1.

Name,objectives and location of our firm

a) Background of our firm
We have noticed that there are over 1500 cats abandoned by their owners and
rescued by inspectors on the streets annually,according to SPCA.Although the
situation of stray cats is horrifying,most people still choose to buy their pets in a
pet shop,resulting in the decreasing number of stray cats being homed. We,as
cat lovers,are sad for this and we are willing to help them.Therefore,we will use
this 1 million money capital to run a cat cafe and we are hoping to earn enough
profit to support our daily operations and the expense spent on the cat
equipments by selling drinks and snacks to our customers.

b) Our business objectives

● To help stray cats as much as we can
We will try to ease the horrifying situation by adopting over 10 stray cats
from SPCA and keeping them in the cafe.Apart from this,while providing a
good environment for the better growth of those stray cats,we also aim to
raise people’s awareness about the problems that the cats are
encountering,encouraging customers not to abandon their pets so
easily.At the same time,we would ask customers for funding and we will
use most of our revenue to spend on the food and care to the stray cats.
● To provide a good opportunity for customers to interact with cats
We understand that most families in Hong Kong are willing but not able to
take cats as their pets due to the lack of space.Therefore,our firm is
encouraging these types of families to come to our shop.We can ensure
that they can have fun with the cats while having our good cuisine in our
shop.

c) Firm’s name and its origin

Our cafe’s name is Cat City.There are two reasons why we have this
name.Firstly,our cats have never stayed in a home which really belongs to them
so we want to create a place which is really for cats to live and grow up.The
name ‘Cat City’ has emphasised our aims. Secondly,it has also cemented the
enormous amount of our cats,attracting more people to come to our cafe.

d) Our firm logo

In our logo,there is a cat sleeping comfortably next to a hot coffee.Coffee is a
symbol of our cafe.We aim to give our cats a warm and comfortable life in our
cafe and this logo symbolises our hope.
 -our logo

e) Location of our cafe

● We are planning to set up our cafe in the Mills in Tsuen Wan,which its
exact location is as follow:

-The Mills is right opposite to Discovery park (one of the land mark in Tsuen Wan)
● Reasons why choosing Mills as our firm’s location
❖ the location of Tsuen Wan
It is located in the centre of Hong Kong with a great transportation
network.We believe that with such a fantastic location,our
customers will have an easier access to our cafe and result in a
greater turnover.
❖ the nature of the building
The Mills is a building famous with so many pet shops or animal
cafes.It can already attract so many pet lovers to the building so
that our advertising cost can be reduced.
❖ Reasonable rent
According to the Midland Realty website,the rent for a flat with 800
feet is around $18000 per month which we think is affordable.

-the rent for the flats in the Mills

2.The form of business ownership of Cat City
Cat City is operated as a partnership,which its advantages and disadvantages are listed
as below:
● Advantages
❖ Inexpensive and simple set-up procedures and lower profit tax rate
This can help us to save up capital for better renovation and buying a
better variety of food.
❖ A wider scope of specialisation
With a wider scope of specialisation,each of us can help in different areas,
such as waiter and dishwasher. As there is no separation of cafe's
ownership and management, we will have a stronger incentive to improve
efficiency and we are more willing to create new ideas for the menu and
take care of the cats.
❖ A closer relationship with employees and customers
We also have a higher chance to attract stable and loyal customers and
employees as our interaction may be improved in this way.
● Disadvantages
❖ Suffer a separate legal status and unlimited liability
We will have full responsibility if there is a problem with the contracts of
the food supplier and the cafe's debts.
❖ No lasting continuity
The cafe will end if one of the teenagers goes bankrupt, dies or withdraws
from the business.
❖ Difficult to transfer the business
If the cafe is having a financial problem, it is more difficult to transfer the
business and let the others take care of the cats as it requires the consent
of all partners.
● Reasons why we choose set up a partnership
We understand that Cat City,as a partnership,has a high chance to
end.Also,we,as its owners, may suffer a heavy debt as a result. It is risky,but,we
understand the huge amount of requirements needed to be met and the amount
of capital we need to set up a limited company.We,as teenagers,do not have
enough capital to set up one.Therefore,we take partnership as the form of Cat
City and we aim to use our capital to provide services with higher quality instead.
1.Set-up cost of Cat City
The set-up cost of our cafe is formed by two parts,including:
a) Business registration fee
Unlike a limited company,a partnership simply needs to obtain a business
registration certificate and register the business in the inland revenue
department.According to the Inland Revenue Department, there are two types of
business registration certificate, namely 1-year certificate and 3-year
certificate.As we aim to have a sustainable growth of our cafe,we will apply for
the 3-year certificate which will cost us around 5650 dollars.
The fee table for the business registration certificate is as follow:

