Game of Scones Caf

Business Plan
Horia Herman, Amanda Arts, Robert Langner, Samiya Jahar, Ivan Ortiz

Wednesday July 22, 2015

Technological Entrepreneurship GEN TECH 3EN3
For Michael W. Piczak, Dipl. T., B. Comm., MBA
McMaster University, Hamilton, ON, Canada

Table of Contents

Table of Contents

Executive Summary

Company Profile

Marketing Plan

SWOT Diagram

Opportunities

Threats

Target Market

Market Potential

10

Methods of Identifying & Attracting Customers

13

Marketing Mix & 4 Ps

14

Promotion & Networking Plan

17

Operations Plan

20

Customer Service Plan

23

Financial Plan

29

Appendix

38

Citations

39

Executive Summary
Game of Scones Caf, board game and specialty coffee house, is determined to become a daily
entertainment venue for local coffee lovers and gaming enthusiasts, a comfortable place with an
inviting atmosphere to meet your friends or spend time with family. With the growing demand for
high-quality specialty coffee with an emphasis on excellent service, Game of Scones Caf will
gain advantage from its proximity to the Hamilton downtown core to build a base group of repeat
customers. Only the best prepared coffee in the area will be supplied to customers, complimented
with pastries, as well as board games, contests and live entertainment to keep the patrons engaged.
The company will operate a 1,257 square foot coffee bar within walking distance from downtown
amenities such as bus routes and parking, as well as embody its historic and retro style.

Company Profile
Company Name

Owners

Industry Type
Location

Game of Scones Caf

Horia Herman
Robert Langner
Amanda Arts
Samiya Jahan
Ivan Ortiz
Coffee & Entertainment
12 John Street North, Hamilton,On,Canada

Marketing Plan
Analysis of Target Market
I.

Purpose
The purpose is to outline the basics of Game of Scones Caf. This includes SWOT,
company statements, and the financial supportive research.

II. Mission
Provide good service to Game of Scone Caf customers and have an experience that entices
their return.
III. Vision
Game of Scone Cafs vision is to remain focused on hospitality and customer service,
specialty beverages, and its board games.
IV. Values
Specialty/fair trade coffee products
Large board game library
Reliable and knowable staff
Excellent customer service
Wide array of social and game events
The intended trading area is the Hamilton downtown core and its suburban surroundings. Most of
the business will be drawn from the allure of the downtown nightlife and persons interested in
alternative entertainment on the weekends.

SWOT Diagram
Opportunities

Threats

Constant releases of new board games (sales 2040% in the last four years)23
Increase in demand for a place to play board
games (20+ board game Cafs in Toronto vs. 1 in
Hamilton)25

Alternatives Arcades/ Video Games26

Other recreational/social activities28

Rapid expand of large coffee chains29

Board Game Friendly

Increase in demand for one on one interaction30

New coffees and coffee-like products

26

Decrease in video Game sales

Specialty Coffee is trending upwards12

Aggressive (marketing & advertising)

Expected 25% increase in coffee demand in

the next 5 years24
Strengths
- Location20

Weaknesses
- Limited consumers

Demand / Interest

Consumer Patience

Competitive Prices / Hours

Board Game Maintenance

Fun new idea for Hamilton

Non-alcoholic beverages

Larger variety of board games

Limited food option

Social events:

Inexperienced staff

Expensive compared to big name merchandise

live acoustic nights

coffee tasting
tournaments
-

Environmental conscience

Fair Trade coffee, sugar and cocoa

Organic Products

Additional products

Other baked goods

Opportunities

Constant release of new board games - in the last four years board game sales went up
20-40%23, indicating a consumer demand and supplier response. New iterations of old
board games as well as new ideas have hit the market and done well.

Increase in demand for a place to play board games9 - there is over twenty board game
Cafs in the Toronto area compared to one location in Hamilton. The Hamilton location
has done very well since entering the market, providing community incentives that have
been mentioned in the newspaper as well as all of the Toronto locations are still open for
business.

Increase in demand for one on one interaction30 - with the popularity of technological
advancements and increased use of automated services, people feel they are forgetting
what its like to have quality one on one interaction and is being highly sought after.

Decrease in video game sales26 - while usually steady sales are seen here, the availability
of free to play video games, increased price for gaming devices and a more informed
populous, video games sales have declined which may signal a change of entertainment
choices.

Increase in demand for specialty coffee30 - there has been a steady increase in specialty
coffee shops across Canada, from java to organic free trade coffee, as consumers try to
find better alternatives to large coffee chains and new exciting trends.

Threats

Alternatives - arcades and venues such as Playdium26 are a threat to the business as they
provide more exciting entertainment that may entice the newer generations.

