Churros Lounge

Laoag City, Ilocos Norte

09279721568

PREPARED BY:
Timothy Renz Martin

Monique G. Tagaban

June 2023
 EXECUTIVE SUMMARY

Churros Lounge is a partnership pastry business situated in Laoag City, Ilocos Norte, near

the premises of Mariano Marcos State University (College of Teacher Education). It aims to

provide and supply affordable, delicious, and healthy snacks for all students and employees of

Mariano Marcos State University, as well as the residents of Laoag City. This small enterprise

offers two churro options– classic churros, and malunggay churros– and two dipping sauces–dark

chocolate and white chocolate.

Churros are growing in popularity in Ilocos Norte. The business aims to aid in the

growing popularity of churros while simultaneously addressing the lack of variety in desserts as

well as healthy dessert options in Laoag City.

Through the help of social media advertising and referral marketing, Churros Lounge

aims to promote and expand its business throughout Laoag City. The company is founded by

Timothy Renz Martin and Monique Tagaban who are students of Mariano Marcos State

University (College of Teacher Education).

 TABLE OF CONTENTS

COVER SHEET............................................................................................................... i

EXECUTIVE SUMMARY.............................................................................................. ii

TABLE OF CONTENTS..................................................................................................iii

SECTION

1. COMPANY DESCRIPTION

Description of Business..............................................................................1

Vision, Mission, Goal, and Objectives........................................................2

Products.......................................................................................................3

Market Analysis.......................................................................................... 6

Marketing Plan…....................................................................................... 7

Location…...................................................................................................9

Competition….............................................................................................10

Management and Operations...................................................................... 11

Personnel.................................................................................................... 12

Application and Effect of Loan or Investment........................................... 12

2. FINANCIAL DATA

Income statements.......................................................................................13

Cash Flow Statements................................................................................ 13

Balance Sheets............................................................................................ 14

Sources and Uses of Funds......................................................................... 15

 SECTION 1: COMPANY DESCRIPTION

I. Description of Business

Churros are tasty deep-fried, ridged sticks of dough, rolled in cinnamon sugar, and served

with chocolate sauce for dipping. Churros have long been the working man’s breakfast or after-

party snack of choice all around the globe originating in Spain. The Churros Lounge will be

putting a new twist on this classic dessert.

Churros Lounge is a pastry business that is focused on providing churros in Laoag City.

The pastry business has slowly been gaining popularity especially in the Philippine. With more

and more Filipinos being intrigued with Western and European desserts, the company aims to

meet this demand by establishing a churro business that is focus on providing authentic and

healthy churros in Laoag City, Ilocos Norte.

Excellent customer service, food options, accessibility, and ease of purchase are some of

the other things that modern consumers look for when making a purchase. Not only that, but

healthy desserts have grown in popularity in recent years and do not seem to be fading. The

Churros Lounge will offer two flavors of churros which is the classic churros coated in cinnamon

sugar, and healthy treat, the malunggay churros. Additionally, it also offers two options for the

dip; dark chocolate and salted caramel. This will ensure that consumers will have a variety of

choices for how they want to enjoy their churros. Furthermore, the churros lounge will also offer

in-store or online purchases. Customers have the option to buy the churros directly in the

physical store of churros lounge or they can make order through churros lounge’s Facebook

page. Consecutively, customers also have the option to pick-up their online order in the physical

store or have it delivered to them. By doing this, customers who are in a hurry or don’t want to

leave their houses but still want to treat themselves with a churro can be accommodated by the

business.
 II. Vision, Mission, Goal, Objectives

Vision

To become the leading churro business in Laoag City, Ilocos Norte by 2025

Mission

To provide an authentic, healthy, and delicious churros to the customers with top-notch

customer service.

Goal

● To provide dessert options to Laoag City residents, MMSU students, and employees.

● To provide authentic churros to Laoag City residents, MMSU students, and employees.

● To provide healthy and delicious dessert options to Laoag City residents, MMSU

students, and employees.

● To provide top-notch customer service to Laoag City residents, MMSU students, and

employees.

Objective

The primary objectives of the company are as follows:

1. To establish a business that is locally and nationally competitive;

2. To satisfy customers with exquisite food and customer service; and

3. To recoup the amount of investment and gain pro

 III. Products

Churros Lounge offers two churro flavors and two flavors of dipping sauce. For the

churros, the business offers the classic churro, and a second one the malunggay churros. On the

other hand, two dipping sauces are offered by our business; dark chocolate, and white chocolate

The price of the churros for the classic will be forty pesos (Php 40.00) per piece.

