Epicurean Chocolates

EPICUREAN | 1

Epicurean Chocolates | 1

Ateneo de Davao University

A Project Feasibility Study in establishing a

Chocolate Patisserie in Davao City

“EPICUREAN CHOCOLATES”

In Partial Fulfilment of the requirements in

Accounting 12: Management Consultancy

Submitted to:

Ryan Morales, CPA

Submitted by:

Dexter Val Alonday

Jeanette Amabelle Ansing

Dawn Nicca Aryata

Joshua Rey Cosare

Jasper Nikko Estimada

Maricon Mamaclay

Sweetzel Dyne Morales

Shieldon Vic Pinoon

October 2016

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Acknowledgement

We, the proponents of this feasibility study, would like to express our heartfelt gratitude to

the people who have contributed to the success and completion of this study:

To our Almighty Father, for without Him, everything will not be possible.

To our respective families, for the unfailing financial and moral support.

To Mr. Ryan Morales, CPA, subject professor, for the guidance and insights in our

revisions to make our study a good one.

To Mr. Charlon San Pedro, chef, for his insights regarding our proposed menu and sharing

his knowledge about the workings of a restaurant.

To Mr. Eric V. Mamaclay and Engr. Ely V. Mamaclay, for making the floor plan of our

proposed store.

To Rafski Pastry and Bakery Supplies, for accommodating us in our interviews regarding

the technical aspect of our study.

To Mr. Fernando Lagahit, Regional Head of DBP Davao, for sharing his knowledge

regarding the financial part of our study.

To Alonday Family, for their hospitality in offering their home and resources when we

needed it.

To the administrators of University of the Immaculate Conception, Holy Cross of Davao

College, and Mazda, for allowing us to enter their school and business premises in order to conduct

our survey.

To the respondents, who have willingly given their time to answer our survey questions.

To everyone, who have, in one way or another helped us in our journey.

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TABLE OF CONTENTS

Acknowledgment ............................................................................................................................ i

Table of Contents .......................................................................................................................... ii

List of Charts ................................................................................................................................ iv

List of Figures .................................................................................................................................v

List of Tables ..................................................................................................................................v

I. Summary of the Project ........................................................................................................1

A. Name of the Project .............................................................................................................1

B. Location ...............................................................................................................................2

C. Descriptive Definition of the Project ...................................................................................2

D. Long Range Objectives ........................................................................................................3

E. Feasibility Criteria ...............................................................................................................3

a. Market ............................................................................................................................3

b. Technical ........................................................................................................................3

c. Financial .........................................................................................................................3

d. Socio-economic..............................................................................................................4

e. Organization and Management ......................................................................................4

F. Highlights .............................................................................................................................4

a. History of the Project .....................................................................................................4

b. Nature of the Industry ....................................................................................................5

c. Problems faced by the industry ......................................................................................5

d. Mode of Financing .........................................................................................................5

e. Investment cost and initial working capital ...................................................................6

G. Major Assumptions and Summary of Findings and Conclusions .......................................6

a. Market ...........................................................................................................................6

b. Technical ........................................................................................................................7

c. Financial .........................................................................................................................7

d. Socio-economic..............................................................................................................8

e. Organization and Management ......................................................................................8

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II. Market Study .......................................................................................................................10

A. Product Description ...........................................................................................................10

B. Market Description ............................................................................................................11

C. Supply ................................................................................................................................13

D. Demand ..............................................................................................................................18

E. Price Study .........................................................................................................................32

F. Marketing Program ............................................................................................................35

III. Technical Feasibility ...........................................................................................................52

A. The Products ......................................................................................................................52

B. Production Process .............................................................................................................71

C. Production Scheme and Operations ...................................................................................76

D. Plant Location ....................................................................................................................78

E. Establishment Layout.........................................................................................................80

F. Machinery and Equipment .................................................................................................83

G. Building and Facilities .......................................................................................................96

H. Raw Materials and Supplies.............................................................................................102

I. Utilities .............................................................................................................................110

J. Waste Disposal.................................................................................................................111

K. Labor Requirements .........................................................................................................112

L. Production Cost ................................................................................................................114

IV. Financial Aspect ................................................................................................................115

A. Major Assumptions used in the preparation of Financial Statements..............................115

B. Total Project Cost ............................................................................................................117

C. Initial Working Capital Requirements .............................................................................118

D. Alternative Sources of Financing.....................................................................................119

E. Sources of Financing the Project .....................................................................................120

F. Pro-Forma Financial Statements ......................................................................................122

G. Financial Analyses ...........................................................................................................140

a. Financial Ratios .........................................................................................................140

b. Horizontal and Vertical Analyses ..............................................................................142

c. Capital Budget Analysis ............................................................................................148

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1. Payback .............................................................................................................148

2. Discounted Payback ..........................................................................................149

3. Net Present Value .............................................................................................149

4. Internal Rate of Return......................................................................................150

H. Accounting and Control Policies ..................................................................................151

a. Revenue Cycle ........................................................................................................151

b. Expenditure Cycle ...................................................................................................153

V. Socio Economic Aspect .....................................................................................................156

VI. Organization and Management Study ............................................................................158

A. Basic Considerations in Forming the Organization ......................................................158

B. Form of Ownership .......................................................................................................159

C. Key Personnel ...............................................................................................................160

D. Organizational Policy....................................................................................................162

Appendices ..................................................................................................................................164

Bibliography ..............................................................................................................................194

APPENDICES

Appendix 1.0. Articles of Partnership..........................................................................................164

Appendix 2.0. Lease Contract ......................................................................................................167

Appendix 2.1. Survey Questionnaire ...........................................................................................171

Appendix 3.0. Cost of Raw Materials ..........................................................................................172

Appendix 4.0. Credit and Debit Card Transaction Path ..............................................................177

Appendix 4.1. Lists of banks for future borrowings ....................................................................178

Appendix 4.2. Computation of WACC........................................................................................182

Appendix 4.3 Local Business Tax Matrix ..................................................................................183

Appendix 4.4 Basis for Inflation Rate .........................................................................................184

Appendix 4.5. DBP Credit Terms ................................................................................................185

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LIST OF CHARTS

Chart 2.0. Epicurean’s Annual Share in the Overall Demand for Cakes in Units for the Years

2016-2021 ........................................................................................................................................2

Chart 2.1. Epicurean’s Annual Share in the Overall Demand for Cupcakes in Units for the Years

2016-2021 ......................................................................................................................................29

Chart 2.2 Epicurean’s Annual Share in the Overall Demand for Cookies in Units for the Years

2016-2021 ......................................................................................................................................30

Chart 2.3 Epicurean’s Annual Share in the Overall Demand for Ice Cream in Units for the Years

2016-2021 ......................................................................................................................................30

Chart 2.4. Epicurean’s Annual Share in the Overall Demand for Hot Chocolate Drinks in Units

for the Years 2016-2021 ................................................................................................................31

Chart 2.5. Epicurean’s Annual Share in the Overall Demand for Cold Chocolate Drinks in Units

for the Years 2016-2021 ................................................................................................................31

Chart 3.0. Order Processing Flow .................................................................................................70

Chart 3.1. Take-out process Flow ..................................................................................................71

Chart 3.2. Production Process ........................................................................................................72

Chart 3.3. Order Processing ..........................................................................................................73

Chart 3.4. Raw material Procurement Process...............................................................................74

Chart 3.5. Raw material Receipt Process .......................................................................................75

LIST OF TABLES

Table 2.0. Number of Pastry and Coffee Shops in Davao City for the past five years .................13

Table 2.1. Projected number of Pastry and Coffee Shops in Davao City for the next five years ..13

Table 2.2 Respondent’s Response on Whether They Have Health Issues with Chocolate Products

........................................................................................................................................................19

Table 2.3. Weighted Number of Responses for Respondents’ Preference of Premium Chocolate

House ............................................................................................................................................20

Table 2.4. Weighted Percentage of Frequency of Going to Hangout/Study Place/Cafe of

Respondents ...................................................................................................................................22

Table 2.5. Percentage of Respondents with Consumption of Products of 1-2 times and More

than 2 times Per Week ...................................................................................................................23

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Table 2.6 Computed Daily and Annual Demand for Each Product ...............................................24

Table 2.7 Estimates of market share for a new food business with different levels of competition

........................................................................................................................................................25

Table 2.8. Epicurean’s Share in the Computed Overall Annual Demand in Davao City for Each

Product in Units ............................................................................................................................26

Table 2.9. Computed Percentage of Prospective Customers of a Chocolate House and Target

Market per Week of the Current Year and the Next Five Years

........................................................................................................................................................27

Table 2.10. Overall Demand per Day per Product in Units for the Next Five Years. ..................27

Table 2.11. Epicurean’s Annual Share in the Overall Demand in Units for the Next Five Years 28

Table 2.12. Demand-Supply Ratio Based on Present and Forecasted Demand and Supply .........28

Table 2.13. Comparative presentation of competitor’s price range. .............................................32

Table 2.14. Computed average price floor and average price ceiling. .........................................33

Table 2.15. Changes in the prices of Malagos Chocolates; for the last two years, the prices

increased by 20%. ..........................................................................................................................34

Table 2.16. Computation of Advertising and Promotional Cost ...................................................51

Table 3.0. Summary of Epicurean’s Production Capacity .............................................................77

Table 3.1. List of Raw Materials with Corresponding Descriptions, Shelf Life, Prices, and

Suppliers ......................................................................................................................................110

Table 3.2 Water Rates Data .........................................................................................................110

Table 3.3. Computation of Estimated Monthly Water Bill ..........................................................110

Table 3.4. Computation of Total Estimated Monthly Electricity Bill .........................................110

LIST OF FIGURES

Figure 2.0. Market Positioning Map ..............................................................................................17

Figure 2.1. Products’ Packaging Layout ........................................................................................38

Figure 2.2. Social Media Account’s Layout ..................................................................................44

Figure 2.3. Promotional Poster Layouts ........................................................................................47

Figure 3.0. Suggested Arrangement of Items ................................................................................73

Figure 3.1 Day before opening day ...............................................................................................76

Figure 3.2 Regular Operating days ................................................................................................77

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Figure 3.3. Location Map...............................................................................................................78

Figure 3.4. Front View of Actual Location ....................................................................................78

Figure 3.5. Interior perspective of Actual Location ......................................................................79

Figure 3.6. Interior perspective of Actual Location ......................................................................79

Figure 3.7. Current Floor Plan of the building...............................................................................81

Figure 3.8. Epicurean’s Floor Plan ................................................................................................82

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CHAPTER I

SUMMARY OF THE PROJECT

A. Name of the Enterprise

The name of the enterprise will be Epicurean. Epicurean is rooted from the name of the ancient

philosopher, Epicurus. Epicurus advanced the philosophy Epicureanism, which teaches that the

greatest good is to seek modern pleasures in order to attain a state of tranquility, freedom from

fear, and absence from bodily pain. Epicurean as an adjective, means appreciation of good food

and drink. The proponents have chosen the name because Epicurean, as an enterprise, aims to serve

good food, drink, and service to its clientele.

Epicurean’s logo sports white chocolate bars which form the letters E and C. It symbolizes

Epicurean’s primary ingredient in all the food and drink that it will serve, which is chocolate. The

logo’s dominant color is brown which symbolizes the color of chocolates.

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B. Location

The proponents chose to establish Epicurean in a 150 sq.m. commercial space available

for lease situated at the ground floor of Fabie Building, Poblacion District, Davao City. It is located

in the downtown area – in front of UCCP Church’s Shalom Center, at the back of Gaisano South

Citimall, and few blocks away from Apo View Hotel and People’s Park.

The following are the factors considered in choosing the location. First, the initial capital

outlay in putting up the shop would be lesser. The cost of renovation and monthly rental fee would

be cheaper than the cost of buying a land and constructing a new building. Second, the shop would

be accessible to its customers since it would be situated in the downtown area where several

jeepneys pass. Lastly, the place would be conducive for study, business meetings, hang-out, and

the like because the location of the shop is not crowded nor busy.

C. Descriptive Definition of the Project

The project is proposed by a group of fifth year students of Ateneo de Davao University

enrolled in the course, Bachelor of Science in Accountancy. The proposition is due to the

proponent’s foreseen potential of establishing a chocolate house in Davao City i.e. the advantages

of entering an unsaturated industry.

Epicurean, the name of the business proposed, is a conceptual chocolate house in Davao

City that would be established through a contract of partnership. As a chocolate house, it will offer

products that have chocolate as the main ingredient such as chocolate cakes, cupcakes, cookies,

ice cream, and hot and cold chocolate drinks.

Epicurean would also adopt the concept of a patisserie which would have the products

displayed for easy selection. As a unique concept in Davao City, the business is expected to attract

college or senior high school students, young professionals, and other businessmen. Specifically,

the target market of Epicurean would be those with ages ranging between 15 and 34 and have an

income or allowance ranging between Php 1,001.00 and above.

In Davao City, there is only one known shop with the same concept with Epicurean i.e.

Chocolatier. However, the business would have many indirect competitors such as coffee shops

and pastry shops. The coffee shop industry, especially “homegrown” coffee shops, is continually

flourishing in Davao City (DavaoFoodTripper, 2014). Nonetheless, Epicurean, with something

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new to offer, is believed to have a huge potential of being a successful and profitable business

venture.

D. Long Range Objectives

Within ten years from its establishment, Epicurean aims to:

be widely known for its premium and quality product and service offering;

be a major player in the coffee and patisserie shop industry in Davao City;

create and maintain a loyal customer base;

be able to produce its chocolates (backward integration);

maintain if not increase a dominant market share despite potential entries of patisserie

shops in Davao City; and

have a considerable growth in Return on Assets of 20% per year.

E. Feasibility Criteria

Market

The main concern under this criterion is the capability of the business to introduce

itself to the market. This also concerns the determination of an existing demand for the

products offered by the business. This criterion determines the level of existing competition

in the same and related industries and the capacity of the business to compete.

Technical

Important considerations under technical feasibility are the availability of raw

materials needed for the production especially the seasonality of fruits to be used,

availability of technology relevant to Epicurean’s industry that are affordable and cost-

efficient, availability of spaces for Epicurean’s location, availability of manpower, and its

production capacity to meet demand.

Financial

The Internal Rate of Return (IRR), Net Present Value (NPV), and the Payback

Period are the measures that critically quantify the financial feasibility of the project. Ratios

such as liquidity, leverage and profitability are computed using the projected financial

statements prepared. These factors are affected by the (1) availability and mix of equity

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and debt sources of financing, (2) the computed Weighted Average Cost of Capital

(WACC) and (3) assumptions.

Socio-Economic

The primary considerations in this feasibility criteria are: how the project would be able

to help the people in the community, the government, and the economy of the country. In

line with this, specific activities are to be implemented to achieve the abovementioned

criterion.

Organization and Management

The primary considerations in choosing what type of organization and management

scheme to apply for Epicurean is the sufficiency of initial financing that it could provide to

the entity and how efficient and effective it will be in the implementation of the project. In

addition, the organizational chart used in the business, the policies and standards set are

also considered.

F. Highlights

History of the Project

The idea of a chocolate house emerged after the proponents read an online article

stating that in the present, one of the businesses with high potential for booming is a

chocolate house. The idea was then supported by the latest news about Malagos Chocolate

being awarded with Silver Awards in the 2015 International Chocolate Awards in

Germany. Given that Philippine chocolate is already internationally recognized as good

chocolate, the proponents were convinced of the great potential of establishing a chocolate

house.

The proponents then observed and researched on the popular chocolate houses in

Davao City and found only one which is Chocolatier. The said business is located at

Abreeza Mall, Davao City. The idea that the proponents had in mind for a chocolate house,

however, is in an independent location like most coffee shops and not attached to a mall

or any bigger entities. This made the idea unique and convinced the proponents to pursue

the project. Since there are no existing chocolate houses that positions itself the way the

proponents plan to position their conceptual chocolate house in terms of product

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presentation and offerings, the proponents pursued the project and named the conceptual

chocolate house, Epicurean.

Nature of the Industry

Description

A patisserie is a type of French or Belgian bakery that specializes in pastries

and sweets. Basically, a patisserie is a pastry shop with the distinction of its product

presentation.1 In Davao, the equivalent types of shop are coffee shops. The coffee and

pastry shop industries pose a tight competition in the market due to the many number

of shops littering the city.

Role in the economy

The Epicurean Chocolates belongs to the Hotel and Restaurant Industry. Based

on the census conducted by the Philippine Statistics Authority (PSA) on the year 2012,

the Restaurant and Mobile Food Service Activities, under the Hotel and Restaurant

Industry, garnered the highest number of establishments in the country which is

around 70% of the whole industry. With this, the Restaurant and Mobile Food Service

Activities give the highest percentage of employment and highest compensation to its

employees within its industry. It also ranked as the highest income earner and biggest

expenditure spender.

