business plan of a coffee outlet. it was submitted at confluence 2012 conducted by IIM Ahmadabad...

1. Executive Summary
Drink & Think coffee bar is determined to become a daily necessity for local coffee addicts, a place to
dream of as you try to escape the daily stresses of life and just a comfortable place to meet your friends
or to read a book, all in one 24 hr. a day and 365 days in a year. With the growing demand for high-
quality gourmet coffee and great service, Drink & Think will capitalize on its proximity to the University of
Oregon campus to build a core group of repeat customers. Drink & Think will offer its customers the best
prepared coffee in the area that will be complimented with pastries, as well as free books that its patrons
can read to enjoy their visit.
The company will operate a 2,300 square foot coffee bar within a walking distance from the Maharashtra
Institute Of technology campus. The owners have secured this location through a three-year lease with
an option for extending. They have also provided 1, 25,000 of the required 4, 00,000 start-up funds. The
remaining capital will be obtained through Bank of India commercial loans.
The company is expected to grow sales revenue from Rs. 6, 00,000 in FY2012 to Rs.16, 33,500 in year
three. As Drink & Think will strive to maintain a 65% gross profit margin and reasonable operating
expenses, it will see net profits between Rs. 4, 50,000 to Rs. 6, 00,000 during the same period.
1.1 Objectives
Drink & Thinks’ objectives for the first year of operations are:
Become selected as the "Best New Coffee Bar in the area" by the local restaurant guide.
Turn in profits from the first month of operations.
Maintain a 65% gross margin.

2. 1.2 Keys to Success
The keys to success will be:
Store design that will be both visually attractive to customers, and designed for fast and efficient
operations.
Employee training to insure the best coffee preparation techniques.
Marketing strategies aimed to build a solid base of loyal customers, as well as maximizing the sales
of high margin products, such as espresso drinks.
1.3 Mission
Drink & Think will make its best effort to create a unique place where customers can socialize with each
other in a comfortable and relaxing environment while enjoying the best brewed coffee or espresso and
pastries in town. We will be in the business of helping our customers to relieve their daily stresses by
providing piece of mind through great ambience, convenient location, friendly customer service, and
products of consistently high quality. Drink & Think will invest its profits to increase the employee
satisfaction while providing stable return to its shareholders.
Company Summary
Drink & Think, a NJ group of co., sells coffee, other beverages and snacks in its 2,300 square feet
premium coffee bar located near the Maharashtra institute of technology campus. Drink & Think major
investor is Nitesh Jaiswal who cumulatively own over 54% of the company. The start-up loss of the
company is assumed in the amount of Rs. 68,000.
2.1 Company Ownership
Drink & Think is registered as a Private Ltd. Co. under the jurisdiction of pune. Nitesh Jaiswal owns 54%
of the company. His cousin sanket rai, as well as friend ricky morgan and somil dixit hold minority stakes
in Drink & Think, pvt. Ltd. Co..
2.2 Start-up Summary
The start-up expenses include:
Legal expenses for obtaining licenses and permits as well as the accounting services totaling Rs.
25000
Marketing promotion expenses for the grand opening of Drink & Think in the amount of Rs. 145,000
and as well as flyer printing (22,000 flyers at Rs.1 per copy) for the total amount of Rs.167,000
Consultants fees of 65,000 paid to NESCAFE Espresso Services for the help with setting up the
coffee bar.
Insurance (general liability, workers' compensation and property casualty) coverage at a total
premium of Rs. 85000.

3. Pre-paid rent expenses for one month at Rs. 25 per square feet in the total amount of Rs. 57,500.
Premises remodeling in the amount of Rs. 1,35,000.
Other start-up expenses including stationery (Rs,3700) and phone and utility deposits (Rs. 4400).
The required start-up assets of Rs. 5,05,020 include:
Operating capital in the total amount of Rs.1,72,000 which includes employees salaries of Rs.
1,50,000 for the first two months and cash reserves for the first three months of operation
(approximately Rs.22000 per month).
Start-up inventory of Rs.2,11,700, which includes:
o Coffee beans (12 regular brands and five decaffeinated brands) - Rs. 88000
o Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. – Rs. 1,12,000
o Retail supplies (napkins, coffee bags, cleaning, etc.) – Rs. 9000
o Office supplies – Rs.2700
Equipment for the total amount of Rs.1,21,320:
o Espresso machine – Rs.12000
o Coffee maker – Rs. 3300
o Coffee grinder – Rs. 1450
o Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) -
Rs18,000
o Storage hardware (bins, utensil rack, shelves, food case) – Rs.7,720
o Counter area equipment (counter top, sink, ice machine, etc.) – Rs.9,500
o Serving area equipment (plates, glasses, flatware) – Rs.6,000
o Store equipment (cash register, security, ventilation, signage) – Rs.9,750
o Office equipment (PC, fax/printer, phone, furniture, file cabinets) – Rs.3,600
o Other miscellaneous expenses – Rs.5000
Funding for the company comes from two major sources--owners' investments and bank loans. Major
owner, Nitesh Jaiswal have contributed Rs. 8,10,000 respectively. All other investors have contributed
Rs,2,50,000 which brings the total investments to Rs.10,60,000. The remaining Rs.4,40,000 needed to
cover the start-up expenses and assets came from the two bank loans--a one-year loan in the amount of
Rs.1,55,000 and a long-term (five years) loan of Rs.2,85,000. Both loans were secured through the Bank
of India. Thus, total start-up loss is assumed in the amount of Rs.68000.
The following chart and table summarize the start-up assumptions.

