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Quick Order Pass
Presented By: Andrej Ciric, Chris Roberts, and Carlton Northern
Representing: Quick Order Systems, Inc.
CS410 - Professional Workforce Development I
2
Team Members
Andrej CiricProject Manager
Christian CrisostomoDemographics
Kevin JonesRisk Assessment
Christopher RobertsTechnical Feasibility
Software Development
Michael SchaeferWebsite
Documentation
Carlton Northern Marketing
Systems Development
3
Overview
Societal ProblemProposed SolutionProject Schedule
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Societal Problem
The process coffee houses use to provide specialty orders is inefficient, inconvenient and error prone.
5
Inherent Complexity of Specialty Orders
Starbucks menu:
73 Regular Menu Items
10 Flavors of Syrup
13 Modifiers
9490 possible combinations assuming only (1) of each is selected.
http://www.starbucks.com
6
Traditional Transactions
Inefficient Inconvenient Error prone
“ I’d like a double tall, non-fat, decaf, vanilla latte, one-pump walnut, with room, please”
Consider a typical order by a daily customer:
Order
Cash/Credit
Change/Credit & Receipt
OrderAmount
Owed
Cash/Credit
Change/Credit & Receipt
Amount Owed
7
Proposed Solution
Develop a system that can digitally:Retrieve an order Provide payment
Without verbal communication.
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Typical Transaction with Our System
Quick Order is accurate Payment is precise Easy to use
Order & Payment
Receipt
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Typical System Use:
Customer #
Receipt Customer #
Waves Pass
1010010111101010101
Customer #, 30bits
Central Database
Customer #
Order &Account Balance
New AccountBalance
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Software Diagram
Reader Input Module
Central Database
Ord
er
&A
cco
un
t B
ala
nce
Ne
w A
cco
un
tB
ala
nce
Database Com Module API Com ModuleCustomer #
Cu
sto
me
r #
Ord
er
&A
cco
un
t B
ala
nce
Order &Account Balance
API
Pre-existing POS Program
Ne
w A
cco
un
tB
ala
nce
API opens check,Orders, pays and
closes check
New AccountBalance
Ne
w A
cco
un
tB
ala
nce
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Solution Will Not
Eliminate preparation errorsPreclude current ordering systems
Can always order and payProhibit order changesEliminate the casual customer
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Project Organization
Project Organization
Management Plan Evaluation Plan Marketing Plan Funding Plan
Scheduling and AccountsIndustry ConsultationTestingTeam Formation
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Management Organization
Weekly team meetings Take minutes Progress performance assessment
Schedule deadlines WBS Team status checks
Technical Progress and Reporting Evaluation plan
Software development protocols CVS – (Concurrent Versions System ) Design Documentation
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Evaluation Plan
Design Reviews All design documents evaluated before implementation Industry consultation as necessary Documentation generated
Quality Reviews Deliverables evaluated at each phase by team Post mortem evaluation of group process and effectiveness Documentation generated
Testing Testing at each stage of Research and Development Software team evaluation of product Documentation of testing process and integration
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Evaluation Plan, Cont.
Beta-site testingProduct in real world environmentCustomer feedbackConsumer feedback
Seamless integration
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Funding Plan
• SBIR Grant Funding• National Science Foundation • The NSF support’s high quality projects on important scientific, engineering, or
science/engineering education problems and opportunities that lead to significant commercial and public benefit.
• Phase 1• Maximum 100k• December 8th
• Phase 2 • January 29th
• Maximum 750k
• Old Dominion University• Provides
• Facilities• Ethernet
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Marketing Plan
Major coffee shop retailer criteria:
Extensive market shareStrong future growth and revenue
potentialCompatible market strategies in regards
to our productHigh repeat order frequency
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Market Identified
Net Revenue 2003:
$4.1 billion Net Earnings 2003:
$268.3 million 77% of Net Revenue
from beverage sales
http://www.fool.com/news/commentary/2004/commentary040130ram.htm http://www.starbucks.com/
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Starbucks U.S. Market by Stores
Source: http://www.organicconsumers.org/starbucks/indie-coffee.cfm AND http://www.starbucks.com/aboutus/pressdesc.asp?id=454
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Market: Customer Use
A: Are you a repeat customer here?B: Do you order the same thing most of the time?C: If you had small device that could store your order would you use it?D: If you could pay with this device also, would you use it?
Starbucks Survey50 people
98%
2%
70%
30%
54%
46%
52%
48%
0
10
20
30
40
50
60
Yes No Yes No Yes No Yes No
Am
ou
nt
of
Peo
ple
A B C D
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Faster Service Generates Revenue
Statistics indicate that each six-second improvement in speed of service generates an extra 1 percent of sales.
