2001/06 TOTAL Units 3.3 4.9 26.9 Transactions 5.4 6.2 34.9 Value current prices 5.5 6.9 39.4 Value constant prices 4.5 6.3 35.4 Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor
International estimates
4.3 Industry Analysis
The coffee industry has grown by tremendous amounts in K.S.A. over the past five years. Even
general coffee sales have increased with international brands such as Folgers, and Maxwell
House reporting higher sales and greater profits.
KSA is definitely a coffee country and the coffee industry is reaping the rewards.
Consumer Foodservice by Independent Vs Chained Outlets: Units/Outlets 2006
outlets Independent Chained Total Consumer foodservice by type and 11,674 3,056 14,730 chained/independent Cafés/bars 1,549 189 1,738 Full-service restaurants 776 274 1,050 Fast food 8,982 2,371 11,353 100% home delivery/takeaway - 63 63 Self-service cafeterias 8 22 30 Street stalls/kiosks 359 137 496 Pizza consumer foodservice 107 269 376 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International
estimates
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Consumer Foodservice by Eat in Vs Takeaway 2006
% value analysis Eat in Takeaway Total 100% home delivery/takeaway - 100.0 100.0 Cafés/bars 91.6 8.4 100.0 Consumer foodservice by type and 73.6 26.4 100.0 chained/independent Fast food 63.0 37.0 100.0 Full-service restaurants 93.0 7.0 100.0 Self-service cafeterias 74.6 25.4 100.0 Street stalls/kiosks - 100.0 100.0 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International
estimates
Consumer Foodservice by Food Vs Drinks Split 2006
% value analysis Food Drink Total 100% home delivery/takeaway 95.0 5.0 100.0 Cafés/bars 63.0 37.0 100.0 Consumer foodservice by type and 73.1 26.9 100.0 chained/independent Fast food 75.5 24.5 100.0 Full-service restaurants 71.0 29.0 100.0 Self-service cafeterias 70.5 29.5 100.0 Street stalls/kiosks 55.0 45.0 100.0 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International
estimates
Sales in Consumer Foodservice by Location 2001-2006
% value 2001 2006 Stand-alone 56.7 52.5 Retail 21.6 25.6 Travel 11.6 9.8 Leisure 4.1 4.9 Hotels 6.1 7.2 Total 100.0 100.0 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International
estimates
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Eating out patterns differ in Saudi Arabia The consumer foodservice industry increased by 36% in terms of outlets, 45% for transactions and 44% in value sales over the review period. Eating out patterns differ from other countries in the Middle East and North Africa. Islamic regulations forbid serving alcohol in any restaurants or public premises. Therefore, there are no bars or pubs in the Kingdom. Foodservice restaurants are required to diversify by finding products other than alcohol to attract consumers. Most restaurants also try to adapt to the traditions and cultures in Saudi Arabia, by for example, having separate sections for men, women and families allowing the two groups to use different
entrances to the outlet.
Great potential in the Saudi Arabian industry Growth of the consumer foodservice industry was dynamic over the review period. In value terms, sales reached SR20 billion in 2004 demonstrating a constant CAGR of 7%. This was mainly due to strong population growth. 8,400 units operating in 2004 generated 1 billion transactions in the year. Eating out is a very important leisure activity among Saudi Arabians as there is not much entertainment at night. Families like to go out to a restaurant, especially at weekends as a change from dining at home. As outings are restrained, and women are not allowed to go out alone, eating out becomes the main activity at the weekend along with shopping.
Fast food popular among young Saudi Arabians and families Fast food was the most popular area within the consumer foodservice industry during the review period. Fast food registered 45% growth in outlets, 51% and 57% in transactions and value sales respectively. Fast food chains are very popular among the young generations, especially students, who have a lot of spare time and like to meet at night for a quick meal. In addition, satellite TV channels are a great influence towards Western trends in fast food such as McDonald’s and KFC. However, the boycotting of American companies affected their sales during the review period, although they recovered in 2004. Families also prefer fast food to full-service restaurants, as the whole family can dine together. International brands are the most popular although they face stiff competition from Saudi chains and independent fast food. Saudi chains offer Arabic food and are very popular especially in chicken fast food. Saudi investors are aggressive with regard to marketing and many Saudi chains now have a presence in Egypt,
Lebanon, Kuwait, and countries in Asia.
Saudi Government consolidates efforts to attract more tourists There are more than 10,000 natural, historical and cultural sites in Saudi Arabia. The Kingdom also plays host to 534 literary and story-telling events and 61 folklore festivals, including the annual Janadriyah festival. The Kingdom needs an additional 50,000 hotel rooms and 74,000 furnished units by 2020 to meet the expected growth in the number of tourists as well as to service domestic tourists. Saudi Arabians had been spending more than $25 billion on foreign tourism at the beginning of the review period, although many stopped visiting America and Europe for holidays, partly after 11 September 2001 and partly for economic reasons. The arrival of more tourists is welcomed by the foodservice industry. When group’s of tourists come for the Hajj, it is common for travel agencies to order menus from delivery outlets for the entire group for
the duration of the visit.