Other recreational activities28 - there is competition in outdoor and other recreational

activities, especially during the summer months.

Large coffee chains29 - they are able to offer coffee at a lower price and faster service
which some people may be looking for.

Target Market
The Game of Scones Cafs target customer, is one who is actively seeking new sources of social
experiences. They enjoy caffeinated beverages and frequent cafs on a regular basis. They follow
social trends and enjoy retro activities. They are environmentally aware and respect free trade
products.
PRIMARY CUSTOMER PROFILE
Teens (15 - 19)
Young Adults (20 - 34)
Have low disposable income

Have high disposable income

Students looking for afternoon activities

In need of alternative entertainment

Active social lives and follow social trends

Enjoy busy venue and music

Likely to spend more on specialty

Looking for night and weekend activities

caffeinated beverages
Familiar with games and require little
assistance
Visit after school and on weekends

Likely to spend more on specialty

caffeinated and alcoholic beverages
Inexperienced with games and require
some assistance
Group mentality with potential to gather in
an entertaining establishment

SECONDARY CUSTOMER PROFILE

Matures / Families (35 - 64)

Families with children and higher disposable income

Looking for alternative entertainment to sports and crafts

Visit during weekend days

Likely to spend more on non-alcoholic beverages and food

Focus is on a child friendly environment

Environmentally conscious

Value healthy, green and organic options

Less likely to need assistance

Families of 4 or more with potential to spend less than two hours at the
Caf

Market Potential
To determine how much is spent on coffee annually in the proposed trading area. Focus is on
coffee consumers only.

(3 cups/day)3 x (365 days/year) x (0.56 coffee purchased from shop)3 x $2.38 drip coffee =
$1,459 annually, on purchased drip coffee

(3 cups/day)3 x (365 days/year) x (0.56 coffee purchased from shop)3 x $3.55 espresso
based coffee = $2, 177 annually, on espresso based coffee

Annual Average Coffee Expenditures = ( $1,459 x 0.207) + ($2,177 x 0.807) = $2,033 per
person

Target Consumer Population = (36,200 +100,470 +215,975)1 = 352, 645 males and females
aged 15 - 64 (Primary & Secondary Customers)

Annual Market Potential = Annual Average Coffee Expenditures x Target Consumer

Population = $2,033 x 352, 645 = $717, 927, 285

Market Share
To determine how much of the market Game of Scones Caf can reasonably take. There is only
one direct competitor in the Game of Scones Caf niche group (Gameopolis) which translates to a
very open market. Focus is on coffee competitors only.

Coffee Competitors in proposed trading area = 1394

Since, 70%5 of sales are generated from the top 50 coffee shop operators.
Market share for specialty Cafs = $716,927,285 x 30% = $215, 078, 200

Estimated Average Competitor Floor Space = 30ft x 50ft = 1500 sqft6

Game of Scones Caf Floor Space = 1257 sqft

Anticipated Market Share = Game of Scones Caf floor space / Total Competitor floor
space = 1257 sqft / (( 139 competitors x 1500 sqft ) + Game of Scones Caf floor space ) =
1257 sqft / 210, 900 sqft = 0.006 = 0.6%

Anticipated Share of Total Sales = Annual Market Potential x Anticipated Market Share =
$215, 078,200 x 0.6% = $1,290,469 gross annually

Targeted customers (30% @ Age: 14-641) per day = 352, 645 x 0.3 x 0.6% market share =
6347

Attracting 6347 customers and generating 1.29M gross from a newly established specialty caf
is unrealistic. Therefore more research has been done for better sales projection

Calculated sitting7 for the restaurant = ((1257 sqft 30% food prep space 10 sqft Shelving
10sqft entrance 18sqft counter) = 842 sqft/15 sqft per customer sittings = 70 customer
sittings

Customers per week8 = (70 persons/chairs x Monday to Wednesday 60% occupied chairs
x 2 times during the day = 70 x 3 x 0.6 x 2 = 252 person) + 70 persons/chairs x Thursday
to Sunday 80 % occupied chair x 3 times during the day = 70 x 4 x 0.8 x 3 = 672)

Customers per day = (252 + 672)/7 = 132

Based on customers correction factor = 6347/132 = 48.09

Corrected Annual income projection = $1,290,469 x 48.09 = $268,357

The number of competitors in specific niche group is one (Gameopolis) with events strictly
focused on board games and minimal food selection. Game of Scones Caf estimates that
its potential market share is at least 70%.