1-year 3-year
certificate certificate

Fee Levy Total Fee Levy Total

$2000 $150 $2150 $5200 $450 $5650

b) Construction fee and cost of furnitures

In total,the set-up cost of Cat City is around $250,000.

3.Interior decoration in the cafe

-the floor plan of Cat City

Referring to the floor plan,different features in our cafe will be explained from points to
points (labelled in the plan from i to viii).
i) An enormous shoe rack

Customers will have to take off their shoes

before entering the hall in order to ensure a
more clean and comfortable environment for
them to dine and interact with our cats.During
their dining time,we will keep their shoes in the
shoe rack and we will also have a bench next to
the rack for them to take of their shoes.

Price(According to ikea):around $800

ii)Furniture for cats
-MyZoo Ocean Rover -Cat Tunnel

-Cat Cylinder -Cat table

These furniture are designed for cats to have a rest and play there.They are placed in
front of the dining table in order to let our customers take a close look at them.
Price(According to Three Little Meow 貓傢俬):Around 5000 dollars in total

iii)Dining tables and seats

We will use dining tables and seats with a casual style
in order to provide a harmonious surrounding and let
our customers loosen up themselves while having our
cuisines.Their dining experience will be more pleasant
in this way.

Price(According to Ikea):Around 700 dollars per set

iv)Carpet covered on the floor

We will use this type of carpet to cover the floor in

our hall.Due to its texture,sitting on it will give us a
comfortable feeling.Therefore,our customers can
comfortably sit on the floor and can play with our
cats more easily.

Price(according to carousell):$20 per 1

v,vi,vii) Kitchen

We aim to have a kitchen like the one shown in the photo above.Having a big table in
the centre,adequate cooking utensils,an oven etc. ,we also plan to have a pantry
preparing our drinks for our customers.With this kitchen,we hope we can have a better
efficiency to prepare and deliver the food to our customers.

Estimated cost for the kitchen: Around 30000 dollars

viii)beds for cats

It is very important to have a good living space

for our cat’s growth.Therefore,we are planning
to buy a number of cat round beds.We also
place a litter box to prevent them from littering
everywhere and polluting the living
environment.

Price(According to Three Little Meow 貓傢俬):

Cat beds:Around 300 dollars per one
Cat littering box:Around 800 dollars per one

-Expectations for the look of Cat City

2.Monthly operating cost and revenue of Cat City
There are so many things to spend capital on when we start to run Cat City.These all
lead to an extremely high operating cost per month.These costs can be classified into
fixed cost and variable cost,and they are listed as below.

a) Fixed costs
● Wages
Regarding the wage , we will hire a chef and two cat carers and we will
adopt a time rate as our wage payment method which they are paid based
on their working hours and we are going to pay them on a monthly basis.
When we decide to adopt a time rate , we consider its advantages and
disadvantages . First and foremost, the main reason we adopt time rate
for our wage payment instead of others wage payments because it can
ensure the product quality is stable and high , with time rate , chef doesn’t
need to hurry and he can cook and make dessert, drinks and cat food
more serious which carer can pay more attention to take care of our cats.
In addition, adopting a time rate for our wage payment can lower the cost
of calculating wages as we don’t need to measure chef and carer exact
contribution but only need to count their working hours.
However there are also disadvantages. Since we adopt a time rate in
which chef and carer income doesn’t depend on their contribution, they
may shirk and the quantity of food will be lower.As disadvantageous as it
may seem,there is always a way to solve the problem.To prevent the
situation from happening,we will supervise them by ourselves regularly
and ensure the high quality of services.
As mentioned above,we will adopt a time rate in which the hired chef and
the carers will receive $20000 and $23000 as their salaries per month
respectively.
● Rent
As mentioned above,we will rent a unit of around 800 feet in the Mills.The
rent there is around 80000 dollars per month.
● P.S. A fixed cost is the cost which would not vary when our output
increases.
b) Variable cost
● General expenses spent on cats
- Cat food
Food is important for the growth of our cats so we are going to buy
Purina Pro Plan Complete Essentials Chicken Entrée in Gravy Wet
Cat Food.According to New York times,it is recommended as one of
the best cat foods in the world. This brand,Purina employs full-time
veterinary nutritionists and invests heavily in research and
development so we are very confident in the quality of this cat food
and we think our cats will absolutely love it and it will benefit the
growth of our cats.We estimate that we will buy around 300 cans of
food per month.(Around 20 dollars per one )