4. Start-up Requirements
Start-up Expenses
Legal Rs.25,000
Stationery etc. Rs.3,700
Brochures Rs.167,000
Consultants Rs.65,000
Insurance Rs.85,000
Rent Rs.57,500
Remodeling Rs.1,35,000
Other Rs.4,400
Total Start-up Expenses Rs.542,600
Start-up Assets
Cash Required Rs.1,72,000
Start-up Inventory Rs.2,11,700
Other Current Assets Rs.24,350
Long-term Assets Rs.51,970
Total Assets Rs.76,320
Total Requirements Rs.1,24,320
Start-up Funding
Start-up Expenses to Fund Rs.542,600
Start-up Assets to Fund Rs.1,24,320
Total Funding Required Rs.666,920
Assets
Non-cash Assets from Start-up Rs.2,63,670
Cash Requirements from Start-up Rs.1,72,000
Additional Cash Raised $0
Cash Balance on Starting Date Rs.1,72,000
Total Assets Rs.6,07,670

5. Liabilities and Capital
Liabilities
Current Borrowing Rs.1,55,000
Long-term Liabilities Rs.2,85,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities Rs.4,40,000
Capital
Planned Investment
Nitesh Jaiswal Rs.8,10,000
All other investors Rs.2,50,000
Additional Investment Requirement $0
Total Planned Investment Rs.15,00,000
Loss at Start-up (Start-up Expenses) (Rs.68000)
Total Capital Rs.1,72,000
Total Capital and Liabilities Rs.1,24,320
Total Funding Rs.2,96,320
2.3 Company Locations and Facilities
Drink & Think coffee bar will be located on the ground floor of the commercial building at the corner of W
paudoff paud road near kotak Mahindra bank, pune, MH. The company has secured a one-year lease of
the vacant 2,500 square feet premises previously occupied by a hair salon. The lease contract has an
option of renewal for three years at a fixed rate that Drink & Think will execute depending on the financial
strength of its business.
The floor plan will include a 200 square feet back office and a 2,300 square feet coffee bar, which will
include a seating area with 15 tables, a kitchen, storage area and two bathrooms. The space in the coffee
bar will be approximately distributed the following way--1,260 square feet (i.e., 55% of the total) for the
seating area, 600 square feet (26%) for the production area, and the remaining 440 square feet (19%) for
the customer service area.
This property is located in a commercial area within a walking distance from the MIT campus on the
corner of a major thoroughfare connecting Deccan road neighborhood with the busy downtown
commercial area. The commercially zoned premises have the necessary water and electricity hookups
and will require only minor remodeling to accommodate the espresso bar, kitchen and storage area. The
coffee bar's open and clean interior design with modern wooden decor will convey the quality of the
served beverages and snacks, and will be in-line with the establishment's positioning as an eclectic place
where people can relax and enjoy their cup of coffee. The clear window displays, through which passerby
will be able to see customers enjoying their beverages, and outside electric signs will be aimed to grab
the attention of the customer traffic.
Products
Drink & Think will offer its customers the best tasting coffee beverages in the area. This will be achieved
by using high-quality ingredients and strictly following preparation guidelines. The store layout, menu
listings and marketing activities will be focused on maximizing the sales of higher margin espresso drinks.
Along with the espresso drinks, brewed coffee and teas, as well as some refreshment beverages, will be

6. sold in the coffee bar. Drink & Think will also offer its clients pastries, small salads and sandwiches. For
the gourmet clientele that prefers to prepare its coffee at home, Drink & Think will also be selling coffee
beans.
The menu offerings will be supplemented by free books and magazines that customers can read inside
the coffee bar.
3.1 Product Description
The menu of the Drink & Think coffee bar will be built around espresso-based coffee drinks such as
lattes, mochas, cappuccinos, etc. Each of the espresso-based drinks will be offered with whole, skimmed,
or soy milk. Each of these coffee beverages is based on a 'shot' of espresso, which is prepared in the
espresso machine by forcing heated water through ground coffee at high pressure. Such espresso shots
are combined with steamed milk and/or other additives like cocoa, caramel, etc., to prepare the espresso-
based beverages. Proper preparation techniques are of paramount importance for such drinks. A minor
deviation from the amount of coffee in the shot, the size of the coffee particles, the temperature of milk,
etc., can negatively affect the quality of the prepared drink.
3.2 Sales Literature
Two thousand flyers will be distributed in the adjacent neighborhood, on the Institutes campus, at the
malls and in the selected office buildings within two weeks prior to the opening of Drink & Think.
Subsequently, free postcards with Drink & Think endorsement will be printed to increase the company
visibility among the patrons.
Market Analysis Summary
Indian coffee consumption has shown steady growth, with gourmet coffee having the strongest growth.
Coffee drinkers in the Northwest are among the most demanding ones. They favor well-brewed gourmet
coffee drinks and demand great service. Pune, with its liberal and outgoing populace and calm whether,
has traditionally been a great place for coffee establishments. Drink & Think will strive to build a loyal
customer base by offering a great tasting coffee in a relaxing environment of its coffee bar located close
to the bustling MIT campus.
4.1 Market Segmentation
Drink & Think will focus its marketing activities on reaching the Institute students and faculty, people
working in offices located close to the coffee bar and on sophisticated teenagers. Our market research
shows that these are the customer groups that are most likely to buy gourmet coffee products. Since
gourmet coffee consumption is universal across different income categories and mostly depends on the
level of higher education, proximity to the MIT campus will provide access to the targeted customer
audience.
The chart and table below outline the total market potential (in number of customers) of gourmet coffee
drinkers in pune.

7. Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Students and Faculty 2% 18,000 18,360 18,727 19,102 19,484 2.00%
Teenagers 1% 3,000 3,030 3,060 3,091 3,122 1.00%
Office workers 2% 8,000 8,160 8,323 8,489 8,659 2.00%
Other 0% 5,000 5,000 5,000 5,000 5,000 0.00%
Total 1.63% 34,000 34,550 35,110 35,682 36,265 1.63%
4.2 Target Market Segment Strategy
Drink & Think will cater to people who want to get their daily cup of great-tasting coffee in a relaxing
atmosphere. Such customers vary in age, although our location close to the University campus means
that most of our clientele will be college students and faculty. Our market research shows that these are
discerning customers that gravitate towards better tasting coffee. Furthermore, a lot of college students
consider coffee bars to be a convenient studying or meeting location, where they can read or meet with
peers without the necessity to pay cover charges. For us, this will provide a unique possibility for building
a loyal client base.
4.2.1 Market Needs
General trend toward quality among Indian consumers definitely plays an important role in the recent
growth in gourmet coffee. Additionally, such factors as desire for small indulgencies, for something more
exotic and unique, provide a good selling opportunity for coffee bars.
4.3 Industry Analysis

8. Coffee consumption has shown a steady 2.5% growth rate in the Indian over the last decade. In 1994,
total sales of coffee were approximately Rs.7.5 billion with gourmet coffee representing 33% (or Rs.2.5
billion) of that. The retail coffee industry is flourishing in the Indian Northwest. The local climate, with a
moderate calm and cold atmoshphere, is very conducive for the consumption of hot non-alcoholic
beverages. At the same time, hot dry summers drive people into cafes to order iced drinks. Further,
coffee has really become a part of the lifestyle in the Northwest. Its discerning coffee drinkers are in favor
of well-prepared, strong coffee-based beverages, which they can consume in a relaxing environment.
4.3.1 Competition and Buying Patterns
Competition
According to the 1997 Maharashtra Food service Statistics (NAICS 72), Pune had 45 established snack &
non-alcoholic beverage bars (NAICS 722213) with total sales of Rs.14.2 million. Among other
establishments that offer coffee drinks to their customers are most of Pune’s limited- and full-service
restaurants. Drink & Thinks’ direct competitors will be other coffee bars located near the MIT campus.
These include CCD, Zest, durga, and other Food service establishments that offer coffee. CCD will
definitely be one of the major competitors because of its strong financial position and established
marketing and operational practices. However, despite of ccd’s entrenched market position, many
customers favor smaller, independent establishments that offer cozy atmosphere and good coffee at
affordable prices. Durga is a good example of such competition. We estimate that CCD holds
approximately 35% market share in that neighborhood, Durga appeals to 25% of customers, Zest caters
to another 10%, with the remaining market share split among other establishments. Drink & Think will
position itself as a unique coffee bar that not only offers the best tasting coffee and pastries but also
provides home-like, cozy and comfortable environment, which established corporate establishments’ lack.
We will cater to customers' bodies and minds, which will help us grow our market share in this competitive
market.
Buying Patterns
The major reason for the customers to return to a specific coffee bar is a great tasting coffee, quick
service and pleasant atmosphere. Although, as stated before, coffee consumption is uniform across
different income segments, Drink & Think will price its product offerings competitively. We strongly believe
that selling coffee with a great service in a nice setting will help us build a strong base of loyal clientele.
Strategy and Implementation Summary
Drink & Thinks’ marketing strategy will be focused at getting new customers, retaining the existing customers,
getting customers to spend more and come back more often. Establishing a loyal customer base is of a paramount
importance since such customer core will not only generate most of the sales but also will provide favorable
referrals.
5.1 Competitive Edge
Drink & Think will position itself as unique coffee bar where its patrons can not only enjoy a cup of perfectly
brewed coffee but also spend their time in an ambient environment. Comfortable sofas and chairs, dimmed light and

9. quiet relaxing music will help the customers to relax from the daily stresses and will differentiate Drink & Think
from incumbent competitors.
5.2 Sales Strategy
Drink & Think baristas will handle the sales transactions. To speed up the customer service, at least two employees
will be servicing clients--while one employee will be preparing the customer's order, the other one will be taking
care of the sales transaction. All sales data logged on the computerized point-of-sale terminal will be later analyzed
for marketing purposes.
In order to build up its client base, Drink & Think will use banners and fliers, utilize customer referrals and cross-
promotions with other businesses in the community. At the same time, customer retention programs will be used to
make sure the customers are coming back and spending more at the coffee bar.
5.2.1 Sales Forecast
Food costs are assumed at 25% for coffee beverages and 50% for retail beans and pastries. Proximity to the MIT
campus will dictate certain sales seasonality with revenues slightly decreasing during the school vacation periods.
The chart and table below outline our projected sales forecast for the next three years.
Sales Forecast
Year 1 Year 2 Year 3
Sales
Coffee beverages Rs.13,50,400 Rs.13,85,440 Rs.14,23,984
Coffee beans Rs.1,87,600 Rs.1,96,360 Rs.2,05,996
Pastries, etc. Rs.2,46,000 Rs.2,60,600 Rs.3,76,660
Total Sales Rs.17,84,000 Rs.18,42,400 Rs.20,06,640
Direct Cost of Sales Year 1 Year 2 Year 3
Coffee beverages Rs.1,57,600 Rs.1,66,360 Rs.2,00,996
Coffee beans Rs.63,800 Rs.58,180 Rs.61,998