Methods of Identifying & Attracting Customers

To identify and attract Game of Scones Caf customers, several market strategies will be
implemented.
The name itself, Game of Scones Caf will attract customers. Theres a huge social following
for the HBO series Game of Thrones. Customers will choose Game of Scones Caf over the
competition because of the familiarity to the popular series.
The location of Game of Scones Caf will be in trendy downtown Hamilton. Downtown Hamilton
is currently undergoing many renewal projects that are revitalizing old historic buildings and
neighborhoods.

This is attracting young families, professionals, and trendsetters seeking

opportunities in new up and coming urban environments.

An interactive webpage will be created to attract attention to the mass of potential customers
surfing the web for a new hang out or past-time activity. The webpage would offer daily word or
number puzzles online to encourage people to revisit. A schedule of events will be highlighted
and will promote gaming tournaments, happy-hours, specialty coffee tasting nights, comedy and
acoustic music nights. A running blog with in-store game reviews with tips and tricks will be
included.
Game of Scones Caf will actively engage with the community and support local events. Free
wall space will be available for local artists, especially during events like the James Street Art
Crawl. Local musicians will be featured during acoustic nights and sponsored game nights with
charitable childrens groups like Big Brothers Big Sisters and Boys and Girls Clubs will be
organized.

Marketing Mix & 4 Ps

The focus of the Marketing Plan is to build hype and communicate an image and brand that is
respected and loved by the community.

Product Strategy
The Game of Scones Cafes product in its pure form, is an enjoyable social experience in
combination with high quality food and caffeinated/non-caffeinated beverages. The brand is
directly derived from its name. It suggests a fun, gaming element with a combination of food with
the use of the word scone. It is catchy and easy to remember due to its similarity with the highly
popular HBO series Game of Thrones. This provides many promotional possibilities without any
legal implications.
Product packaging is the physical environment as a whole. The location is found in a trendy up
and coming sector of downtown Hamilton on John Street North. It is in walking distance to James
Street, which is famous for artistic crowds and retro-seekers. Inside the caf, an extensive game
library will available to meet the needs of people of all ages. The layout will be casual with some
large oversized sofas, tables with seating up to four which can be manipulated to add tables for
larger groups. Some booths will be available around the perimeter with a stage for featured
entertainment. The caf will feature a bistro-style bar to showcase their coffee-baristas skills with
specialty coffee and the equipment used to prepare it.
Part of the Game of Scones Caf experience is its dedication to customer service and providing an
overall package that is enjoyable for all. To enhance the customer experience, a membership and
loyalty program has been developed. This gives more purchasing power and incentives for

frequent customers. The coffee and tea products sold have been thoughtfully selected. Game of
Scones Caf is committed to purchasing fair-trade and organic products with high quality and
exceptional taste. This commitment is not only for customers but also for providing producers
with better trading opportunities, while promoting sustainability in third world countries.

Pricing Strategy
Price determination is based on the follow the leader strategy; basing food, beverage, and game
rental costs similar to that of the competitors. Research suggested that the majority of sales in the
caffeinated beverage sector, which will be the main focus of sales for Game of Scones Caf,
follows an 80/20 ratio7. Where sales are focused 80% to espresso based drink and 20% to drip
coffee drinks. Following the metrics, the plan maker was slightly adjusted to fit the needs of the
Game of Scones Caf financial plan.
Cost ($) Price ($) Profit ($)
Drip Coffee (Avg.)

0.56

2.38

1.82

Specialty Coffee (Avg.)

0.77

3.55

2.78

Other Food (Avg.)

0.90

5.00

4.10

Game Rental (cover charge)* 0.00

5.00

5.00

* An hourly rate of $1/per person after the first hour is applied

Game of Scones Caf will actively follow a bundling strategy to encourage customers to buy into
the whole coffee and gaming experience. During times of peak sales, daily food and beverage
specials will be available, as well as combos that include a discounted hourly game rental or two
for one cover charge. With the combination of products and low marginal costs, sold during times

of high volume sales, higher margins can be reached. Further examples of this will be included in
active participation of the membership and loyalty program, which will offer exclusive deals and
points for redemption with purchases.
To increase margins, additional fees have been incorporated into game rentals and memberships.
A cover charge of $5 per person is initially charged to game renters with a time limit of one hour.
Once that limit is reached, each person is charged an additional $1 per each additional hour. This
fee will help go towards maintenance and up keep of the games in service. Membership fees will
also be applied to those who sign up. Options for membership include, but are not limited to
dropping the additional hourly charge and offering slightly discounted food options while playing
only. Individuals who are part of this program will be signed up to mailing list, which extends to
the promotional plan.