Products/product lines

A patisserie usually offers sweets such as cakes, cupcakes, cookies, pancakes,

ice cream, and hot and cold drinks. Epicurean will offer all of the mentioned products

with the exception of pancakes.

Problems Faced by the Industry

The chocolate house industry is not yet fully established in Davao City. Hence, it

faces the challenge of introduction to the market. There is no guarantee that businesses in

this industry would garner market acceptance. In addition, chocolate products are also

offered in most coffee and pastry shops which makes the industry prone to being

1 See Figure 3.0

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overmastered by the industry of coffee shops and pastry shops which are continually

thriving in Davao City.

Mode of Financing

Two modes of financing will be used. They are the following:

1. Long term borrowings from banks

2. Capital contributions from partners.

Specific capital structure is indicated in Chapter IV | Financial Aspect of this paper.

Investment Cost and Initial Working Capital

The project will be financed by the capital contributions of the partners and term

borrowings from local banks. The initial working capital will be used to pay for

Epicurean’s tax contributions and regulatory fees for partnership registration. These will

enable the business to operate and assure its customers that they are duly authorized to

open a patisserie.

Also, the initial investment will be used to fund the renovation of the store. It will

require a huge percentage of the initial investment. Moreover, in order for the store to

operate, it will require cash to fund its first two months of operation. These cash will come

from both the initial investment and the operation of the business for the first month.

G. Major Assumptions and Summary of Findings and Conclusion

Market

There is no data available about the historical demand level for Chocolate

Patisserie in Davao City. Hence, the current level of demand in Davao City for the

products offered by Epicurean is computed based on the survey conducted by the

proponents. There are 524 respondents of the survey with ages ranging from 15 to 34 years

old. The share of Epicurean in this overall demand is determined to be 5%. The projected

demand levels for all the products are at an increasing trend.

The projected data about the number of shops supplying similar products with

Epicurean shows no trend. This is made through moving average method.

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The target markets of the entity are senior high school and college students, and

young professionals with ages ranging from 15 to 34 years old having weekly allowance

or income of Php 1,001.00 or more. Chocolate, the main ingredient will be highlighted in

all of Epicureans products. The entity is a service-oriented establishment that provides

quality service to customers and offers chocolate products. The marketing strategy that

will be used to reach the market and secure a competitive position is mainly through the

use of Social Media namely Facebook, Twitter, and Instagram. Printed ads will also be

used by Epicurean for its advertising. The entity aims to attract customers and turn them

into patrons.

Technical

Raw materials of Epicurean needed for baking will come from Rafski Pastry and

Bakery Supplies. The chocolates that will be used as the main ingredient will also come

from the same supplier. Fruits that will be used as ingredients will come from the

Bankerohan wet market.

Orders for raw materials will be made every end of the week for the forecasted

demand of the next week. In cases where materials fall below critical level before the end

of the week, an order should be placed to replenish inventory levels enough for the

remaining days of the week. Shortages will be determined by checking the quantity of raw

materials in the storage room after every end of a work day. Product shelf life will also be

considered when buying raw materials.

Technology needed for Epicurean’s operation are primarily kitchen appliances and

tools such as ovens for baking, chillers for display of products, refrigerator for storage of

raw materials and other finished products not on display, freezer for ice cream display,

blenders for chocolate drinks, and other basic baking tools and equipment such as baking

pans, spatulas, and others.

Baked goods will undergo basic and specialized baking procedures. This process

will be done by the kitchen crews and the chef. Hot and cold chocolate drinks will undergo

heating, stirring, and blending by the front crews. Crews should always be courteous and

offer smiles to the clients.

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Epicurean’s staff will be composed of one chef, four kitchen crews, four front

crews/cashiers, and two shop cleaners. The chef will act as the store supervisor and in-

charge of the daily activities of the establishment as well as its employees.

Financial

Under financial feasibility, major assumptions include (1) all sales transactions are

made in cash, (2) purchases are made in cash and in credit, (3) sales are made evenly

throughout the year, (4) quantity of products sold increases by 2.3% per year based on

projected sales in the market study and (5) and an inflation rate of 4%.

Total capital requirements is P3,262,377.90. Paid-up capital of P660,000.00 will

be sourced from the partners on January 2017 which is 20% of the total capital

requirements. The remaining 80% amounting to P2,640,000.00 will be sourced out from

long-term debt.

For five years of operations, Epicurean has maintained a positive return. Payback

period is approximately 3 years and 5.25 months while return on equity for five years has

an average of 80.74%.

Socio-Economic

The main beneficiary of Epicurean will be the unemployed members of the

community. Epicurean targets to hire college students who are taking up Hotel and

Restaurant Management course and in need of financial help for their studies. Another

activity to help the community is distributing edible left-overs to beggars. Epicurean will

also provide additional revenue to the government through taxes. It will also promote the

locally produced chocolates.

Organization and Management

Epicurean’s form of business will be a partnership. Two partners will pool their

financial resources in order to realize the business. One partner will be a capitalist-

industrial partner and another will be a capitalist partner. They will share in the net profit

of the establishment in a 60:40 ratio with partner A receiving 60 and partner B receiving

40. They will hire a chef which will supervise the kitchen as well as other employees of

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the establishment such as the kitchen crews, front crews/cashier, and shop cleaner. The

Chef will then report to the partners. Also, policies will be established to manage the

business.

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CHAPTER II

MARKETING ASPECT

A. PRODUCT DESCRIPTION

Chocolate is one of the most famous desserts in the world. Every day, many people around

the world eat and crave for chocolate. The types of chocolate products made from cocoa bean

processing that will be used for our products are listed below.

Dark Chocolate: It is the type usually preferred when cooking because it has richer and

more intense flavor. The higher the cocoa solid content of a dark chocolate, the richer and more

intense the flavor you can get (Parragon, 2003). It has a minimum cocoa butter2 content of eighteen

percent (Notter, 2011).

Milk Chocolate: It is usually consumed as an ‘eating chocolate’ rather than used for

cooking. This is because of its creamy, mild, and sweet taste that the milk it contains produces. It

is used for decorations and when a recipe requires for a milder and creamier flavor (Parragon,

2003). Normally, it contains an estimate of 35% fat content. Its composition is 40% sugar, 30%

cocoa beans, 20% milk, and 10% extra cocoa butter (Notter, 2011).

White Chocolate: It is usually used to achieve color contrast when decorating cakes

(Parragon, 2003). It contains at least 20% cocoa butter and 14% milk solids. It also has 3.5% milk

fat and a maximum sugar content of 55% (Notter, 2011).

Chocolate Chips: They are usually used for baking and decorating. They are available in

dark, milk, and white variety (Parragon, 2003).

Cocoa Powder: It can be unsweetened and bitter in flavor or sweetened when mixed with

sugar. It is the powder residue after the cocoa butter has been pressed from the roasted and ground

cocoa beans. When cooking, unsweetened cocoa powder gives off a strong chocolate flavor

(Parragon, 2003).

Epicurean will make use of these types of chocolates to produce and serve a variety of

cakes, cupcakes, cookies, ice cream, hot and cold chocolate drinks.

As the leading producer of cacao in the world, the proponents will use Davao chocolates

in the store’s production. This is to increase Dabawenyo’s awareness about existing quality

chocolates in the region.

2 The natural fat present in cocoa beans. It is yielded by pressing the cocoa mass.

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The products offered will also be incorporated with fruits such as coconut, banana,

strawberry, durian, mango, and orange; nuts such as almond and pistachio; and other

complementary ingredients such as caramel, mocha, matcha, and whiskey.

As a service-oriented entity, Epicurean, will also offer quality customer service to its

customers. The staff will help the customers feel good about their day. From the moment a

customer enters the doors of the store to the time they will leave, Epicurean aims to give them a

comfortable dining experience. A heightened customer service is an important part in influencing

consumer decision whether to return or not.

B. MARKET DESCRIPTION

Epicurean’s general market will be the people of Davao and its tourists, since its location

will be in Pelayo Street, Poblacion District. As of 2010, Davao City has an estimated population

of 1.4 Million (Philippine Statistic Authority, 2013). It is ranked the 4th largest city in the

Philippines in terms of population (Worldatlas, n.d.). With regards to tourists, Davao City had

reached 680,000 visitors as counted by the Department of Tourism from accommodation

establishments in 2010 (Philippine Statistics Authority, 2012). This statistic shows that Davao City

can offer customers to current and potential establishments. Furthermore, the city has young

population. According to PSA, the median age of the population of the city is 24.0 years

(Philippine Statistic Authority, 2013). This suggests that the major customers of businesses in

Davao City will be in that age. Moreover, Davao City is a melting point of its neighboring cities

and municipalities. People from its neighboring cities and municipalities travel to Davao City to

work, to shop, and to do recreational activities.

Epicurean as a patisserie aims to attract college or senior high students, young professionals

and professionals. Due to this, the proponents decided to choose students, primarily senior high

and college students, young professionals and professionals with ages ranging between 15 – 34,

and have an income or allowance ranging between Php 1,001 and above as its target market. As to

the supply of student customers, Davao City provides a great number. Davao City has 20

College/Universities as per www.finduniversity.ph. The most popular colleges and universities in

Davao City are Ateneo de Davao University (AdDU), University of Southeastern Philippines

(USeP), Holy Cross of Davao College (HCDC), San Pedro College (SPC), University of Mindanao

(UM) and University of the Immaculate Conception (UIC). AdDU, SPC, and UIC are the schools

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which are in the high-tuition classification, with tuition ranging from Php 34,000 – 100,000 per

year. While HCDC, UM, and USeP are the schools which belongs to the low-tuition classification

with tuition ranging from Php 14,000 – 40,000 (Finduniversity.ph, n.d.). This data presents the

composition of students in Davao City in terms of allowance and buying power. Furthermore, the

result of the survey of the proponents shows that the usual student’s weekly allowance ranges from

Php 800 to Php 1000 and below Php 800. This represents 64.33% of the total students surveyed,

while the remaining 35.67% has an allowance of Php 1001 and above. This statistic shows that

most of the students have a low buying power. However, this statistic also shows that the 64.33%

is not the overwhelming majority thus allowing the proponents to implement a competitive pricing

strategy.

Davao City presents an impressive number of professional customers. According to the

article of Capon (2015), the employment rate of Davao Region remained stable at 94 percent in

April 2015 as per data from the Department of Labor and Employment (DOLE) 11. Furthermore,

based on the comparative employment status of the Davao Region for 2014 and 2015, employed

Dabawenyos reached 1,914 million of the 2,036 million total labor force. These employed

Dabawenyos are potential customers for every establishment and is a good indicator for businesses

like Epicurean.

As discussed earlier, Epicurean will serve pastries and sweets in Davao City. Consequently,

its major competitors would be pastry shops and coffee shops. In Davao City, pastry shops and

coffee shops are everywhere. Thus, the proponents decided that the point of comparison will be

Maitre Chocolatier, Starbucks, Green Coffee, Lachi’s Sans Rival Atbp. and Dulce Vida as these

are the shops that owns the bigger share of the market. First, Starbucks, a known international

coffee shop with international experience and popular name. Next, Green Coffee, a local coffee

shop which has a vast experience in the Davao City market due to its long years of existence in

the city. Another is Lachi’s San Rival Atbp, a known pastry shop in Davao City which offers cakes

at a low price. Finally, Dulce Vida, a sister shop of Tiny Kitchen, is a pastry shop which offers

premium cakes and delicacies. Despite of the advantages these shops have, the proponents believe

that Epicurean will have an edge against these competitors. According to Chef San Jose, in our

interview, a patisserie is a higher form of pastry of shop and currently there is no patisserie in

Davao City. This distinguishing feature would serve as a competitive advantage to Epicurean

because it would provide a first-mover advantage to the company.

EPICUREAN | 13

C. SUPPLY

Since Epicurean Chocolates (EC) is a type of business that is not yet common in Davao

City, we considered pastry shops and coffee shops as our competitors since these businesses offer

products similar in nature and could be substitutes to Epicurean’s products (e.g. cakes and other

pastries).

Presented below is the number of pastry and coffee shops (in total) which were able to

supply products (such as cakes, ice cream, chocolate drinks, etc.) to the Davao market for the past

five years.

Table 2.0. Number of Pastry and Coffee Shops in Davao City for the past five years

Using the average method of forecasting, we projected the probable number of pastry and

coffee shops in Davao for the next five years, presented below.

Pastry Shops Coffee Shops

2016 1 170

2017 1 171

2018 1 172

2019 1 171

2020 1 171 Table 2.1. Projected number of Pastry and Coffee Shops in Davao City for the next five years

As presented above, supply changes every year, with its number increasing and decreasing

from year to year. These fluctuations, however, do not follow a pattern; hence, the proponents

believe that the average method of forecasting is the most appropriate method in projecting the

supply for the next five years.

Among these establishments currently present in Davao City, the proponents identified five

businesses that they considered as major competitors of Epicurean. These are the following:

Maitre Chocolatier

Maitre Chocolatier is the first boutique cafe in the Philippines which offers a wide array of

High Quality, well known European Chocolate Brands. It has three branches – Manila, Cebu, and

Davao – and one of its branches is located in G/F, Abreeza Mall, J.P. Laurel Avenue, Bajada,

Davao City. The products the store serve to its clients include salads, sandwiches, soup, pasta, rice

Pastry Shops Coffee Shops

2011 2 164

2012 1 164

2013 1 169

2014 1 167

2015 1 175

EPICUREAN | 14

meals, desserts, cakes, drinks, and cocktails, all complemented with chocolates. Aside from

gourmet dishes and desserts, the store also offers chocolate gift baskets and bouquets to its

customers. The proponents considered this as a major competitor since Epicurean would offer

chocolates products, most likely similar to what Maitre Chocolatier offers.

Starbucks

Starbucks is an American coffeehouse chain. Its product offerings include pastries and

sandwiches, and coffee-based, tea, and juice drinks. Currently, it has three branches in Davao City

which have the following locations: (1) Abreeza Mall, J.P Laurel Avenue, (2) SM City, Ecoland,

Matina, Quimpo Boulevard, and (3) SM Lanang Premier, Lanang. The proponents considered

Starbucks as a major competitor since it offers products similar in nature to Epicurean’s products

(pastries, drinks), hence, could be substitutes to chocolate products.

Green Coffee

Green Coffee is a local coffee shop. Like Starbucks, its range of products include pastries

and pasta, and coffee-based, tea, and juice drinks. Currently, it has four branches: three of which

is in Davao City, located in the following areas: (1) F. Torres St., Poblacion District, (2) J.P. Laurel

Avenue, Bajada St., and (3) Ruby St., Marfori Heights; and one branch located along Apokon

Road, Tagum City. The proponents considered Green Coffee as one of the major competitors since

it offers products similar to Epicurean’s and could be considered substitutes to Epicurean’s

chocolate-based products.

Lachi’s Sans Rival Atbp.

Lachi’s Sans Rival Atbp. is a local dessert shop. Aside from the wide variety of pastries it

offers – particularly cakes – the store also offers sandwiches, rice meals, and pasta to its customers.

It has a single branch, located in Ruby St., Marfori Heights, Davao City. This store is considered

as a major competitor of Epicurean since it serves products similar to what Epicurean would be

offering (e.g. pastries and etc.)

Dulce Vida

Dulce Vida is a local dessert shop in Davao City. Aside from cakes and a variety of pastries,

the shop also offers pasta, rice meals, sandwiches, and coffee to its customers. This shop is located

at Tulip Drive Extension, Ecoland Subd., Matina, Davao City. The store also has a branch in Torres

St., Davao City under Tiny Kitchen’s management. The group considered Dulce Vida as a major

EPICUREAN | 15

competitor because of the products it offers, such as pastries, which would also be offered by

Epicurean.

Provided below are SWOT Analyses of Epicurean’s major competitors:

Strengths – Weaknesses

Strengths Weaknesses

Maitre Chocolatier

S1. Wide range of product

offerings

S2. First mover

W1. Popularity is not well

established

W2. Lack of advertisement

W3. Traditional Store Aesthetics

Starbucks

S1. The most well recognized

coffee brand internationally

S2. High quality products

S3. Established name in the

international market

S4. Competitive product prices

W1. Standardized products:

cultural differences

worldwide are not

considered

W2. Lacks product

differentiation

Green Coffee


local market

S2. 24/7 service

S3. Established customer

loyalty: Green coffee is

considered a study hub by

most college students and

preferred among coffee

shops


S5. Competitive product prices

W1. Lacks product

differentiation

Lachi’s Sans Rival

Atbp.


local market (Goodwill)

S2. Product variety

S3. Proper maximization of

their labor force

S4. Affordable product prices

W1. Very small and congested

store place: the place is

small to cater the number of

customers they have daily

W2. Lack some important

amenities such as comfort

rooms.

Dulce Vida


local market


S3. Product variety

W1. Very small store place: the

store could only cater a

small number of customers.