Wireless payment methods have shaved 15 to 20 seconds off transaction times.
McDonald’s CEO Jack Greenberg http://pittsburgh.bizjournals.com/pittsburgh/stories/2004/05/31/story6.html?t=printable%208sep04 http://www.chainleader.com/archive/0702/0702tech.html
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Starbucks Card
Consumer use
Stored value card Starbucks Card: 35 million cards activated to date. Customer “buys” card at store, over the phone, or
on the Starbucks website Customer registers on Website or over the phone Ties registered user to unique number on card
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Competition Table: Quick Pass vs. Starbucks Card
Quick Order Pass (RFID)
Starbucks Card
(Magnetic Stripe)
Transaction time 15-20 seconds faster Normal
Duration 100,000 cycles 1,000 cycles
Durability High Durability Low Durability
Storage Capacity 1000+ Bytes 210 bytes
Security Encryption possible No Encryption
Cost $0.20 + $0.01-$0.40
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Quick Order System
Will follow exact same registration process as current system
Transponder can be in card or keychain format
Requires addition of customer order number field in the central database
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Functional Flow
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Quick Pass: First Use
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Functional Flow
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Quick Order Pass Full Use
Register Person: Hi, how may I help you?Customer: (Uses Quick Order Pass) Register Person: Thank you and have a nice day.
Order Display:
Double café latteTotal: $1.03Change: $0.00
SaveOrder
Pass
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Required Components
RFID Reader Model p_1023
Transponder POS Terminal
IBM 4695-322 Software Package
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Phase 0: Deliverables
Feasibility presentationMilestone presentation
WBSFinal Approval presentation
SBIRProject Website
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Phase 0: Conception Schedule
32
Phase 0: Project Conception
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Phase 0: Budget
None
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Phase 1: Deliverables
Documentation Technical Description Paper Budget White Paper Draft Sub-contractual Paper User’s Manual
Market ResearchPrototype DesignLab PrototypeProject WebsiteSBIR Phase 2
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Phase 1: Proof of Concept Schedule
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Phase 1: Organization
37
Phase 1: Budget
38
Phase 2: Deliverables
Production SpecificationsBeta-test contractsManagement planPersonnel planTest/Evaluation planMarketing plan
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Phase 2: Prototype Development
40
Phase 2: Prototype Development Organization Chart
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Phase 2: Budget
42
Phase 3: Deliverables
Sales ContractsProduct ManualsCustomer Support LocationProduct Roll-outOut Year Strategy
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Phase 3: Production Schedule
44
Phase 3: Production Organization Chart
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Phase 3: Production 1st Year Budget
46
Phase 3: Out Year Budget
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Transition
Security
Starbucks Not Interested
Component Cost
Consumer Acceptance
Risk Analysis/Mitigation
48
3 5
2
4 1
Risk Matrix
Risk Mitigation Likelihood Consequence
Consumer Acceptance Slight difference from current use
3 5
High component cost Cost Benefit
Analysis
4 3
Starbucks not interested Additional market research - modify product
2 5
Security Device Proximity 2 3
Transition Training 5 1
Likelihood
Consequence
5
1 5
Legend
Low High
Rank
1
2
3
4
5
49
Starbucks Profit by Tag Use
947,000
2,840,000
4,730,000
9,500,000
14,200,000
23,700,000
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Profit (dollars)
1 percent 3 percent 5 percent 10percent
15percent
25percent
Customers using Tag
Starbucks Profit by Customer use (per fiscal year)
Refer to Appendix for details
50
Starbucks Break Even Analysis
Starbucks Break Even Analysis
-6,200,000
3,300,000
9,500,000
-8000000
-6000000
-4000000
-2000000
0
2000000
4000000
6000000
8000000
10000000
12000000
Year 1 Year 2 Year 3
Year
Pro
fit
(do
llar
s)
Refer to Appendix for details
51
QOS, Inc. Profit by Transponder
500,000
1,500,000
2,500,000
3,500,000
4,500,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Profit (dollars)
5 million 15 million 25 million 35 million 45 million
Number of Transponders
QOS, Inc. Profit by Tranponder
5 million
15 million
25 million
35 million
45 million
Refer to Appendix for details
52
QOS, Inc. Profit by Hardware
474,000
1,185,000
1,895,000
2,605,000
3,790,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Profit (dollars)
1000 stores 2500 stores 4000 stores 5500 stores 8000 stores
Stores
QOS, Inc. Profit by Hardware
1000 stores
2500 stores
4000 stores
5500 stores
8000 stores
Refer to Appendix for details
Starbucks SEC filing: Long term goal of 30,000 stores
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QOS, Inc. Break Even Analysis of Product Roll Out
0
1000000
2000000
3000000
4000000
5000000
6000000
0 days 91 days 182 days 273 days 364 days 455 days
Rev
enu
e (d
oll
ars)
Revenue
Cost
QOS, Inc. Break Even Analysis of Product Roll Out
Refer to Appendix for details
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QOS, Inc. Profit and Cost Analysis of Years after Product Roll Out
0
400000
800000
1200000
1600000
2000000
0 days 73 days 146 days 219 days 292 days 365 days
Re
ve
nu
e (
do
llars
)
Cost
Revenue
QOS, Inc. Profit and Cost Analysis of Years after Product Roll Out
Refer to Appendix for details
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Summary
Efficient and convenientBased on developed technology
Highly accurateEasy to integrate
Strong market potential
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Questions
?
