FIRST ASIA INSTITUTE OF TECHNOLOGY AND HUMANITIES

S.Y. 2017 – 2018

A COMPARATIVE
ANALYSIS OF
COFFEE SHOPS
PERFORMANCE TASK

To be submitted to:
Dr. Merlita M. Durana
Submitted by:
Ma. Melanie Alyssa P. Mabalot

August 2017
 Table 1 Gathered data from 2 coffee shops along the area
Particulars CB Coffee Shop S Coffee Shop
(SMALL SCALE) (MEDIUM SCALE)
1. Number of cups of coffee 10 cups per hour including 20 cups per hour including
sold per hour takeout takeout
2. Number of operating hours 18 hours per day 18 hours per day
per day (6:00 AM – 12:00 AM) (6:00 AM – 12:00 AM)
3. Number of operating days 7 days per week 7 days per week
4. Gross profit ratio based on 60% 70%
sales
5. Operating expenses based 18% 22%
on sales
6. Selling price per cup ₱ 100 ₱ 100

To have an efficient comparative analysis, I inquired some important data from these
small-scale and medium-scale coffee shops that are significant for the assessment to be
completed. For further understanding, I prepared the following SCIs (Statement for
Comprehensive Income) for the two coffee shops. This will explain the approximate volume of
sales of the coffee shops per month. Also, this will display the gross profit that will help us
compute the cost of sales. Moreover, the SCI will describe the following incidental operating
expenses generated so we can obtain the net income of the coffee shops per month. After
discussing all these necessary particulars, we can attain the profitability of the business.
 Table 2 SCI of CB Coffee Shop

CB Coffee Shop
Statement of Comprehensive Income
For the month 31 August 2018
(In Peso Amount)
Sales ₱ 504 000.00
Less: Cost of Sales 201 600.00
Gross Profit 302 400.00
Less: Operating Expenses
Salaries Expense ₱ 18 000.00
Coffee Beans and Other Supplies 30 000.00
Rent Expense 10 000.00
Insurance Expense 7 500.00
Light and Water Expense 21 220.00
Taxes and Licenses 4 000.00 90 720.00
Net Income ₱ 211 680.00

Firstly, the Sales of CB Coffee Shop is computed from the number of cups sold per hour,
number of operating hours per day, number of operating days, and the selling price of each cup.
From the gathered data, the said coffee shop sells a cup for ₱100. Meanwhile, the coffee shop
sells 10 cups per hour including takeout, operates 18 hours per day (6:00 AM – 12:00 AM) for 7
days and 4 weeks per month. So if we multiply the figures (₱100 x 10 cups per hour x 18 hours
per day x 7 days per week x 4 weeks per month), we get gross sales of ₱ 504 000.00. This
amount is not bad for the rate of the sales per month for a small-scale coffee shop.

After getting the total sales, we can obtain the gross profit ratio based on the computed
sales. As stated from the table 1, the ratio of the gross profit is 60% of the total sales. This means
that if we multiply ₱ 504 000.00 by 60%, we will get the gross profit ratio which is ₱ 302
400.00.

Afterwards, we can get the cost of sales by simply subtracting the sales and gross profit
or by multiplying the total sales by 40% [(₱ 504 000.00 - ₱ 302 400.00) or (₱ 504 000.00 x
0.40)] and we can acquire ₱ 201 600.00.

After getting the gross profit of the business, we should obtain the generated operating
expenses that are to be subtracted from the total gross profit. As per the table 1 indicated, the
operating expenses is 18% of the sales (₱ 504 000.00 x 0.18) which is ₱ 90 720.00. For more
comprehensive analysis, the CB Coffee Shop indicated how they obtained the 18% as the ratio of
the operating expenses. They explained that they have 6 employees (3 employees per shift) who
get paid ₱ 3 000.00 per month with a total of ₱ 18 000.00. They also shared that they spend
approximately ₱ 30 000.00 for the supplies to be used in the business like coffee beans, cream,
and other office supplies needed to run the business. They also use the money for the rent of the
place and insurance of the business which is ₱10 000.00 and ₱7 500.00. Moreover, they also
consume ₱ 21 220.00 for the light and water as they are open for 18 hours per day. Lastly, they
pay ₱ 4 000.00 for the tax and license of the business so it can run for the following months and
year. After adding all the amounts, the CB Coffee shop garnered ₱ 90 720. 00 worth of operating
expenses.

After computing the operating expenses, the coffee shop collected a total of ₱ 211 680.00
of profit which is a pleasant amount of revenue for a small – scale coffee shop.

Table 3 SCI of S Coffee Shop

 S Coffee Shop
Statement of Comprehensive Income
For the month 31 August 2018
(In Peso Amount)
Sales ₱ 1 008 000.00
Less: Cost of Sales 302 400.00
Gross Profit 705 600.00
Less: Operating Expenses
Salaries Expense ₱ 45 500.00
Coffee Beans and Other Supplies 70 000.00
Rent Expense 15 000.00
Insurance Expense 15 200.00
Maintenance Expense 8 300.00
Advertising Expense 9 000.00
Delivery Expense 5 000.00
Light and Water Expense 40 260.00
Taxes and Licenses 13 500.00 221 760.00
Net Income ₱ 483 840.00

Just like how we computed the sales of CB Coffee Shop, S Coffee Shop’s sales is also
computed from the number of cups sold per hour, number of operating hours per day, number of
operating days, and the selling price of each cup. From the gathered data, the said coffee shop
sells a cup for ₱100. Also, the coffee shop sells 20 cups per hour including takeout, operates 18
hours per day (6:00 AM – 12:00 AM) for 7 days and 4 weeks per month. From that, we can
conclude that if we multiply the particulars (₱100 x 20 cups per hour x 18 hours per day x 7 days
per week x 4 weeks per month), we get gross sales of ₱ 1 008 000.00. Even though this coffee
shop is just a medium-scale of business, getting gross sales of a million per month is adequate.
 After getting a number of sales, we can obtain the gross profit ratio based on the
computed sales. As stated from the table 1, the ratio of the gross profit is 70% of the total sales.
This means that if we multiply ₱ 1 008 000.00 by 70%, we will get the gross profit ratio which is
₱ 705 600.00.