10. Pastries, etc. Rs.83,000 Rs.90,300 Rs.1,05,330
Rs.3,14,840
Subtotal Direct Cost of Sales Rs.3,04,400 Rs.3,68,324
Previous PageNext Page »
Management Summary
Drink & Think is majority-owned by Nitesh Jaiswal. Mr. Jaiswal holds a PGDM degree from MIT-SOB. He
also owns a construction co., which he is profitably operating from last 3 years. Mr. Garfield has extensive
business contacts in pune and also being an alumni of MIT that he will leverage to help his new venture
succeed.
However, because of the investors' other commitments they will not be involved into the daily
management decisions at Drink & Think. A professional manager (Rs.2,40,000/yr) will be hired who will
oversee all the coffee bar operations. Two full-time baristas (Rs.1,20,,000/yr each) will be in charge of
coffee preparation. Four more part-time employees will be hired to fulfill the staffing needs. In the second
and third year of operation one more part-time employee will be hired to handle the increased sales
volume.
6.1 Management Team
A full-time manager will be hired to oversee the daily operations at Drink & Think. The candidate (who's
name is withheld due to his current employment commitment) has had three years of managerial
experience in the definitely industry in Pune. This person's responsibilities will include managing the staff,
ordering inventory, dealing with suppliers, developing a marketing strategy and perform other daily
managerial duties. We believe that our candidate has the right experience for this role. A profit-sharing
arrangement for the manager may be considered based on the first year operational results.
6.2 Management Team Gaps
Despite the owners' and manager's experience in the definitely industry, the company will retain the
consulting services of Nescafe Espresso Services, the consultants who have helped to develop the
business idea for Drink & Think. This company has over twenty years of experience in the retail coffee
industry and has successfully opened dozens of coffee bars across the India. Consultants will be primarily
used for market research, customer satisfaction surveys and to provide additional input into the
evaluation of the new business opportunities.
6.3 Personnel Plan
The table below outlines the personnel needs of Drink & Think coffee bar.
Personnel Plan
Year 1 Year 2 Year 3
Manager Rs.2,40,000 Rs.3,20,000 Rs.3,20,000

11. Baristas Rs.2,40,000 Rs.3,20,000 Rs.3,20,000
Employees Rs.2,52,000 Rs.3,60,000 Rs.4,44,000
Total People 7 7 8
Total Payroll Rs.7,32,000 Rs.1000000 Rs.1084,000
Financial Plan
Drink & Think will capitalize on the strong demand for high-quality gourmet coffee. The owners have
provided the company with sufficient start-up capital. With successful management aimed at establishing
and growing a loyal customer base, the company will see its net worth doubling in two years. Drink &
Think will maintain a healthy 65% gross margin, which combined with reasonable operating expenses,
will provide enough cash to finance further growth.
7.1 Important Assumptions
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0
7.2 Projected Cash Flow
As the chart and table below present, the company will maintain a healthy cash flow position, which will
allow for timely debt servicing and funds available for future development.

12. Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales Rs.17,84,400 Rs.18,42,400 Rs.20,06,640
Subtotal Cash from Operations Rs.17,84,400 Rs.18,42,400 Rs.20,06,640
Additional Cash Received
Sales Tax, VAT, HST/GST Received Rs.0 Rs.0 Rs.0
New Current Borrowing Rs.0 Rs.0 Rs.0
New Other Liabilities (interest-free) Rs.0 Rs.0 Rs.0
New Long-term Liabilities Rs.0 Rs.0 Rs.0
Sales of Other Current Assets Rs.0 Rs.0 Rs.0
Sales of Long-term Assets Rs.0 Rs.0 Rs.0
New Investment Received Rs.0 Rs.0 Rs.0
Subtotal Cash Received Rs.17,84,400 Rs.18,42,400 Rs.20,06,640
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending Rs.7,32,000 Rs.10,00,000 Rs.10,84,000
Bill Payments Rs.3,27,865 Rs.3,88,715 Rs.4,20,945
Subtotal Spent on Operations Rs.10,59,865 Rs.13,88,715 Rs.1,504,945
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out Rs.0 Rs.0 Rs.0
Principal Repayment of Current Borrowing Rs.3,300 Rs.3,300 Rs.3,300
Other Liabilities Principal Repayment Rs.0 Rs.0 Rs.0
Long-term Liabilities Principal Repayment Rs.0 Rs.3,585 Rs.3,961
Purchase Other Current Assets Rs.0 Rs.0 Rs.0
Purchase Long-term Assets Rs.0 Rs.2,000 Rs.2,000
Dividends Rs.0 Rs.0 Rs.0
Subtotal Cash Spent Rs.1,063,165 Rs.1,397,600 Rs1, 510,245.
Net Cash Flow Rs.1,784,400 Rs.1,842,400 Rs.2,006,640
Cash Balance Rs.721,235 Rs.444,800 Rs.496,395

13. 7.3 Key Financial Indicators
7.4 Break-even Analysis
With average monthly fixed costs of Rs.1,50,000 in FY 2012 and an average margin of 65%, Drink &
Think's break-even sales volume is around Rs. 2,20,000 per month. As shown further, the company is
expected to generate such sales volume from the out start.

