NORTH EASTERN MINDANAO STATE UNIVERSITY

Tagbina Campus
Bachelor of Science in Hospitality Management

In Partial Fulfillment of the Requirements in

Entrepreneurship in Tourism and Hospitality

TOPIC: FEASIBILITY STUDY OF COFFEE SHOP

Submitted by:

Ana Marie T. Samontina

3rd Year BSHM 3A

Submitted to:

Ms. Shara Jan P. Mendoza

Instructor

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 Table of Content

Executive summary 3

Justification and Objectives 3

Market feasibility 4

Existing Market Information 4

Supply and Demand Analysis 5

Technical feasibility 7

Product Service Technical Description 7

Financial feasibility 11-12

Organization feasibility 13

Conclusion 15

Reference page 16

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 EXECUTIVE SUMMARY

The Délicieux Café is envisioned to be the first class coffee shop serving the best coffee in
Barobo, Surigao Del Sur. Its mission is to make Délicieux Café to be competitive and well-known coffee
shop in the South. Its objective includes the improvement of quality of life by offering the
Barobohanon's employment opportunities. It also aspires to promote the native delicacies of the
Barobo.

In putting up a coffee shop that reflects the culture of Barobo greatly influenced the student
proponents to conduct the aforementioned study. The vending machines and any convenient store in
the Municipality of Barobo that can provide coffee but cannot accommodate the increasing number of
coffee drinkers. Thus, the Délicieux Café will surely be the one that will provide the service that they
can’t get from the said coffee distributors.

Justification and Objectives

The study aims to assess the feasibility of establishing a coffee shop in the Municipality of Barobo
and serve as a venue for socialization and at the same time provides employment for the Barobohanon
people. Also, the study aims to promote the native delicacies in the province.

 To be able to provide the customers with the best coffee.

 To be able to make the price of coffee affordable for the customers.
 To deal with honesty and fairness
 To ensure that our customers get the best service from us.

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 MARKETING FEASIBILITY

Existing Market Information

1. Product/Service Description

The chosen name of the business is “Délicieux Café”. The owners chose to put up a coffee shop
because of the rapid popularity of this business in the market. Coffee is also known for its antioxidant
which is beneficially good for the human health. The name “Délicieux Café" was formulated from the
word “cafe” which means coffee and “Délicieux” which means delicious that describe the feeling of the
costumers as they taste the coffee being served in the cafè"

2. Target Market

The major costumers of the Coffee Shop will be workers, people residing in the community, local
and even foreign tourists, and most especially students who want to drink delicious coffee as they do
their assignments while relaxing.

3. Supply and Demand Trends

Coffee shop is considered as a “third place”. It is the social surroundings separate from the two
usual social environments of home and the workplace. Coffee shop emphasizes on providing a free place
for social interaction which is highly accessible, offers inexpensive foods and drinks and brings about a
welcoming and comfortable environment.

The Philippines Graphic 2018 consumer report say eight out of 10 adults in the Philippines.
Philippines consumption of coffee continues to increase. Experts predict that the level of consumption
will follow population growth.

24-hour service coffee shops are expected to capitalize on the predicted stronger economic
performance in the Philippines. Increasing number of students and professionals employed in Laoag City
is projected to provide a fertile ground for establishing a coffee shop. It is also expected that as the pool
of higher income consumer widens, sales from this channel will grow.

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 The project’s primary source of supply is the Surigao Del Sur Robusta located in Siargao which
remained as the number one source of coffee beans, not only in the place, but of the entire province
and most parts of Southern Mindanao.

However, if the supplies coming from this company are not enough to provide for the existing
demand, the project alternative sources of supply are the Brew Central Coffee House.

Coffee Company (RMACC) which is found in Tuba, Benguet, and other local growers of coffee. As
for the food products, the ingredients are bought in supermarket in Gaisano Mall in San Francisco.

4. Competitor’s Current Marketing Arrangement

As the enterprise’s sale will reach its high peak, there’s no way to avoid the fact that in business,
there is always a competition.

Supply and Demand Analysis

Unforeseeable conditions such as calamities may alter the production of coffee beans. Agricultural
sectors will have a problem on meeting the expected demand of the public. Coffee shop industries will
experience shortage on their products since the ingredients to be used are not supplied on its expected
amount.

Prices can also affect the product supply of coffee shop industries. If there is a sudden increase in
prices of raw materials and the price is high, the buying power of the coffee shop will decrease causing
them to buy lesser than what is required. This will greatly affect the business through shortage on their
product supply thereby not meeting the expected demand of their customers. Product supply is directly
affected by prices of raw materials since fluctuations of prices cannot be avoided.