EPICUREAN | 16

Opportunities Threats

Maitre Chocolatier

O1. One of its kind in Davao,

hence, they can monopolize

the market

O2. Davao’s increasing interest

in premium shops

O3. Increasing number of

suppliers i.e. cacao farms

T1. New entrants

Starbucks

O1. Strong brand image as

compared to other coffee

shops

T1. High and growing

competition within the

coffee industry

T2. Dependency in coffee price

fluctuations

Green Coffee


in premium shops

T1. High and growing

competition within the

coffee industry

T2. Dependency in coffee price

fluctuations

Lachi’s Sans Rival

Atbp.

O1. Store expansion: the store

could opt to expand to cater

its high number of

customers


in new products: venture to

new products

T1. High and increasing number

of competitors (both direct

and indirect)

Dulce Vida

O1. Increasing trend in desserts

and pastries

O2. Increasing interest for

premium products in Davao

T1. New entrants in the industry

T2. High number of competitors

in the market (both direct

and indirect)

EPICUREAN | 17

Figure 2.0. Market Positioning Map

Legend:

X Axis: Price

Y Axis: Quality

High Price: X > 130

Low Price: X < 130

High Quality: Frequently Visited by Customers

Low Quality: Not Frequently Visited by Customers

As presented by the market position map above, we position Epicurean in the first quadrant

(High Price, High Quality). We want to establish Epicurean as a Premium Chocolate Shop,

offering varied chocolate-inspired food products with prices competitive to that of the industry.

EPICUREAN

Dulce Vida

Lachi’s Sans Rival Atbp. Green Coffee

Starbucks

Maitre Chocolatier

Low Price High Price

High Quality

Low Quality

EPICUREAN | 18

DEMAND

I. Current Demand

Due to the lack of availability of historical data to determine the overall demand for

the products offered by Epicurean, a survey has been made to 524 respondents. The number

of respondents is 140 more than the recommended sample size by the Sample Size

Calculator. They are composed of randomly selected students and young professionals

aging from 15 to 34 years old in Davao City.

The following factors are taken into consideration in computing for the demand:

1. Health Issues Regarding Chocolate Products

There are people who cannot eat products with chocolates due to their health

implications. Some of these implications may be allergies and tonsillitis among

others. Those whose bodies react negatively to chocolates are those that are least

likely to buy the products involving chocolates.

2. Customer Preference

Varying human preferences challenge businesses to be able to increase

demand. The idea behind this is to find the group of people sharing the same

preferences that the business wants to cater. For a concept like a chocolate house,

only those who like the idea would possibly go in that place. If the chocolate house

offers chocolate cakes but not chocolate ice creams, only those preferring cakes

among those that like the idea of a chocolate house would determine the possible

customers of the chocolate house.

3. Frequency of Patronage and/or Consumption

The number of times a person consumes a product certainly affects the

product’s demand. The more a person consumes it in a day for example increases

the demand for that product in a day as well.

4. Income or Allowance

A person’s income and/or allowance would define that person’s capacity to

purchase the products available.

After taking into consideration the factors stated, a formula was derived to estimate

the overall demand of the products offered by Epicurean in Davao City. The procedure in

arriving at the estimated demand is as follows:

EPICUREAN | 19

1. Determining the Percentage of Prospective Customers of a Chocolate House (X)

Formula:

X = (p-e) hli

Where:

X = Prospective customers of a chocolate house in percentage

p = Survey population in percentage

e = Margin of error in percentage

h = Percentage of respondents who do not have health issues with

chocolate products

l = Weighted percentage of respondents’ preference to go to a

chocolate house

i = Percentage of respondents’ whose weekly income or allowance

is P1001 or more

Application:

Before applying the formula, the following variables to the formula

are obtained first:

1. PERCENTAGE OF RESPONDENTS WHO DO NOT HAVE HEALTH

ISSUES WITH CHOCOLATE PRODUCTS (h):

Response Number of Respondents

Yes 29

No 495

TOTAL 524

Table 2.2. Respondent’s Response on Whether They Have Health Issues with

Chocolate Products

h = No. of Respondents with No Health Issues with Chocolate Products / Total

Respondents

= 495/524

= 94.46%

EPICUREAN | 20

2. WEIGHTED PERCENTAGE OF RESPONDENTS’ PREFERENCE TO

GO TO A CHOCOLATE HOUSE (l):

Table 2.3. Weighted Number of Responses for Respondents’ Preference to Go to a

Chocolate House

l = Weighted No. of Responses / Total Respondents

= 286.50 / 524

= 54.67%

3. PERCENTAGE OF RESPONDENTS’ WHOSE INCOME OR

ALLOWANCE IS MORE THAN P1000

Based on the survey, 185 out of 524 respondents have income or

allowance of P1001 or more. This is 35.31% of the sample population.

4. MARGIN OF ERROR (e):

e = z ∗ √𝜌(1 − 𝜌)

n

where:

e = margin of error

z*= value at 95% level of confidence (from table of Z*-values of

Selected Confidence Levels)

𝜌 = hli = sample portion

n = sample size

No. of

Responses

Assigned

Weight

Weighted No. of

Responses

Very Likely 223 1 223

Somewhat Likely 160 0.50 80

Neutral 122 0 0

Somewhat Unlikely 5 -0.50 -2.50

Very Unlikely 14 -1 -14

TOTAL 524 286.50

EPICUREAN | 21

Computation:

e = 1.96 ∗ √[(0.9446 𝑋 0.5467 𝑋 0.3531)][1 − (0.9446 𝑋 0.5467 𝑋 0.3531)]

524

e = 0.0331 ≈ 3%

Hence,

X = (100% - 3%)(94.46%)(54.67%)(35.31%)

= 17.69%

The result shows that 17.69% of the sample constitutes the potential

customers of chocolate house.

2. Solving the Target Market (per Week) in the Population (n)

Target Market (n) represents the group that the business would be aimed.

The target market for Epicurean is obtained by applying the percentage of

prospective customers to the actual population and the product to be defined by the

frequency of going to a chocolate house.

Formula:

n = N x ( X ) x F

where

n = Target market

N = Actual population

X = Percentage of prospective customers of chocolate house

F = Frequency of going to a chocolate house

The following variables to the formula are obtained first:

1. ACTUAL POPULATION (N):

According to results of 2010 Census of Population and Housing,

Davao City has a total population of 1,449,296 with household population

EPICUREAN | 22

of 1,443,890. Out of that, the household population of people aging from 15

to 34 years old is 540,076.

Hence, N = 540,076.

2. FREQUENCY OF GOING TO A CHOCOLATE HOUSE (F):

Respondents

(in %)

Assigned Weight

F

Never 0.1145 0 0

Rarely 0.6546 0.125 0.0818

Regularly-Once a month 0.0496 0.25 0.0124

Regularly-Once a week 0.0897 1 0.0897

Regularly-More than once a

week 0.0916 2 0.1832

Table 2.4. Weighted Percentage of Frequency of Going to Chocolate House of

Respondents

Applying the formula target market (TM), the following are the results:

nRarely = 540,076 x 17.69% x 0.0818

= 7,815

nRegularly-OAM = 540,076 x 17.69% x 0.0124

= 1,185

nRegularly-OAW = 540,076 x 17.69% x 0.0897

= 8,570

nRegularly-MTOAW = 540,076 x 17.69% x 0.1832

= 17,503

nTotal = nRarely + nRegularly-OAM + negularly-OAW + nRegularly-MTOAW

EPICUREAN | 23

= 7,815 + 1,185 + 8,570 + 17,503

= 35,073

The total target market (per week) is 35,073.

3. Determining the Total Demand per Day per product in units (Q)

The formula for the total demand (Q) is:

Q = [(nq1-2times)/7](𝑓

7) + [(nq>2times)/7](

𝑓

7)

Where

Q = Daily demand per product

n = Target market

q1-2times = Percentage of respondents with “1-2 times" weekly

frequency of buying the product

q >2times = Percentage of respondents with “More than 2 times"

weekly frequency of buying the product

f = mean of range of frequency of consumption or minimum of

range of frequency of consumption

This formula is derived from Wiley’s demand formula, Q = nqp.

The following information are obtained for the application of the formula:

Table 2.5. Percentage of Respondents with Frequency of Buying of Products of 1-

2 times and More than 2 times Per Week

Respondents in %

(q1-2times)

Respondents in %

(q>2times)

Cake 53.05 3.63

Cupcake 45.61 7.25

Cookies 49.62 17.94

Ice Cream 59.73 20.23

Hot Chocolate Drink 50.19 19.85

Cold Chocolate Drink 47.71 17.37

EPICUREAN | 24

The total demand (Q) in units for each product per day is shown below. The units

of measure referred for the products are “slices” for cake, “servings” for cupcakes, cookies

and ice creams, and “glasses/cups” for hot and cold chocolate drinks.

Qcake = [(35,073 x 53.05%)/7][(1+2

2)/7] + [(35,073 x 3.63%)/7](3/7)

= 647 units

Qcupcake = [(35,073 x 45.61%)/7][(1+2

2)/7] + [(35,073 x 7.25%)/7](3/7)

= 645 units

Qcookies = [(35,073 x 49.62%)/7][(1+2

2)/7] + [(35,073 x 17.94%)/7](3/7)

= 918 units

Qice cream = [(35,073 x 59.73%)/7][(1+2

2)/7] + [(35,073 x 20.23%)/7](3/7)

= 1076 units

QHCD = [(35,073 x 50.19%)/7][(1+2

2)/7] + [(35,073 x 19.85%)/7](3/7)

= 965 units

QCCD = [(35,073 x 47.71%)/7][(1+2

2)/7] + [(35,073 x 17.37%)/7](3/7)

= 885 units

In tabular form, the computed overall daily and annual demand in Davao

City for each product offered by Epicurean is shown below.

Product

Computed Demand per

Day in units

(Q)

Annual

Demand

in units

(Q x 360)

Cake 647 232,920

Cupcake 645 232,200

Cookies 918 330,480

Ice Cream 1,076 387,360

Hot Chocolate Drink 965 347,400

Cold Chocolate Drink 885 318,600

Table 2.6. Computed Overall Daily and Annual Demand in Davao City for Each Product

Offered by Epicurean in Units

EPICUREAN | 25

To determine Epicurean’s share in the overall annual demand in Davao City, the

percentage of the market share of Epicurean is estimated through the table provided by

Food and Agriculture Organization of the United Nations (see Table 2.7) where ranges of

estimates are provided for every combination of the factors: number of other producers of

the product, size of competitors and product range.

All products offered by Epicurean belong to the same combination – “Many” other

producers, “Small” sizes of competitors, and “Similar (S)” product range. Thus, the market

share is estimated between 5-10% from which the proponents selected the smallest of the

range, 5%, as the estimate to be applied.

No. of other

producers

Many Few One None

Size of

competitors

Large Small Large Small Large Small

Product range S D S D S D S D S D S D

Market share (%) 0-2.5 0-5 5-10 10-15 0-2.5 5-10 10-15 20-30 0-5 10-15 30-50 40-80 100

Legend: S = similar products, D = dissimilar products Source: www.fao.org

Table 2.7. Estimates of market share for a new food business with different levels of competition

EPICUREAN | 26

Epicurean’s share on the overall annual demand in units per products is as shown

on the table below.

Product

Annual Demand

in units

(a)

Epicurean’s

Annual Share in the Demand

in units

(a x 5%)

Cake 232,920 11,646

Cupcake 232,200 11,610

Cookies 330,480 16,524

Ice Cream 387,360 19,368

Hot Chocolate Drink 347,400 17,370

Cold Chocolate Drink 318,600 15,930

Table 2.8. Epicurean’s Share in the Computed Overall Annual Demand in Davao City for Each Product in

Units

II. Five-year Demand Projection

The demand computed in Part 1 was for the current year, 2016. However, the

operations will start within the year 2017.

To project Epicurean’s share in the overall demand for the first five years of

operations, the same formula is used and with the following assumptions:

1. The actual population (N) is determined by multiplying the immediately

preceding year’s population with the average population growth rate of Davao City

for 2010-2015 of 2.30% and adding the product to the immediately preceding year’s

population;

2. All other percentages and variables are constant.

Given that the current population (N0) is 540,076, the projected populations for the

next five years (N1, N2, N3, N4 and N5) are computed as follow:

N0 = 540,076

N1 = (540,076 X 0.023) + 540,076 = 552,498

EPICUREAN | 27

N2 = (552,498 X 0.023) + 552,498 = 565,205

N3 = (565,205 X 0.023) + 565,205 = 578,205

N4 = (578,205 X 0.023) + 578,205 = 591,504

N5 = (591,504 X 0.023) + 591,504 = 605,109

Now that the populations for the next five years are determined, by applying the

same formula the overall daily and annual demands for the next five years can be computed.

Table 2.9. Computed Percentage of Prospective Customers of a Chocolate House and Target

Market per Week of the Current Year and the Next Five Years

The projection of total overall demand per day per product in units for the next

five years is shown on the table below.

2016 2017 2018 2019 2020 2021

Cake 647 662 677 693 709 725

Cupcake 645 660 675 691 707 723

Cookies 918 939 961 983 1,005 1,028

Ice Cream 1,076 1,100 1,126 1,152 1,178 1,205

Hot Chocolate

Drink 965 987 1,010 1,033 1,057 1,081

Cold Chocolate

Drink 885 906 926 948 970 992

Table 2.10. Overall Demand per Day per Product in Units for the Next Five Years

Percentage of Prospective

Customers of a Chocolate House

(X)

Target Market

(per Week) in the

Population

(n)

Current Year (Y0) 17.69% 35,073

Year 1 17.69% 35,879

Year 2 17.69% 36,705

Year 3 17.69% 37,549

Year 4 17.69% 38,412

Year 5 17.69% 39,295

EPICUREAN | 28

The overall annual demand for each product in units for the next five years is shown

below.

Table 2.11. Overall Annual Demand per Product in Units for the Next Five Years

Out of the computed overall demand of each product in Davao City for the next

five years, Epicurean’s annual share in the overall demand in units is computed.

2016 2017 2018 2019 2020 2021

Cake 11,646 11,916 12,186 12,474 12,762 13,050

Cupcake 11,610 11,880 12,150 12,438 12,726 13,014

Cookies 16,524 16,902 17,298 17,694 18,090 18,504

Ice Cream 19,368 19,800 20,268 20,736 21,204 21,690

Hot Chocolate

Drink 17,370 17,766 18,180 18,594 19,026 19,458

Cold Chocolate

Drink 15,930 16,308 16,668 17,064 17,460 17,856

Table 2.12. Epicurean’s Annual Share in the Overall Demand in Units for the Next Five Years

2016 2017 2018 2019 2020 2021

Cake 232,920 238,320 243,720 249,480 255,240 261,000

Cupcake 235,440 237,600 243,000 248,760 254,520 260,280

Cookies 330,480 338,040 345,960 353,880 361,800 370,080

Ice Cream 387,360 396,000 405,360 414,720 424,080 433,800

Hot Chocolate

Drink 347,400 355,320 363,600 371,880 380,520 389,160

Cold Chocolate

Drink 318,600 326,160 333,360 341,280 349,200 357,120

EPICUREAN | 29

Chart 2.0 Epicurean’s Annual Share in the Overall Demand for Cakes in Units for the Years 2016-

2021

Chart 2.1. Epicurean’s Annual Share in the Overall Demand for Cupcakes in Units for the Years

2016-2021

10,500

11,000

11,500

12,000

12,500

13,000

13,500

2016 2017 2018 2019 2020 2021

10,500

11,000

11,500

12,000

12,500

13,000

13,500

2016 2017 2018 2019 2020 2021

EPICUREAN | 30

Chart 2.2. Epicurean’s Annual Share in the Overall Demand for Cookies in Units for the Years

2016-2021

Chart 2.3. Epicurean’s Annual Share in the Overall Demand for Ice Cream

in Units for the Years 2016-2021

15,500

16,000

16,500

17,000

17,500

18,000

18,500

19,000

2016 2017 2018 2019 2020 2021

18,000

18,500

19,000

19,500

20,000

20,500

21,000

21,500

22,000

2016 2017 2018 2019 2020 2021

EPICUREAN | 31

Chart 2.4. Epicurean’s Annual Share in the Overall Demand for Hot Chocolate Drinks

in Units for the Years 2016-2021.

Chart 2.5. Epicurean’s Annual Share in the Overall Demand for Cold Chocolate Drinks

in Units for the Years 2016-2021

16,000

16,500

17,000

17,500

18,000

18,500

19,000

19,500

20,000

2016 2017 2018 2019 2020 2021

14,500

15,000

15,500

16,000

16,500

17,000

17,500

18,000

18,500

2016 2017 2018 2019 2020 2021

EPICUREAN | 32

D. PRICE STUDY

The researchers have decided to use competitive pricing as the pricing strategy of Epicurean.

