Gavina Coffee Presentation

BandinCohen,Chris.neHasan,BlakeBennington,KleyChavez,KaShingSiu,DavidLean,JudyKim,LeeChoi,RyanBoynton,IsaacNurik,AronDaSiliva,JohnLim

Mission&Objec-ve

•  EnhanceGavinabrandawarenessthroughflagshipretailstore

•  Educateconsumersonen.reGavinacoffeeexperience

•  Createself‐sufficientmarke.ngconceptwiththisflagshipstore

GavinaHistory&Opportunity

•  GavinabrothersmovefromhomelandinSpaintocoffeerichCuba

•  CastroRegimetakescontrolofCuba…DonFranciscomovedtoSouthernCalifornia

•  Problem:Lowbrandawareness– Ex:McDonald’scoffee

•  Opportunity:toexposeconsumerstopremiumGavinabrandthroughflagshipstore

StoreConcept

1)  HighTrafficArea,pedestrianoriented

2)  InformcustomersaboutGavinaCubanheritage

3)  Func.onaldesignoverlaidwithCubanstyle4)  ShowcaseallGavinacoffeebeansandDon

Franciscoproductsasfocalpoint

5)  StoreZonings:Passive,Ac.ve,Community,Educa.on

6)  Educate,Experience,Enjoy!

ConceptBubbleDiagram

SecondFloor(Loa)

FirstFloor

PassiveZone

Ac.ve/PurchaseZoneEduca.onZone

CommunityZone

EnterStoreHere

Poten-alLoca-on

•  HighTraffic,PedestrianArea•  Urban

–  DowntownLosAngeles,LALive–  SantaMonica,3rdStreetPromenade

GavinaEcosystem

Content

Service

Interoper Ability

Peer Opinion Supports My Goals

Customer Support

Channel

Device

Software

Gavina Coffee

-Retail Stores

-Mobile Posts

-Kiosks

-Online and Phone Delivery

-Superior Coffee

-Cater to sophisticated drinkers

-Increase brand awareness

-Enhancing the coffee ritual

-McDonald’s (Gavina) rated best coffee among Starbucks, Burger King, Dunkin’ Donuts -Premium product

-Premiere Coffee Shop

-Brewed Coffee

-Environment

-Ritual Enhancement

-Connoisseur’s Corner

-Cash registers

-Ordering supplies systems

-Brewed & Specialty beverages

-Furniture

-Dishware / Serving Equipment

-Packaging

-Synergy with high-end environments

GavinaStore

FloorPlan:UserExperience

Loa(2ndFloor)PassiveZone

1stFloor

Community

Ac.ve

Educa.on

Purchase/Ac.veArea

FirstFloor‐Sea.ng(foreground)‐Tas.ngBar(lea)‐OrderingCounter(right)‐Secondfloorloa(top‐back)

SecondFloorLounge‐Passivezone‐Fireplace

FirstFloor‐CommunitySea.ng(center)‐Fireplace(right)

FirstFloor‐CommunitySea.ng(lea)‐EspressoBar(backcenter)‐Tas.ngbar(backright)

Whoisourcustomer?

BusinessMan FriendsGedngCoffee JazzMusicianPersona

GavinaProducts

StainlessSteelVacuumBofle Tumbler

TableTopProducts

CandleHolder SugarBowl

FrenchPress

To‐goCups

In‐storeCups&Utensils

Tas-ngBar

FrontViewofTas-ngBar

GavinaTas-ngExperiencePackage

•  OntheMenu:– Taste5blendsofcoffee+acookie+barista’seduca.onaltalkaboutcoffeefor$6

HeritageWall

Promo-on

•  BuyLargecupofCoffeeandgetfreesamplebagofbeans

•  Couponsforcoffeebeans•  BillboardAds

SWOTAnalysis

  Familialculture&tradi.on

  Over130yearsoffamilyexperience

  Highstandardsinquality

  State‐of‐the‐artroas.ngandpackingfacility

  LeadingretailbrandinSouthernCalifornia,top10brandintheU.S.