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4.3.1 Industry Participants
Leading Chained Café/bars Brands by Number of Units 2006
Brand Global Brand Owner outlets Cone Zone Cone Zone Co 250 Baskin-Robbins Dunkin' Brands Inc 165 House of Donuts House of Donuts 115 Seattle's Best Coffee Focus Brands Inc 71 Mövenpick Mövenpick 55 Holding AG Starbucks Starbucks Corp 50 Restaurant Co Dunkin' Donuts Dunkin' Brands Inc 34
Consumer Foodservice by Independent Vs Chained Outlets: Units/Outlets 2006
outlets Independent Chained Total chained/independent Cafés/bars 1,549 189 1,738
4.3.2 Competition and Buying Patterns
There are four general competitors in Mocha's drive-thru market. They are the international
specialty beverage chains, such as Starbucks and Costa Café, local coffee houses--or cafes--
with an established clientele and a quality product, fast food restaurants, and convenience
stores. There is a dramatic distinction among the patrons of each of these outlets.
Patrons to a Starbucks, or to one of the local cafes, are looking for the "experience" of the coffee
house. They want the ability to "design" their coffee, smell the fresh pastry, listen to the soothing
music, and read the local paper or visit with an acquaintance. It is a relaxing, slow paced
environment.
Patrons of the fast food restaurants or the convenience stores are just the opposite. They have
no time for idle chatter and are willing to over-pay for whatever beverage the machine can spit
out, as long as it's quick. They pay for their gas and they are back on the road to work. Although
they have the desire and good taste to know good from bad, time is more valuable to them.
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Competitors to the Mobile Cafes on campuses would include fast food restaurants--assuming
they are close enough to the consumer that they can get there and back in the minimal allotted
time, vending machines, and company or school cafeterias. The consumers in this environment
are looking for quick, convenient, fairly priced, quality refreshment that will allow them to
purchase the product and return to work, class, or other activity.
4.3.4 Main Competitors
When measuring head-to-head, direct competitors, we have found that there are none in the
area. Mocha will be the first double-sided, drive-thru coffee house in the area. However, there is
still significant competition from traditional coffee houses and other retailers.
International Chains:
Starbucks, one of the international leaders with 50 outlets across the kingdom
Seattle's Best Coffee from 71 franchised locations in fiscal year 2006. Dunkin Donuts with 34
locations
Mocha believes it has a significant competitive advantage over these chains because of the
following benefits:
Drive-thru Service
More Substantial Customer Service
Community Benefit
Selection
Higher Product Quality
Local Cafes:
The toughest competitor for Mocha is the established locally owned cafe. Mocha knows the
quality and pride that the local cafe has in the product purchase by their customers. Any local
cafe has a customer base that is dedicate. The quality of beverages served at an established
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cafe will surpass any of the international chains.
The competitive edge Mocha has on the local cafes is based on the attributes of:
Drive-thru Service
Consistent Menu
Quality Product
Drive-thru Coffee Houses:
There is not a drive-thru specialty beverage retailer with significant market presence in KSA. The
only company with similar depth to that of Mocha is Dr. Cafe; However, Dr.Cafe has limited its
corporate footprint to Mid-Region and the Western Region.
In the drive-thru specialty beverage market, Mocha has a competitive edge over the smaller
retailers, and even Dr. Cafe , due to:
Consistent Menu
Quality Product
Supply Discounts
Valued Image
Greater Product Selection
Fast Food and Convenience Stores:
These are two industries where Mocha will experience a certain level of competition. The
international fast food chains and convenience store chains already serve coffee, soda, and
some breakfast foods. The international fast food chains obviously know the benefits and value
to customers of drive-thru. Mocha knows that within the specialty coffee and tea market, the
quality of the products sold will be much greater than what can currently be purchased at fast
food and convenience stores. Mocha knows the quality of our products, along with the addition
of domestic soft drinks and the ease of drive-thru, gives it a competitive edge over fast food and
convenience stores.
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Other competition:
The Mocha knows that once it has entered the market and established a presence, others will try
to follow. However, Mocha believes that the corporate missions and even the organizational
design will be imitated, but never duplicated. Mocha will constantly evaluate its products,
locations, service, and corporate missions to ensure that it remains a leader in the specialty
beverage industry
5.Strategy and Implementation Summary
5.0 Strategy and Implementation Summary
Mocha will penetrate the commuter and captive consumer markets by deploying Drive-thru ,mall
,In-Line facilities and Mobile Cafes in the most logical and accessible locations. The Drive-thrus
are designed to handle two-sided traffic and dispense customer-designed, specially ordered
cups of specialty beverages in less time than required for a visit to the locally owned cafe or one
of the national chains.
Mocha has identified its market as busy, mobile people whose time is already at a premium, but
desire a refreshing, high quality beverage or baked item while commuting to or from work.
In addition to providing a quality product and an extensive menu of delicious items, to ensure
customer awareness and loyalty, as well as positive word of mouth and four walls marketing.
5.1 Strategy Pyramids
Mocha's strategy is to show people that it has an excellent product and convenient accessibility.
24
To execute on this strategy, Mocha is placing the Drive-thrus and Mobile Cafes at easily
accessible locations throughout the country. Mocha is pricing its product competitively and
training the production staff to be among the best Baristas in the country. Then, through coupons
and display ads at the locations,
In so doing, Mocha has:
1. Provided a customer with a quality product at a competitive price.
2. Provided the customer with a more convenient method for obtaining their desired
product.
3. Provided the customer direct -mailing programs and community involvement programs.
5.3 Value Proposition
The Drive-thru facilities provide a substantial value proposition in that the customer does not
have to find a parking place, exit the vehicle, stand in line to order, wait for the beverages ahead
of him to be produced, pay a premium price for average product, find a place to sit, clean up the
previous patron's mess, then enjoy their coffee ... assuming they have sufficient time to linger
over the cup.