This means that Epicurean will be setting its prices largely based on what the competition is

charging. As of the moment, the only direct competitor, in terms of concept, the group has

identified is Chocolatier. Both Epicurean and Chocolatier are essentially selling the same products

– chocolate-themed. For the indirect competitors, the researchers identified that coffee shops fit

the criteria of satisfying the same customer need Epicurean offers. In Davao City, the two widely

known coffee shops are Starbucks and Green Coffee. The group also identified Dulce Vida as a

competitor as it offers substitute products (in terms of pastries) for Epicurean.

Below is the comparison of competitors’ prices:

Chocolatier Starbucks

(with large size) Green Coffee

Espresso Beverages 100-170 70-140

Tea 100-160 160

Chocolate Drinks:

Hot 155-165 125-150 140

Cold 150-160 160-180 145-150

Frappuccino 135-190 130-160

Coffee-Free / Fruit Drinks 140-160 140-170

Freshly Brewed 100-120 90-125

Ice Cream

Cupcakes

Cakes (slice) 176-360 120 95-100

Wines / Cocktails 120-170

Products with chocolate:

Salad 115-188

Pizza and Sandwiches 186-168

Rice meals and Pasta 180-250

Snacks (panini, waffles,

crepe) 128-188

Table 2.13. Comparative presentation of competitor’s price range.

EPICUREAN | 33

Consideration in setting the price

1. Competitors Price Range

Since the group decided to use competitive pricing strategy, the first priority the researchers

consider in setting the price is the competitors’ price range. Computed average price floor and

price ceiling will bear a large percentage on price setting (see Table 2.14). However, it does

not necessarily mean that the price should not go above the price ceiling or go below the price

floor. The proponents will adjust the pricing if necessary.

Table 2.14. Computed average price floor and average price ceiling.

2. Product Cost

After considering the standing of the competitors and the demand of the consumers, it is

important that the selling price remains profitable. An increase in profit margin is possible if

the product is still inside the competitors’ price range and customers’ price range.

Price Setting

Step 1: Price = Cost + Profit margin

Step 2: Compare computed price to competitors’ price range.

Decide if acceptable or not.

Remedy.

Step 3: Final Price

Products Average Price Floor Average Price Ceiling

Chocolate Drinks 145 157.5

Frappuccino 132 165

Coffee-Free / Fruit Drinks 133 175

Cakes 130 193

Wines / Cocktails 120 170

Products with chocolate:

Salad 115 188

Pizza and Sandwiches 132 210

Rice meals and Pasta 180 250

EPICUREAN | 34

Factors Affecting Change in Selling Price

1. Cost

In fixing the price, Epicurean should consider the cost involved in producing and

selling its products. This includes the product costs and period costs. The substantial

increase and decrease of these costs affects the profitability of the company and arises

the need for change in selling price. Presented below are the changes in the prices of

Epicurean’s main ingredient, chocolates. The price of chocolates increased roughly by

20%.

Chocolate

Weight

YEAR 2014 YEAR 2016

Price per Php Price per Kilo Price per Php Price per Kilo

100-gram bar 120.00 - 150.00 -

504 grams 264.00 - 330.00 -

1000 grams 440.00 440.00 550.00 550.00

2000 grams 840.00 420.00 1050.00 525.00

750-gram block 336.00 448.00 420.00 560.00

1600-gram block 640.00 400.00 800.00 500.00

Table 2.15. Changes in the prices of Malagos Chocolates; for the last two years, the prices increased by

20%.

2. Availability of substitute / similar products

Availability of substitute products increases competition in the market. New

entrants in the industry may offer more innovative products or there may be a product

development by the existing competitors. In order for the company to remain

competitive, it should also make product innovations which may directly affect the

product pricing.

3. Change in predetermined objectives

Epicurean should consider the objectives of the firm in fixing its prices. For

example, if the firm plans to have an increase to its return, then it may charge a higher

price and if the firm plans to capture a large market share, then it may charge a lower

price. (Chand, n.d.)

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4. Image of the firm

The change of price of the product may also be determined on the basis of the image

of the firm in the market. In the long run, if Epicurean will be able to establish its name,

it can demand to increase its price as it enjoys goodwill in the market. (Chand, n.d.)

5. Economic Conditions

In establishing the price, the prevailing economic conditions should also be

considered. For instance, during period of prosperity, people are much willing to buy

because they have more money and so, marketers can take advantage of the price setting.

While during recession, consumers have lesser money to spend, and so, prices are also

expected to go down.

E. MARKETING PROGRAM

Marketing is a form of communication between the entity and its customers. It includes

advertising, selling and distributing the products to the people. Moreover, it can be conducted in

various types and techniques.

i. Marketing Practices of Major Competitors

1. Maitre Chocolatier Boutique and Cafe (Davao Branch)

Maitre Chocolatier makes use of social media advertising in promoting their

store. They have a Facebook account which they update from time to time. They are

also featured in different food blogs in Davao. They created a website, www.m-

chocolatier.com, which highlights the products they are selling.

2. Lachi’s Sans Rival Atbp.

Lachi’s rely mostly on word-of-mouth advertising. This advertising scheme

involves the customers of Lachi’s and their sharing of their dining experience in the

store. It is an effective marketing tool because people put more credibility on the

comments of their friends and acquaintances. Lachi’s incurs zero cost with this

advertising. Lachi’s also have a Facebook page.

EPICUREAN | 36

Lachi’s is also featured in food blogs and food reviews. When you search

Google for the top pastries in Davao, Lachi’s is usually on the list. Tourists mostly rely

on this method when they are looking for an establishment to visit.

3. Green Coffee

Green Coffee employs social media advertising in promoting their store and

their products. They have a Facebook page that they update once in a while. Word-of-

mouth advertising is also utilized by Green Coffee.

4. Starbucks

Starbucks uses social media advertising in promoting their store and their

products. They have a Facebook page that they update every now and then.

They publicize promos such as “Buy 1, Take 1” schemes and other creatively

thought gimmicks to spice up their customer relations. They also make use of word-of-

mouth advertising.

5. Dulce Vida Bakery + Resto

Dulce Vida rely on word-of-mouth advertising. They have a Facebook page,

although unofficial, in which customers may rate and leave a comment. They received

a 4.8 out of 5-star rating in Facebook. They rely on their customers as they post pictures

of their cakes which attracts new customers to try their products.

They are also advertised in different blogs which highlight their menu like the

davaofoodtrips.com and libotero.com.

ii. Proposed Marketing Program

1. Marketing Mix

PRODUCT STRATEGY

Epicurean will offer a mixture of product and service to its clientele. It will

serve chocolate products highlighting Davao chocolates. At the same time, it will

also offer quality customer service.

DISTRIBUTION STRATEGY

This strategy includes decisions about modes of transportation,

warehousing, inventory control, order processing, and selection of marketing

channels (Kurtz, 2012).

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Modes of transportation: Epicurean will make use of motor carriers for the

transportation of supplies. This is done because Epicurean’s suppliers will be

around Davao Region.

Warehousing: Epicurean’s warehouse will be located at the back of the

store3.

Inventory control: Epicurean applies the JIT (Just-in-Time) Inventory

control Strategy. Just-in-time (JIT) is an inventory strategy companies employ to

increase efficiency and decrease waste by receiving goods only as they are needed

in the production process, thereby reducing inventory costs. This method requires

the Epicurean Management to forecast demand accurately and timely to avoid

supplier dilemmas. (Kurtz, 2012).

This method will allow lowering the inventory costs and at the same time

ensuring that raw materials are available when needed.

Order processing: Orders from Epicurean to the suppliers will be made via

phone calls and through online. Other orders particularly for fruits will be made

directly in the stall of the supplier. Orders from consumers to Epicurean will be

made in the store premises where buyers order directly to the store staff.

Marketing channels: Epicurean will make use of direct selling. The

chocolate products will be made by Epicurean and will move directly to the

consumers of the products.

Packaging: The store highlights the premium quality of their products

through its packaging. They will use materials that are of high quality but with a

reasonable cost. (Please refer to the pictures in the next page to see how the products

are packaged)

3 See floor-plan.

http://www.investopedia.com/terms/i/inventory.asp

EPICUREAN | 38

These cake boxes are

for take-out orders of

cake slices and other

pastries.

This is the standard-

size cake box for a

whole cake

Figure 2.1. Products’ Packaging Layout

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This smoothie cup is

used for take-out orders

of cold beverages. It is

served with a straw and

a cover.

This smoothie cup is


of Hot Beverages. It is

served with a cover.


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This cupcake box is


of cupcakes. A group of

six cupcakes is placed

inside and in a circular

holder for it to be held

safe while being

carried.

This paper bag is used

instead of plastic

cellophanes when

packaging take-out

orders.


EPICUREAN | 41

This pastry bag is used

when serving cookies.

Every package will be imprinted with this label highlighting the name, the address and

the contact number of Epicurean Chocolates.


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PROMOTION STRATEGY

Epicurean Chocolates will make use of Social Media Advertising

particularly Facebook, Twitter, and Instagram to promote the store. The store will

intensify their social media presence by incorporating promos such as a 50%

discount, Birthday Promos, Graduation Promos and etc.

PRICING STRATEGY

Epicurean Chocolates will apply the competitive pricing strategy.

Competitive pricing is setting a price in comparison with competitors. They will

base their prices on the prices of their major competitors. They may price lower,

equal or higher than their market opponents.

2. Marketing Goal

The proponents aim to make known Epicurean Chocolates to our target market

through effective and cost-efficient methods.

3. Marketing Objectives

Attract and encourage potential customers to go to the store and become

patrons.

Create a hype for the store.

Keep customers and potential customers up-to-date on the activities and promos

of the store.

Make the store trending in social media sites such as Facebook, Twitter and

Instagram.

4. Marketing Strategies

SOCIAL MEDIA ADVERTISING

Using social media as an advertising tool creates a high public relations

value for the store with little to no cost incurred. Today, the younger

generations, including students and young professionals, pore over their

gadgets scrolling through Facebook, Twitter, Instagram, Pinterest, and other

EPICUREAN | 43

social media sites. The proponents aim to use this to their advantage in creating

a hype for the store.

The proponents will make a Facebook page for the store and post

quirky, witty, and eye-catching posters in the page. They will also post Promos

that could attract customers such as Graduation Promos, Birthday Promos and

etc. The posters made should be consistent with the theme of the store. The

proponents aim to gather as much as 200,000 hits i.e. people reached, likes and

shares for every post made. The proponents will also make use of the app Social

Media Analytics to locate audience and viewers of the store’s Facebook page.

The proponents will also make a Twitter account where various witty

and quirky chocolate quotes will be posted. Posters that were posted in

Facebook will be posted in twitter as very to cover a larger scope of people.

The proponents will also make an Instagram account for the store.

Photos of cakes, other chocolate products, and Chef Specials will be regularly

posted here.

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Facebook Account (Desktop View)

Facebook Account

(Mobile View)

Figure 2.2. Social Media Account’s Layout

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Twitter Account (Desktop View)

Twitter Account

(Mobile View)


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Instagram Account (Desktop View)

Instagram Account

(Mobile View)


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Promotional Poster- Pre-Opening Poster

This poster will be posted 2 weeks before the opening of the store. This will give

customers a 50% discount for all cake purchases if they will like the store’s Facebook,

Twitter, and Instagram accounts. This strategy will give the store more attention and will

make customers get updated by any updates and announcements of the store through

Facebook, Twitter, and Instagram.

Figure 2.3. Promotional Poster Layouts

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Promotional Poster Sample 1.0: Birthday Promo

This Promo will allow customers who are celebrating their birthday to get 50%

discount if they are accompanied by at least 2 other paying customers. The celebrant must

present a valid ID or a birth certificate to be qualified for the discount.


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Promotional Poster Sample 2.0: Graduation Promo

This Promo will allow customers who have recently graduated to be given a 50%

percent discount on all products if they are accompanied by at least 2 other paying customers.

They must present their graduation photo or any evidence that they have graduated for the

recent year.


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PRINTED ADVERTISEMENTS

The proponents will be posting tarpaulins in different areas of Davao, most

especially in the downtown area so that the passersby would be aware of the store

and of its promos time to time. The proponents will produce at least 50 posters

annually.

5. Content Management Plan

Social Media Promotions

Time Frame Action

Two to three months before store

opening

Launch Social Media Page i.e. Facebook,

Twitter, and Instagram

Every two weeks after Social Media

Page launch

Post promotional posters i.e. what is the

store all about, opening date

One week before store opening Post promotional posters i.e. promos to be

offered on the opening date

Every month after store opening Post promotional posters i.e. promos and

sale during the month and on certain events

Printed Advertisements

Two to Three Months before the store

opening

Post tarpaulins within the Davao’s

downtown area, schools, and

establishments.

Every time the store has promos

Post tarpaulins highlighting the promos

near the areas where the bulk of its target

market stays specifically in the downtown

area.

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6. Advertising and Promotion Costs

Medium Unit Cost Total Annual Cost

Social Media PHP 165/ Boost Annual Number of Posts’

Boost: 50*

50 boost X PHP 165

=PHP 8,250

Tarpaulins PHP 10/ Square Feet Annual Number of

Tarpaulins: 50

50 Tarpaulins X 10 X 3 X 5

= PHP 7,500

TOTAL ANNUAL ADVERTISING COST PHP 15,750

Table 2.16. Computation of Advertising and Promotional Cost

*The number of boost (these are posts that will appear regularly in the news feed

allowing a better chance that people will see the post) will vary every year but a

maximum of 50 boosts is set by the proponents allowing 4-5 boosts monthly.

EPICUREAN | 52

CHAPTER III

TECHNICAL ASPECT

A. THE PRODUCT

Epicurean is a Chocolate Patisserie House located at Fabie Building, Pelayo Street,

Poblacion District, Davao City. It has an inviting atmosphere that will make customers feel

that they are in their own homes. It will also offer attentive and courteous service to its

clientele. It will be open for seven days a week from 10AM-10PM. The customer service policy

of Epicurean is to make sure that every customer will leave the store happy through serving

quality products and crew’s fast response to customer needs.

Epicurean will offer a variety of chocolate products to its clientele. The following are

the product lines of the store:

a) PRODUCT LINES

a.1. Cakes

Cake is an item of soft, sweet food made from a mixture of flour, eggs, sugar, and

other ingredients, baked and often decorated. Cakes can be moist, dense, small, or big. It

can be mixed with dried fruits and nuts or filled with fresh fruit and flavored creams.

Epicurean will offer the following cake products:

White Chocolate Mocha Mousse Mini

Cake

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Black Forest Mini Cake

Chocolate-Covered Strawberry Cake

Banana Bread Tiramisu Mini Cake

S’mores Mini Cheesecakes

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Triple Chocolate Mousse Mini Cake

Chocolate Whiskey Cake

Almond Joy Cake

Chocolate Espresso Bundt Cake with

Dark Chocolate Cinnamon Glaze

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Nutella Cheesecake

Chocolate Cake

Honey Comb Cake

Mint Cookies and Cream Cake

EPICUREAN | 56

Mango Mousse Cake

Salted Chocolate Caramel Ice Cream

Cake

Strawberry Chocolate Mousse

Mudslide Cake

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Triple Chocolate Cheesecake

Salted Caramel Milk Chocolate Cake

a.2. Ice Cream

Ice Cream is a sweet, frozen dessert typically made with milk and cream. Deriving

from its name, this cold treat is literally, iced cream. Ice creams are usually French-style or

Philadelphia-style (Arias, 2013). French-style ice cream means that ingredients, which

include egg yolks, are cooked until you have a thick custard before you freeze the mixture.

Philadelphia-style means that there are no eggs and cooking. Due to the egg yolks and

cooking process, French-style ice cream is richer, creamier, and smoother. Ice cream

sandwiches are two cookies with a scoop of ice cream in between.

Epicurean will offer the following ice cream products:

Matcha Avocado

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S’mores Waffle Sundae

Caramel Brownie

Chocolate Waffle Ice Cream Sandwiches

Chocolate Almond Coconut

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Blueberry and Coconut Ice Cream

Sandwich

Salted Caramel Chocolate

Grasshopper Ice Cream Sandwich

Boston Cream Pie

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a.3. Cupcakes

Cupcake is a variation of cake baked in cup-shaped tins. Cupcakes are bite-sized

and does not usually require plate and fork when served.

Epicurean will offer the following cupcake products:

Chocolate Espresso Cupcake

Salted Caramel Cupcake

Chocolate Pistachio Cupcake

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Matcha Cocoa Cupcake

Salted Caramel Chocolate Cupcake

Mint Chocolate Cupcake

Red Devil’s Food Cupcake

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Chocolate Sponge Cupcakes with

Chocolate Espresso Buttercream

Coffee Chocolate Cupcakes with

Bailey’s Irish Frosting

Espresso Fudge Cupcakes with

Chocolate Cream Cheese Icing

Chocolate Banana Cupcakes with Dulce

de Leche Filling

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Double chocolate Cupcakes with White

Chocolate Cream Cheese

Maple Buttercream and Bacon Cupcake

a.4. Hot Chocolate Drinks

Hot chocolate drinks are made from chocolates, milk, and hot water. It could be

added with sweeteners such as brown sugar, honey, or maple syrup if you want to

additional sweetness. Additional spices could be included in the mix to add texture to the

drink. Alcoholic beverages like whiskey or rum could also be added before serving.