Promotional Strategy
Game of Scones Cafs plans to build brand awareness through several promotional and
advertising methods. In an age of technology, the most effect way to reach potential customers is
through use of social media and developing a website that is searchable and easy to use.
The advertising campaigns will be focused in the institutional perspective which will showcase
the caf and gaming experience as a whole. Individual product advertising is not feasible. Adds,
flyers, and small billboards will be purchased and/or rented. Examples of this effort would include:
Crossword or Sudoku puzzles sponsored in local newspapers, printed puzzle hand-outs with
coupons at libraries and sporting complexes.

Awareness will also be gained through active involvement in the community. Charitable gaming
tournaments will be hosted and local artists will be featured during nightly events. With this type
of involvement, Game of Scones Caf can seek out media attention through news sources like
CHCH and the Hamilton Spectator.

Promotion & Networking Plan

Monthly volunteer activities will be planned in the community, such as park clean-ups, soup
kitchen work and Habitat for Humanity. In addition to the monthly work, Game of Scones Caf
will donate any and all usable food items to local soup kitchens, such as Inn of the Good Shepherd,
etc.
The local media will be contacted for the Grand Opening. The goal is to be featured during a
CHCH news segment and also to get featured in an article in the Hamilton Spectator, as well as
other local newspapers.
Social networking accounts, such as Facebook, Instagram, Twitter, Yelp, and TripAdvisor, will be
opened to attract customers and offer incentives for visiting.
Pop-up Cafs will be established in malls, festivals, and parks for brief periods to increase our
brand exposure. During these events, we will serve a select range of coffee and tea-based
beverages with paired pastry treats to encourage the community to try our products. Quick-play
games would be available for further participation.
Memberships and loyalty cards will be provided to customers. Customers can accumulate points,
which can later be redeemed for food or game play. For a small fee, customers who sign up for

memberships will be provided exclusive offers and limited-time discounts. To promote

participation in our memberships, non-members are offered punch cards. For example, after five
scones have been purchased, the sixth is free, or one free game play after ten consecutive visits.
We will create partnerships with local businesses and who can distribute coupons to draw attention
to Game of Scones Caf.

Physical Distribution Strategy

To gain access to the fair-trade organic industry, Game of Scones Caf will partner with the
wholesaler Alternate Grounds. The decision to use a wholesaler, over all other routes (direct
channels or through brokers) is based on the fact that they are an existing business with an
established reputation and network. They have over 20 years experience and have done extensive
research into the producers they deal with. They purchased green coffee beans directly from coffee
cooperatives and roast them at their facility in nearby Toronto. The fact that they prepare these
products locally makes purchasing more accessible and reduces shipment costs.
The games library will be collected through a more creative route of distribution. To reduce cost,
a large majority will be collected through donations. Some games will be purchased through online
auctions, online ads, and garage sales. A relationship with several gaming wholesalers will be
established to acquire the remaining games. Having used games also emphasizes Game of Scones
Cafs commitment to recycling and having an environmentally eco-friendly mind-set.

Selling Approach
The main source of income will be dependent on sales from the caf. This includes coffee, tea,
espresso based specialty drinks, non-caffeinated drinks, baked goods, and light meal options. Our
commitment to high quality, environmentally friendly, and free-trade products will create a
trusting relationship and familiarize the brand with customers.
The selling approach is to up-sell and offer customers other products while enjoying their visit.
Knowledgeable staff will offer food pairings with their drink purchases. Quick-play gamessuch
as: Connect Four, Snakes and Ladders, Tic-Tac-Toe etc.will be suggested to the short stay
beverage only consumers. Coffee and game combos will be available. Incentive and loyalty
programs will be offered to increase their purchasing power as consumers and entice their return.
The game portion of this business will be rental based., offering an hourly rate per person for
usage. This rate will include a small fee which covers lost or damaged game pieces.

Operations Plan
This section is to be used as a snapshot of how the company will be structured. It is an execution
strategy of day-to-day operations for a successful business.

Location
Game of Scones Caf will be located in immediate proximity to the downtown core at 12 John
Street North, Hamilton, Ontario, Canada. With its historic appeal, and surroundings that include
large and small businesses alike, artistic influences and retro feel this is a perfect location to build
a customer base of those looking for alternative venues for meetings and entertainment.
With a total floor space of 1257 square feet, the leasehold agreement includes existing furniture,
bar and beverage equipment with a layout suitable for a board game Caf. The layout is comprised
of an open seating arrangement close to the entrance, beverage bar and board rental area near the
back and side, as well as an open space near the bar for live entertainment. This is a high traffic
downtown commercial area which is advantageous to the density of customers, it is easily
accessible by public transportation while providing moderate immediate parking as well as nearby
public parking on a designated lot and/or street.