Mocha concept is that the customer drives up, places the order, receives a high quality product
at a competitive price, and drives away, having wasted little time in the process.
5.3 Competitive Edge
Mocha's competitive edge is simple. Mocha International provides a high quality product at a
Competitive price in a Drive-thru environment that saves time.
5.4 Marketing Strategy
First and foremost, Mocha will be placing its facilities in locations of very high visibility and great
ease of access. They will be located on high traffic commuter routes and close to shopping
facilities in order to catch customers going to or from work, or while they are out for lunch, or on
a shopping expedition. The Drive-thrus are very unique and eye-catching, which will be a
branding feature of its own.
25
Mocha will be implementing a low cost advertising/promotion campaign which could involve
drive-time radio, but not much more.
Mocha Word of mouth has always proven to be the greatest advertising program a company can
instill.
5.4.1 Positioning Statements
For busy, mobile people whose time is already at a premium, but desire a refreshing,
high quality beverage or baked item while commuting to or from work.
For our most important target market who crave new coffeehouse option Mocha satisfies
that need. We will offer the customer an experience unlike anything he has currently
available
5.4.2 Pricing Strategy
Mocha pricing will be comparable to the competition, but with the value-added feature of
immediate, drive-thru service and convenience.
Our food and drinks options are priced to give us an attractive margin while at the same time
offering value to the consumer. We want repeat business. We also want the experience to
remain fresh
5.4.3 Promotion Strategy
We will promote our company name almost more than the product itself, because to be successful we have to stand for brand –name integrity and excellent menu offerings. therefore , our promotion strategy including focusing on
1. Local radio concentrating on drive time radio Mocha will experiment with different stations, keeping careful track of results
2. Mocha expects the facilities and signage to be a substantial portion of our advertising.
However, in the start-up phase, Mocha needs to let people know where to look for the
facilities.
26
5.4.4 Distribution Strategy
Mocha will locate Drive-thru facilities in high traffic areas of the city where it knows working
commuters will be passing.
Mocha will also make arrangements for the Café units to be at as many Malls , Residential,
businesses areas and events as possible every year, so that new customers, those who come in
from areas where Mocha may not have a Drive-thru facility, can be reached and those who didn't
have the time to stop
5.4.5 Marketing Programs
Advertising and Promotion:
In the first year, Mocha plans to spend S.R.98, 000 on advertising and promotion, after the
opening of the first Drive-thru. This would not be considered a serious advertising budget for any
business, but Mocha also believes that word-of-mouth advertising and free beverage coupons
will be better ways to drive people to the first and second locations.
In the second year, Mocha is increasing the budget to S.R. 236, 000, since it will need to
promote several locations, with particular emphasis on announcing these openings and all the
other locations. .
In the third year, Mocha will increase its advertising and promotion budget to S.R.418, 000, with
the majority of the advertising budget being spent on drive time radio. As in the previous years.
5.5 Sales Strategy
There will be several sales strategies put into place, including posting specials on high-profit
items at the drive-up window. The Baristas will also hand out free drink coupons to those who
have purchased a certain number of cups or something similar. Mocha will also develop window
sales techniques such as the Baristas asking if the customer would like a fresh-baked item with
their coffee.
27
5.5.1 Sales Forecast
In the first year, Mocha anticipates having 7 Drive-thru locations, 2 Mall locations and one In –
Line location in operation. The first location will open in the first month of the year 2008 and be
fully operational beginning on the 1st day of July2008. The second Drive-thru will open 1 month
later. Mocha is building in a certain amount of ramp-up for each facility while commuters become
familiar with its presence. The Outlets will generate 365,000 Transactions in the first year of
operation, or approximately SR. 4.9 million in revenue.
In the second year, Mocha will add two more Outlets and, in the third year, Mocha will add an
additional 13 outlets with different facilities. The addition of these facilities will increase the
revenue from a total of over 858000 Transactions or SR .11.8 million in the second year and
1,469,600 Transactions or just over Sr.20 million in the third.
Mocha is also showing revenue from the commerce portion of our website, where it will sell
"Mocha" t-shirts, sweatshirts, insulated coffee mugs, pre-packaged coffee beans, and other
premium items. Mocha is not expecting this to be a significant profit center, but it is an integral
part of the marketing plan -- as a function of developing our brand and building product
awareness. Mocha expects revenues from this portion, to begin in the second fiscal year, to
reach SR. 44000 initially, and SR.82, 500 in the third fiscal year.