Epicurean will offer the following hot chocolate products:

Chocolate Buttered Rum

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S’mores Hot Chocolate

White Chocolate

Melted Hot Chocolate with Sea Salt

Whipped Cream

Coconut Hot Chocolate

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Mocha Latte

a.5. Cold Chocolate Drinks

Similar with hot chocolate drink, cold chocolate drinks are usually made of

chocolate and milk. Chocolate drinks could be smoothies, shakes, lattes, or just plain milk

and melted chocolate mixed with cold water.

Epicurean will offer the following cold chocolate drink products:

Black Forest Smoothie

Chocolate Strawberry Smoothie

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White Chocolate Latte

Salted Caramel Mocha Smoothie

White Chocolate Mango Smoothie

Chocolate Avocado Smoothie

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a.6. Cookies

A cookie is a small, flat, sweet, baked good, usually containing flour, eggs, sugar,

and either butter, cooking oil or another oil or fat. It may include other ingredients such

as raisins, oats, chocolate chips or nuts.

Epicurean will offer the following cookie products:

Chocolate Peanut Butter Chip Cookies

Chocolate Sugar Cookies

Chocolate Orange Cookies

https://en.wikipedia.org/wiki/Baked_goods

https://en.wikipedia.org/wiki/Flour

https://en.wikipedia.org/wiki/Egg_(food)

https://en.wikipedia.org/wiki/Sugar

https://en.wikipedia.org/wiki/Butter

https://en.wikipedia.org/wiki/Cooking_oil

https://en.wikipedia.org/wiki/Raisin

https://en.wikipedia.org/wiki/Oat

https://en.wikipedia.org/wiki/Chocolate_chip

EPICUREAN | 68

Coconut Oatmeal Chocolate Chip

Cookies

Double Chocolate Chip

Mint Oreos

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Hot Chocolate Thumbprint

Salted Caramel Dark Chocolate

Cookies

White Chocolate Green Tea Cookies

White Chocolate Lemon Sugar Cookies

EPICUREAN | 70

B. PRODUCTION PROCESS

As a patisserie, Epicurean would have various processes for each for its operation. In the

case of Epicurean, there are four major processes. Under each major processes are sub processes,

which are the activities under each major process. The major processes, together with its sub

processes, are explained in this section.

1. Order Processing

The first major process is the order processing. This major process would provide the

general procedure for processing a customer order. Under this major process are two sub

processes, the dine-in process and the take-out process. The dine-in process is illustrated in

Chart 3.0, which is shown below.

Customer

Counter

Cashier

Front

Crew (FC)

Customer

Shop

Cleaner

1. The customer picks his/her choice of food and gives it to the cashier.

1. The cashier takes the order.

2. The cashier asks the customer whether it would be dine-in or take-out.

3. The cashier repeats the order and confirms it with the customer.

4. The cashier takes the payment.

5. The cashier takes the name of the customer and writes it in both receipts.

6. The cashier gives the receipt to the customer and the other receipt to a front

crew.

1. A FC prepares the order.

2. After the FC finished preparing the order, the FC will look for the customer by

calling out the name that is in the receipt.

3. When the FC finds the customer he/she will check the details of the receipt

(e.g. name, and items ordered) and match it with his/her copy and if it match

the FC will give the order.

1. The customer receives the order and consumes it.

2. The shop cleaner cleans the table and arranges the chairs and gets the plates

and utensils after the customer leave.

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The chart above specifies the general procedures when processing a dine-in order.

There will be several exemptions that might happen between these procedures. Two sample

exemptions would be: first, the Front Crew finds a wrong customer. In this case the Front

Crew would just continue to find the right customer. But if the front crew cannot find the

customer, he/she will place the ordered items in the counter area until a customer asks for

such order. Second, the order received by the customer does not match what he/she ordered.

In this case, the front crew will attend to the concerned customer and replace or add items

that are inconsistent with receipt of the customer.

The next process will be the Take-out process. The Take-out process will be

illustrated by Chart 3.1 below.

The take-out process is similar to the dine-in process except that the front crew, in

preparing the order of the customer, places the order in a packaging and that the customer

does not consume the order in the shop. For this reason, the exemptions stated in the dine-

in process is also applicable in this process.

Customer

Counter

Cashier

Front

Crew (FC)

Customer

1. The customer picks his/her choice of food and gives it to the cashier.

1. The cashier takes the order.

2. The cashier asks the customer whether it would be dine-in or take-out.

3. The cashier repeats the order and confirms it with the customer.

4. The cashier takes the payment.

5. The cashier takes the name of the customer and writes it in both receipts.

6. The cashier gives the receipt to the customer and the other receipt to a front

crew.

1. A FC prepares the order and places it in the take-out package.

2. After the FC finished preparing the order, the FC will look for the customer by

calling out the name that is in the receipt.

3. When the FC finds the customer he/she will check the details of the receipt

(e.g. name, and items ordered) and match it with his/her copy and if it match

the FC will give the order.

1. The customer receives the order and leaves Epicurean.

EPICUREAN | 72

2. Production process

The second major process is the production process. Under this major process are

processes with regards to preparation of display items, preparation of short-order items,

and the dishwashing operation. First is the preparation of display items. In this sub process,

items in the counter chillers are checked, replenished and arranged. The general procedure

in this sub process is shown Chart 3.2 below.

The suggested arrangement of the items in the counter chillers is shown in Figure

3.0. It is suggested that the counter chillers must always be filled up with items so that the

customers will be attracted to the display. For this reason, any missing item in the counter

chiller will then make such item be listed in the list of item/s for replenishment.

The second sub process under this major process, is the short-order process. Under

this process the chef together with the kitchen crews, prepare a short-order item for either

dine-in or take-out. For this sub-process to start the order processing should first take place.

The general procedures in this sub-process is shown in chart 3.3 below

Kitchen

Crew (KC)

1. A KC checks the counter chillers for items to be replenished.

2. The KC then makes a list of item/s for replenishment.

3. The list will then be submitted to the chef.

Chef 1. The chef checks the list of item/s for replenishment and makes a list of

ingredients needed for preparation.

2. The list of ingredients needed for preparation is then given to a KC.

Kitchen

Crew (KC)

1. The KC/s gets the ingredients from the store room based on the list of


2. The KC/s arranges the ingredients in the kitchen ready for cooking/assembly.

Chef 1. The chef will assign tasks to the KCs and supervise their work.

2. After the items are prepared, the chef checks the quality of the items before

putting them in the counter chillers.

Kitchen

Crew (KC)

1. The KC/s arranges the checked items into the counter chillers for display.

EPICUREAN | 73

Order

Processing

Chef 1. The chef receives the order from the front crew.

2. The chef makes a list of ingredients needed for preparation then gives it to a

kitchen crew.

Kitchen

Crew (KC)

1. The KC/s gets the ingredients from the store room based on the list of


2. The KC/s arranges the ingredients in the kitchen ready for cooking/assembly.

Chef 1. The chef will assign tasks to the KCs and supervise their work.

2. After the short-order is/are prepared, the chef checks the quality of the items

before giving it to the front crew.

Front

Crew (FC)

1. The FC receives the short-ordered item then serves it to the customer.

Figure 3.0. Suggested Arrangement of Items Source:https://media-cdn.tripadvisor.com/media/photo-s/07/99/9a/fb/patisserie-vaniye.jpg

EPICUREAN | 74

Instead of the front crew, the chef, together with the kitchen crews are the ones that

will prepare the short-ordered items. In case of a take-out, it is also the chef and the kitchen

crew that packs the short-ordered items.

The last sub-process is the dishwashing operation. This sub-process deals with the

collecting of the used dishes and utensils, washing of the dishes and utensils, and arranging

of the dishes and utensils in the plate rack.

The process would first start when the cleaning crew takes in the used dishes and

utensils to the kitchen. After that, the kitchen crew takes the dishes and utensils and washes

them. Any left overs that are not edible are disposed accordingly and any leftovers that are

still edible are kept in the store room for distribution to the needy. Lastly, the washed dishes

and utensils are arranged in the plate rack.

3. Raw materials procurement process

The third major process is the raw materials procurement process. It has two sub-

processes namely, raw materials ordering and raw materials receipt process.

In the raw materials ordering sub-process, a kitchen crew makes a list of raw

materials to be ordered which in turn will be submitted to the industrial partner who will

contact the suppliers of each raw material. The general procedures of this sub-process is

presented in chart 3.4.

There is an instance where the industrial partner does not contact the suppliers and

vendors to order the raw materials. It is when fruits are purchased directly in the market by

the chef and the kitchen crew.

Kitchen

Crew (KC)

1. A KC checks the level of inventory of raw materials in the store room.

2. The KC then makes a list of raw materials that are in their critical level.

3. The list will then be submitted to the industrial partner.

1. The IP receives the list of raw materials submitted by the KC.

2. The IP then contacts suppliers and vendors to order the raw materials in the

list.

Industrial

Partner

(IP)

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Epicurean will have an authorized list of suppliers for each raw material. However,

in case the supplier runs out of the said raw material/s, the industrial partner will be

responsible in finding a new supplier. For fruits, there is no list of suppliers.

The second sub-process is the raw materials receipt process. Under this sub-process

both the industrial partner and the chef will look unto the raw materials delivered. The

industrial partner will be responsible in checking whether the prices and the quantity

ordered is the same with what was ordered. Meanwhile, the chef will be responsible in

checking the quality of the raw materials. The general procedures of this process are

presented in Chart 3.5 below.

4. Equipment and Shop Maintenance Processes

This major process entails the maintenance of the shop, its furniture, and

equipment. For the maintenance of the shop, a shop cleaner will be hired. This shop cleaner

will be responsible for maintaining the cleanliness of the shop at all times. This includes

collecting the used dishes and utensils and taking it inside the kitchen.

The kitchen crew and the chef will be responsible for the maintenance of the

kitchen. Before leaving the shop, the kitchen crew and the chef should make sure that every

tool that they used had already been cleaned. Through this, the life of the tools will be

prolonged.

1. The supplier delivers the raw materials with the corresponding prices and

quantities.

Chef 1. The chef checks the quality of the raw materials.

2. The approved raw materials are separated from the rejected raw materials.

Industrial

Partner

(IP)

1. The IP counts the approved raw materials and checks the prices for each raw

material.

2. The IP then computes the total amount due to the supplier and pays the

supplier accordingly.

Kitchen

Crew (KC)

1. The approved raw materials are then carried by a KC inside the store room.

2. The KC then arranges the raw materials in the store room according to their

type and qualities.

Supplier

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Lastly, for the maintenance of the various equipment, a quarterly maintenance will

be done by an outside professional. This is done to prolong the life of the equipment and

to make sure that the quality of the product will be consistent.

C. PRODUCTION SCHEME AND OPERATIONS

Epicurean will operate for seven days a week, from 10:00 AM – 10:00 PM. The proponents

came up with this operating days and hours through a survey of the target market.

Epicurean will use Lean production in producing its products. The proponents proposed

this type of production scheme due to the fact that most of the products of Epicurean have a short

shelf life or is best served when freshly made. Through this, Epicurean will reduce the cost of

spoilage and at the same time give the customers quality products.

In applying Lean production, Epicurean will use batch processing. For example, 5 cakes

will be made every time the number of such type of cake in the counter chiller drops to 5. Through

this, the equipment used for making such cake will be used efficiently and effectively.

This type of production scheme depends heavily on demand of the product because a

product will only be produced if a demand arises. This is due to the pull inventory control system

principle. The pull inventory control system begins with a customer's order, which would then

trigger the production of a product to fulfill the next order. With this strategy, companies only

make enough product to fulfill customer's orders (Hunt, n.d.).

To further explain the production scheme of Epicurean, the proponents prepared a daily

production Gantt chart.

Figure 3.1 Day before opening day

*Includes delivery time, receipt of raw materials, quality check of raw materials, storage of raw materials.

**Please refer to chart 3.0 in the Operation Processes discussion.

***Includes cleaning of the shop, finalizing the setup, making sure everything is ready for opening day.

EPICUREAN | 77

A.

B.

Figure 3.2 Regular Operating days- (a) Sunday (b) Monday - Saturday *Includes delivery time, receipt of raw materials, quality check of raw materials, storage of raw materials. **Please refer to Chart 3.0 in the Operation Processes discussion. ***Includes preprocessing of raw materials for the next day ****Includes cleaning of the shop, checking the whole shop and closing. The continuous replenishment of display items throughout the operating hours of

Epicurean represents the pull inventory system of Epicurean. Also, time is allocated for the

preparation of pre-processed raw materials to facilitate ease of preparation of display items for the

next day.

Production Capacity

Table. 3.0. Summary of Epicurean’s Production Capacity

The table above presents the production capacity of Epicurean. This amounts are computed

by factoring in the capacity of equipment, operation hours, average preparation time of each

product, and production mix. The table shows that Epicurean can produce well above what is

demanded. This means that capacity at the moment is not a constraint in achieving the demand.

Products Daily Capacity (in

units)

Monthly Capacity (in

units)

Yearly Capacity (in

units)

Cake 202 6,063 72,752

Cupcake 462 13,869 166,425

Cookies 2,860 85,814 1,029,762

Ice Cream 2,811 84,322 1,011,863

Hot Chocolate Drink 121 3,631 43,574

Cold Chocolate Drink 153 4,590 55,080

EPICUREAN | 78

D. PLANT LOCATION

The site is located at the ground floor of Fabie Building, Pelayo Street, Poblacion

District, Davao City. It is situated in front of UCCP Church’s Shalom Center, at the back

of Gaisano South Citimall, and few blocks away from Apo View Hotel and People’s Park.

Figure 3.3. Location Map

Figure 3.4. Current front view of actual location

EPICUREAN | 79

Figure 3.5. Current interior perspective of actual location

Figure 3.6: Current interior perspective of actual location

Choice of Location

The main factor considered in planning and selecting the site for the establishment

of a new chocolate patisserie house is the cost of constructing the establishment. Instead of

looking for a vacant lot to put up a new building, the proponents decided to rent a free

EPICUREAN | 80

space that can be renovated according to the layout design. In this way, the capital outlay

of putting up the chocolate house would be lesser.

Proximity to the downtown area was also put into consideration in choosing the

site. The location is near to the universities and other working establishments in the city.

The site is very accessible since there are several jeepney routes passing by Pelayo Street.

To reach the site, students and young professionals can take a short ride from their

respective schools and offices.

Also, the proponents chose the location because of its surroundings. The area

around the rental space allows it to be conducive for study, hang-out, and the like. This is

because the street where the space is located is not busy nor crowded.

E. ESTABLISHMENT LAYOUT

Floor Plan

The Floor plan for Epicurean is Presented in the next 2 Pages.