14. Break-even Analysis
Monthly Revenue Break-even Rs.231,247
Assumptions:
Average Percent Variable Cost 35%
Estimated Monthly Fixed Cost Rs.95,311
7.5 Projected Profit and Loss
Annual projected sales of Rs. 1,784,000 in FY2012 translate into Rs.775.7 of sales per square foot, which
is in line with the industry averages for this size of coffee bar. Overall, as the company gets established in
the local market, its net profitability increases from 17.06% in FY 2012 to 17.63% in FY2014. The table
below outlines the projected Profit and Loss Statement for FY2012-2014.
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales Rs.1,784,000 Rs.1,842,400 Rs.2,006,640
Direct Cost of Sales Rs.3,04,400 Rs.3,14,840 Rs.3,68,324
Other Rs.0 Rs.0 Rs.0
Total Cost of Sales Rs.3,04,400 Rs.3,14,840 Rs.3,68,324
Gross Margin RS.1,479,600 Rs.1,527,560 Rs.1,638,316
Gross Margin % 65.00% 65.00% 65.00%
Expenses
Payroll Rs.732,000 Rs.1,000,000 Rs.1,084,000
Sales and Marketing and Other Expenses Rs.167,000 Rs.160,000 Rs.165,000
Depreciation Rs.5,400 Rs.5,500 Rs.5,500
Rent Rs.18000 Rs.18000 Rs.18000
Maintenance Rs.15,840 Rs.16,424 Rs.17,066
Utilities/Phone Rs.9,000 Rs.9,500 Rs.10,000
Payroll Taxes Rs.18,690 Rs.21,570 Rs.23,272
Other Rs.0 Rs.0 Rs.0
Total Operating Expenses Rs.965,930 Rs.1,230,994 Rs.1,322,838
Profit Before Interest and Taxes Rs.513,670 Rs.296,566 Rs.315,478
EBITDA Rs.51,270 Rs.49,866 Rs.64,034
Interest Expense Rs.2,821 Rs.2,326 Rs.1,618
Taxes Incurred Rs.33,740 Rs.35,510 Rs.42,424
Net Profit Rs.425,839 Rs.208,864 Rs.207,402
Net Profit/Sales 17.00% 16.58% 16.52%
7.6 Projected Balance Sheet
The company's net worth is expected to increase from approximately Rs.6, 00,000 by the end of FY2012
to approximately Rs. 16, 35,500 in FY2013. The table below summarizes the projected balance sheets for
this period.
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets

15. Current Assets
Cash Rs.195,358 Rs.296,358 Rs.417,648
Inventory Rs.21,175 Rs.23,293 Rs.25,622
Other Current Assets Rs.0 Rs.0 Rs.0
Total Current Assets Rs.216,533 Rs.319,651 Rs.443,270
Long-term Assets
Long-term Assets Rs.59,170 Rs.61,170 Rs.63,170
Accumulated Depreciation Rs.5,400 Rs.10,900 Rs.16,400
Total Long-term Assets Rs.53,770 Rs.50,270 Rs.46,770
Total Assets Rs.270,303 Rs.369,921 Rs.490,040
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable Rs.31,974 Rs.31,947 Rs.34,836
Current Borrowing Rs.6,700 Rs.3,400 Rs.100
Other Current Liabilities Rs.0 Rs.0 Rs.0
Subtotal Current Liabilities Rs.38,674 Rs.35,347 Rs.34,936
Long-term Liabilities Rs.20,000 Rs.16,415 Rs.12,454
Total Liabilities Rs.58,674 Rs.51,762 Rs.47,390
Paid-in Capital Rs.140,000 Rs.140,000 Rs.140,000
Retained Earnings (Rs.27,680) Rs.71,628 Rs.178,159
Earnings Rs.99,308 Rs.106,530 Rs.124,491
Total Capital Rs.211,628 Rs.318,159 Rs.442,650
Total Liabilities and Capital Rs.270,303 Rs.369,921 Rs.490,040
Net Worth Rs.211,628 Rs.318,159 Rs.442,650
7.7 Business Ratios
The table below outlines the company's business ratios. The last column represents industry average
business ratios for Specialty Eating Places (SIC 5812).
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 10.00% 10.00% 7.60%
Percent of Total Assets
Inventory 7.83% 6.30% 5.23% 3.60%
Other Current Assets 0.00% 0.00% 0.00% 35.60%
Total Current Assets 80.11% 86.41% 90.46% 43.70%
Long-term Assets 19.89% 13.59% 9.54% 56.30%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 14.31% 9.56% 7.13% 32.70%
Long-term Liabilities 7.40% 4.44% 2.54% 28.50%
Total Liabilities 21.71% 13.99% 9.67% 61.20%
Net Worth 78.29% 86.01% 90.33% 38.80%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 65.00% 65.00% 65.00% 60.50%
Selling, General & Administrative Expenses 47.94% 48.47% 47.37% 39.80%