Total first year unit sales should reach 365,000, equating to revenues of SR.4, 905,000. The
second year will see unit sales increase to 858,000, or SR.11, 828,000. The third year, with the
addition of such a significant number of outlets, we will see unit sales increase to 1,469,600,
equating to gross sales revenue of SR.20,922,600 million
28
Sales Yearly
Sales Forecast
FY 2008 FY 2009 FY 2010
Transactions
Drive-thru #1 54,000 64,800 74,520
Drive-thru #2 44,000 52,800 60,720
Drive-thru #3 40,000 48,000 55,200
Drive-thru #4 36000 43,200 49,680
Drive-thru #5 20000 24,000 27,600
Drive-thrus #6 & #7 56000 67,200 77,280
Drive-thrus #8, #9, & #10 0 132000 151,800
Drive-thrus #11, #12, & #13 0 108000 124,200
Drive-thrus #14, #15, & #16 0 96000 110,400
Drive-thrus #17, #18, & #19 0 0 132,000
Drive-thrus #20, #21, & #22 0 0 120,000
Drive-thrus #23, #24, & #25 0 0 108,000
1.س.ر
5,111,111.س.ر
01,111,111.س.ر
05,111,111.س.ر
71,111,111.س.ر
75,111,111.س.ر
10 outlets 12 outlets 13 outlets
FY 2008 FY 2009 FY 2010
Website Sales/Premium Items
In-Line Cafe #1,#2,#3
Mall Cafe #5 ,#6 ,#7
Mall Cafe #3 ,#4
Mall Cafe #1 ,#2
Drive-thrus #23, #24, & #25
Drive-thrus #20, #21, & #22
Drive-thrus #17, #18, & #19
Drive-thrus #14, #15, & #16
Drive-thrus #11, #12, & #13
Drive-thrus #8, #9, & #10
Drive-thrus #6 & #7
Drive-thru #5
Drive-thru #4
Drive-thru #3
Drive-thru #2
Drive-thru #1
29
Mall Cafe #1,#2 70,000 84,000 96,600
Mall Cafe #3,#4 0 60,000 69,000
Mall Cafe #5,#6,#7 0 0 90,000
In-Line Cafe #1,#2,#3 45000 74000 115,100
Website Sales/Premium Items 0 4,000 7,500
Total Transactions 365,000 858,000 1,469,600
Unit Prices
FY 2008 FY 2009 FY 2010
Drive-thru #1 .00.11ر.س. 03.51ر.س. 03.11ر.س
Drive-thru #2 .00.11ر.س. 03.51ر.س. 03.11ر.س
Drive-thru #3 .00.11ر.س. 03.51ر.س. 03.11ر.س
Drive-thru #4 .00.11ر.س. 03.51ر.س. 03.11ر.س
Drive-thru #5 .00.11ر.س. 03.51ر.س. 03.11ر.س
Drive-thrus #6 & #7 .00.11ر.س. 03.51ر.س. 03.11ر.س
Drive-thrus #8, #9, & #10 .00.11ر.س. 03.51ر.س. 1.11ر.س Drive-thrus #11, #12, & 00.11ر.س. 03.51ر.س. 1.11ر.س. #13Drive-thrus #14, #15, & 00.11ر.س. 03.51ر.س. 1.11ر.س. #16Drive-thrus #17, #18, & 00.11ر.س. 1.11ر.س. 1.11ر.س. #19Drive-thrus #20, #21, & 00.11ر.س. 1.11ر.س. 1.11ر.س. #22Drive-thrus #23, #24, & 00.11ر.س. 1.11ر.س. 1.11ر.س. #25
Mall Cafe #1,#2 .05.11ر.س. 00.51ر.س. 00.11ر.س
Mall Cafe #3,#4 .05.11ر.س. 00.51ر.س. 1.11ر.س
Mall Cafe #5,#6,#7 .05.11ر.س. 1.11ر.س. 1.11ر.س
In-Line Cafe #1,#2,#3 .05.11ر.س. 05.11ر.س. 05.11ر.س
Website Sales/Premium Items .00.11ر.س. 00.11ر.س. 1.11ر.س
A/C .80.41ر.س. 83.31ر.س. 83.31ر.س
30
Sales FY 2008 FY 2009 FY 2010
10 outlets 23 outlets 35 outlets
Drive-thru #1 .0,103,741ر.س. 4,0,411ر.س. 17,111,ر.س
Drive-thru #2 .451,141ر.س. 07,411,ر.س. 5,7,111ر.س
Drive-thru #3 .7,411,,ر.س. 004,111ر.س. 571,111ر.س
Drive-thru #4 .025,571ر.س. 543,711ر.س. 004,111ر.س
Drive-thru #5 .340,011ر.س. 370,111ر.س. 701,111ر.س
Drive-thrus #6 & #7 .0,140,271ر.س. 711,,21ر.س. 74,111,ر.س
Drive-thrus #8, #9, & #10 .7,075,711ر.س. 47,111,,0ر.س. 1ر.س
Drive-thrus #11, #12, & #13 .34,411,,0ر.س. 0,054,111ر.س. 1ر.س
Drive-thrus #14, #15, & #16 .0,505,011ر.س. 0,720,111ر.س. 1ر.س
Drive-thrus #17, #18, & #19 .0,404,111ر.س. 1ر.س. 1ر.س
Drive-thrus #20, #21, & #22 .0,041,111ر.س. 1ر.س. 1ر.س
Drive-thrus #23, #24, & #25 .0,507,111ر.س. 1ر.س. 1ر.س
Mall Cafe #1,#2 .0,002,111ر.س. 0,704,111ر.س. 241,111ر.س
Mall Cafe #3,#4 .0,135,111ر.س. 4,1,111ر.س. 1ر.س
Mall Cafe #5,#6,#7 .0,351,111ر.س. 1ر.س. 1ر.س
In-Line Cafe #1,#2,#3 .70,511,,0ر.س. 0,001,111ر.س. 0,5,111ر.س
Website Sales/Premium Items .47,511ر.س. 00,111ر.س. 1ر.س
Total Sales ر.س.