EPICUREAN | 81

Figure 3.7. Current Floor Plan of the Building

EPICUREAN | 82

Figure 3.8. Epicurean’s Floor Plan

EPICUREAN | 83

F. MACHINERY AND EQUIPMENT

The following are the machineries and equipment needed in the operation of Epicurean:

Basic Tools

Particulars Image Supplier Qty Unit Price Cost

1. Bowls

Baketech

Bakery

Equipment

and Stainless

Fabrication

5 pc 270 1,350

2. Cooling

Racks

Baketech

Bakery

Equipment

and Stainless

Fabrication

5 pc 650 3,250

3. Knives

Baketech

Bakery

Equipment

and Stainless

Fabrication

1 Set 879 879

4. Spatulas and

Pastry Brush

Baketech

Bakery

Equipment

and Stainless

Fabrication

2 set 809 1,618

EPICUREAN | 84

5. Rolling Pins

Baketech

Bakery

Equipment

and Stainless

Fabrication

3

701 2,103

6. Ruler

Baketech

Bakery

Equipment

and Stainless

Fabrication

3

20 60

7. Scissors

Baketech

Bakery

Equipment

and Stainless

Fabrication

3

40 120

8. Sifter and

Strainers

Baketech

Bakery

Equipment

and Stainless

Fabrication

3

745 2,235

9. Timers

Baketech

Bakery

Equipment

and Stainless

Fabrication

1

415 415

10. Peeler

Baketech

Bakery

Equipment

and Stainless

Fabrication

2

926 1,852

EPICUREAN | 85

11. Whisk

Baketech

Bakery

Equipment

and Stainless

Fabrication

3

180 540

12. Wooden

Spoons

Baketech

Bakery

Equipment

and Stainless

Fabrication

3

315 945

13. Zester

Baketech

Bakery

Equipment

and Stainless

Fabrication

2

453 906

14. Cake

Decorating Kit

Baketech

Bakery

Equipment

and Stainless

Fabrication

1 187.5 187.5

15. Heat

Resistant

Gloves

Baketech

Bakery

Equipment

and Stainless

Fabrication

3 350 1,050

16. Icing

Smoother

Baketech

Bakery

Equipment

and Stainless

Fabrication

2 736

1,472

Total 18,982.50

EPICUREAN | 86

Measuring Utensils


1. Measuring Cups and

Spoons

Baketech

Bakery

Equipment

and

Stainless

Fabrication

1

999

999

2. Weighing Scales

Baketech

Bakery

Equipment

and

Stainless

Fabrication

1

586 586

3. Measuring Jug

Baketech

Bakery

Equipment

and

Stainless

Fabrication

3 99.75

299.25

Total 1,884.25

Mixing Tools


1. Hand-Held Mixer

Baketech

Bakery

Equipment

and

Stainless

Fabrication

1

1,329 1,329

EPICUREAN | 87

2. Electric Stand Mixer

(10 quarts/ 2 kg)

Baketech

Bakery

Equipment

and

Stainless

Fabrication

1

23,000 23,000

Total 24,329

Specialty Tools


1. Ice Cream Scoop

Baketech

Bakery

Equipment

and

Stainless

Fabrication

2

1,019 2,038

2. Cake-decorating

Turntable

Baketech

Bakery

Equipment

and

Stainless

Fabrication

3

1,131 3,393

3. Cherry Pitter

SM

Ecoland

1

894 894

EPICUREAN | 88

4.Electric Coffee

Grinder

SM

Ecoland

1

2,680 2,680

5. Cream Butter

Whipper Foam Maker

SM

Ecoland

1 1,417 1,417

Total 10,422

Baking Pans


1. Baking Sheets / Cookie

Sheets

Baketech

Bakery

Equipment

and

Stainless

Fabrication

5

380 1,900

2. Cake Pans

Baketech

Bakery

Equipment

and

Stainless

Fabrication

8

696 5,568

3. Bundt Cake pan

Baketech

Bakery

Equipment

and

Stainless

Fabrication

3

1,084 3,252

4. Cup Cake Pans

Baketech

Bakery

4 57 228

EPICUREAN | 89

Equipment

and

Stainless

Fabrication

Total 10,948

Kitchen Supplies

Particulars Supplier Qty Unit Price Cost

1. Aluminum Foil Baketech

Bakery

Equipment

and

Stainless

Fabrication

10 Roll 105 1050

2. Cardboard Cake Rounds 100 Pc 20 2,000

3. Non-stick Pan Liners 100 pc 5 500

4. Parchment Paper 10 Roll 140 1,400

5. Plastic Wrap 10 Roll 150 1,500

8. Waxed Paper 10 Roll 150 1,500

Total 7950

Utensils

Particulars Supplier Qty Unit Price Cost

1. Spoon

SM

Ecoland

70 Pc 40 2,800

2. Fork 70 Pc 40 2,800

3. Table Knife 70 Pc 50 3,500

4. Glass 70 pc 60 4,200

5. Tall Glass 50 pc 60 3,000

5. Cup and Saucer 40 pc 95 3,800

6. Mug 40 pc 80 3,200

7. Plate 100 pc 70 7,000

8. Bowl 50 pc 40 2,000

Total

32.300

Office Supplies

Particulars Supplier Quantity Unit Price Cost

1. Short and Long Bond Paper

RicStar

Enterprises

3 rim 200 600

2. Filing steel Cabinet 2 pc 2800 5,600

3. Ballpen 10 pc 7 70

4. Stapler 2 pc 120 240

EPICUREAN | 90

5. Tape Dispenser 2 pc 160 320

6.Puncher 2 pc 200 400

Total 7,230

Furniture and Fixtures


Table Set

2 seaters

Coffee Table Set

M.Tanoy

Concepts

5 set

6,500 39,000

Wooden Dining

Table

M.Tanoy

Concepts

5 Set (1

chair

and

Table)

5980 29,900

4 seaters

Mariel Dining Set

M.Tanoy

Concepts

3 set 6,000 18,000

Sofa

Loveseat Sofa

M.Tanoy

Concepts

1 pc 10,500 10,500

Angelica Sofa

M.Tanoy

Concepts

2 pc 19,000 38,000

EPICUREAN | 91

Table

Coffee Table

M.Tanoy

Concepts

1 pc 4,500

4,500

Georgia Coffee

Table

M.Tanoy

Concepts

1 pc 6500 6500

Bar Stool

M.Tanoy

Concepts

8 pc 1,100 8,800

Wide Ceiling Light

Fixture (three 40

watts bulb)

M.Tanoy

Concepts

5 pc 4,000 20,000

Total 175,200

EPICUREAN | 92

Equipment

Particulars Image Specs Supplier Qty Unit Price Cost

1. Chillers

Curve glass

ref. cake case

Curved glass, four feet (4),

1200x810x1370mmH

, Danfoss SC15G,

385watts, R134a, Black

Marble, three (3) shelves

Brand: Maruko

Baketech

Bakery

Equipment

and

Stainless

Fabrication

2 pc 175,000 350,000

Glass Door

Merchandiser

22 cu.ft. Chiller

220V/210W

EER: 220

7-level electronic control

LCD temperature

display/Clean back design

Double glass door/ Fan-

cooled system

Internal lamp/Lighted

panel/Drain pan

6 adjustable coated wire

shelves

Baketech

Bakery

Equipment

and

Stainless

Fabrication

1 pc 74,548 74,548

2.Refrigerator

60 cubic feet model,

Combi-freezer/chiller

(-25 deg. and 0 to +15

deg.)1800x730x1950mmH,

Danfoss Compressor 850

watt, R404a,

1,520 liters, 220v/60Hz

Brand: Daiko

Merit

Stainless

Steel, J.P

Laurel

Avenue

1 pc 155,000 155,000

3. Stationary

Oven

Capacity: 12 trays

Gas powered Baketech

Bakery

Equipment

and

Stainless

Fabrication

1 pc 16,000 16,000

EPICUREAN | 93

4. Blender

Blades: High grade

stainless steel ever sharp

blades (2 IN 1 BLADES)

Control Panel Features:

Traditional / Work Top

Type

Design Feature: Radial

cooling fan and thermal

protection system

Motor: German original

motor technology

Pulse function for

crushing ice and solid

foods

Baketech

Bakery

Equipment

and

Stainless

Fabrication

2 pc 9,999 19,998

5. Rice

Cooker

Power Capacity: 220V

2-in-1 rice cooker and

Warmer

1.8-liter capacity

Equivalent to 10 full cups

of rice

Solid, durable glass cover

Merit

Stainless

Steel, J.P

Laurel

Avenue

1 Pc 1,399 1,399

6. Stove

Adjustable type switch，

strong fire，suit every kind

of cooking

The higher efficiency of

combustion，save time

and save gas

Imbedded stove，nice

shape，for embedded use

and can be platform use

Good quality firelighter，every durable and easy to

use

Merit

Stainless

Steel, J.P

Laurel

Avenue

1 pc 2,640 2,640

7. Spoon

Heater

4 holes

Baketech

Bakery

Equipment

and

Stainless

Fabrication

1 pc 8,500 8,500

EPICUREAN | 94

8. Freezer

25 cu.ft. curved glass

sliding door chest freezer

Capacity: 700 liters

LED internal Light

Temperature range: 4 to -

25°C

Adjustable

Temperature/Function:

Freezer to chiller

7 pcs. wire basket

Lock and keys

Merit

Stainless

Steel, J.P

Laurel

Avenue

1 pc 54,000 54,000

9. Work

Tables

Stainless

3feet x 6feet

Baketech

Bakery

Equipment

and

Stainless

Fabrication

1 Pc 19000 19,000

10. Sinks

Stainless

Single sink Baketech

Bakery

Equipment

and

Stainless

Fabrication

1 Pc 22,000 22,000

11. Chocolate

Fountain

Baketech

Bakery

Equipment

and

Stainless

Fabrication

1 Pc 1,950 1,950

Total 206,011

EPICUREAN | 95

Other Equipment

Particulars Specs Supplier Qty Unit Price Cost

1. Laptop Intel Core i5-6200u

2.3Ghz - 2.8Ghz / 3MB Cache

4 GB DDR3L 1600mhz Memory

Octagon,

Gaisano

mall of

Davao

Branch

1 Pc

27,510

27,510

2. Printer Color inkjet printer, copier, and

scanner

Octagon,

Gaisano

mall of

Davao

Branch

1 Pc 4,550 4,550

3. Telephone Phonebook

Memory: 1 redial memory

Gaisano

Mall of

Davao

Department

Store

1 Pc 699 699

4. Air conditioner

-Standing

-Split Type

-6.0HP Floor Standing Air

Conditioner

Non-Inverter

High Cooling Performance

Superior Air Distribution

1.5HP Split Type Air Conditioner

Non-Inverter

Inverter like savings

Turbo Function: fast room

cooling

Merit

Stainless

Steel, J.P

Laurel

Avenue

1

1

Pc

pc

93,795

28,299

93,795

28,299

5. Internet Router Interface:4 10/100Mbps LAN

Ports,1 10/100Mbps WAN Port

Button: WPS/Reset Button

External Power Supply:12VDC /

1A

Octagon,

Gaisano

mall of

Davao

Branch

1 Pc 6,308 6,308

6. Cash Register Freely programmable direct

keys for PLU's & Depts

Error correct, Void, Refund,

R/A & P/O

Internal Dot Matrix Printer

76mm w/manual cutter

Barcode Scanner

connectivity

Columbia

Business

Machines,

J.P. Laurel

Avenue

1 Pc 39,000 39,000

EPICUREAN | 96

128 flat keyboard

4mb RAM

7. Office Table -Material: MDF

-Colors available: Gray and Wenge

-Dimension: L46.1″ x W22.4″ x

H28.5″

Gaisano

Mall of

Davao

Department

Store

1 Pc 3,450 3,450

8. Office Chair Gaisano

Mall of

Davao

Department

Store

1 pc 2,400 2,400

Summary of Costs

G. BUILDING AND FACILITIES

The establishment is shaped like a capital letter “L” and has a total land area of one

hundred fifty square meters (150 sq.m.) located in a commercial building available for

lease. It also has a parking lot in front which occupants could freely use. Its monthly rental

fee is Php 100,000 with the terms of two-month advance and one-month security deposit.

The lessee is permitted by the owner to renovate the space.

The chocolate house has a homey ambiance where one area is themed like a dining

room, another like a living room and another like a study room. The counter has a design

like a kitchen where the products are displayed. At the back of the counter area is where

the kitchen and the dishwashing area are located which are connected to the storage room.

Particulars Amount

Basic Tools 18,982.50

Measuring Utensils 1,884.25

Mixing Tools 24,329.00

Specialty Tools 10,422.00

Baking Pans 10,948.00

Kitchen Supplies 7,950.00

Utensils 32,300.00

Office Supplies 7,230.00

Furniture and Fixtures 175,200.00

Equipment 725,035.00

Other Equipment 206,011.00

Grand Total 1,220,291.75

EPICUREAN | 97

It also has two comfort rooms, one for the customers and one for the personnel. There is

also one small office for administrative purposes.

ESTIMATED COST OF CONSTRUCTION

I.D. NO DESCRIPTION UNIT QTY UNIT COST TOTAL COST GRAND

TOTAL MATERIAL LABOR MATERIAL LABOR

GENERAL REQUIREMENTS

Mobilization/Temporary Structures, Utilities and Services/Demobilization / Standard Billboard /

Material Testing

lot 1.00 2,582.33 1,721.55 2,582.33 1,721.55 4,303.88

Safety and Health lot 1.00 4,303.88 0.00 4,303.88 0.00 4,303.88

Hauling cost lot 1.00 0.00 0.00 0.00 0.00 0.00

Sub-total 8,607.76

0.50 DEMOLITION WORKS

0.51 Removal of Flush Doors & Jambs sets 3.00 0.00 300.00 0.00

900.00

900.00

0.52 Removal of Sliding Glass Door and Fulll glass

partition

units 2.00 0.00 1,500.00 0.00

3,000.00

3,000.00

0.53 Demolition of existing counter units 2.00 0.00 2,000.00 0.00 4,000.00

4,000.00

0.54 Demolition of existing ceiling @ counter units 2.00 0.00 2,500.00 0.00

5,000.00

5,000.00

0.55 Demolition of wall for door provision sq.m. 4.20 0.00 800.00 0.00 3,360.00 3,360.00

0.56 Demolition of concrete floor for plumbing and

sanitary lines

lot 1.00 0.00 4,800.00 0.00

4,800.00

4,800.00

0.57 Demolition of floor tiles sq.m. 16.00 0.00 300.00 0.00 4,800.00 4,800.00

Sub-total 25,860.00

1.00 Earthworks

1.02 Structural Excavation cu.m 3.60 0.00 200.00 0.00 720.00 720.00

1.03 Backfilling and Compaction cu.m 2.16 0.00 150.00 0.00 324.00 324.00

1.04 Gravel Bedding G-1 cu.m 1.00 850.00 169.90 850.00 169.90 1,019.90

Sub-total 2,063.90

2.00 Concreting Works (3000 psi)

Wall Footng cu.m 1.42

2.01 Portland Cement bag 13.00 236.00 46.40 3,068.00 603.19 3,671.19

2.02 Crushed Gravel 3/4" cu.m 1.50 950.00 165.18 1,425.00 247.77 1,672.77

2.03 Washed Sand cu.m 0.75 850.00 141.92 637.50 106.44 743.94

Columns/Stiffiner cu.m 1.35



2.03 Washed Sand cu.m 0.75 850.00 141.92 637.50 106.44 743.94

Beams cu.m 1.07



2.03 Washed Sand cu.m 0.75 850.00 141.92 637.50 106.44 743.94

Slab on Grade cu.m 0.47


2.05 Crushed Gravel 1" cu.m 0.50 950.00 141.58 475.00 70.79 545.79

2.03 Washed Sand cu.m 0.25 850.00 141.92 212.50 35.48 247.98

EPICUREAN | 98

Sub-total 19,343.45

3.00 Rebar Works

Wall footing kg 84.89

Columns/Stiffiner kg 60.36

Beams kg 130.19

Slab on Grade kg 0.00

3.01 Deformed Round Bars, Grade 40 kg 275.44 38.56 7.50 10,620.89 2,065.78 12,686.67

3.02 G.I. Tie Wire kg 6.00 55.00 9.00 330.00 54.00 384.00

Sub-total 13,070.67

4.00 Formworks

Columns/Stiffiner sq.m 8.40

4.01 Coco Lumber bd.ft 42.90 18.00 4.25 772.20 182.33 954.53

4.02 Plywood Ordinary, 1/4" x 4' x 8' pc 2.00 373.33 86.25 746.66 172.50 919.16

4.04 CWN, Assorted kg 1.00 55.00 15.00 55.00 15.00 70.00

Beams sq.m 14.23

4.01 Coco Lumber bd.ft 72.60 18.00 4.25 1,306.80 308.55 1,615.35

4.02 Plywood Ordinary, 1/4" x 4' x 8' pc 3.00 373.33 86.25 1,119.99 258.75 1,378.74

4.04 CWN, Assorted kg 2.00 55.00 15.00 110.00 30.00 140.00

Sub-total 5,077.78

5.00 Masonry Works

Masonry Wall sq.m 155.28

5.05 CHB 6" thk pc 1,941.00 12.50 2.64 24,262.50 5,124.24 29,386.74

5.02 Portland Cement bag 78.00 236.00 46.40 18,408.00 3,619.13 22,027.13

5.03 Washed Sand cu.m 7.00 850.00 141.92 5,950.00 993.42 6,943.42

5.06 10mm x 6m RSB kg 300.84 38.56 7.50 11,600.54 2,256.33 13,856.87

5.07 G.I. Tie Wire kg 7.00 55.00 9.00 385.00 63.00 448.00

Plastering sq.m 310.56

5.02 Portland Cement bag 103.00 236.00 46.40 24,308.00 4,779.11 29,087.11

5.03 Washed Sand cu.m 11.00 850.00 141.92 9,350.00 1,561.08 10,911.08

Sub-total 112,660.35

6.00 Doors and Windows

6.01 D-1, Flush Door 1.80m x 2.10m on 50mm x

150mm Wooden Jamb with keyed lever type lockset

set 1.00 7,500.00 1,500.00 7,500.00 1,500.00 9,000.00

6.02 D-2, Flush Door 0.80m x 2.10m on 50mm x 150mm Wooden Jamb with keyed lever type lockset

sq.m 4.00 4,500.00 900.00 18,000.00 3,600.00 21,600.00

6.03 D-3, Flush Door 0.90m x 2.10m on 50mm x

150mm Wooden Jamb with keyed lever type lockset

set 2.00 5,000.00 1,000.00 10,000.00 2,000.00 12,000.00

6.04 W -1, (2.6 x 1.83 m) Shutter Type Window

Jalousie Holder with Clear Glass Blades on Silver Colored Frame and Fixed Clear Glass Transom on

