coffee shop opening

In Paris, the new shop would be a full-service café. The café will serve a full menu of reasonably priced "comfort" food and beverages inspired by African coffee and cooking practices. The pieces, however, will be focused on time-honored recipes from around the world. The café will include a dessert bar, a venue for live dance and music, especially on Fridays and weekends, magazines, and free Wi-Fi for customers.

Marvin and Smith LLC, a Paris limited liability company run by Smith and Marvin, both Paris natives, will own and own the coffee shop. The business plan presents interested financial agencies a chance to review our strategic focus and vision. It also offers a step-by-step plan for the shop start-up.

The plan features the choice of the location or country, marketing mix, geographical area, financial assessment, and conclusion.

This place is a tourist destination which attracts visitors throughout the year. Setting up a coffee shop in this location will ensure continuity of the business through constant customer inflow. The city is near the river banks thus it offers a serene environment attractive to many visitors, both local and international.

Choice of the City for the coffee shop

The basis of choosing Paris is that it is the most populated area in Paris with a total population of about 13, 378 followed by Lyon, Marseilles, and Lille (Anon 2017). The population also comprises of a good number of people who like coffee.

The French government created new business status for people interested in establishing a business in the country by offering tax breaks and streamlined corporate registration procedure in 2009 (Anon 2017). Currently, Paris has many start-ups such as BlaBlaCar and Deezer among others.

The majority of workers in Paris can afford a cup of coffee daily. The table and figure show the average income of people aged above 65.

Table 1: Average Household Income

Category

Household Income ($)

Under 25

39,917

25 to 44

39,907

45 to 64

46,422

Above 65

39,621

(Source: Anon 2017)

Figure 1: Average Household Income

(Source: Anon 2017)

As evident in table 1 and figure 1, the level of income shows that most of the residents in Paris can afford a cup of coffee and maybe one for a friend on their way to work or after work.

Employment level is high in the city with 61% of the residents being white collar employees and 39% blue collar workers (Anon 2017). As such, a high number of residents can afford a cup or two of coffee daily or five times a week.

Paris is strategically located in the Northern centre of the country. The city borders River Seine for approximately 8 miles thereby making it scenic for visitors. According to Boston Scientific Corporation (2017), Paris is a key location for transport and a home of many attractions including Eiffel Tower. Paris is also among the world’s top businesses, cultural centers, and tourist destinations. Its influence in entertainment, fashion, media, and education make it among the major cities worldwide.

Paris has a rich coffee culture. Popular drinks in the city include café au lait, made of streamed milk, grande and petite café also known as Noisette double or single espresso with cream, café leger, and café Americain also called filter coffee (Eleanor 2012, para. 2).

The coffee culture in Paris includes liquor and wine though drunk with moderation rather than being guzzled down as the case in a bar. The typical French waiter called “garcon” which Jean-Paul Sartre described his character in the book Existentialism is a good part of the Paris coffee culture. Workers in Paris especially those in café are superior and aloof, but a few admit to knowing English (Eleanor 2012). It is also worthy understanding that in the French café culture also adopted in Paris; the client is not always right. As such, it is easy to serve them without much complains. Most importantly, French waiters’ attitude is that they do not depend on tips for their earning thus there is no incentive to meet customer needs.

The other important culture is that recently smoking was allowed indoors. However, smoking in public is now illegal in the city. Therefore, customers will require a smoking zone. Parisians love taking drinks in cafés (Eleanor 2012). Unfortunately, the French coffee in the city has no good reputation. In other words, it is bitter, burnt, and weak. However, the current culture which has developed around the city, embodied by cafés such as Les Deux Magots and Café de Flore offers an opportunity for further exploration.

Nearly 80% of adults in Paris drink coffee every day (Anon, 2017). The target population might be business workers and students as they walk to work or class depending on the price charged per cup of coffee. The owners will also consider the upscale market to attract upper and middle-class coffee drinkers who can afford a cup of coffee. The age of coffee drinkers is also important. Approximately 40% of residents aged between 18 and 24 take coffee every day and about 54% of those aged between 25 and 40 indulge drink coffee daily (Anon 2017).