Strengths Weaknesses

  No retail stores

  Target Market lacks brand awareness

  Non-coffee drinkers have no knowledge of them

SWOTAnalysis

  Upscale/premierecoffeehouse

  Emergingmarkets(18‐25/55‐64yearolds)

  Over100milliondailycoffeedrinkersintheUS

  Maleslessconcernedwithpricewillingtopayforpremierecoffee

  65%morelikleytohavehouseholdincome$100k+ayear

Opportunities Threats

  Entering an already over saturated market (Starbucks closed 76 stores in California alone last year)

  Fierce competition and brand loyalty

  Lack of brand recognition

  Existing relationships with McDonald’s

“Coffee House”

Barriers of Entry • High due to strong existing companies with large market share

Rivalry • Starbucks, Coffee Bean, Pete’s • Low Differentiation • Multiple distribution channels

Substitutes • Rival coffee companies • Other independent coffee houses • Lounges, night-life entertainment establishments

Buyers • “Coffee Drinkers”…growing market

Suppliers • Quality • Quality • QUALITY!

Major Competition for Gavina…

•  Starbucks

•  Peet’s Coffee & Tea

•  Coffee Bean

•  Folgers

Starbucks •  Largest coffee company in

world –  17,000 stores in 49

countries (11,000 US) •  Retail and entertainment

product offerings –  Hear Music = Starbucks’

music concept and record label

•  Holds dominant position specialty coffeehouse market

•  Over $9 billion in sales in 2009

Peet’s Coffee & Tea • Small, primarily California based company

-192 retail locations in US

• Focused on coffee and tea retailer rather than coffee bar

• Multiple distribution channels

-company owned stores, grocery stores, restaurants, food service accounts, and home delivery (online and mail orders)

Coffee Bean •  750 franchised locations in 22

countries –  Within US, majority of

locations are in Southern California

•  Multiple distribution channels –  Franchised locations, grocery

stores (strategic partnership with Ralphs Grocery Company), and online purchasing

Folgers •  Founded in 1850

–  Strong brand equity; iconic American brand

•  Online and retail distribution –  Mostly available at large chain

grocery stores, drug stores, and convenience stores

–  Online purchasing available on Smucker’s website

•  2008 became a subsidiary of The J.M. Smucker Co

–  Since acquisition of Folgers, Smucker’s sales increased 52% (up to $1.28 billion)

Compe--on‐Starbucks•  StarbucksforBusiness

–  AbilitytoofferexclusiveStarbuckscoffeeincompanybreakrooms

–  Deliveryavailable–  Highvolume/trafficareascanleadtolicensingathealthcare

facili.es,universi.es,offices,hotels,orotherrelevantmarket

•  StarbucksCulture–  Emphasisonpeoplebeforeproduct–  Supporttobaristascommongoal,worktogether–  Emphasisonbeingaenvironmentallyresponsiblebusiness–  Employeesreferredtoaspartners–  Storesaredevelopedtomeetthecultureofthearea(somehigh

traffic/faststoresversusslowermorecommunitybasedstores)–  Retailstorestryandbeapartofthecommunity

Compe--on‐Peet’s

•  Peet’sCulture– Emphasisoncollabora.on,teamwork,anddiversityevidentthroughvarietyofproductofferings

– Opencommunica.onwithcustomerdesires– Educateemployeesaboutcoffeeandtea,turnthatknowledgeintoapassion

– Improveprofitabilityover.mebycrea.ngfana.candloyalcustomers

– Alwaysroastandshiponsameday

Sta-s-csonCoffeeDrinkers

KeyFinancialProjec-on

Year1 Year2 Year3

StartupCosts $925,000 ‐ ‐

Revenue $380,000 $687,500 $945,000

Expenses $580,000 $637,500 $715,000

CashFlow ($200,000) $50,000 $230,000

Posi.vecashflowshouldoccurinquarter2ofyear2.Breakevenshouldoccurinquarter2ofyear7.