50 x 150 mm Wooden Jamb complete Accessories

set 2.00 4,667.50 592.61 9,335.00 1,185.21 10,520.21

Sub-total 53,120.21

9.00 Ceiling and Carpentry Works

Interior and Exterior Ceiling sq.m 147.13

9.17 Metal Carrying Channel (12mm x 38mm x 5m x .8mm thk

pc 28.00 125.00 61.38 3,500.00 1,718.64 5,218.64

EPICUREAN | 99

9.09 Fiber Cement Ceiling Board (4.5mm thk) pc 51.00 390.00 118.80 19,890.00 6,058.80 25,948.80

9.18 Metal Double Furring Channel (19mm x 50mm x 5mm x 0.5mm thk

pc 51.00 135.00 71.50 6,885.00 3,646.50 10,531.50

9.32 Wall Angle 1" x 1" x 10' pc 33.00 90.00 19.80 2,970.00

653.40

3,623.40

9.20 W Clip pc 236.00 5.00 1.50 1,180.00 354.00

1,534.00

9.21 Suspension Clip and Rod Joiner pc 121.00 135.00 40.50 16,335.00

4,900.50

21,235.50

9.26 Steel Angle pc 79.00 46.00 4.40 3,634.00 347.60

3,981.60

9.33 Suspension Rod #8 kg 133.00 30.00 31.90 3,990.00

4,242.70

8,232.70

8.37 Blind Rivets pc 495.00 1.35 0.27 668.25 133.65

801.90

9.16 Concrete Nail #3 kg 2.00 70.00 7.92 140.00

15.84

155.84

Sub-total 81,263.88

10.00 Electrical Works

Roughing-ins

10.01 Electrical Conduit uPVC, 15mmØ pc 40.00 50.00 10.00 2,000.00 400.00 2,400.00

10.06 RSC 20mmØ pc 1.00 112.50 22.50 112.50 22.50 135.00

10.34 Entrance Cap 20mm dia. pc 1.00 50.00 10.00 50.00 10.00 60.00

10.16 Junction Box, 4" x 4" G.I. pc 12.00 15.00 3.00 180.00 36.00 216.00

10.17 Utility Box, 2" x 4" G.I. pc 16.00 17.00 6.00 272.00 96.00 368.00

Wires & Fixtures

10.11 3.5 mm2 THW Wire, Stranded m 360.00 25.00 6.60 9,000.00 2,376.00 11,376.00

10.12 5.5 mm2 THW Wire, Stranded m 10.00 36.00 10.10 360.00 101.00 461.00

10.28 Duplex C.O. with Plate pc 12.00 263.80 52.76 3,165.60 633.12 3,798.72

10.25 2-Gang Switch with Plate pc 8.00 208.00 41.60 1,664.00 332.80 1,996.80

10.23 Single Switch with Plate pc 4.00 64.00 19.54 256.00 78.14 334.14

10.18 FL 2 x 36W Fluorescent Lighting Fixture (Box

Type - Surfaced Ceiling Mounted)

set 16.00 2,600.00 520.00 41,600.00 8,320.00 49,920.00

10.19 18W Compact Fluorescent Lighting Fixture with Medium keyless type Porcelain Receptacle (surfaced

Ceiling Mounted)

set 11.00 215.00 236.90 2,365.00 2,605.90 4,970.90

10.48 Panel Box, Flush Type, 4 Branches set 1.00 1,202.75 180.41 1,202.75 180.41 1,383.16

10.40 Circuit Breaker, 40A 2P set 3.00 310.00 62.60 930.00 187.80 1,117.80

10.38 Circuit Breaker, 20A 2P set 5.00 310.00 62.60 1,550.00 313.00 1,863.00

10.59 Wall Fan (Standard/Any Equivalent) set 10.00 1,500.00 150.00 15,000.00 1,500.00 16,500.00

10.58 Electrical Tape pc 6.00 37.50 5.63 225.00 33.75 258.75

Sub-total 97,159.28

13.00 Painting Works

Ceiling sq.m 133.17

13.18 Neutralizer gal 2.00 132.00 39.60 264.00 79.20 343.20

13.01 Latex, Flat gal 6.00 550.00 165.00 3,300.00 990.00 4,290.00

13.14 Masonry Putty gal 6.00 319.00 95.70 1,914.00 574.20 2,488.20

13.02 Latex, Semi Gloss gal 6.00 490.00 147.00 2,940.00 882.00 3,822.00

13.20 Acri Color qrt 2.00 165.00 49.50 330.00 99.00 429.00

Walls sq.m 240.91

13.18 Neutralizer gal 4.00 132.00 39.60 528.00 158.40 686.40

13.01 Latex, Flat gal 10.00 550.00 165.00 5,500.00 1,650.00 7,150.00

13.14 Masonry Putty gal 10.00 319.00 95.70 3,190.00 957.00 4,147.00

EPICUREAN | 100

13.02 Latex, Semi Gloss gal 10.00 490.00 147.00 4,900.00 1,470.00 6,370.00

13.20 Acri Color qrt 3.00 165.00 49.50 495.00 148.50 643.50

Wood surfaces sq.m 115.20

13.04 Enamel, Flatwall gal 6.00 525.00 157.50 3,150.00 945.00 4,095.00

13.15 Glazing Putty gal 6.00 492.00 147.60 2,952.00 885.60 3,837.60

13.05 Enamel, Semi Gloss gal 6.00 490.00 147.00 2,940.00 882.00 3,822.00

13.16 Paint Thinner gal 3.00 260.00 78.00 780.00 234.00 1,014.00

Steel Surfaces sq.m 100.00

13.12 Primer, Zinc Chromate gal 5.00 537.00 161.10 2,685.00 805.50 3,490.50

Sub-total 46,628.40

16.00 Tileworks

16.01 400mm x 400mm unglazed floor tiles pcs 217.00 61.00 18.30 13,237.00 3,971.10 17,208.10

16.02 200mm x 400mm unglazed floor tiles pcs 200.00 42.00 12.60 8,400.00 2,520.00 10,920.00

16.03 200mm x 400mm glazed wall tiles pcs 360.00 43.00 12.90 15,480.00 4,644.00 20,124.00

16.04 200mm x 200mm Tiles pcs 120.00 22.00 6.60 2,640.00 792.00 3,432.00

16.05 Tile adhesives bags 20.00 224.00 67.20 4,480.00 1,344.00 5,824.00

16.06 Tile grouts kg 6.00 68.00 20.40 408.00 122.40 530.40

Sub-total 58,038.50

Plumbing Works

Plumbing fixtures

Water closet unit 4.00 6,500.00 1,300.00 26,000.00 5,200.00 31,200.00

Lavatory unit 4.00 4,100.00 820.00 16,400.00 3,280.00 19,680.00

Urinal unit 2.00 3,800.00 760.00 7,600.00 1,520.00 9,120.00

Faucet set 2.00 320.00 64.00 640.00 128.00 768.00

Goose neck faucet set 8.00 380.00 76.00 3,040.00 608.00 3,648.00

Facial Mirror (.90m x 1.20m) set 3.00 2,000.00 400.00 6,000.00 1,200.00 7,200.00

Hand Dryer set 3.00 4,500.00 900.00 13,500.00 2,700.00 16,200.00

Kitchen sink set 3.00 6,000.00 1,200.00 18,000.00 3,600.00 21,600.00

Tissue holder set 3.00 250.00 50.00 750.00 150.00 900.00

Gate valve set 6.00 280.00 56.00 1,680.00 336.00 2,016.00

Soap holder set 3.00 200.00 40.00 600.00 120.00 720.00

Pipes and Fittings

PP-R Pipe 3/4"Ø pc 10.00 345.00 103.50

3,450.00 1,035.00 4,485.00

PP-R Pipe 1/2"Ø pc 12.00 217.00

65.10

2,604.00 781.20 3,385.20

PP-R Coupling, 1/2"Ø pc 9.00 9.00

2.70

81.00 24.30 105.30

PP-R Coupling, 3/4"Ø pc 11.00 15.00

4.50

165.00 49.50 214.50

PP-R Tee, 1/2"Ø pc 6.00 17.00

5.10

102.00 30.60 132.60

PP-R Tee, 3/4"Ø pc 8.00 31.00

9.30

248.00 74.40 322.40

PP-R Tee, 3/4" x 1/2"Ø pc 4.00 25.00

7.50

100.00 30.00 130.00

PP-R Elbow 90o x 1/2"Ø pc 4.00 14.00

4.20

56.00 16.80 72.80

PP-R Elbow 90o x 3/4"Ø pc 5.00 23.00

6.90

115.00 34.50 149.50

PP-R Coupling Reducer, 1/2" x 3/4"Ø pc 2.00 11.00

3.30

22.00 6.60 28.60

PP-R Plug, 1/2"Ø pc 2.00 8.00

2.40

16.00 4.80 20.80

EPICUREAN | 101

PP-R Plug, 3/4"Ø pc 2.00 12.00

3.60

24.00 7.20 31.20

Sub-total 122,129.90

12.00 Sanitary Works

12.01 Catch Basin unit 2.00 1,500.00

450.00

3,000.00 900.00 3,900.00

12.02 Concrete Pipe 150mmØ pc 4.00 200.00

60.00

800.00 240.00 1,040.00

12.04 PVC Pipe 2"Ø pc 8.00 168.50

50.55

1,348.00 404.40 1,752.40

12.06 PVC Pipe 4"Ø pc 10.00 451.50

135.45

4,515.00 1,354.50 5,869.50

12.11 uPVC Elbow 90o x 2"Ø pc 8.00 25.00

7.50

200.00 60.00 260.00

12.13 uPVC Elbow 90o x 4"Ø pc 4.00 96.00

28.80

384.00 115.20 499.20

12.14 uPVC Elbow 1/8 x 2"Ø pc 3.00 20.50

6.15

61.50 18.45 79.95

12.16 uPVC Elbow 1/8 x 4"Ø pc 5.00 82.50

24.75

412.50 123.75 536.25

12.17 uPVC Tee 2" x 2" pc 6.00 36.00

10.80

216.00 64.80 280.80

12.19 uPVC Tee 4" x 2" pc 2.00 89.00

26.70

178.00 53.40 231.40

12.21 uPVC Tee 4" x 4" pc 2.00 138.00

41.40

276.00 82.80 358.80

12.22 uPVC Wye 2" x 2" pc 5.00 38.00

11.40

190.00 57.00 247.00

12.25 uPVC Wye 4" x 2" pc 4.00 97.00

29.10

388.00 116.40 504.40

12.27 uPVC Wye 4" x 4" pc 2.00 165.00 49.50

330.00 99.00 429.00

12.30 uPVC P-Trap 2" pc 8.00 66.00

19.80

528.00 158.40 686.40

Sub-total 16,675.10

I. MATERIALS (VAT inclusive) 511,868.39

II. LABOR 149,830.79

III. DIRECT COST (I + II) 661,699.18

IV. INDIRECT COST 22% of (III) 145,573.82

V. TAX 5% of (III + IV) 40,363.65

VI. TOTAL CONSTRUCTION COST (III + IV + V) 847,636.65

EPICUREAN | 102

F. RAW MATERIALS AND SUPPLIES

i. List of Raw Materials

Almond Extract

Almond Flour

Almonds

Anzac Biscuits

Avocado

Bacon

Baking Soda

Banana

Bicarbonate of Soda

Blueberry

Bourbon

Buttermilk

Caramel

Caramel Sauce

Cardamom Seeds

Cashews

Cherries

Chia Seeds

Chocolate Chips

Chocolate Jimmies / Chocolate

Sprinkles

Chocolate Sandwich Cookies

Chocolate Sauce

Chocolate Syrup

Chocolate Wafer Cookies

Chocolate Waffles

Cinnamon

Cocoa Powder

Coconut Cream

Coconut Ice Cream

Coconut Ice Cream

Coconut Milk

Coconut Milk

Coconut Oil

Coffee Ice Cream

Confectioner's Sugar

Corn Syrup

Cornstarch

Cornstarch

Cream

Cream Cheese

Crushed Graham

Dark Chocolate

Dark Rum

Dates

Durian

Eggs

Evaporated Milk

Flour

Fresh-Brewed Coffee

Honey

Instant Chocolate Pudding

Instant Chocolate Pudding

Instant Pudding

Lemon Juice

Mango

Mango

Mango Puree

Maple Syrup

Marshmallow Cream

Marshmallows

Matcha Powder

Matcha Powder

Milk

Mint Leaves

Mint Leaves

Oats

Oreo Cookies

Peppermint Extract

Pink Gel Food Coloring

EPICUREAN | 103

Pistachio Pudding Mix

Pistachios

Puff Pastry

Raspberry

Red Food Coloring

Red Velvet Cake Mix

Rocky Road Ice Cream

Salt

Salted Butter

Salted Caramel

Semi-Sweet Chocolate

Shortening

Sour Cream

Strawberry

Strawberry

Strawberry Jam

Strawberry Puree

Sugar

Tapioca Starch

Vanilla Extract

Vanilla Ice Cream

Vanilla Ice Cream

Vegetable Cream

Vegetable Oil

Vodka

Waffle Mix

Whipping Cream

White Chocolate

Yogurt

EPICUREAN | 104

ii. List of Suppliers

In business, one of the key components for an effective and efficient operations is

finding good and reliable suppliers who can meet its client’s demands and set prices within

the reasonable range.

The group considered several factors in selecting Epicurean's prospective suppliers.

The first consideration is the reputation of the supplier in selling high quality products. Also,

a supplier should contribute to product development by offering and suggesting raw materials

that are of higher quality. Secondly, the supplier should meet the quantity/volume demanded

of its clients to avoid circumstances of shortage and inefficiencies. Next, the price of the raw

materials should be reasonable and may give the company a competitive edge in the bottom

line by providing discounts and rebates. Then, the timeliness of the supplier is also an essential

criterion. The supplier should make timely delivery of the items ordered so that there are no

inefficiencies in operations. Lastly, a supplier should be willing to extend some financial credit

to accommodate its clients in times of growth and cash shortage.

The following are the list of suppliers:

1. RAFSKI PASTRY AND BAKERY SUPPLIES

Rafski sells wide variety of baking products under different brand names within

reasonable wholesale and retail price range. The company is known for its respected

reputation in selling high quality and fresh bakery products. It currently serves as

supplier to known bakery establishments in the city such as BreadTalk.

Rafski offers trade discounts, and other classes of price deductions which helps

the company to cut costs and gain financial advantage. It also delivers ordered items

within the day or a day after the time of order and gives no delivery charges. This cuts

the delivery costs of Epicurean. It also extends financial credit to its valued customers

by giving 15 days and up to two months of payment terms. This accommodates

customers who do not have available cash at the time of purchase. Lastly, in case of

product unavailability, Rafski is willing to refer its customers to another supplier if

there is a need on the part of the latter to get the items before Rafski can restock. This

assures Epicurean that product shortage is reduced to a very low level.

EPICUREAN | 105

2. BANKEROHAN MARKET

Ingredients such as fresh fruits are bought directly from the market. The

proponents decided not to specify suppliers since these items are accessible in the

market due to its large supply. Another reason for this is that the following items, when

taken individually, are not critical items in the production process. However, the

proponents identified a number of fruit suppliers who are known for its good quality

products.

