BIZCAFE Case 6 Analysis

Jane Valdez's Background

• After 30 years of long work hours, Jane Valdez seeks a new direction.
• She is a Collegetown native with a degree in engineering and a minor in business.
• Previous work experience includes Hewlett-Packard and Apple Computer in the 1970s and 1980s.
• After several attempts at entrepreneurship, her third venture in handheld computing for hospitals succeeded.
• Jane took her company public in 1995 and sold it before the tech bubble burst.

Educational Initiative

• Jane plans to teach college students business management through operating a coffee shop.
• Student teams will receive a $25,000 start-up loan at 10% interest for this project.
• Anticipated potential for students to repay the loan successfully within a year.

Specialty Coffee Market Insights

• Coffee consumption has risen to 62% daily among people, with a notable increase in younger consumers.
• Gourmet coffee demand is growing, with 59% of coffee consumed recently being gourmet.
• Major coffee shop chains: Starbucks (26,000+ locations), Dunkin’ (12,000+ locations), Tim Hortons (4,500), Costa Coffee (3,400), and McCafe (1,300).
• Single-owner and local cafes are thriving due to a growing support for local businesses.

Coffee Shop Location

• Potential storefront located on Main Street near the business school and downtown pedestrian mall.
• Retail space spans 1,000 sq. ft. with good visibility due to glass frontage.
• Nearby establishments include R.C. Fox Women’s Clothing, Salamanca restaurant, and Readerwise Booksellers.
• Annual rent totals $24,000 with monthly payments of $2,000, plus approximately $500/month in utilities.

Customer Demographics and Demand

• The target customer base includes businesspeople, students, and local residents.
• Long-term success depends on the quality of service, atmosphere, staff friendliness, and coffee pricing.
• Demand can also be influenced by advertising and promotions.

Operational Challenges

• Students are responsible for staffing, inventory management, and customer service.
• Importance of hiring quality part-time servers who work 10 hours weekly.
• Daily operations require careful management to handle customer rushes and staff productivity.

Financial Management and Marketing

• Initial weeks may see higher expenditures than revenues; profitability expected to grow over time.
• Managers must supervise operations before opening and after closing; a minimum of two managers is required.
• Pricing must be competitive, with sensory differences between cup sizes ranging between 20¢ to $1.00.
• Marketing options include a website and social media advertising, both vital for establishing a brand presence.

Performance Monitoring

• Use reports under the COMPANY menu to track performance, cash flow, and profitability.
• The Dashboard highlights overall cafe performance and industry rankings.
• The Checkbook aids in monitoring cash flow and ensuring enough funding for expenses.
• Evaluate sales through the Daily Receipts report, checking capacity vs. actual cups sold.

Inventory Management

• Weekly Purchases report helps manage stock levels; coffee inventory is perishable.
• Effective management of inventory is crucial to prevent wastage and ensure sufficient supplies for demand.