71,277,011ر.س. 00,474,111ر.س. 0,215,111
Direct Unit Costs
FY 2008
FY 2009
FY 2010
Drive-thru #1 .0.15ر.س. ,5.2ر.س. 0.17ر.س
Drive-thru #2 .0.15ر.س. ,5.2ر.س. 0.17ر.س
Drive-thru #3 .0.15ر.س. ,5.2ر.س. 0.17ر.س
Drive-thru #4 .0.15ر.س. ,5.2ر.س. 0.17ر.س
Drive-thru #5 .0.15ر.س. ,5.2ر.س. 0.17ر.س
Drive-thrus #6 & #7 .0.15ر.س. ,5.2ر.س. 0.17ر.س
Drive-thrus #8, #9, & #10 .0.15ر.س. ,5.2ر.س. 1.11ر.س
Drive-thrus #11, #12, & #13 .0.15ر.س. ,5.2ر.س. 1.11ر.س
Drive-thrus #14, #15, & #16 .0.15ر.س. ,5.2ر.س. 1.11ر.س
31
Drive-thrus #17, #18, & #19 .0.15ر.س. 1.11ر.س. 1.11ر.س
Drive-thrus #20, #21, & #22 .0.15ر.س. 1.11ر.س. 1.11ر.س
Drive-thrus #23, #24, & #25 .0.15ر.س. 1.11ر.س. 1.11ر.س
Mall Cafe #1,#2 .0.15ر.س. ,5.2ر.س. 0.17ر.س
Mall Cafe #3,#4 .0.15ر.س. ,5.2ر.س. 1.11ر.س
Mall Cafe #5,#6,#7 .0.15ر.س. ,5.2ر.س. 1.11ر.س
In-Line Cafe #1,#2,#3 .0.15ر.س. ,5.2ر.س. 0.17ر.س
Website Sales/Premium Items .0.51ر.س. 0.51ر.س. 1.11ر.س
Direct Cost of Sales
FY 2008
FY 2009
FY 2010
Drive-thru #1 .051,025ر.س. 015,,34ر.س. 375,103ر.س
Drive-thru #2 .350,,30ر.س. 305,700ر.س. 700,441ر.س
Drive-thru #3 .333,201ر.س. 740,501ر.س. 701,411ر.س
Drive-thru #4 .311,500ر.س. 210,,75ر.س. 71,,700ر.س
Drive-thru #5 .000,241ر.س. 003,741ر.س. 071,011ر.س
Drive-thrus #6 & #7 .500,,00ر.س. 010,040ر.س. 071,,33ر.س
Drive-thrus #8, #9, & #10 .204,321ر.س. 44,101,ر.س. 1ر.س
Drive-thrus #11, #12, & #13 .50,001,ر.س. 01,,000ر.س. 1ر.س
Drive-thrus #14, #15, & #16 .271,,00ر.س. 5,3,071ر.س. 1ر.س
Drive-thrus #17, #18, & #19 .24,011,ر.س. 1ر.س. 1ر.س
Drive-thrus #20, #21, & #22 .70,111,ر.س. 1ر.س. 1ر.س
Drive-thrus #23, #24, & #25 .053,011ر.س. 1ر.س. 1ر.س
Mall Cafe #1,#2 .540,031ر.س. 510,041ر.س. 070,011ر.س
Mall Cafe #3,#4 .051,,00ر.س. 354,711ر.س. 1ر.س
Mall Cafe #5,#6,#7 .500,511ر.س. 1ر.س. 1ر.س
In-Line Cafe #1,#2,#3 .020,355ر.س. 41,,000ر.س. 7,1,211ر.س
Website Sales/Premium Items .51,,04ر.س. 70,111ر.س. 1ر.س
Subtotal Direct Cost of Sales .4,420,010ر.س. 5,070,072ر.س. 733,,7,02ر.س
32
5.5.2 Sales Programs
Corporate Tasting Events- Mocha plans to host tasting events for customers on a quarterly
basis. Each quarter, at the introduction of each season, Mocha will be adjusting its menu to
reflect the changes in the flavors served.
Drink Coupons- We will be giving away drink coupons as awards. This encourages the person
to come in for their free beverage and bring a friend or buy a baked item or a package of our
premium coffee. The Drive Thru units will also be distributing coupons for special menu items or
new product introductions.
5.6 Strategic Alliances
Mocha will depend heavily on alliances with its core suppliers and we will always search for new
alliances with other brands, as well as our alliances with the Drive-thru facility manufacturers and
consumable products providers. However, we will always be looking for better quality products,
more favorable pricing, or more timely delivery from other potential alliances.
5.7 Milestones
The Milestone table reflects critical dates for launching the first Drive-thru and subsequent Drive-
thrus, as well as deployment of the other units. Mocha also defines our website launch, and
other key markers that will help us measure our success in time and accomplishment.
33
Milestone Start Date End Date Budget Manager
Open First Drive-thru 1/11/2007 1/1/2008 .055,111ر.س Ops
Open Second Drive-thru 1/12/2007 1/2/2008 .055,111ر.س Ops
Open Third Drive-thru 1/12/2007 1/3/2008 .055,111ر.س Ops
Open Fourth Drive-thru 1/3/2008 1/4/2008 .055,111ر.س Ops
Open Fifth Drive-thru 1/5/2008 1/6/2008 .055,111ر.س Ops
Open Drive-thrus 6 and 7 1/6/2008 1/8/2008 .301,111ر.س Ops
Open Drive-thrus 8, 9 and 10 1/10/2008 1/1/2009 .005,111ر.س Ops
Open Mall Cafe #1,#2 1/4/2008 1/7/2008 .321,111ر.س Ops
Expand to Eastern Region 1/1/2009 1/3/2009 .301,111ر.س Ops
Light Website 6/1/2009 8/15/2009 .05,111ر.س Ops
Open First Franchise 1/2/2011 1/3/2011 .055,111ر.س Finance
Initiate Exit Strategy 10/1/2010 1/1/2011 .05,111ر.س Finance
Totals
030,53222ر.س.