Customers can also opt for a bundle of three classic churros for one hundred twenty-five pesos

(Php. 125.00) or a bundle of six for two hundred forty-five pesos (Php. 245.00). For the

malunggay churros, it will cost forty-five pesos (Php.45.00) per piece. Same with the classic

churros, customers can avail a bundle of three for one hundred forty pesos (Php. 140.00), or a

bundle of six for two hundred seventy-five pesos (Php. 275.00). The bundles will all include any

dip of their choice. If customers do wish to buy a dip separately, the cost will be twelve pesos

each (Php. 12.00).

Cost Analysis

ITEM QUANTITY COST

Classic Churros
Flour 1 kilogram ₱ 90.00
Butter 2 bars ₱ 250.00
Milk 1 liter ₱ 100.00
Sugar 500 grams ₱ 50.00
Cinnamon 100 grams ₱ 80.00
Cooking oil 1 liter ₱ 130.00
Packaging
Plastic cup 32 pieces ₱ 149.00
Sticker paper 10 sheets ₱ 20.00
TOTAL ₱ 869.00
 ITEM QUANTITY COST

Malunggay Churros
Flour 1 kilogram ₱ 90.00
Butter 2 bars ₱ 250.00
Milk 1 liter ₱ 100.00
Sugar 500 grams ₱ 50.00
Cinnamon 100 grams ₱ 80.00
Malunggay powder 500 grams ₱ 200.00
Cooking oil 1 liter ₱ 130.00
Packaging
Plastic cup 32 pieces ₱ 149.00
Sticker paper 10 sheets ₱ 20.00
TOTAL ₱ 1 069.00

ITEM QUANTITY COST

Dark Chocolate Dip

Dark chocolate bar 1 bar ₱ 100.00
All-purpose cream 250g ₱ 80.00
TOTAL ₱ 180.00

ITEM QUANTITY COST

White Chocolate Dip

White chocolate bar 1 bar ₱ 100.00
All-purpose cream 250g ₱ 80.00
TOTAL ₱ 180.00
 CLASSIC CHURROS
Calculation Total

Labor Cost ₱ 869 x 0.20 ₱ 173.8

Total Cost ₱ 869 + ₱ 173.8 ₱ 1 042.80

Estimated Price ₱ 1 042.80/32 ₱ 32.59 or ₱ 33

Final Price ₱ 40.00

Total Profit 32 x 40 – 1042. 80 ₱ 237.20

MALUNGGAY CHURROS
Calculation Total

Labor Cost ₱ 1 069 x 0.20 ₱ 23.8

Total Cost ₱ 869 + ₱ 173.8 ₱ 1 282.80

Estimated Price ₱ 1 282.80/32 ₱ 40.10

Final Price ₱ 45.00

Total Profit 32 x 45 – 1 282. 80 ₱ 157.20

DARK AND WHITE CHOCOLATE

DIP
Calculation Total
Labor Cost ₱ 360 x 0.20 ₱ 79.20

Total Cost ₱ 360 + ₱ 79.20 ₱ 439.20

Estimated Price ₱ 439.20/64 ₱ 6.86 or ₱ 7.00

Final Price ₱ 12.00

Total Profit 64 x 12 – ₱ 439.20 ₱ 328.80
 IV. Market Analysis

Churros are a popular fried dough treat that is frequently consumed as a snack or dessert.

They are becoming more and more popular in the Philippines, especially among the younger

population. Students and employees at Mariano Marcos State University, specifically in the

Laoag Campus, are the company's target market. Additionally, residents of Laoag City are also

included in our planned target market.

Upon observation and research, it was found that there is a lack of food options,

particularly desserts, for students, employees, and people who live or stay in Laoag. Moreover,

most food establishments do not sell churros. Churro businesses are likely to expand as they

acquire popularity in the Philippines, particularly among youngsters and adults. Furthermore,

there seems to be a trend for healthy and delicious snacks and desserts. Currently, Laoag City

lacks food establishments that offer healthy dessert varieties.

The planned business will provide two churro alternatives as well as two dipping sauce

options. The Churros Lounge will serve the classic churro, coated in cinnamon sugar, and a

healthier alternative, the malunggay churro. Moreover, two dipping sauces are also offered; dark

chocolate and white chocolate.

Opportunity Statement:

The following are the identified opportunities:

● Lack of Churro Business

The Churros lounge is set to be located in Laoag City. The location chosen for the

business currently has no businesses or stores offering churros on their menu. The

Churros Lounge will be the first of its kind in Laoag City.