-Perina cat food

- Pet curing fee

It is easier for cats to get illnesses than humans.Also,our cats are
used to be stray and they would have so many bacterias on their
bodies.They have a higher risk of being sick.Their health is very
important so we will spend some costs on taking them to see a vet
once they are sick even if the costs are extremely high.

● Overtime working payment for employees

Except for customers,it is also important for owners to maintain a great
relationship with our employees.We understand their harsh work so we will
also provide OT payment to them to appraise their good working
performance and to maintain their loyalty to Cat City.
OT payment:$80 per hour
 ● Water and electricity fee/gas bill
To maintain a smooth operation and production of our products,electricity
and water must be needed .We have to pay a cost for that.It is estimated
we have to spend around $15000 on electricity,$2000 on gas bill and
$1000 for water fee per month.

● Ingredients
As mentioned above,we will source some high-quality ingredients from all
around the world such as eggs from the Netherlands,chicken nuggets
from Taiwan etc. High quality ingredients always cost more so we expect
we will therefore spend around $30000 for our ingredients which is already
a big amount for us.

The total estimated amount of cost is listed below,

c) Monthly revenue
To maintain our daily operation,we hope under a popular trend of cat cafes,Cat
City can attract more visitors so that we can meet our target revenue which is
$5500 a day.With that amount of revenue,we can cope with the monthly
operation cost and have a better development of our cafe.
a) Types of products and services we will provide(what to produce)
● Products
- Fried food
We understand that nowadays,both kids and parents love eating
fried food. To ensure our customers can have their lunch with their
family more happily,we have prepared different kinds of fried food
like fried onion rings,etc. at a reasonable price.
- Dessert
According to different research,they point out that eating sweet
treats releases those feel-good dopamine brain chemicals that
bring us happiness.Yet,it is difficult to make a sweet dessert at
home and try the joyful feeling.So,we would like to prepare some
delicious dessert like Souffle etc for our customers to enjoy and we
aim to let our customers play with our cats more happily while
having sweet desserts.
- Special drinks
It is always missing something if we only have fried food or
desserts.It must be a drink! So,we will prepare different kinds of
drinks like coffee,cola and soda for customers to enjoy.

● Services
- Cat accompany services
As mentioned,we will keep around 10 cats in our cafe.We will put 3
to 4 cats in the hall,interacting and accompanying with our
customers.At the same time,we will monitor their body situation.If
they are sick or sound tired,we will not put them in the hall,but
instead,let them to have a rest in their cat beds or immediately take
them to the clinics.
- Food delivery services
When the food is ready in the kitchen,customers don’t need to take
their food back to their seats again.Instead,we will have our waiter
take the dishes to customers efficiently in order to ensure a
pleasant dining experience for customers.
- P.s. These services can be enjoyed freely once our visitors order
our food or drinks.
-our menu
a) Our target customers(for whom to produce)
● Citizens who love cats
Hong Kong is a small place so it is difficult for people to take cats as pets
although they are willing to have one.Therefore,as we have around 10
adorable cats in our cafe,we hope to attract more cat lovers to visit our
shop while they can enjoy having fun with our cats.
● Citizens who would love to support stray cats
We believe that many citizens know the problem of stray cats but don’t
know how to help them.As mentioned,our cafe will use most of our profit to
help stray cats and we are one of the ways to help them.We would like to
attract these citizens to visit our cafe and we will also ask them for
donations to help the cats.
● Couples
We understand that when couples want to have a date,it is the most
difficult to find a place for them to meet.The dating place has to be
quiet,with fewer people and to be comfortable.And our cafe is full of
cats.Sitting on the comfortable carpet and looking at those adorable
cats,couples can more focus on their dating experience and have a good
memory with each other.Therefore,we hope, with such an environment,we
can attract more couples to visit our cafe.