34
6.0 Management Summary
Mocha is a relatively flat organization. Overhead for management will be kept to a minimum and
all senior managers will be "hands-on" workers. There is no intention of having a top-heavy
organization that drains profits and complicates decisions.
At the zenith of this three-year plan, there will be four "Executive" positions: General Manager,
Financial Manager, Operations Manager and Marketing Manager. There will be other mid-
management positions, such as Purchasing Manager and district managers for every four Drive-
thrus, and a facilities manager to oversee the maintenance and stocking of the Cafes, as well as
overseeing the maintenance and replacement of equipment in the outlets.
6.1 Organizational Structure
The organization will be a relatively flat one, since the majority of personnel are involved in
production and there will be a relatively low headcount in management.
There are three functioning groups within the company: Operations, Sales and Marketing, and
General and Administrative. For purposes of this plan--and to show the details of adding senior
level management—Mocha has broken management down as a separate segment, but it is an
integral part of the General and Administrative function.
Operations involve the Baristas, or Customer Service Specialists, who will be manning the Drive-
thrus and Mobile Cafes and blending the beverages for the customers. Sales and Marketing will
handle the promotion and scheduling of the Mobile Cafes, as well as the promotion of the Drive-
thrus and the Community Contribution program. General and Administrative manage the
facilities, equipment, inventory, payroll, and other basic, operational processes.
6. Management Summary
35
6.3 Management Team Gaps
Mocha knows that it is going to require several quality management team members over the
next three years, beginning with a district manager for every four Drive-thrus. This person will
oversee the quality of product, the training of the Baristas, the inventory management, and
customer satisfaction. Ideally, as Mocha grows, it will be able to promote from within for this
position. This individual will be responsible for the operation of up to four drive-thrus under his
management. They will be required to visit between locations and possibly even join
administrative personnel on training or marketing travel. Clearly, as the need arises, these
individuals will ideally be selected from the operations team.
By the beginning of the third year, Mocha will hire three key senior managers. They are: an
Operations Manager, Financial Manager, Marketing Manager, The role of each of these
individuals will be discussed in subsequent sections of this plan.
6.4 Personnel Plan
Mocha expects the first year to be rather lean, since there will only be ten locations and one
mobile unit--none of which will be deployed for the entire year. The total headcount for the first
year, including management, administrative support, and customer service (production), will be
46, with a total payroll of 762,00
The second year, with the addition of 12 units, Mocha will add customer service personnel, as
well as 2 district managers and some additional support staff at headquarters, including an GM,
Inventory Clerk, Equipment Technician, and administrative support. The headcount will increase
by nearly 124% in the second year to103 with a payroll of 1,929,000.
The third year will see the most dramatic growth in headcount, due to the addition of 13 units. In
the third year, there will also be an increase of 158% over the previous year. Total payroll for the
third year will be 3,332,100. A significant increase in the senior management team, with the
addition of Financial Manager, Marketing Manager and Operations Manager. There will also be a
fourth district manager, and a corporate events sales executive. Total personnel will reach 163.
The General Manager : Achieve company s mission and strategic directions through effectively
Oversee, facilitate and coordinate departmental activities to maximize integration and synergy.
Planning, managing & directing all functions of the company. Monitor, evaluate, and coach department’s head
towards achieving objectives and leading all strategic decisions.
36
The Financial Manager: will be brought on to oversee the increase in numbers of retail outlets and to manage a dramatically more detailed P&L statement and to manage the Balance Sheet and inventory controls. This
individual will also be added in fiscal year three.
The Marketing Manager: will be charged with managing the relationships with advertising
agencies, public relations firms, the media, and our website.
The Operations Manager: Plan and implement operation strategy. Improve and coordinates
operation` s activities and staff. Ensure customer satisfaction in all operation processes and sales
Services. Conduct all activities to meet and exceed QSC standards. Improve staff satisfaction and
Moral. Maximize profitability.
Personnel Plan FY 2008 FY 2009 FY 2010
Production Personnel
Drive-thru Team .0,750,011ر.س. 40,111,ر.س. 327,111ر.س
Mall Cafe Team .074,411ر.س. 704,111ر.س. 030,111ر.س
In-Line Cafe Team .354,011ر.س. 770,111ر.س. 007,111ر.س
Equipment Care Specialist (Headquarters) .7,111,ر.س. 30,111ر.س. 1ر.س
Other .70,111ر.س. 70,111ر.س. 1ر.س
Subtotal .011,,7,03ر.س. 0,330,111ر.س. 034,111ر.س
Operations and Marketing Personnel
District Manager (Four Outlets) .311,111ر.س. 775,111ر.س. 5,111,ر.س
Corporate Events Sales Exec .30,111ر.س. 1ر.س. 1ر.س
Marketing Manager .001,111ر.س. 1ر.س. 1ر.س
Other .1ر.س. 1ر.س. 1ر.س
Subtotal .000,111ر.س. 775,111ر.س. 5,111,ر.س
37
General and Administrative Personnel
Bookkeeper/Office Administrator .3,511,ر.س. 02,111ر.س. 70,511ر.س
Warehouse/Site Manager .70,511ر.س. 70,511ر.س. 70,511ر.س
Inventory Clerk .70,511ر.س. 70,511ر.س. 1ر.س
Other .07,111ر.س. 0,111ر.س. 1ر.س
Subtotal .030,511ر.س. 010,111ر.س. 02,111ر.س
Other Personnel
General Manager .700,111ر.س. 700,111ر.س. 1ر.س
Financial Manager .711,111ر.س. 1ر.س. 1ر.س
Operations Manager .051,111ر.س. 1ر.س. 1ر.س
Purchasing Manager .1ر.س. 1ر.س. 1ر.س
Subtotal .000,111ر.س. 700,111ر.س. 1ر.س
Total People 46 103 163
Total Payroll .0,077,,,,ر.س. 0,909,777ر.س. 000,777ر.س
38
7. Financial Plan
7.0 Financial Plan
Mocha's financial picture is quite promising. Since Mocha is operating a cash business, the initial
cost is significantly less than many start-ups these days. The process is labor intensive and Mocha
recognizes that a higher level of talent is required. The financial investment in its employees will
be one of the greatest differentiators between it and Mocha's competition. There will be a
minimum of inventory on hand so as to keep the product fresh and to take advantage of price
drops, when and if they should occur.