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Appendix
A. Hardware Cost 47 - 48B. Projected Cost and Profit 49 - 54 C. Determining Cost 55D. Survey Raw Data 56 -57E. Starbucks Information 58 – 62
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Hardware Cost
Hardware cost: RFID Readers: Base cost is 45.00, Cost to Starbucks 90.00 Cables: Base cost is 3.00, Cost to Starbucks 6.00 Installation: Base Cost is 110.00, Cost to Starbucks 220.00 Figures from Hardware Installation Table assume 3 registers. Transponder: Base Cost is 0.20, Cost to Starbucks is 0.30
5500 stores are capable of accepting the Starbucks Card currently
http://www.phidgetsusa.com/viewcategory.asp?category=USB+Sensors http://www.starbucks.com
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Hardware Installation Profit Table
Item Number of units
Base Cost Cost to
Retailer
Profit
RFID Reader 3 @ 45.00 135.00 270.00 135.00
Cables 3 @ 3.00 9.00 18.00 9.00
Mounting and Installation
3 @ 110.00 330.00 660.00 330.00
Total 948.00 474.00
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Hardware Costs to Starbucks
948,000
2,370,000
3,790,000
5,210,000
7,580,000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Cost (dollars)
1000 stores 2500 stores 4000 stores 5500 stores 8000 stores
Number of Stores
Hadware Installation Cost to Starbucks
1000 stores
2500 stores
4000 stores
5500 stores
8000 stores
Refer to Appendix for details
61
Transponder Cost to Starbucks
1,500,000
4,500,000
7,500,000
10,500,000
13,500,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
Cost (dollars)
5 million 15 million 25 million 35 million 45 million
Transponders
Transponder Cost to Starbucks
Refer to Appendix for details
62
Determining Profit / Cost
Estimates based off Starbucks Net Revenue, 2003. 77% beverage sales
4.1 billion X 0.77 = 3.157 billion
Time: 15-20 second range from statistics, we use 18 second average
Sales increase 1% for each 6 seconds saved, therefore 18 / 6 = 3% increase in sales
3.157 billion x 0.03 = 94,710,000 million
94,710,000 assumes 100% customer use
Scaled Values based on current Starbucks Card Customer use
1. Starbucks Card represented 10% of all transactions in 2003
2. Starbucks Card, 35 million total activated to date
Profit potential (assuming 10% customer use): 94,710,000 x 0.10 = 9,471,000 million
Potential Cost: 35 million x 0.30 = 10.5 million
http://www.fool.com/news/commentary/2004/commentary040130ram.htm http://www.starbucks.com/aboutus/pressdesc.asp?id=451 http://www.entrepreneur.com/article/0,4621,315202,00.html http://www.mindfully.org/Technology/2004/HyperActive-Bob8sep04.htm
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Estimates based off current Starbucks trends and data. 6,000 Starbucks, 3 new stores open daily 35 million Starbucks Cards sold to date assume complete replacement in 3 years 12 million Starbucks Cards sold per year, assume sales of 12 million tags per year $.10 profit per sale of transponder, $474 profit per store installation 1st year QOS, Inc. production cost is 1,368,600 (estimated in budget) 25 installation technicians, assume retrofit average of 25 stores per working day 240 working days per year
Profit for Product Roll Out:
35,000,000 / 3 years = 11,666,000 + 12,000,000 = 23,666,000
6,000 stores x $474 = $2,844,000 profit to retrofit existing Starbucks
25 / 6,000 = 240 working days to retrofit (240 working days = 1 year)
23,666,000 * $.10 = 2,367,000 profit from transponder sales
$2,367,000 + $2,844,000 = $5,211,000 total
Profit for years after product roll out:
3 new stores daily * 365 days = 1,095 stores
1,095 stores x $474 = $519,000 profit to retrofit new Starbucks stores
12,000,000 x $.10 = 1,200,000 profit from transponders
$519,000 + $1,200,000 = $1,719,000
Determining Profit / Cost for QOS, Inc.