b) Production of products (How to produce)

- Fried food

Name of cuisine How to produce?

Fried onion rings We will source onions made in Taiwan.Cut

them into rings in shape and put them into hot
oil.We also place some tomato sauce next to
the cooked onion.

French fries We will source potatoes around the world like

France,US and Australia etc.Cut them into
pieces and put them into the hot oil.A dish of
french fries is finished.
 Popcorn chicken We will source chicken nuggets from a
Taiwanese supplier which also provides
nuggets to Mcdonald to ensure the high
quality of the cuisine.Fry the nuggets with little
bread inside.We will add some sauces next to
the fried chicken.

Greedy Platter A dish mixed with th cuisines above

- P.s. we will source some fryers from a Japanese brand Thanko and we will
use the fryers to fry the food above.

- Dessert

Name of cuisine How to produce?

Tiramisu We will source the biscuits from Italy.Add a

mixture of cheese,egg yolk and sugar on
it.Freeze it in the refrigerator for some time
and tiramisu is finished and is ready to be
served.

Souffle We will source eggs in Netherland.Mix its egg

white and egg yolk together and bake it in the
oven.The soft and yummy souffle is finished
then.
 Cheese cake We will source cheese from the US,eggs from
the Netherlands and flour from Taiwan.Mix
them up and cover on a biscuit.A cheesecake
is then finished.

Creme Brulee As usual,we will still use eggs from the

Netherlands.Mix the egg white and the egg
yolk in a small container.Heat them in the oven
and cool them down.Add yellow sugar on the
top and burn it using a blow torch.A creme
brulee is done.

P.s. We will source an oven from Japan to bake the desserts,a refrigerator
to keep the ingredients and the desserts and a blowtorch to finish the
Creme Brulee.

- Drinks
Name of drinks How to produce ?

Coffee(i.e.Espresso, We will source coffee beans in Brazil because it

Latte) has a strong taste with chocolate smells and is
of a high quality.We will also source a coffee
machine from the brand Pigeon which has the
highest rating in Amazon,a shopping
platform.With better coffee beans and coffee
machines,we hope to provide better coffees.

Soda/Cola We will source a beverage machine from

Alibaba,a famous supplier of machines in the
world, so that we can prepare the drinks just by
pressing a button on the machines only and
hence the efficiency can be enhanced.
c) Production of services
- Cat accompany services
We understand that cats are the main reason for our customers to visit our
shop.If we provide cat accompany services at a bad quality(i.e. The
hygiene is very poor),it is possible that our customers will not visit our
shop again.Therefore,as mentioned,we will hire a cat carer to monitor the
health,growth,hygiene and behaviours of cats in order to ensure our
customers will be satisfied on the dining experience and to ensure a
smooth production of this service.
- Food delivery services
We,as the owners of the cafe,will also work as waiters in the cafe.We will
deliver the food to customers immediately once the food is ready in the
kitchen.

d) Production strategies
- Importing ingredients for our products
We aim to provide food and drinks with high quality and we understand
that the quality of the food depends on their ingredients, so we would like
to search for some high-quality ingredients from all around the world and
import them at a reasonable price.

- Special features added on the products

We know that competition is intense in this industry and we have to
differentiate our products with theirs so that we can attract more people to
visit our cafe. So,we decided to add some features to our products during
production.For example,we will place our hand-made cat accessories next
to the food.We will have some latte art in our coffee,showing a shape of a
cat.