Mocha anticipates the initial of investments of SR 1,942,500 to carry it without the need for any
additional equity or debt investment, beyond the purchase of equipment or facilities. This will mean
growing a bit more slowly than might be otherwise possible, but it will be a solid, financially sound
growth based on customer request and product demand.
7.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following
table. The key underlying assumptions are:
Mocha assumes a Fast-growth economy.
Mocha assumes of course that there are no unforeseen changes in public health
perceptions of its general products.
Mocha Assumes a growth rate of 28% in transactions over the next 5 years
Mocha Assumes a growth rate of 26% in sales value over the next 5 years
Forecast Units, Transactions and Value Sales in Consumer Foodservice: % Growth 2006-2011
% growth 2006-11 CAGR 2006/11 TOTAL Units 2.8 14.9 Transactions 5.1 28.0 Constant value 4.8 26.5 Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International
estimates
39
7.2 Key Financial Indicators
The following chart shows changes in key financial indicators: sales, gross margin and operating
expenses The growth in sales exceeds 241% each year. Mocha expects to keep gross margin
above the 55% projected for the first year, but it doesn't anticipate anything higher than 58%.
The projections for inventory turnover that Mocha will maintain a relatively stable amount of
inventory in its headquarters warehouse so that it has no less than two weeks of inventory on
hand, but no more than three weeks, in order to keep products fresh. The only time it would
consider holding larger stores of inventory is if there was some catastrophic event that could
cause a dramatic rise in the price of its coffees or teas.
Benchmarks
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Sales Gross Margin OperatingExpensses
FY 2008
FY 2009
FY 2010
40
7.3 Break-even Analysis
Break Even Analysis Mocha International
Years 1 2 3 Income 4,905,000 11,828,000 20,922,600
Expenses 5,115,850 10,747,200 18,134,214
Profit (210,850) 1,080,800 2,788,386
Debt 1,277,700 1,488,550 407.750
Balance (1,488,550) (407,750) 2,380,636
(2,000,000)
(1,500,000)
(1,000,000)
(500,000)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
1 2 3
Bala
nce
Years
Break -Even Analysis
Break even point
41
7.4 Projected Profit and Loss
Mocha is expecting some dramatic growth in the next three years, reaching SR.20,992,600 in
sales and a 57% Gross Profit Margin by the end of the third year. Expenses during the third
year will be roughly S.R. 9,346,722 leaving a Net-Profit of S.R. 3,512,136
Pro - Forma P& L Statement Mocha International 2008 -
2010
Year 2008 2009 2010 3 Years
Number Of Outlets 10 22 35 35
Sales 4,905,000 11,828,000 20,922,600 37,655,600
Other Revenues 0.0 0.0 0.0 0
Total Revenue 4905000 11828000 20922600 37655600
Cost Of Sales
T.C. 365,000 858,000 1,469,600 2,692,600
AV/Check 13 14 14 14
Food Cost 1,716,750 4,021,520 6,904,458 12,642,728
Paper Cost 490,500 1,064,520 1,883,034 3,438,054
Cost Of Sales 2,207,250 5,086,040 8,787,492 16,080,782
% 45.0 43.0 42.0 43
Gross Profit 2,697,750 6,741,960 12,135,108 21,574,818
% 55.0 57.0 58.0 57
Controllable
Salaries & Wages 490,500 1,182,800 2,092,260 3,765,560
Bonus 49,050 118,280 209,226 376,556
Staff Meals 24,525 59,140 104,613 188,278
Prevision for end of service 49,050 118,280 209,226 376,556
Maintenance 49,050 118,280 209,226 376,556
Staff Accommodations 98,100 236,560 418,452 753,112
Utilities 98,100 236,560 418,452 753,112
Operating Supplies 49,050 118,280 209,226 376,556
Marketing Expense 98,100 236,560 418,452 753,112
Misc. 49,050 118,280 209,226 376,556
Damaged goods 24,525 59,140 104,613 188,278
Area Managers 140,000 280,000 420,000 840,000
Total Operating Cost 1,219,100 2,882,160 5,022,972 9,124,232
% 24.9 24.4 24.0 24
Profit After Controllable 1,478,650 3,859,800 7,112,136 12,450,586
% 30.1 32.6 34.0 33
42
Non Controllable
Rent 600,000 1,200,000 2,100,000 3,900,000
Assets Dep.& Amortization 289,500 579,000 723,750 1,592,250
Total Non Controllable Cost 889,500 1,779,000 2,823,750 5,492,250
Operating Profit 589,150 2,080,800 4,288,386 6,958,336
% 12.0 17.6 20.5 18
Indirect Expense
Head Office Expense 800,000 1,000,000 1,500,000 3,300,000
Total Indirect Expenses 800,000 1,000,000 1,500,000 3,300,000
Total Fixed Cost 2,908,600 5,661,160 9,346,722 17,916,482
Net Profit (210,850) 1,080,800 2,788,386 3,658,336
% -4% 9% 13% 10%
7.5 Projected Cash Flow
Cash flow will have to be carefully monitored, as in any business, but Mocha is also the
beneficiary of operating a cash business. After the initial investment and start -up costs are
covered, the business will become relatively self-sustaining.