The coffee house will rely on finest coffee beans imported from Gumutindo Coffee in Uganda. The owner will use a Fairtrade supplier in Uganda which is directed to enable farmers in Uganda to get an independent income and run their farms. A Recent survey shows that there are high ethical concerns among customers in Uganda. The owners of the proposed coffee shop will reflect this aspect by offering high quality tea, and herbal infusions from Fairtrade acknowledged Foundations in Eastern Uganda.

Structural Consideration

Location

The new coffee shop will be located at Louvre Museum, which is one of the largest museums globally. The museum is a central landmark of the city located on the bank of River Seine. The region receives more than 8 million visitors annually. The city also constitutes one of the 8 departments of Ile-de-France administrative area. The owner will identify a vacant shop in the museum and take advantage of the visitors.

Transport

Paris is the centre of transport in the country with major public transport system. The area has many transport terminus including metro, and suburban tram routes which connect to city centre thereby making transport cheap (Timeout.com 2017). The National rail operator (SNCF) operates RER lines D, E, and C. SNCF also serves suburbs in Paris which are divided into various travel zones.

Marketing Mix

The application of the marketing mix to the coffee shop helps to standardize an organisation’s marketing strategy and improves the marketing section of the company’s business plan. The marketing mix comprises of the market, industry, internal, and competitive analysis. Contemporary companies use the P’s to solidify their strategy. As Marvin and Smith analyse their marketing mix reflecting relevant marketing aspects in Paris, they should pay attention to the information available in the marketing section of their business plan. Thus, as they expand their business to Paris, the marketing strategy will be useful as they will be in a position to identify unmet customer needs in the marketplace. Precisely, the strong marketing plan will be significant in solving and be ahead of their competitors.

Product

The coffee house will sell fairly-priced drinks to middle and upper-class guests. The venue will feature espresso-based beverages and brewed coffee, fruit smoothies, juices, and granite ices among other products related to a coffee shop. A dessert bar in the shop will serve various freshly prepared desserts which can be taken with coffee for breakfast.

Notably, most cafés in Paris do not have a menu. Similarly, the proposed coffee shop will not have a menu but take orders and prepare fresh drinks for customers. However, waiters will precisely explain all the drinks available and approximate waiting time to avoid losing customers who might be in a hurry.

Price

This section comprises of the cost of production and the selling price to the clients. The prices will be based on competitive pricing strategy which involves setting lower prices than existing related businesses but ensure quality (Jensen 2013 p. 1). A cup of coffee costs about 2Euros. Setting the price at about 1.5 Euros will attract customers quickly. However, the price should be high enough to cover the costs.

Place

Customers will be at liberty to take their drinks in the shop or have takeaways. The shop will have leather seats and table covered with white cloth. The management will also offer free Wi-Fi and charging sockets for customers taking or waiting for their orders. The entertainment bar will include soft background music and children playground for parents who might come with their children.

Promotion

The shop will offer 50% discount on the first 100 cups of coffee. Customers will choose any drink for the discount. During holidays, the shop will offer lower the prices for group customers buying more than five cups at once. The strategies will help to attract and keep a substantial number of customers to sustain the new business.

Implications of Covering a Wider Geographical Area

Organisational Culture

The development of the organisation depends on the assessment and selection of the variables that ensure the efficiency of the company. The corporations and leaders will ensure work commitment to enhancing productivity. The managers of the company establish rules, objectives, and values of the business based on the organisation culture in Paris (Chenhall 2015). The management is in charge of educating the workers about the cultural values of the organisation and to help them understand how their system works. The administration should build a culture of learning in the company.

Organisation culture has a positive effect on worker’s performance in the company. Dussault and Dubois (2013) assert that everyone has a different culture and therefore they need to adjust and fit into the values and rules of the organisation. Covering wider geographical area will result in adopting culture. Arguably, an established culture in the organisation is significant for the new workers to adapt to the company’s culture (Eleanor 2012). Therefore, worker’s commitment and team work are core roles in helping the workers to adapt to new beliefs and values of the company and improve the overall performance.