-cat accessories -Latte art in cat shape

- Reserve more ingredients for urgent situation
To ensure a smooth production of our food,we will make sure that the
amount of ingredients is enough even if there are too many orders in a
day.At the same time,we will adjust the amount of ingredients we source
during special situations.For example,we will source fewer ingredients
when the observatory has announced a typhoon warning or signal.

- Specialisation
During our production, we adopt a complex division of labour (which is
defined as different workers specialising in different production stages of
the same product ). Since we hire chefs and carers, we play different roles
in teamwork.

In our café, the chef mainly specialises in making cat food. He not only
has to make enough quantity of cat food provided to those stray cats in
our cat café to satisfy their wants, but also needs to maintain the good
quality of cat food in order to make those cats live safely and healthy.
Moreover, he also has to make a high-quality dessert and drinks such as
cheesecakes and cola in order to satisfy the demand of visitors.

Regarding the work of carers, they have a responsibility of taking care of

stray cats by cleaning their room and providing breakfast, lunch, dinner as
usual every day.

As for us, the owners also have the responsibility to pay monthly wages to
the chefs and carers, we also work as waiters where we must serve food
and drinks to the customers, we also have to face the complaints and
orders from customers.

Adopting division of labour has an advantage of raising the labour

productivity such as choosing the most suitable jobs to people, practice
makes perfect and saves time in training.Employees can be more
productive in this way and thus enhance their working efficiency.It also
raises capital productivity and makes sure all of our machines are being
utilised all the time.Needless to say, there’s also a disadvantage of
complex division of labour such as loss of job satisfaction, limited skills
required and greater risk of unemployment.To solve the problem,we will
hold some trainings for them in order to increase their loyalty and enhance
their skills etc.
e) Market research
● Market structure
The market structure of a cat cafe can be classified as monopolistic
competition. In the cat cafe market, there are plenty of small sellers.
Although there are some well-known cat cafes in Hong Kong such as
‘Cats Tea Room’ , which has few branches separated in New Territories
and Kowloon, they don’t dominate the markets as their market shares are
relatively small. During our establishment process, it is unnecessary to
hold a licence. That means the market for cat cafes has free entry for
newcomers. We are free to start a cat cafe anytime we desire. Besides,
sellers supply heterogeneous products. Products or services offered by
cat cafes may be similar but not identical and can be differentiated by
customers, even if they have just minor differences in features. For
example, in the case of a cat cafe, each cat cafe may have its unique
services, cuisines and discounts like Cat City.We would like to provide
customers with some special accessories in the dishes. Under the market
of cat cafes, both sellers and buyers have imperfect information about the
market. No buyers or sellers have perfect information about the market
demand and the market supply. As sellers supply heterogeneous products
and nobody has perfect information, sellers are price searchers. Firms can
search and set their own prices for their own purpose. This provides us an
opportunity to set our own prices to corporate social responsibility. To be
appealing in a massive number of cat cafes, we have to engage in price
and non-price competitions like offering price discounts and advertising.
● Market demand
In modern society,from the youth to the adults,all of whom are under
immense pressure due to a busy urban life.According to an article in
HelpGuide,interacting with cats can reduce anxiety and
stress.Therefore,many people are willing to pay for the food in cat cafe
just to have a chance to play with cats and reduce their stress.As a
result,the demand for it is very high and cat cafes are very popular among
customers.
● Possible factors affecting market demand
- Vitriol from animal protection group
As there are always some owners of cat cafes trying to maximise
their profit and neglect animal well being in the industry,cat cafes
are always the target for animal protection groups to criticise.Their
negative comments would pollute our cafe’s reputation.Thus,fewer
people will come and place less demand for our food and services.
- Hygiene problem
 According to some research in the industry,the main reason for
coming to the cafes is due to cats.Our cats can reduce their
stress,loneliness etc. However,we understand that animal waste is
difficult to clean up while a clean environment for cats’ growth and
customers to dine has to be needed.If we neglect the hygiene
problem,the whole cafe will finally be full of smells from animal
waste and the number of visitors willing and able to come will
greatly decrease in this case.
- Significant increase in people’s income
In modern society,urban development is very fast and efficient.The
income level for most people has therefore been increasing these
years. In a cat cafe,the food and the drinks are similar to those in a
normal cafe,but sold at a higher price and thus considered as
superior goods.As mentioned,when people’s income increases,the
demand for superior goods (i.e. food/drinks in a cat cafe) would
also increase in this case.
- People’s taste/cultural background
Customers would follow their taste or their cultural background to
buy things when they are shopping. Visiting a cat cafe is also the
same. As cats have a quite popular trend at the moment and if
customers are cat-lovers,they would therefore choose to visit a cat
cafe.However,once the trend is over or people no longer love
cats,less people are willing to visit a cat cafe then.
● Elasticity of demand for our products and services
As mentioned above,we find out that people visiting cat cafes are mainly
for interacting and playing with cats.For visitors,the food and the drinks in
the cafe are not as important as the cats and they would not care the price
of the products so much.It means that whatever the price of the products
increases or not,people will still visit cat cafes,order the products while
interacting with cats.Therefore,their demand is relatively inelastic in this
case.
● Market supply
As it is easy to run a cat cafe while the rate of return is quite high,there are
a number of cat cafes all over the world.According to CNN,the US has at
least 125 cat cafés available across more than 50 states with a
surprisingly increasing rate.In other countries like Thailand,according to
Thaiest,Thailand has over 20 cat cafés as of the early 2020s.How about
Hong Kong? In this small city,we have over 10 cat cafes here.The above
data has proven how large the supply of cat cafes is.
● Elasticity of supply for our products and services
Firstly,in Hong Kong,no licences are required for cat cafes.We do not need
to worry about violating the laws while cooking food for our customers or
providing cat companion services.Secondly,as our cafe is operated in a
relatively small scale and requires fewer factors of production (we only
have labour/ingredients/cats),we can adjust the amount of production very
easily.Thirdly,as mentioned above,we would like to reserve some
ingredients for urgent situation.These reserved ingredients enable us to
increase our production when price of our products increases.Due to no
regulations,easy adjustment of production and enough amount of reserved
capacity,the supply of our food and drinks is relatively elastic and has a
great responsiveness when price changes.
● Cat City’s reflection to the market research
We are so happy about the popular trend of cat cafes and the large
demand for them and we are confident in the development of Cat City
because of this.But at the same time,we understand that there are so
many factors that badly affect the demand for our products,like hygiene
problems etc.Also,there are so many competitors in the cat cafe
market.Because of these,we will focus more on hygiene issues.For
example,we will clean our shop everyday,seperate animal wastes from the
dining area.We will also have some air fresheners to make the air clean
and comfortable to smell.We will also keep a reasonable price of our
products and we hope with the above measures,we can better satisfy our
customers’ demand and thus keep a high demand level.With a higher
demand,we can have more revenue for our daily operation and the
expenses for our cats.
a) Promotion plan