 ● Minimal Options

Most pastry and food business in Laoag City offers the same dessert options to

their customers with little to no variety. The Churros Lounge will be able to aid in this

problem by providing another dessert option for residents, students, and faculty situated

in Laoag City.

● Healthy Option

One of the churros and dip offered by the company is the malunggay churros and

a dark chocolate dip. These two are known to be healthy choices. The malunggay is a

popular medicinal plant in the Philippines known for its various health benefits. Dark

chocolate on the other hand is known to be less sweet and less processed than other

chocolates hence its popularity among health-conscious people.

● Deliveries and Online Orders

Most food and dessert business in Laoag City do not offer deliveries and doesn’t have

the option for online orders. With this in mind, the churros lounge aims to address this

problem by providing delivery options, in-store pick-up, in-store purchases, and online

purchases through its Facebook page.

V. Marketing Plan

Churros Lounge is focused on providing a variety of delicious and healthy snacks for people

to enjoy without compromising on quality. Churros Lounge plans to launch its first location in

Laoag City, Ilocos Norte with its target market compromising mainly of students, employees,

and residents of Laoag City.

Target Market

● MMSU students and employees

● Residents of Laoag City

A. Demographics

● Aged 10-50 years old

● Located in urban, rural, school areas

B. Psychographics

● Health-conscious people

● People looking for dessert varieties

● People looking for a Western/ European dessert

● People looking for authentic churros

● People looking for healthy churros

● People looking for a budget-friendly snack/ desserts

Packaging and Labelling

● Business name: Churros Lounge

● Label/ Logo:

:
 ● Packaging:

Promotional Techniques

Social media advertising and referral marketing will be employed to promote the business

among the company’s target market.

VI. Location

Churros Lounge plans to establish its first physical store in Laoag City, Ilocos Norte,

specifically near or around the premises of Mariano Marcos State University. This location is

accessible to the company’s target market because it is located in the city’s metropolitan region

and is close to schools and public facilities. Additionally, it is near on busy commuting routes

and has available parking sports. Furthermore, the physical store of the churros lounge will be

open from 8:00 am to 7:00 pm and will operate from Monday to Saturday.
 VII. Competition

Currently, there are only a few businesses in Laoag City that sell churros. The products

offered by the business are unique and will complement the current market’s dessert offers.

Furthermore, the products will also aid in the growing demand for healthy dessert options.

Churros Lounge relies on the originality of its creations as well as its variety of choices. It is

committed to providing our consumers with fresh, and high-quality churros.

The primary competitors of the business would be the various food establishments

situated in the area. However, since most of these food establishments are not selling churros the

threat that they imposed is little to none.

Competitive Advantage

The competitive advantage of the business is the following:

● Various Options

The churros lounge offers customers a wide variety of options with both the

churro flavors and dipping sauces. It offers 2 flavors of churros and 2 flavors of dip.

● Healthy and Nutritious

The churros lounge offers malunggay churro and a dark chocolate dip for anyone

who is looking for a healthier alternative while still getting to enjoy the deliciousness of

churros.

● Ease of Purchase and Accessibility

The churros lounge is located around the premises of Mariano Marcos State

University. Since most of our target market is MMSU students, our location can easily be

accessed by students. Not only that, but customers can also order online and can either

pick up their orders at our physical store or they can have them delivered to them
 VIII. Management and Operations

Churros Lounge is a pastry business owned by 2 people. The business will be handled by

the 2 owners, both of them have undergone an entrepreneurship subject. Profits will be

distributed evenly. The duties and tasks are separated into four: management, production and

supply, delivery and customer service, and marketing

Management and Production and Supply will be handled by Monique Tagaban.

Management job will entail, overseeing and directing the company’s operation, making critical

decisions, and ensuring the company achieves its mission, vision, and goal, and that it stays true

to its objective. Additionally, this job also includes coordinating and regulating the enterprise

financial activities. While Production and Supply include assessing market circumstances and

defining product characteristics. It also includes procurement, operations, logistics, and

marketing channel so that the raw materials are efficiently converted into a finished product and

delivered successfully to the consumer, The plan and road map are also part of the job.

Marketing Management and Delivery and Customer service will be in the hands of

Timothy Renz Martin. Marketing Management will include the process of creating and

scheduling content designed to promote the company and its product. This also includes

engaging and nurturing audiences across different social media platforms. More importantly, this

management will include the public relation part of the company. While Delivery and Customer

service will be ensuring a responsible for the seamless delivery of both the finished products and

the raw materials needed for production. Additionally, this job will also entail providing and

managing orders for the store.