http://biz.yahoo.com/bw/041014/145258_1.html http://www.glscs.com/archives/1.02.norton.htm?addcode=30 http://www.thebatt.com/news/2002/08/12/FrontPage/Starbucks.Store.Comes.To.College.Station.Scene-518368.shtml
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Survey Raw Data
Total 50 people surveyed Starbucks, Ghent Location 3-5pm
Questions Asked: 1. Are you a repeat customer here
Yes: 49 No: 1
2. Do you order the same thing most of the time? Yes: 35 No: 15
3. If you had a small device that could store your order, would you use it? Yes: 27 No: 23
4. If you could pay with this device also, would you use it? Yes: 26 No: 24
5. Of the people who answered Yes to 3 would they also pay with it? Yes: 26 No: 1
65
Survey Raw Data
Location: Starbucks (Greenbrier location) Time: Times below recorded from Employee greeting, to receipt generation (in seconds)
81, 38, 32, 51, 46, 33, 72, 117, 76, 19, 24, 18, 23, 33, 77, 65, 32, 66, 16, 23, 31, 28, 14, 33, 40, 29, 25, 40, 130, 60, 31, 52, 20, 43, 41, 21, 37, 52, 24, 14, 18, 66, 24, 22, 35, 50, 20, 80, 34, 45
Average is 42 seconds
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Starbucks Growth
67
Starbucks Projected Growth
www.starbucks.com
1000
4400
8700
15,000
30,000
0
5000
10000
15000
20000
25000
30000
Number of Stores
1998 2001 2004 2006 long term
Year
Starbucks Store Growth
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Commitment to Innovation
“These strong trends can be attributed to an all-time high level of innovation, continued speed-of-service improvements, and successful new store concepts”
Jim Donald, Starbucks CEO designate
69
Starbucks Vision
Starbucks continues to refine the Starbucks Experience:
“Starbucks has become an enduring, global brand by continually raising the bar and finding ways to innovate throughout all areas of the business”
CEO Designate, Jim Donald
70
Starbucks Order Modifiers
Americano: A coffee made w/ two shots of espresso and hot water.
Breve: A latte made w/ half-and-half. Cappuccino: A drink made w/ espresso and
foamed milk. Con Panna: Italian for whipped cream Creme: A coffee-free beverage Demitasse: Half-cup Doppio: Italian for double Double: Two shots of espresso Dry: More foam, less milk Espresso: Coffee's purest, sweetest and most
intense form. Frappucino: Icy and smooth drink Grande: 2nd to the largest size drink Half-Caf: One shot of regular and one shot of
decaf Latte: A drink made w/ espresso and steamed
milk Light: Less of something in a drink Macchiato: Italian for marked or stained Misto: Italian for mixed, combination of drip
coffee and steamed milk Mocha: A drink made w/ espresso, chocolate and
steamed milk
Quad: Four shots of espresso in a drink Ristretto: A short pull of espresso, capturing only
the sweetest part Shaken: Iced tea or coffee mixed w/ ice in a
shaker Short: Small drink size Single: One shot of espresso in a drink Skinny: Made w/ nonfat milk Solo: One shot of espresso by itself Tall: Regular size drink Triple: Three shots of espresso in a drink Unleaded: Decaffeinated Valencia: Orange syrup Venti: Large size drink Wet: More milk, less foam Whip: Whipped cream With Legs: To Go With Room: Space to add milk in a drink
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Order Times
Transaction Time
0
20
40
60
80
100
120
140
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
Order Number
Tim
e (s
eco
nd
s)
Average Order Time (from greeting to receipt): 42 seconds
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Software GUI
Register Person: Hi, How may I take your order?Customer: I would like a double café latte please.Register Person: Double café latte, that will be $1.03 please.Customer: Here is $2.00.Register Person: Okay $2.00Register Person: here is your change and receipt. Thank you and have a nice day.
Order Display:
Double café latteTotal: $1.03Payment: $2.00Change: $0.73
73
Software Translation
Actual Start Actual Finish
Venti Decaf Café Latte Skim milk Extra Hot
Customer Order Number0010010101001011100101
Software Translation
Register Side Database matches bits to actual order
items
01001 à Cafe Latte
Order #, 100 bits
1010010111101010101….
Existent register software
matches item to cost and totals
order