Period How do we advertise our cafe?

Set up period Recently,instagram or other social media platforms are very

popular among both adults and teenagers.So,we will open an
ig page/facebook page and upload some information or
photos of our shop to attract people to come.Also,we are
welcome for those student unions to ask us for discounts and
it can further attract students to come too.

-IG account template

2-3 years after If we have enough capital,we will try to employ a TV channel
setting up Cat (like viu tv,tvb etc.) to advertise our shop by advertisements
City on TV in order to attract more people to come.Although there
are fewer people still watching tv nowadays,we believe that
some elderlies are still watching and we hope to attract this
type of people visiting our cafe.
b) Expansion plan

Period Scale of Cat City

Set up period When we set up Cat City,we only have less than 10
employees.We can only perform a small scale of
specialisation.Also,we hope to have $25000 as our gross
profit per month.We don’t have another physical shop except
the one in the Mills.To conclude,we are operating in a small
scale.

Few years after If we have enough capital,we aim to have an internal

setting up Cat expansion by opening another physical shop in Tuen Mun as
City we aim to let people in other places know more about cats.In
order to maintain the operations in both shops,we will also
hire more pet carers and chefs.We,as owners,will also be
sent into different shops and work.A larger scope of
specialisation can be performed.We expect to have more
revenue and Cat City can operate in a larger scale in this
case.