16. Advertising Expenses 2.26% 2.18% 2.26% 3.20%
Profit Before Interest and Taxes 23.27% 22.47% 23.85% 0.70%
Main Ratios
Current 5.60 9.04 12.69 0.98
Quick 5.05 8.38 11.95 0.65
Total Debt to Total Assets 21.71% 13.99% 9.67% 61.20%
Pre-tax Return on Net Worth 62.87% 44.64% 37.71% 1.70%
Pre-tax Return on Assets 49.22% 38.40% 34.06% 4.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 17.00% 16.58% 17.62% n.a
Return on Equity 46.93% 33.48% 28.12% n.a
Activity Ratios
Inventory Turnover 10.91 10.11 10.11 n.a
Accounts Payable Turnover 11.25 12.17 12.17 n.a
Payment Days 27 30 29 n.a
Total Asset Turnover 2.16 1.74 1.44 n.a
Debt Ratios
Debt to Net Worth 0.28 0.16 0.11 n.a
Current Liab. to Liab. 0.66 0.68 0.74 n.a
Liquidity Ratios
Net Working Capital Rs.177,858 Rs.284,304 RS.408,334 n.a
Interest Coverage 48.16 62.07 104.13 n.a
Additional Ratios
Assets to Sales 0.46 0.58 0.69 n.a
Current Debt/Total Assets 14% 10% 7% n.a
Acid Test 5.05 8.38 11.95 n.a
Sales/Net Worth 2.76 2.02 1.60 n.a
Dividend Payout 0.00 0.00 0.00 n.a
Appendix
Sales Forecast
Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 h 12
Sales
Coffe
e
bever 0 Rs.24, Rs.27, Rs.28, Rs.28, Rs.28, Rs.28, Rs.28, Rs.28, Rs.29, Rs.31, Rs.33, Rs.33,
ages % 000 000 800 800 800 800 800 800 400 200 000 000
Coffe
e 0 Rs.6,0 Rs.6,7 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,3 Rs.7,8 Rs.8,2 Rs.8,2
beans % 00 50 00 00 00 00 00 00 50 00 50 50
Pastri
es, 0 Rs.10, Rs.11, Rs.12, Rs.12, Rs.12, Rs.12, Rs.12, Rs.12, Rs.12, Rs.13, Rs.13, Rs.13,
etc. % 000 250 000 000 000 000 000 000 250 000 750 750

17. Total Rs.40, Rs.45, Rs.48, Rs.48, Rs.48, Rs.48, Rs.48, Rs.48, Rs.49, Rs.52, Rs.55, Rs.55,
Sales 000 000 000 000 000 000 000 000 000 000 000 000
Direc
t Cost
of Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
Sales h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 h 12
Coffe
e
bever Rs.6,0 Rs.6,7 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,2 Rs.7,3 Rs.7,8 Rs.8,2 Rs.8,2
ages 00 50 00 00 00 00 00 00 50 00 50 50
Coffe
e Rs.3,0 Rs.3,3 Rs.3,6 Rs.3,6 Rs.3,6 Rs.3,6 Rs.3,6 Rs.3,6 Rs.3,6 Rs.3,9 Rs.4,1 Rs.4,1
beans 00 75 00 00 00 00 00 00 75 00 25 25
Pastri
es, Rs.5,0 Rs.5,6 Rs.6,0 Rs.6,0 Rs.6,0 Rs.6,0 Rs.6,0 Rs.6,0 Rs.6,1 Rs.6,5 Rs.6,8 Rs.6,8
etc. 00 25 00 00 00 00 00 00 25 00 75 75
Subto
tal
Direc
t Cost
of Rs.14, Rs.15, Rs.16, Rs.16, Rs.16, Rs.16, Rs.16, Rs.16, Rs.17, Rs.18, Rs.19, Rs.19,
Sales 000 750 800 800 800 800 800 800 150 200 250 250
Personnel Plan
Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
h1 h2 h3 h4 h5 h6 h7 h8 h9 h 10 h 11 h 12
Mana 0 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20
ger % 000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000
Barist 0 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20
as % 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000
Empl 0 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28 Rs.28
oyees % 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000
Total
Peopl
e 7 7 7 7 7 7 7 7 7 7 7 7
Total
Payro Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68,
ll 000 000 000 000 000 000 000 000 000 000 000 000
General Assumptions
Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 h 12