• Mainobjec.veisnotprofit.• Objec.ve:Makeenoughmoneytokeepthismarke.ngprogramgoing.• ExcessCashflowwillgotoaddi.onalPR&Marke.ngbesidesflagshipstore.

StartUpExpenses

CapitalEquipment

Furniture 150,000

EqupimentandFixtures 275000

TotalCapitalEquipment 425,000

GeneralandAdministra-veExpenses

LeaseDeposits 15000

U.lityDeposits 5000

Construc.on(Remodeling) 250000

Décor 35000

PrepaidInsurance 10000

Pre‐OpeningSalaries 50000

TrainingCosts 15000

Other 25000

TotalGeneralandAdministra-veExpenses 405000

OpeningInventory

Cups,pots,utensils 10000

Coffeeonhandforretailsale 15000

Coffeesurplusforinstoreserving/ToGo(inaddi.ontoCOGS) 10000

TotalOpeningInventory 35000

Adver-singandPromo-onalExpenses

Promo.onalExpenses(materialsforfreedrinks,demos,etcetera) 25000

Signage 15000

Prin.ng 5000

WebsiteCrea.on 15000

TotalAdver-singandPromo-onalExpenses 60000

TotalStart‐UpCosts 925,000

P&LStatement

AugustSeptemberOctober November DecemberJanuary FebruaryMarch April May June July August TOTAL

Sales 0 0 0 6000 10000 9000 11000 12000 14000 16000 18000 20000 22000 138000

CostofGoodsSold 0 0 0 900 1500 1350 1650 1800 2100 2400 2700 3000 3300 20700

GROSSPROFIT 0 0 0 5100 8500 7650 9350 10200 11900 13600 15300 17000 18700 117300

G&A 1000 1000 5000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 17000

Payroll‐Managers 0 0 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 3750 41250

Payroll‐AssistantManagers 0 0 0 1500 1500 1500 1500 1500 3000 3000 3000 3000 3000 22500

Payroll‐Bar.stas 0 0 0 1875 1875 1875 1875 2812.5 2812.5 2812.5 2812.5 2812.5 3750 25312.5

Rent 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 6000 78000

TOTALEXPENSES 7000 7000 14750 14125 14125 14125 14125 15062.5 16562.5 16562.5 16562.5 16562.5 17500184062.5

NetBeforeTax ‐7000 ‐7000 ‐14750 ‐9025 ‐5625 ‐6475 ‐4775 ‐4862.5 ‐4662.5 ‐2962.5 ‐1262.5 437.5 ‐67962.5

Assump-ons:

Posi.on AnnualSalary PerMonthSalary

1Manager 45,000 3750

2AssistantManagers 35,000 2916.666667

6Full.meemployees 30,000 2500

12Part.meemployees 15,000 1250

TOTAL 125,000 10,417

1) Lease

2400sq.a.

$2.89persq.a.(assume$3)

Rentpermonth 7200

Rentperquarter 21600

Totalrentperyear: 86400

2) Furniture

TableSea.ngandchairsfor30 10000

LoungeChairs/BoothSea.ngfor20 12500

Miscelaneousotherfurniture 5000

TotalFurniture 27,500

3) EquipmentandFixtures

IndustrialRefrigerators(3) 7500

IndustrialFreezers(2) 5000

EspressoMachines(4) 35000

Blenders(6) 2000

Sinks,dishwashers,steamers 15000

BakingEquipment(Ovens,ranges,etcetera) 25,000

Toiletsandbathroomfurnishings 5000

CountersandBar 20000

Total 114500

BreakEvenAnalysis

‐400000

‐200000

0

200000

400000

600000

800000

1000000

1200000

1400000

1 2 3 4 5 6 7 8 9

Year

CashonHand

Series1BreakEvenPoint

CashOnHand

ThankYou!AnyQues-ons?