Supply and Inventory Management

The chosen supplier, Alternate Grounds, is an existing business with a reputable background and
over twenty years experience. They boast a comprehensive network and have a facility in Toronto;
this is important to avoid supply disruptions, reduce shipping costs and build a strong local
relationship. They adhere to fair-trade organic products which is a key business strategy.

Effective inventory management is important to maintain a satisfied customer base and avoid
disruptions to service. A weekly inventory audit will be scheduled to avoid setbacks and
maintain adequate stock. After the first three months, average sales of product will have to be
assessed to better modify ordering schedule and avoid holding excess inventory of low sales
products. Game of Scones Caf will be implementing a Kanban system to aid in the managing of
inventory and production. As for board game management, a running list of popular games and
customer requested games will be kept on hand to allow for a visual depiction of what is offered
currently, what will be coming soon and what can be phased out.

Production
A plan will be produced to best utilize employee hours and maintain quality service for customers
through times of rising and falling demand. These trends will be analyzed in the first year of
operation

to

better

plan

ahead

when

new

employees

are

hired.

In terms of physical demands of production, three employees at the counter will effectively cover
complete orders for customers in a timely fashion. Depending on the items ordered, standard point
of sale equipment is used, followed by a trained barista who sees the order on a display screen and
proceeds to make the order utilizing specialty coffee equipment such as espresso and specialty
coffee machines. The third representative will be in charge of preparing the requested board game
and anything that may come with it. One or two servers, considering peak hours, will be
responsible for attending to tables and their orders. One daily manager will oversee the trained and
certified personnel to ensure quality control is being considered with every transaction while
follow up promotional surveys will supply feedback for improvement.

Organization
The Game of Scones Caf management philosophy and business culture can be summarized as
follows:

I.

Managers are leaders

Focus on people and personal development

II.

Enable employees
Position opportunities for success

III.

Equality and fairness

Treat people with respect and honesty

IV.

Communication for success

Avoid conflict and stay on track

V.

Quality above all

Maintains a satisfied customer

VI.

Positivity and inclusivity

Embody this to supply a welcoming environment

VII.

Adapt and learn

Change is inevitable

These are important to business success in how customers and employees are treated, and how the
Game of Scones Caf reputation will be built on.
Management responsibilities will fall to the owners as outlined below.

Customer Service

The Customer Service department

will oversee customer interaction at
the Caf level and will ensure they
keep up with industry trends and
customer feedback

Horia Herman
Customer Service Manager

Marketing

The Marketing Department will

focus primarily on promotional and
advertising incentives; including
online

Amanda Arts
Marketing Manager

Accounting

The Financial Department is

Robert Langner
responsible for moneys involved in Accounting Manager
any transaction with the Caf and its
employees
Samiya Jahan
Accounting Manager

Operations & Quality Control

The Operations Department will

oversee quality control and safety
concerns, as well as day to day
processes

Ivan Ortiz
Operations Manager

Human Resources

The Human Resources Department

is directly involved with hiring, and
dealing with internal and external
concerns with employees

Horia Herman
Human Resources Manager

Future Considerations
The caf will be owner operated, until such time that expansion or demand is peaking. A proposed
plan to hire full-time managers and part-time staff will be implemented when such time arises.
These persons will have the opportunity to apply in person, online or recommended through
approved agencies. They must meet general criteria for servers, cashiers and baristas and follow
the management philosophy. Compensation will be assessed based on experience. Employee
incentives will be put in place to retain valuable staff, training will be provided and employee
benefits for those on salary.

Customer Service Plan

Game of Scones Caf is an entertainment caf that relies deeply on its customer experience through
its large variety of board games, specialty food/beverages and diverse activities. Through them,
growth and success will be attainable for this business.

Principles
Services are based on customer feedback and on latest trends. Consumer opinion matters the most
when deciding what selection of board games the caf should have, as well as what type of events
should be hosted. Having a close connection with the costumers allows the caf to stay up to date
with the latest trending board games. Also, Game of Scones will be able to differentiate and attract
more clients by hosting events requested by them, such as paint night, tea/coffee tasting and live
music night (local bands). A closer relationship will be established with the customers by satisfying
their requests. Through them, Game of Scones Caf can grow and have a great distinctive
advantage over the competition.

Incentives
Game of Scones Caf will be offering a lot of incentives to attract and keep more customers. The
goal is to create a positive business to customer relationships. One way to achieve that is by
creating a membership system where the customers can gain points through their purchases.
Another incentive that Game of Scones Caf will offer is coupons, to different events and discounts
to other stores by creating partnerships with the local small business community. It will gain

popularity by attracting customers from other markets and also ensure that the current customers
benefit from that as well.