18. Plan
Month 1 2 3 4 5 6 7 8 9 10 11 12
Curre
nt
Interes 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
t Rate % % % % % % % % % % % %
Long-
term
Interes 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
t Rate % % % % % % % % % % % %
Tax 30.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00
Rate % % % % % % % % % % % %
Other 0 0 0 0 0 0 0 0 0 0 0 0
Pro Forma Profit and Loss
Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 h 12
Rs.14 Rs.14 Rs.10 Rs.10 Rs.12 Rs.12 Rs.16 Rs.16 Rs.18 Rs.11 Rs.11 Rs.11
Sales 8,700 8,700 0,700 0,700 0,000 0,000 5,000 5,000 5,000 5,200 5,200 5,200
Direct
Cost of Rs.30, Rs.30, Rs.17, Rs.17, Rs22, Rs.22, Rs.32, Rs.33, Rs.35, Rs.20, Rs.20, Rs.20,
Sales 367 367 800 800 800 800 800 766 150 250 250 250
Other Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0
Total
Cost of Rs.30, Rs.30, Rs.17 Rs.17 Rs22, Rs.22 Rs.32 Rs.33 Rs.35 Rs.20 Rs.20 Rs.20
Sales 367 367 ,800 ,800 800 ,800 ,800 ,766 ,150 ,250 ,250 ,250
Gross Rs.11 Rs.11 Rs.82, Rs.82, Rs.97, Rs.97, Rs.13 Rs.13 Rs.14 Rs.,94 Rs.94, Rs.94,
Margin 8,333 8,333 900 900 200 200 2,200 2,200 9,850 ,950 950 950
Gross
Margin 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00 65.00
% % % % % % % % % % % % %
Expens
es
Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68, Rs.68,
Payroll 000 000 000 000 000 000 000 000 000 000 000 000
Sales
and
Marketi
ng and
Other
Expense Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1 Rs.2,1
s 50 50 50 50 50 50 50 50 50 50 50 50
Depreci Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45 Rs.45

19. ation 0 0 0 0 0 0 0 0 0 0 0 0
Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15, Rs.15,
Rent Rs.0 000 000 000 000 000 000 000 000 000 000 000
Mainten Rs.40 Rs.45 Rs.48 Rs.48 Rs.48 Rs.48 Rs.48 Rs.48 Rs.49 Rs.52 Rs.55 Rs.55
ance 0 0 0 0 0 0 0 0 0 0 0 0
Utilities Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75 Rs.75
/Phone 0 0 0 0 0 0 0 0 0 0 0 0
Payroll 15 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5 Rs.1,5
Taxes % 58 58 58 58 58 58 58 58 58 58 58 58
Other Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0 Rs.0
Total
Operati
ng
Expens Rs.16, Rs.20, Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20 Rs.20
es 191 641 ,671 ,671 ,671 ,671 ,671 ,671 ,681 ,711 ,741 ,741
Profit
Before
Interest
and Rs.9,8 Rs.8,6 Rs.10, Rs.10, Rs.10, Rs.10, Rs.10, Rs.10, Rs.11, Rs.13, Rs.15, Rs.15,
Taxes 09 09 529 529 529 529 529 529 169 089 009 009
EBITD Rs.10, Rs.9,0 Rs.10, Rs.10, Rs.10, Rs.10, Rs.10, Rs.10, Rs.11, Rs.13, Rs.15, Rs.15,
A 259 59 979 979 979 979 979 979 619 539 459 459
Interest Rs.24 Rs.24 Rs.24 Rs.24 Rs.23 Rs.23 Rs.23 Rs.23 Rs.22 Rs.22 Rs.22 Rs.22
Expense 8 5 3 1 9 6 4 2 9 7 5 3
Taxes Rs.2,8 Rs.2,0 Rs.2,5 Rs.2,5 Rs.2,5 Rs.2,5 Rs.2,5 Rs.2,5 Rs.2,7 Rs.3,2 Rs.3,6 Rs.3,6
Incurred 68 91 72 72 73 73 74 74 35 16 96 97
Net Rs.6,6 Rs.6,2 Rs.7, Rs.7, Rs.7, Rs.7, Rs.7, Rs.7, Rs.8, Rs.9, Rs.11 Rs.11
Profit 93 73 715 716 718 720 721 723 205 647 ,088 ,090
Net
Profit/S 16.73 13.94 16.07 16.08 16.08 16.08 16.09 16.09 16.74 18.55 20.16 20.16
ales % % % % % % % % % % % %
Pro Forma Cash Flow
Mon Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
th 1 h 2 h 3 h 4 h 5 h 6 h 7 h 8 h 9 h 10 h 11 h 12
Cash
Received
Cash
from
Operatio
ns
Cash $40, $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0
Sales 000 00 00 00 00 00 00 00 00 00 00 00

20. Subtotal
Cash
from
Operatio $40, $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0
ns 000 00 00 00 00 00 00 00 00 00 00 00
Addition
al Cash
Received
Sales
Tax,
VAT,
HST/GS
T 0.00
Received % $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New
Current
Borrowin
g $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New
Other
Liabilitie
s
(interest-
free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New
Long-
term
Liabilitie
s $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of
Other
Current
Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of
Long-
term
Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New
Investme
nt
Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal
Cash $40, $45,0 $48,0 $48,0 $48,0 $48,0 $48,0 $48,0 $49,0 $52,0 $55,0 $55,0
Received 000 00 00 00 00 00 00 00 00 00 00 00

21. Expendi Mon Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
tures th 1 h 2 h 3 h 4 h 5 h 6 h 7 h 8 h 9 h 10 h 11 h 12
Expendit
ures from
Operatio
ns
Cash $10, $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3 $10,3
Spending 383 83 83 83 83 83 83 83 83 83 83 83
Bill
Payment $22,1 $29,8 $30,5 $29,4 $29,4 $29,4 $29,4 $29,4 $30,4 $32,7 $34,1
s $728 12 45 69 50 49 47 45 74 24 27 95
Subtotal
Spent on
Operatio $11, $32,4 $40,2 $40,9 $39,8 $39,8 $39,8 $39,8 $39,8 $40,8 $43,1 $44,5
ns 112 96 28 52 34 32 30 29 57 08 10 78
Addition
al Cash
Spent
Sales
Tax,
VAT,
HST/GS
T Paid
Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal
Repayme
nt of
Current
Borrowin
g $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275
Other
Liabilitie
s
Principal
Repayme
nt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-
term
Liabilitie
s
Principal
Repayme
nt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