 IX. Personnel

The company’s main team is composed of 2 members namely, Monique Tagaban who is

in charge of management and marketing and Timothy Renz Martin is responsible for the

company’s production and supply and delivery and customer service.

Since Churros Lounge is a start-up business, all operations will be handled by the 2

members for the first two to three years. For now, the 2 owners are the only permanent

employees of the business.

As the business progresses the company plans to hire contractual employees. Contractual

employees of Churros Lounge will be paid hourly, and no benefits will be given. In the case of

overtime, any overtime will be paid based on the hourly rate.

X. Application and Effect of Loan or Investment

The business capital will come from three sources; own funds by the 2 owners, a bank

loan of one million pesos (Php. 1 000 000.00), and a sponsorship fund. As for the bank loan, it

will be divided into various expenses such as equipment, packaging, advertising, and acquisition

of the business area. To pay off the loan, 2% of the total profit per month will be set aside as loan

payment
 SECTION 2: FINANCIAL DATA

I. Income statements
Line Item 2023
Revenue ₱ 167 424.00
COGS (Cost of Goods Sold) ₱ 637 008.00
Gross Profit ₱ 469 584.00
Operating Expense ₱ 100 000.00
Operating Income (EBIT) ₱ 369 584.00
Interest Expense ₱ 40 000.00
Profit Before Tax ₱ 329 584.00
Taxes at 10% ₱ 32 958.40
Net Income ₱ 296 625.60

II. Cash flow statements

Cash Flow Statement
For the year ended to June 29 2023 to June 30,
2025
Operating Activities
2024
Sales Receipts ₱ 167, 424.00
Payments for Operations ₱ 100 000.00
Interest Payments ₱ 40 000.00
Taxes ₱ 16 742.40
Extraordinary Items
Net Cash Flow from
Operating Activities
Investing Activities
Purchase of New Fixed ₱ 1 150 000.00
Assets (Property/Machinery)
Interest Received
Net Cash Flow from Investing Activities
Financing Activities
Short-term Debt
Long-term Debt ₱ 1 000 000.000
New Equity Issued
Net Cash Flow from
Financing Activities
Net Increase (Decrease in Cash)
Cash at the Beginning of the Year ₱ 2 100 000.00
Cash at the End of the Year ₱ 992 924.80
 III. Balance Sheets
Churros Lounge
Balance Sheet Date: June 30 2024
Assets Year
Current Assets
Cash ₱ 992 924.00
Accounts Receivable ₱ 150 681.60
Inventory ₱ 100 000.00
Prepaid Expenses ₱ 40 000.00
Short-term Investments
Total Current Assets ₱ 1 243 605.60
Fixed (Long-Term Assets)
Long-Term Investments
Property, plant, and equipment ₱ 1 150 000.00
(Less accumulated depreciation)
Intangible assets ₱ 50 000.00
Total fixed assets ₱ 1 200 000.00
Other Assets
Deferred Income tax ₱ 32 958.40
Other
Total Other assets
Total Assets ₱ 32 958.40
Liabilities and Owner’s Equity
Current Liabilities
Accounts Payable ₱ 960 000.00
Short-term Loans
Income Taxes Payable ₱ 32 958.40
Accrued Salaries and wages ₱ 50 000.00
Unearned Revenue
Current portion
Current Portion of long-term debt ₱ 40 000.00
Total Current Liabilities ₱ 1 082 958.40
Long-Term Liabilities
Long-term debt ₱ 1 000 000.00
Deferred Income Tax ₱ 32 958.40
Other
Total long-term liabilities ₱ 1 032 958.40
Owner’s Equity
Owner’s Investment ₱ 600 000.00
Retaine earnings ₱ 246 625.60
Other
Total owner’s equality ₱ 169 647.20
Total Liabilities and Owner’s Equality
Common Financial Ratios
Debt Ratio (Total Liabilities/Total Assets) 0.87%
Current Ratio (Current 1.15%
Assets/Current Liabilities)
Working Capital (Current Assets – Current ₱ 160 646.60
Liabilities)
Assets-to-Equity Ratio (Total Assets/Owner’s 7.33%
Equity)
Debt-to-Equity Ratio (Total Liabilities 6.38%
/ Owner’s Equity)

IV. Sources and Uses of Funds

SOURCES OF FUNDS

Own Funds 600,000

Bank Loan 2,000,000

Investments / Sponsors 500,000

TOTAL 2,100,000

USES OF FUNDS

Store Building 1,000,000

Tools and Equipment 150,000

Ingredients 30,000
Packaging 4,000
Labor Cost 10,000
Advertising Fund 20,000
TOTAL 1,214,000
Excess 886,000