Membership
Game of Scones Caf will have a membership system for its regular customers. Upon creating a
membership for a small fee, the client will receive a free board game night, in which he/she will
not have to pay the standard board game fee. With each food or beverage purchase the customer
will be able to use the membership to gain points. The accumulated points can be used to get a
free board game night access, free beverages or win a free board game. Non-members are
offered punch cards. After five scones have been purchased, the sixth is free, or one free game
play after ten consecutive visits.

Members
6250
5000
3750
2500
1250
0
January

March

May

July

Members

Figure 1: Anticipated Members

September

December

PURCHASE

POINTS

Board game hour

50

Beverage Small

10

Beverage Medium

15

Beverage Large

20

Food

30

POINTS

PRIZE

300

Free board game night

100

Free beverage

500

Free board game

Board Games
In order to ensure that the games meet the customer demand, Game of Scones Caf will have
surveys, in which the clients can suggest board games that they would like to play. The staff will
be responsible for verifying that the board game has all the necessary pieces before and after a
customer uses it. This way, Game of Scones Caf will be able to ensure that no customer will have
a bad experience while playing the game. The caf will also research and keep up to date with the
latest and most popular board games to continue entertaining the clients and also create a very
distinctive game library. In addition, to ensure that no customer will be disappointed, Game of
Scones Caf will have at least two of each game.

Weekly Events
Every Friday night, Game of Scones Caf will be hosting events. Through them, it will gain
awareness, attract more clients and also improve its customer experience. Every week, a lottery
draw will be hosted, in which the event participants could win a free board game.
Game of Scones Caf will be hosting the following events:
I.

Coffee Tasting

II.

Live Karaoke

III.

Live Local Band

IV.

Comedy Night

V.

Charity Tournament Night

Specialty Tea/Coffee
The business is very aware of the environmental and ethical problems around world. It will be
providing fair trade coffee, sugar and cocoa. The specialty drinks will attract customers who enjoy
specialty coffee/tea and are environmentally concerned. The goal is to differentiate and attract
customers through delicious and special drinks.

Staff
Game of Scones Cafs staff will be welcoming to each of the customers with a big smile and will
treat them with courtesy and respect. They will always know that the customer is always right and

that they play an important role toward business success. They will also be trained to know how
each one of the board games should be played. The staff will be able to provide answers to our
customers questions and concerns.

Online Website
Customers will be able to access our website, view the board game library, write reviews about a
specific game, read the rules of and also be able to keep up to date with the latest board game
arrivals. The webpage will offer daily word or number puzzles online to encourage people to
revisit.

Keeping Customers Close

Game of Scones Caf understands that the vast majority of its customer are teens and young adults.
The business will be able to stay in touch with them through social media. It will have a Facebook,
Instagram, Twitter, Yelp, and TripAdvisor account in which it will be posting upcoming events,
new board game arrivals and also receive customer feedback. The cafe will learn and listen to
customer suggestions and implement them for a better experience.

Financial Plan
Start-Up Costs
The total value of assets required at start up for Games of Scones Cafe will be $124, 230. This
covers the current assets, pre-paid expenses, fixed and other assets. 75% of the start-up costs are
fixed and other assets; this includes all coffee equipment, furniture, millwork and re-modelling.
The leasehold improvement, machinery and equipment, and furniture percentages are lower than
normal because the location/space proposed requires a minimal amount of improvement and the
other assets are from personal collections or donation. The remaining 25% accounts for total
current assets and pre-paid expenses; this includes cash on opening day, rent, insurance and
licensing. The pre-paid expenses are minimal with start-up because the caf will be owner operated
and salary less. The percentages of each aspect at start-up are outlined in Figure 2.
0% 6%

12%
0%

22%

13%

0%

17%
30%

Cash & Bank Accts.

Inventory

Prepaid Expenses

Land & Buildings

Furn. & Fixtures

Leasehold Improv.

Vehicles

Other

Figure 2: Start-up Cost Pie Chart

Machinery & Equip.