Subsequently, we can acquire the cost of sales by simply subtracting the sales and gross
profit or by multiplying the total sales by 30% [(₱1 008 000.00 - ₱ 705 600.00) or (₱1 008
000.00 x 0.30)] and we can acquire ₱ 302 400.00.

After getting the gross profit of the business, we should obtain the generated operating
expenses that are to be subtracted from the total gross profit. As per the table 1 indicated, the
operating expenses is 22% of the sales (₱1 008 000.00 x 0.22) which is ₱ 221 760.00. For more
thorough analysis, the S Coffee Shop indicated how they obtained the 22% as the ratio of the
operating expenses. Thus, the business firm explained that they have 6 employees – a store
manager, three (3) baristas, and two (2) delivery boy who get paid a total amount of ₱ 45 500.00
per month. They also shared that they spend approximately ₱ 70 000.00 for the supplies to be
used in the business like coffee beans, cream, milk, food supplies, and other office supplies
needed to run the business. Furthermore, S Coffee Shop also consumes the money for the rent
and insurance of the business which is ₱15 000.00 and ₱15 200.00 respectively. As they are
bigger on the scale than CB Coffee Shop, they have maintenance expense which is ₱ 8 300.00,
advertising expense such as tarpaulins and brochures for promos which sum up to ₱ 9 000.00,
and they also entertain deliveries so they have a delivery expense for gas which costs ₱ 5 000.00.
Moreover, they also pay ₱ 40 260.00 for the light and water as they are open for 18 hours per
day. Lastly, they pay ₱ 13 500.00 for the tax and license of the business so it can run for the
following months and year. After adding all the amounts, the CB Coffee shop garnered ₱ 221
760. 00 worth of operating expenses.

After computing the operating expenses, the coffee shop collected a total of ₱ 483 840.00
which is considered as a fair amount of profit for a medium– scale coffee shop.

ANALYSIS
 If you are going to invest for a coffee shop business, there are distinctive features for both
the small-scale and medium-scale enterprise.

For the small-scale coffee shop business, one of the advantages of this is that you just
need a small capital to start a business. You don’t need that much of money on the pot, just small
amount of investment and your coffee shop business will be running. Furthermore, small-scale
businesses are much easier to manage because you can closely supervise the whole shop. The
close relationship between the employer and employee is also an advantage because the
employer can look after the welfare of his employees and the employees will also consider their
work as a comfortable hobby and their work will go smoothly without any pressure.
Additionally, the operating expenses to maintain this kind of business is lower compared to
medium-scale business meaning you don’t consume that much of capital if you maximize your
resources and minimize the expenses. You only employ a minimal number of employees so the
salary pay is not costly and the supplies you need for inventory is nominal which is enough for a
small business. However, the profitability of this kind of enterprise is smaller than medium-scale
businesses. Of course, if you consider the total of sales in table 2, the medium-scale business
sells better towards the market as displayed on table 3 so it is natural for the small-scale coffee
shop to earn a lesser profit than medium-scale coffee shops. To sum up, small-scale coffee shop
means small capital, less amount of operating expense but generates small profit also.

In contrast, if you have the substantial capital to invest towards a business, you can go
with a medium-scale coffee shop. The starting capital of a medium-scale business can be
somehow costly than a small-scale one. In this type of business, you need more capital to have
more equipment and machineries but this can at your advantage as it helps you advance and
exceed your competitors. You also need additional workforce as the medium-scale business
performs more activities and tasks. However, you have more people working under you and your
job load and supervising responsibility can be reduced if you have efficient and hardworking
staffs that can work in their own creative way. Furthermore, as the scale of the shop got larger,
the operating expenses to maintain this kind of business is pricey compared to small-scale
business. You pay more personnel, inventory of supplies should be numerous, you also have
additional expenses for advertising, delivery services, and more payment for the electricity and
water. In spite of this, the good thing about investing in the medium-scale coffee shop is the
amount of the profitability. More investment equals more revenue, yes you heard that right.
Engaging in this kind of business makes you further experience the fruit of your labor as your
sales are higher and better than small-scale coffee shops. To conclude, medium-scale coffee
shops require you to invest a handful amount of money for capital and expenses but the result of
the profit will make you experience the real bounty you capitalized.

Either way, coffee shops business are on trend today. Many Filipinos are really engrossed
on having a coffee every day. Sometimes, people can’t go to work without the dose of their
morning coffee. You just need to consider some things in deciding whether to invest on a small-
scale or a medium-scale coffee shop. I have summarized the main points, benefits or demerits, of
the each type of business. I hope this will greatly help you in determining the size of the scale
you want to invest in because, under any circumstances, the success of the business depends
upon the one who will manage it.