Personnel and Managing Staff Issues

When an organisation expands its operations, there is a need for human resources to make decisions revolving around workforce diversification. Access to the geographical information is essential in staff allocation to various regions. The coffee shop will employ eight full-time workers at the current market salary scale. Employees will also get bonuses in the case of customers preferring to be served by particular work. The information will be obtained through short monthly interviews with the customers to identify dedicated workers.

Covering wider geographical requires reallocation of the existing employees to the new established organisational structures. The process of allocation of workers causes discord and high anxiety due to fear of change, career ambitions and personal preferences (Khandelwal 2014). For example, a worker might feel uncomfortable to assume the new task as accountant or chef.

Another implication of wider geographical reach leads to decentralization of the personal files of the staff and must be transferred to the administration that is in charge. The new management of the staff will now compile all the relevant information of the staff, particularly, their salary, qualifications, and training, previous performance, transfer files.

4. Influence of Profitability and Liquidity on Decision Making

Profitability

The management of the company needs to understand the profitability of the firm before making decisions. Thus, there is a need for assessing the company’s financial statements since they help in predetermine the organisation ability to raise returns from its undertakings (Rico, Sayani, and Sone 2009). Therefore, Marvin and Smith’s decisions will focus on the ratios like return on investment (ROI) and assets (ROA). By evaluating this ratio, the two partners will be in a position to project their profits from Paris in France.

According to the financial statements presented, the coffee firm has the return on assets of (26,800 / 113,000 = 23.71%) this ratio is obtained by dividing net income by total assets. The ROA measures the income generated by the assets in fiscal years compared to average total assets. The ratio measures the efficiency of the company. Therefore, Marvin and Smith decision should be based on the figures resulting from these ratios.

The main reason why Marvin and Smith are going international is to maximize their revenues. Therefore, based on the profitability ratio they will be in a position to observe the ability of their coffee shop in converting their assets into the profits and make their decisions accordingly. Also, before they make their decision, they can look at the ROA for the coffee shop because assets are mostly the main investment for most companies. In this case, they should make investment decisions. In summary, the profitability ratio helps the management in making decisions revolving around the organisation’s assets. Based on the analysis, it is profitable to start a coffee shop in Paris.

Liquidity

Liquidity is organisation’s ability to change current assets into cash is a fundamental regard of the business owners because the problems arising from cash crisis can negatively affect the effectiveness of company’s operation and profitability. Marvin and Smith need to incorporate these ratios in decision making because if they are ignored, they are likely to increase the gap.

Liquidity ratios are significant in decision making. These ratios analyse the capacity of an organisation to settle their debts or when their long-term obligation becomes current (Lee, Lee, and Lee 2009, p. 32). The ratio influences the decisions of the management since the cash levels of the company keep fluctuating hence the need for consistency in decision making.

Liquidity does not only measure the cash level of the company but also indicates how easy or hard a company can raise funds or convert their assets into cash. Therefore, Marvin and Smith’s decisions about their investment should be based on this ratio. Considerably, the current ratio of their business is (35,400 / 6,200 = 5.70). The ratio is determined by dividing current assets by current liabilities. The ratio indicates that the coffee shop has the ability to settle its debt since the ratio is above the threshold.

Conclusion

In summary, the paper has analysed the benefits of expanding the coffee shop in the international market. Based on the assessment of various factors, the shop is likely to perform well in Paris because this place is a tourist destination which attracts visitors throughout the year. Setting up a coffee shop in this location guarantees the customer hence ensuring continuity of the business. However, there are certain implications which will have to the business. For example, the expansion of the business, covering wider geographical reach leads to decentralization of the personal files of the staff and adoption of different culture and must be transferred to the administration that is in charge. In my opinion, the business will first establish a small shop in Paris before expanding on a large scale depending on the performance of the smaller one. Also, it is significant for the business to operate in and international market.

References

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