Sales Projection
Game of Scones Caf Target Customer Population
Total Number

Population

Description

14-19 year old1 (Primary)

36,200 Based on Census 2011

20-34 year old1 (Primary)

100,470 Based on Census 2011

35-64 year old1 (Secondary)

215,975 Based on Census 2011

Total Customers

352,645 Based on Census 2011

Targeted customers (30% @ Age: 14-64)

105,793 Calculated based on Census 2011 Data

Table 1 - Target Customer Population

Game of Scones Cafs Operation Data
Total days annually

312 Based off of 6 day business week

Hours of operation per day

13 Industry practice

Required number of product to be sold per

12 Carried over from above

hour
Number of coffee person during operating

3 Based on Coffee Association of Canada

hours
Required customers per hour

4 Calculated by required # of products to be

sold divided # of coffee per person

Table 2 - Operation Data

Market Potential
Total Number of Customers

105,793 Carried over from above

Annual spending by Canadians

2,033 Based off of study done on average annual

on coffee ($) per person

Calculated value of market ($)

spending of Canadians on coffee

215,078,200 Calculated by multiplying avg. annual spending by
total number of customers

Estimated market share (%)

0.6 Estimated based on sq. footage vs competitors

6348 Projected by multiplying % of market share by the

Projected number of customers

total # of customers per day

132 Calculated on Market Share analyses based on

Average number of customers

per day
Projected annual income ($)

Dynamic Business Plan8

268,357 Calculated by dividing market share by value
correction factor for customers

Price of product7 ($)

3.78 Average price for coffee (Based on CoffeeTalk,

2015), Food, and Cover charge

Required number of sales per

year
Required Number of sales per
day
Required Number of sales per
operating hour
Table 3 - Anticipated Market Potential

70994 Calculated by dividing projected annual income by

average product price
227 Calculated by dividing required # of sales
by # of operational days
17 Calculated by dividing required # of sales by hours
of operation

MONTHLY SALES PROJECTION

$38,750

Sales (CAD)

$31,000
$23,250
$15,500
$7,750
$0
SEP

OCT

NOV

DEC

JAN

FEB MAR
Month

APR

MAY

JUN

JUL

AUG

Figure 3: Monthly Sales Projection

Cash Flow
The net cash flow fluctuates based on factors affecting sales of each month such as weather,
holidays and summer vacation, and company growth. Cash flow is steady after start-up with
advertising fizzling out and annual premiums paid for. At the end of the fiscal year there is a large
drop in cash flow due to the payment of income taxes. The net cash flow per month is represented
in Figure 4.

MONTHLY NET CASH FLOW

Net Cash Flow (CAD)

$30,000
$24,000
$18,000
$12,000
$6,000
$0
SEP

OCT

NOV

DEC

JAN

FEB MAR
Month

APR

MAY

JUN

JUL

AUG

Figure 4: Monthly Net Cash Flow Year 1

Income Statement
At start-up, the board game caf will do its best being that it is a new item to downtown Hamilton.
In the follow year the sales will decline but stay steady every year after. The gross margin and
income/loss before tax will also see the same decline and stay steady but proportionate to the yearly
sales.

SALES, GROSS MARGIN & NET INCOME - YEARS 1-5

Annual Sales (CAD)

$400,000
$320,000
$240,000
$160,000

$80,000
$0
Year
Sales

Gross Margin

Income/Loss Before Tax

Figure 5: Sales, Gross Margin & Net Income Years 1-5

Balance Sheet
The retained earnings grow from $256,738 at the end of year 2 up to $554,100 at the end of year
5. The earnings grow 115% with a minimal amount of re-investment and draw on credit. By year
5 all loans will be paid off., indicated in Figure 6.

Retained Earnings (CAD)

RETAINED EARNINGS

$554,100

$600,000
$456,332
$450,000

$356,738

$256,738
$300,000
$150,000
$0
2

4
Year

Figure 6: Retained Earnings

Breakeven Point
The breakeven point at the end of year 1 is $80,563 or 19,754 units. Represented in Table 4 and
Figure 7.
Game of Scones Caf
BREAKEVEN POINT CALCULATION FOR YEAR 1
YEAR 1 FIXED COSTS (Yr. 1 Inc. Stat.):

$70,980

UNIT CONTRIBUTION
Average Unit/Customer Selling Price:

$4.08

Less: Average Unit/Cust. Var. Cost:

$0.49

Unit Contribution:

$3.59

BEP = TFC/UC =

19,754 UNITS/CUSTOMERS

BEP ($SALES) = BEP(UNITS/CUST.) X USP =

$80,563

Table 4: Breakeven Point

BREAKEVEN POINT
$130,000.00

CAD ($)

$106,250.00
BEP, 80562.3614

Expenses
Sales
BEP

$82,500.00

$58,750.00

$35,000.00
5000.

11250.

17500.

23750.

30000.

36250.

# of Units Sold

Figure 7: Breakeven Point Graph

Financial Ratios
Game of Scones Cafs gross profit margin and net profit margin are 88% and 62% respectively.
This indicates that the caf is very profitable. The Return-on-investment at the end of year 1 is
66%, this shows that the investment gains compare favorably to investment cost. The investment
is very efficient. After year 1, the caf will have a networking capital of $219,304, allowing for an
opportunity to expand. The caf has a debt ratio of 0.18 and debt-equity ratio of 0.22, this signifies
that the caf is less dependent of leverage. Detailed financial ratios shown in Table 3.