On the other hand, if the prices of these raw materials increased with a corresponding increase in
income, their buying power will not be affected that much since their income will be sufficient to buy
these commodities.

However, if the prices of raw materials decreased, food industries will take advantage of buying
more goods in order to meet the increasing demand. But the disadvantage of having low prices is that

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suppliers and producers tend to be discouraged to market their goods because they will not earn back
the expenses they incurred during the production/planting process. Therefore, the supply of the raw
materials will decrease.

Also, the number of producers in the market can affect the supply of products. If there are too many
producers in the market, product supply will also increase. Prices will also decrease, and consumers will
go to the one who offers the lowest price.

The number of competitors is also affected by the supply of raw materials. If there are too many
competing coffee shops in the market and a limited number of suppliers, there is tendency that supply
of the raw materials would not be met for each competing shop. It may also lead to the increase of
prices relative to the increase of demand for the product and will lead to a lower income for the coffee
shop.

Proposed Marketing Strategy

1. Channels of Distribution/Delivery System

The products of the coffee shop will be distributed only within the premises of the locality.

2. Product /Service Quality and Packaging

SUPPLIER PRODUCER END USER

With respect to the designs to be made and containers to be produced, our product will be packaged
through an intermediate containers such as cups for coffee and plates for the native delicacies.

3. Promotion

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 Storing
To enhance customer awareness, the coffee shop will distribute brochures which will show the
services and products offered by the business. Also, included in it are the promos that the coffee shop is
willing to give to their customers.

If possible, TV and radio advertisements will be made in order for the public to know more about this
and for customer acceptance as well.

Part of their promo is to provide loyalty card for each regular customer to earn points in order for
them to receive a reward, discount, or an incentive.

TECHNICAL FEASIBILITY

Product/Service Technical Description

The project will establish a coffee shop that will serve the best coffee and native delicacies of
Barobo. Its mission is to make Délicieux Café to be competitive and well-known coffee shop in the
Municipality. The consumers will buy coffee and consume it inside or out the shop.

Product/Service-Provision Processes

Operations Flow Chart

Purchasing

Receiving

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 Serving

Collecting

Clearing and Cleaning

Washing and Sanitizing

Baking and Cooking

Purchasing

Purchasing is the buying of materials of the right quality and quantity at the right time from the right
source at the right price. It requires the application of the food buying policies of the foodservice
organization based on the food budget. This is influenced by laws governing the buying of food, by the
availability and kind of storage space and by available sources of food supply.

Receiving

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Receiving part of the purchasing function which ensures what has been purchased is the same quality
and quantity with what is being delivered. This step should not be done during the busiest production
time so that there would be plenty of time for thorough inspection and the operations need not be
interrupted.

Storing

The goods received must now be judged according to the type of storage needed. Foods can be divided
into perishables and non-perishables. Perishable foods are those must be stored under refrigerated or
freezing conditions. Non-perishable foods are stored at room temperature. Proper maintenance of
proper storage temperature, humidity, air circulation and sanitation would preserve the quality and
quantity value of food.

Baking and Cooking

The proposed coffee shop offers pastries and native delicacies. These products are therefore produced,
baked, and cooked by the professional chefs. Cooking and baking is any process of applying heat to food
for the following purposes: 1) To ensure food safety, 2) For increased digestibility and aid in chewing and
swallowing, 3) To enhance flavor and related palatability factors, 4) To retain or add nutrients, and 5)
For aesthetic appeal by attaining the desired texture, form, or shape and color.

Serving

Proper delivery and service of safe foods and coffee to eat and drink after it has been prepared are
major aspects of the total food service system. Delivery, sometimes called distribution, refers to the
transportation of prepared foods from the place of production to the place of serving them. Service
includes activities of assembling the foods delivered in bulk to individual trays or covers.

Collecting

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Payments are received from customers after the orders are given to customers

Clearing and Cleaning

Clearing means getting all the leftover and the used dishes, glasses, cups and other table wares when
customers leave. After which, the table should be cleaned by a clean cloth.

Washing and Sanitizing

This process involves washing and sanitizing the dishes. It also involves wiping the dishes to become very
dry and be ready again in the next process.