Investment Cost Estimates 2008
Value
Drive-thru #1
155,000
Drive-thru #2
155,000
Drive-thru #3
155000
Drive-thru #4
155000
Drive-thru #5
155000
Drive-thrus #6 & #7
310,000
Mall Cafe #1,#2
390,000
In-Line Cafe #1
467500
Total 1,942,500
43
Investment Cost Estimates 2009
Value
Drive-thrus #8, #9, & #10
465,000
Drive-thrus #11, #12, & #13
465,000
Drive-thrus #14, #15, & #16
465,000
Mall Cafe #3,#4
390,000
In-Line Cafe #2
467,500
Total 2,252,500
Investment Cost Estimates 2010
Value
Drive-thrus #17, #18, & #19
465,000
Drive-thrus #20, #21, & #22
465,000
Drive-thrus #23, #24, & #25
465,000
Mall Cafe #5,#6,#7
585,000
In-Line Cafe #3
467,500
Total 2,447,500
WORKING CAPITAL
Year 2008 Year 2009 Year 2010
Food 1,716,750 4,021,520 6,904,458
Packaging 490,500 1,064,520 1,883,034
Cash 100,000 100,000 100,000
Receivables Payables -141,279 -244,097 -338,302
Working Capital required 2,265,971 5,041,943 8,649,190
Change in W/C 2,265,971 2,775,972 3,607,247
Year 2008 Year 2009 Year 2010
Sales Plan 4,905,000
11,828,00
0 20,922,600
Food Cost 1,716,750 4,021,520 6,904,458
Packaging 490,500 1,064,520 1,883,034
44
Cash Flow
Year 2008 Year 2009 Year 2010
Cash Inflow : Net profit -210,850 1,080,800 2,788,386
Depreciation 289,500 579,000 723,750
Total Cash Inflow 78,650 1,659,800 3,512,136
Cash Outflow : Capital Expenses 1,942,500 2,012,500 2,237,500
Pre-Operating Expenses 77,700 80,500 89,500
Increase In Working Capital 2,265,971 2,775,972 3,607,247
Total Cash Outflow 4,286,171 4,868,972 5,934,247
Net Cash Flow -4,207,521 -3,209,172 -2,422,111
Cumulative Net Cash Flow -7,416,693 -9,838,804
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
1 2 3
Increase In Working Capital
Increase In Working Capital
45
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
1 2 3
Total Cash Inflow
Total Cash Inflow
-5,000,000
-4,000,000
-3,000,000
-2,000,000
-1,000,000
-
1 2 3
Net Cash Flow
Net Cash Flow
46
7.6 Business Ratios
Standard business ratios are included in the following table. The ratios show a plan for
balanced, healthy growth. Mocha's position within the industry is typical for a heavy growth
startup company.
Comparing the ratios in the third year with the industry, this pro-forma plan appears to be within
an acceptable difference margin.
The Drive Thru -business model is lean thus allowing for increase return ratio.
Ratio Analysis
FY 2008 FY 2009 FY 2010
Industry Profile
Sales Growth 0.00% 320.92% 156.42% 15.00%
Inventory 9.60% 13.68% 11.12% 3.60%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 55.00% 57.00% 58.00% 55.00%
G&A 16.31% 8.45% 7.17% 15.00%
Advertising Expenses 2.00% 2.00% 2.00% 3.00%
Main Ratios
Return on Assets 26.14% 92.31% 190.24% 25.00%
Additional Ratios FY 2008 FY 2009 FY 2010
Net Profit Margin -4.30% 9.14% 13.33% 15%
47
7.7 Exit Strategy
There are two scenarios for the investors and management to recover their
investment-- with significant returns on each Riyal invested.
Scenario One:
Mocha becomes extremely successful and has requests from other communities for
Mocha operations to be opened there. This opens the door for franchising
opportunity. When one looks at the wealth that has been created by the likes of
McDonald's, Wendy's, Kentucky Fried Chicken, Burger King, and Taco Bell, the
value of franchising a great idea cannot be dismissed. However, developing a
franchise can be extremely costly, take years to develop, and be destroyed by one
or two franchisees who fail to deliver the consistency or value on which the
founding company had built its reputation.
Scenario Two:
By the third year, the growth for Mocha will have made the news in more than just
in Riyadh area. It can be assumed that competitors, such as Starbucks, Dr.Cafe or
any other competitor will have seen the press and realized the value proposition in
Mocha's business plan. This will make Mocha an attractive target for buyout. The
company could be purchased by a much larger competitive concern by the end of
the third year.