Game of Scones Caf

KEY BUSINESS RATIOS AT END OF YEAR 1
Profitability Ratios
Gross profit margin = gross profit/sales =

87.48%

Net profit margin = net profits after taxes/sales =

62.09%

Return on investment (ROI) = net profits after taxes/total assets =

65.75%

Return on equity (ROE) = net profits after taxes/owners equity =

80.31%

Liquidity Ratios
Net working capital = current assets-current liabilities =

$219,304

Inventory turnover = cost of goods sold/average inventory =

36.6 times

Average age of inventory = 360/inventory turnover =

10 days

Debt Ratios
Debt Ratio = total liabilities/total assets =

0.18

Debt-equity Ratio = long-term debt/owners' equity =

0.22

Table 5: Financial Ratios Year 1

Appendix

Total population of Hamilton Ontario in 2011 - 519,9501

Total population of Hamilton Ontario in 2006 - 504,5601

Population is growing ( 3.1% in 5 years)1

Combined males and females in Hamilton Ontario in 2011 aged 15-34 1366701

Combined males and females in Hamilton Ontario in 2011 aged 35-64 2159751

In 2011, the number of census families in Hamilton was 144,120, which represents an
increase of 2.4% from 20061

Ontario familys average food expenditures increased by 4.8% in 2013 from 2012
Recreation expenditures increased by 11.0% during that same period2

56% of coffee purchased prepared is bought at donut or bagel shops3

The average Canadian drinks 3 cups of coffee a day3

139 coffee shops in Hamilton (only one coffee shop has Fair Trade coffee, in-store seating,
organic selection, Wifi) & one board game Caf4

Estimated Competitor Floor space calculated through Google Maps5

Citations
1.
2.
3.
4.
5.
6.
7.

Statistics Canada, Census, 2011

Statistics Canada, Household Spending and Savings, 2015
Coffee Drinking Association, Canadian Coffee Drinking Study, 2011
Findmecoffee, Coffee Shops, 2015
Statistics, Brandon Gaille, 2013
Google Maps, Earth View, 2015
http://www.dynamicbusinessplan.com/realistic-number-of-customers

8. Coffee Talk, Coffee Shop Ratio that Boosts Profits by 50%, 2015
9. http://www.cbc.ca/news/canada/hamilton/news/couple-rolls-the-dice-on-hamilton-s-firstboard-game-caf-1.1406624
10. http://www.canadiangrocer.com/uncategorized/crazy-for-coffee-11529
11. http://www.investopedia.com/financial-edge/0709/the-real-cost-of-drinking-coffee.aspx
12. http://www.coffeeassoc.com/coffee-in-canada/canadian-coffee-drinking-study-2011highights/
13. http://www.thestar.com/business/small_business/leadership/2011/10/13/standing_out_in_a_c
rowded_coffee_market.html?referrer=http%3A%2F%2Ft.thestar.com%2F
14. https://www12.statcan.gc.ca/census-recensement/2011/as-sa/fogs-spg/Facts-csdeng.cfm?LANG=Eng&GK=CSD&GC=3525005
15. http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil130g-eng.htm
16. http://www.rcinet.ca/en/2014/01/29/statistics-canada-canadian-household-spending/
17. http://www.bplans.com/coffee_shop_business_plan/company_summary_fc.php
18. http://brandongaille.com/25-coffee-shop-industry-statistics-and-trends/
19. http://www.findmecoffee.com/
20. http://spacelist.ca/p/on/hamilton/12_john_st_n
21. http://www.alternativegrounds.com/about-us
22. http://magazine.coffeetalk.com/may13-boost-profits/
23. http://www.theguardian.com/technology/2014/nov/25/board-games-internet-playstationxbox
24. https://www.specialtyfood.com/news/news-center/article/coffee-consumption-increase-25-5years/
25. http://www.blogto.com/eat_drink/2014/06/the_top_20_bars_and_cafes_for_board_games_in
_toronto/
26. http://www.homemediamagazine.com/financial/march-video-game-sales-decline-6-35684
27. http://www.playdium.com/pricing_portal.php
28. http://www.outdoors.ca/en-CA/Articles/FamilyActivitiesInCanada.aspx
29. http://listdose.com/top-10-largest-coffee-chains-in-the-world/

30. http://www.prevention.com/sex/friendship/how-reconnect-friends-family-and-yourcommunity