22. Other
Current
Assets
Purchase
Long-
term
Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividend
s $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal
Cash $11, $32,7 $40,5 $41,2 $40,1 $40,1 $40,1 $40,1 $40,1 $41,0 $43,3 $44,8
Spent 387 71 03 27 09 07 05 04 32 83 85 53
Net
Cash $28, $12,2 $7,49 $6,77 $7,89 $7,89 $7,89 $7,89 $8,86 $10,9 $11,6 $10,1
Flow 613 29 7 3 1 3 5 6 8 17 15 47
Cash $95, $107, $115, $122, $130, $138, $145, $153, $162, $173, $185, $195,
Balance 736 966 462 235 127 020 914 811 679 596 211 358
Pro Forma Balance Sheet
Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
h1 h2 h3 h 4 h 5 h 6 h 7 h 8 h 9 h 10 h 11 h 12
Start
ing
Bala
Assets nces
Current
Assets
$67,1 $95, $107 $115 $122 $130 $138 $145 $153 $162 $173 $185 $195
Cash 23 736 ,966 ,462 ,235 ,127 ,020 ,914 ,811 ,679 ,596 ,211 ,358
Invento $16,0 $15, $17, $18, $18, $18, $18, $18, $18, $18, $20, $21, $21,
ry 27 400 325 480 480 480 480 480 480 865 020 175 175
Other
Current
Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total
Curren
t $83,1 $111 $125 $133 $140 $148 $156 $164 $172 $181 $193 $206 $216
Assets 50 ,136 ,291 ,942 ,715 ,607 ,500 ,394 ,291 ,544 ,616 ,386 ,533
Long-
term
Assets
Long- $59,1 $59, $59, $59, $59, $59, $59, $59, $59, $59, $59, $59, $59,

23. term 70 170 170 170 170 170 170 170 170 170 170 170 170
Assets
Accum
ulated
Deprec $1,3 $1,8 $2,2 $2,7 $3,1 $3,6 $4,0 $4,5 $4,9 $5,4
iation $0 $450 $900 50 00 50 00 50 00 50 00 50 00
Total
Long-
term $59,1 $58, $58, $57, $57, $56, $56, $56, $55, $55, $54, $54, $53,
Assets 70 720 270 820 370 920 470 020 570 120 670 220 770
Total $142, $169 $183 $191 $198 $205 $212 $220 $227 $236 $248 $260 $270
Assets 320 ,856 ,561 ,762 ,085 ,527 ,970 ,414 ,861 ,664 ,286 ,606 ,303
Liabilit
ies
and Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont
Capital h 1 h 2 h 3 h 4 h 5 h 6 h 7 h 8 h 9 h 10 h 11 h 12
Current
Liabiliti
es
Accoun
ts
Payabl $21, $28, $29, $28, $28, $28, $28, $28, $29, $31, $33, $31,
e $0 118 825 587 469 467 465 464 462 335 586 092 974
Current
Borrow $10,0 $9,7 $9,4 $9,1 $8,9 $8,6 $8,3 $8,0 $7,8 $7,5 $7,2 $6,9 $6,7
ing 00 25 50 75 00 25 50 75 00 25 50 75 00
Other
Current
Liabiliti
es $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtot
al
Curren
t
Liabilit $10,0 $30, $38, $38, $37, $37, $36, $36, $36, $36, $38, $40, $38,
ies 00 843 275 762 369 092 815 539 262 860 836 067 674
Long-
term
Liabiliti $20,0 $20, $20, $20, $20, $20, $20, $20, $20, $20, $20, $20, $20,
es 00 000 000 000 000 000 000 000 000 000 000 000 000
Total
Liabilit $30,0 $50, $58, $58, $57, $57, $56, $56, $56, $56, $58, $60, $58,
ies 00 843 275 762 369 092 815 539 262 860 836 067 674
Paid-in $140, $140 $140 $140 $140 $140 $140 $140 $140 $140 $140 $140 $140

24. Capital 000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000
Retain
ed
Earnin ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27, ($27,
gs 680) 680) 680) 680) 680) 680) 680) 680) 680) 680) 680) 680) 680)
Earnin $6,6 $12, $20, $28, $36, $43, $51, $59, $67, $77, $88, $99,
gs $0 93 966 680 397 115 834 556 279 484 130 218 308
Total $112, $119 $125 $133 $140 $148 $156 $163 $171 $179 $189 $200 $211
Capital 320 ,013 ,286 ,000 ,717 ,435 ,154 ,876 ,599 ,804 ,450 ,538 ,628
Total
Liabilit
ies
and $142, $169 $183 $191 $198 $205 $212 $220 $227 $236 $248 $260 $270
Capital 320 ,856 ,561 ,762 ,085 ,527 ,970 ,414 ,861 ,664 ,286 ,606 ,303
Net $112, $119 $125 $133 $140 $148 $156 $163 $171 $179 $189 $200 $211
Worth 320 ,013 ,286 ,000 ,717 ,435 ,154 ,876 ,599 ,804 ,450 ,538 ,628