Product/Service-Provision Schedules

The coffee and native delicacies will be produce in the shop. The daily production size of coffee is
estimated to be 1,000 serving based on the demand of coffee near the proposed location. Daily food
production size is 50% of the servings of coffee which is 500 servings

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 FINANCIAL FEASIBILITY

Modifiable Data

Land 1,000,000

Storage Building 500,000

Tools and Equipment 300,000

Furniture and fixtures 100,000

Salaries (monthly) 6,000

Utilities Expenses (monthly) 5,000

Fixed Expenditures(Years 1-5) 1,000,000

Production cost(year1) 700,000

Espresso sold(year 1) 18,600

Espresso sold(year 2) 37,200

Espresso sold(year 3) 55,800

Price per serving(Php) 50.00

Macchiato sold(year 1) 22,320

Macchiato sold(year 2) 44,640

Macchiato sold(year 3) 66,960

Price per serving(Php) 60.00

Americano sold(Year1) 33,480

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Americano sold(Year2) 66,960

Americano sold(Year3) 100,440

Price per serving(Php) 90.00

Cappuccino sold(year 1) 29,760

Cappuccino sold(year 2) 59,520

Cappuccino sold(year 3) 89,280

Price per serving(Php) 80.00

Affogato sold(year 1) 14,880

Affogato sold(year 2) 29,760

Affogato sold(year 3) 44,640

Price per serving(Php) 40.00

Chocolate Fudge sold(year 1) 5,580

Chocolate Fudge sold(year 2) 11,160

Chocolate Fudge sold(year 3) 16,740

Price per serving(Php) 15.00

Cheese cake sold(year 1) 5,580

Cheese cake sold(year 2) 11,160

Cheese cake sold(year 3) 16,740

Price per serving(Php) 15.00

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 ORGANIZATIONAL FEASIBILITY

Legal form of Business

Our legal form of business is “partnership” because in this situation we can easily get information
and other aspects that can affect our business. In putting up any business many problems will be
encounter. In this context, partnership is in advantage because these problems and risk are shared
among the partners. Problems will be solved as much as possible and improvements can be achieved
through more suggestions. In partnership, more “heads” contribute to the success of the business.

Organizational Structure

Organizational Chart

Managing Partner

Accountant

Assistant Managing Partner Assistant Managing Partner

for Production & Operations for Maintenance & Security

Security
Service Guard
Cook Pastry Chef Cashier Crew

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 Usually in partnership, management is headed by the managing partners. One partner is appointed
as General Manager whose duties and responsibilities are to plan, to organize, to direct and to control
the over-all operation of the business and creates long-term plans for the whole organization. He is
further assisted by the managing partners for Production and Operations, and Maintenance and
Security.

The Manager for Production and Operations is involved with the planning, coordination and
control of the production processes. They ensure that coffees are produced efficiently and that the
correct and perfect blend is achieved. Their typical works involved overseeing the production process
and ensuring that the production is cost effective, being responsible for the selection and maintenance
of equipment, and ensuring that health and safety guidelines are followed.

Under the Manager for Production and Operations is the Cook who is responsible in cooking the
delicacies offered by the coffee shop. The Pastry Chef is responsible in baking the pastries. The Baristas
are the ones who prepare the different varieties of coffees.

The Manager for Maintenance and Security oversees the non-production activities. Under him is
the Cashiers who are responsible in the counter to get payments from the customers. Service crews are
the ones in charge in clearing and cleaning the tables, as well as maintain the cleanliness and orderliness
of the coffee shop. Security guard assures the safety and security of the coffee shop.

The Accountant who is also directly responsible to the Managing Partner does the accounting,
reporting, administrative work, providing operations feedback, establishing order in the office, and
prepares Financial Statements.

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 CONCLUSION

The Project will provide an estimated 10 full time jobs. It will employ those living in Municipality
of Barobo and neighboring towns like Sanfrance and Tagbina and even from other municipality in
Surigao Del Sur, subject to qualifications. It is expected that this employment opportunity will result to
job security for people working in the food service industry. In addition, it is hoped that the coffee shop
will help halt the drain in the working force as people prefer to move outside the province for work in
the big cities only to end up as low-paid fast-food servers.

This was also an issue of logistics. It aims to employ people from within the province to ensure a
steady supply of labor. It will also help the Provincial Government of Barobo in eliminating too many
jobless Barobohanons.

As to taxes, the national government will benefit from the payment of taxes by the coffee shop.
As the coffee shop matures and prospers, the Bureau of Internal Revenue will increase tax collection
from the business.

The local government of Barobo will also benefit through the payment of licenses, permits and
municipal taxes. It is expected that this tax revenue for the national and municipal governments will lead
to the betterment of the lives of the Barobohanon people and the general increase in the standard of
living.

Furthermore, Délicieux Café believes in protecting the environment. It is the partnership’s policy
to ensure that the operations do not pollute the soil and air through proper disposal of solid and liquid.

References:

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H. D. Tacio(2018) Have a cup of coffee. https://philippinesgraphic.net

N. De Castro. Coffee Mate Café Feasibility Study. http://www.academia.edu

Philippines-Agriculture, www.Nations encyvlopedia.com

RUSH: Health Benefits of Coffee. http://www.rush.edu

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