· Senorita Fruit Supplier

Address: Door 81, Virgo St., GSIS Heights, Davao City

Telephone: 082-241-0094

·Angel Prince Fruits and Vegetables

Address: Bankerohan Public Market ,Marfori Road, Davao City

Telephone:082-225-8040

3. ABREEZA MALL OF DAVAO / GAISANO MALL OF DAVAO

A number of product ingredients (e.g. raspberry, cherries, pistachio nuts, dates,

etc.) in the menu of Epicurean are available only in the following stores because such

items are either imported or not immediately available in the public market. The

Abreeza Mall and Gaisano Mall are the preferred stores where Epicurean will buy these

product ingredients because of the short distance between the store location and these

establishments. Also, the proponents are certain that both establishments sell high

quality and fresh products to its customers.

iii. List of Ingredients

INGREDIENTS DESCRIPTION SHELF LIFE

(when opened)

PRICE/UNIT SUPPLIER

Peppermint Extract 2-4 years P40 /20 ml Rafski Pastry and

Bakery Supplies

Cornstarch Indefinite P 38/ pack Rafski Pastry and

Bakery Supplies

Matcha Powder Indefinite Price unavailable Rafski Pastry and

Bakery Supplies

Salted Butter 5 months under normal

refrigeration

P98/ 1 KG Rafski Pastry and

Bakery Supplies

Sugar 2 years P51/1 KG Rafski Pastry and

Bakery Supplies

Confectioner's Sugar Indefinite p55/1 kg Rafski Pastry and

Bakery Supplies

EPICUREAN | 106

Cinnamon 6 to 12 months P600/ 1 kg Rafski Pastry and

Bakery Supplies

Cocoa Powder 12 months 250 / 1 KLG. Rafski Pastry and

Bakery Supplies

Marshmallows 2-4 months P150/ 1 BAG Rafski Pastry and

Bakery Supplies

Coconut Cream refrigerator - 5-7 days ;

Freezer - 1-2months

Price unavailable Rafski Pastry and

Bakery Supplies

Cream 2 weeks P45.50 / 250 ml Rafski Pastry and

Bakery Supplies

Sourcream a dairy product

obtained by fermenting

regular cream with

certain kinds of lactic

acid bacteria

7-10 days P89.57 / 8oz Rafski Pastry and

Bakery Supplies

Milk 5-7 days P65 / 500 ml Rafski Pastry and

Bakery Supplies

Buttermilk 7-10 days P185/1 KG Rafski Pastry and

Bakery Supplies

Evaporated Milk 3-4 days P38.20/300ML Rafski Pastry and

Bakery Supplies

Coconut Oil 2-3 months P42.35 / 1 Ltr Rafski Pastry and

Bakery Supplies

Vegetable Oil 1 year P60/1 ltr Rafski Pastry and

Bakery Supplies

Lemon Juice 1 week P45/150 ML Rafski Pastry and

Bakery Supplies

Maple Syrup Indefinite P149/50 ml Rafski Pastry and

Bakery Supplies

Corn Syrup Indefinite P93.3/24 oz Rafski Pastry and

Bakery Supplies

Almond Extract 4 years P34.20/ 20 ml Rafski Pastry and

Bakery Supplies

Vanilla Extract 2-4 years P33.27/20ml Rafski Pastry and

Bakery Supplies

Cream Cheese 1-2 weeks P380/1KG Rafski Pastry and

Bakery Supplies

Whipping Cream 1-2 weeks, unopened 3-4

months from past printed

date

P220/1 KG Rafski Pastry and

Bakery Supplies

Yogurt 7-10 days P119.89/18oz Rafski Pastry and

Bakery Supplies

Salt Indefinite P15/ 1 KG Rafski Pastry and

Bakery Supplies

Dark Chocolate 6-8 months P380/ 550g Rafski Pastry and

Bakery Supplies

White Chocolate 6-8 months P505.55/500g Rafski Pastry and

Bakery Supplies

Semi-Sweet Chocolate 6-8 months P380/ 550g Rafski Pastry and

Bakery Supplies

Chocolate Chips 6-8 months P220/1 KG Rafski Pastry and

Bakery Supplies

Salted Caramel 2-3 months P180/500G Rafski Pastry and

Bakery Supplies

EPICUREAN | 107

Caramel Sauce 2-3 months P180/500G Rafski Pastry and

Bakery Supplies

Caramel 2-3 months P200/500g Rafski Pastry and

Bakery Supplies

Chocolate Sauce 1-2 years 210/500G Rafski Pastry and

Bakery Supplies

Honey Forever P300/8 oz Rafski Pastry and

Bakery Supplies

Chocolate Syrup 1-2 years 210 / 500 ml Rafski Pastry and

Bakery Supplies

Crushed Graham 1 month- pantry ; 3-4

months -Freezer

P 45.62 / Pack Rafski Pastry and

Bakery Supplies

Vegetable Cream 5-7 days Price unavailable Rafski Pastry and

Bakery Supplies

Oats 5-7 days - refrigerator ;

freezer -not recommended

166/1.2 kg Rafski Pastry and

Bakery Supplies

Flour 6-8 months P43/kg Rafski Pastry and

Bakery Supplies

Cornstarch Indefinite P39 / 500g Rafski Pastry and

Bakery Supplies

Tapioca Starch 6 months Price unavailable Rafski Pastry and

Bakery Supplies

Baking Soda Indefinite P40 / 500 g Rafski Pastry and

Bakery Supplies

Matcha Powder is finely ground

powder of specially

grown and

processed green tea.

2 months in fridge 375/50 g Rafski Pastry and

Bakery Supplies

Marshmallow Cream 2-4 months 350/198g Rafski Pastry and

Bakery Supplies

Waffle Mix 1 year P220 / 325 ml Rafski Pastry and

Bakery Supplies

Chocolate Waffles 1 year P 250/ 325 ml Rafski Pastry and

Bakery Supplies

Instant Chocolate Pudding 3-4 weeks Price unavailable Rafski Pastry and

Bakery Supplies

Chocolate Jimmies /

Chocolate Sprinkles

3-5 years P38.74 / pack Rafski Pastry and

Bakery Supplies

Pink Gel Food Coloring 12 months P30-40/20 ml Rafski Pastry and

Bakery Supplies

Puff Pastry 12 months P108/ PACK Rafski Pastry and

Bakery Supplies

Almond Flour 6-8 months P48 / kg Rafski Pastry and

Bakery Supplies

Bicarbonate of Soda is an alkali which is

used to

raise soda breads and

full-flavoured cakes

Indefinite P 15 / pack Rafski Pastry and

Bakery Supplies

Shortening 6 months P 373 / 453 g Rafski Pastry and

Bakery Supplies

Red Food Coloring 12 months P30-40/20 ml Rafski Pastry and

Bakery Supplies

Mint Leaves Indefinite Price unavailable Rafski Pastry and

Bakery Supplies

https://en.wikipedia.org/wiki/Green_tea




EPICUREAN | 108

Red Velvel Cake Mix 4-5 months P 220/250 g Rafski Pastry and

Bakery Supplies

Chocolate Sandwich

Cookies

2-3 weeks P 148 / Pack Rafski Pastry and

Bakery Supplies

Oreo Cookies 2-3 months(opened) P 63 / pack Rafski Pastry and

Bakery Supplies

Chocolate Wafer Cookies 2-3 months(opened) P 57 /Pack Rafski Pastry and

Bakery Supplies

Pistachio Pudding Mix 4-5 weeks P 70 / Pack Rafski Pastry and

Bakery Supplies

Instant Chocolate Pudding 4-5 weeks P 70 / Pack Rafski Pastry and

Bakery Supplies

Instant Pudding 4-5 weeks P 70 / Pack Rafski Pastry and

Bakery Supplies

Fresh-Brewed Coffee 2 days Price unavailable In-house

Coconut Milk Refrigerator - 4-6 days;

Freezer - 2-3 months

Price unavailable Bankerohan Market

Avocado 7-10 days 60 /1 kg Bankerohan Market

Coconut Milk 1 week 20/piece Bankerohan Market

Mango 5-7 days once riped P60 / 1 kg Bankerohan Market

Eggs 3-4 weeks 100/30 pieces Bankerohan Market

Mango 5-7 days P 60 /KG Bankerohan Market

Durian 3 Weeks P 40 / KG Bankerohan Market

Raspberry 2-3 days -refrigerator ,

freezer- 10-12 months

Price unavailable Abreeza Mall or

Gaisano Mall of

Davao

Rocky Road Ice Cream 1-2 months -freezer P220/ 1.5 ltr Abreeza Mall or

Gaisano Mall of

Davao

Mint Leaves 7-10 days-refrigerator ;

freezer -4-6 months

Price unavailable Abreeza Mall or

Gaisano Mall of

Davao

Coconut Ice Cream 1-2 months -freezer P220/ 1.5 ltr Abreeza Mall or

Gaisano Mall of

Davao

Anzac Biscuits is a sweet biscuit,

made using rolled oats,

flour, sugar, butter,

golden syrup, baking

soda, boiling water and

optionally desiccated

coconut.

4-5 months Price unavailable Abreeza Mall or

Gaisano Mall of

Davao

Dark Rum Indefinite P1200.40/1 LTR Abreeza Mall or

Gaisano Mall of

Davao

Bourbon Indefinite P1791.29/1 LTR Abreeza Mall or

Gaisano Mall of

Davao

Cardamom Seeds a spice made from

the seeds of several

plants

3-4 years Price unavailable Abreeza Mall or

Gaisano Mall of

Davao

EPICUREAN | 109

Cashews 6-9 months 400 per kg Retail

Price

Abreeza Mall or

Gaisano Mall of

Davao

Pistachios 3 months Price unavailable Abreeza Mall or

Gaisano Mall of

Davao

Dates 6-12 months 300/454kg Abreeza Mall or

Gaisano Mall of

Davao

Cherries 2-3 days- pantry 5-10 days

-refrigerated

340/kg Abreeza Mall or

Gaisano Mall of

Davao

Chia Seeds are tiny, like a sesame

seed – and part of the

mint family.

2 years Price unavailable Abreeza Mall or

Gaisano Mall of

Davao

Strawberry 5-7 days 500/kg Abreeza Mall or

Gaisano Mall of

Davao

Blueberry 5-10 days 1250/kg Abreeza Mall or

Gaisano Mall of

Davao

Almonds 9-12 months 170/1kg Abreeza Mall or

Gaisano Mall of

Davao

Coffee Ice Cream 1-2 months -freezer P220/ 1.5 ltr Abreeza Mall or

Gaisano Mall of

Davao

Vodka Indefinite P650/700 ml Abreeza Mall or

Gaisano Mall of

Davao

Vanilla Ice Cream 1-2 months -freezer P220/ 1.5 ltr Abreeza Mall or

Gaisano Mall of

Davao

Bacon 1 week 278/500g Abreeza Mall or

Gaisano Mall of

Davao

Strawberry 5-7 days P250-350/kg Abreeza Mall or

Gaisano Mall of

Davao

Strawberry Jam 6-12 months P190-200/Kg Abreeza Mall or

Gaisano Mall of

Davao

Strawberry Puree 6 months P200 Abreeza Mall or

Gaisano Mall of

Davao

Mango Puree 6 months P75/ kg Abreeza Mall or

Gaisano Mall of

Davao

Vanilla Ice Cream 1-2 months P 200 / 1.5 ltr Abreeza Mall or

Gaisano Mall of

Davao

Coconut Ice Cream 1-2 months P 200 / 1.5 ltr Abreeza Mall or

Gaisano Mall of

Davao

EPICUREAN | 110

Banana 2-7 days -pantry/

refrigerator 2-9 days

lakatan banana --

P30 per kg;

latundan banana --

P15 per kg

Bankerohan Market

Table 3.1. List of Raw Materials with Corresponding Descriptions, Shelf Life, Prices, and Suppliers

G. UTILITIES

The Davao City Water District will be Epicurean’s water source. The water rate in the city

is presented in table 3.1. The estimated unit consumption per month for commercial space

according to Davao City Water District Data is 70.91 cubic meter.

Table 3.2. Water Rates Data

To get the estimated monthly water bill:

Table 3.3. Computation of Estimated Monthly Water Bill

Davao Light & Power Company will be Epicurean’s electricity source. The per kilowatt-

hour rate in the city is Php. 7.51. The table below shows the breakdown of the monthly kilowatt

consumption of each of the appliances and machinery that the proposed project will be consuming.

Table 3.4. Computation of Total Estimated Monthly Electricity Bill

Minimum Charge 11-20 m3 21-30 m3 31-40 m3 41-50 m3 51-up m3

137.3 14.4 18.6 24.7 36 36

Minimum Charge 137.30

11-20 cubic meter 144.00




51-up cubic meter ((70.91-50)*36) 752.76

Estimated Monthly Water Bill 1827.06

Equipment kW Hrs/Day 30 days Peso/kWhr Peso/Month

Airconditioning Unit (1.5 HP) 1.25 12 30 7.51

3384.907

Airconditioning Unit (6 HP)

12 30 7.51

0

Flourescent Lamp (15bulbs, 40watts/bulb) 0.6 12 30 7.51

1622.16

Blender/Grinder/Mixer/Grinder 0.7 3 30 7.51

473.13

Rice Cooker, 1.8 liter 0.65 3 30 7.51

439.335

Spoon Heater 1.5 4 30 7.51

1351.8

Glass Door Chiller 0.2 24 30 7.51

1081.44

Freezer 0.15 24 30 7.51

811.08

Laptop and Printer 0.1 4 30 7.51

90.12

Refrigerator 0.15 24 30 7.51

811.08

Total Estimated Monthly Electricity Bill

10065.05

EPICUREAN | 111

H. WASTE DISPOSAL

Proper waste management is one of the most important aspect to consider in running

a food business such as a patisserie. Epicurean Chocolates considers waste management as

an integral part of its day to day operations. The proponents should follow these guidelines

in standardizing the management of their waste materials:

1. Waste materials such as paper, cardboard, plastics, food wastes and other special

wastes must be properly collected by the waiters after the customers have left their

table. They will deliver the waste materials together with the plates and other dishes

to a small opening behind the counter which leads to the dishwashing area inside the

kitchen. The dishwasher will then gather the waste materials and segregate them in

the trash bins in accordance to its nature (e.g. Biodegradable, Non-Biodegradable,

Recyclable and etc.).

2. Following the City Ordinance No. 0361-10 or the Mandatory Segregation of Solid

Waste, before closing the store, a person will be assigned to gather the waste materials

from the different trash bins and bring them out from the kitchen to the local garbage

bins outside of the store. These wastes will then be collected by the local garbage

collector.

3. Regarding the spoilage of products and inventories, the proponents will have to

dispose the spoiled goods upon inspection during daily check-ups before closing the

store.

4. To dispose wastewaters, a septic tank will be constructed. Its purpose is to separate

solids from the wastewater, store and partially decompose as much solid material as

possible, while allowing the liquid (or effluent) to go to the drainage. Wastewater

from the toilet and the kitchen flows into the tank and remains there for up to 24 hours

(known as the retention time) before it passes to the drainage. This helps prevent

clogging of the drainage, which can lead to failure and costly repairs.

5. Monthly waste audit will be conducted to reduce the amount of waste the store

produces per day and to ensure environmental responsibility is considered. Examples

of which is the avoidance of using Polystyrene (Styro) materials in the store’s

packaging.

EPICUREAN | 112

Strict implementation on these guidelines will be observed. Epicurean Chocolates

fosters respect and care for the environment through responsible waste management and

waste reduction standards.

I. LABOR REQUIREMENTS

Direct Labor

Employee Qualifications Number Salary/Wage Rate

Chef/Store Supervisor ● Must have a degree in

pastry arts

● Graduate of an HRM

course

● Knows how to bake and

cook

● Possess leadership skills

● Possess organizational and

management skills

● Must be creative

● Must be manually

dexterous

● Possess good

communication skills

● Availability to work on

flexible schedules

1 Php 50,000/month

Kitchen Crew ● Knows how to bake and

cook

● Has organizational and

management skills

● Must be attentive to detail

● Must be manually

dexterous

● Ability to follow written

and oral instructions

● Able to handle work well

during rush hours

● Availability to work on

flexible schedules

4 Php 15,000/month

Presented here are the officers and employees that will be needed for Epicurean’s

operations. Along with the list are their qualifications and the suggested salary/wage rate.

EPICUREAN | 113

Indirect Labor

Employee Qualifications Number Salary/Wage Rate

Front Crew/ Cashier ● Knows how to use

equipment such as blender

● Able to multitask

● Has the ability to prepare

and pack food in

conformance with the

orders

● Able to handle work well

during rush hours

● Willing to learn

● Has bright personality

● Ability to work efficiently

with other crew workers

● Dedicated and meticulous

● Possess general math skills

● Possess skill in handling

and counting cash

● Able to maintain a high

energy level

● Has bright personality

● Possess good interpersonal

skills (Able to provide

prompt and friendly

customer service)

● Able to converse using the

English language

2 Php 400/day

Shop Cleaner ● Ability to work efficiently

with other crew workers

● Enthusiastic to perform all

physical aspects of the

cleaning job duties

● Highly skilled in cleaning

2 Php 317/day

EPICUREAN | 114

J. PRODUCTION COST

Production cost is a cost incurred by a business when manufacturing a good or producing a

service. Production costs combine raw material and labor. To figure out the cost of production per

unit, the cost of production is divided by the number of units produced. A company that knows

how much it will cost to produce an item, or produce a service, will have a clearer picture of how

to better price the item or service and what will be the total cost to the company (Investopedia,

n.d.). Presented here is a rough estimate of the production cost of Epicurean per year.

2017 2018 2019 2020 2021

Variable Cost

Raw Materials 4,470,039.77 7,654,144.65 8,145,148.50 8,664,875.27 9,214,610.38

Total Variable Cost 4,470,039.77 7,654,144.65 8,145,148.50 8,664,875.27 9,214,610.38

Fixed Cost

Direct Labor 770,000.00 1,372,800.00 1,427,712.00 1,484,820.48 1,544,213.30

Depreciation

Basic Tools and measuring

utensils

2,173.62 3,726.21 3,726.21 3,726.21 3,726.21

Mixing Tools 1,267.14 2,172.23 2,172.23 2,172.23 2,172.23

Specialty Tools 542.81 930.54 930.54 930.54 930.54

Baking Pans 1,140.42 1,955.00 1,955.00 1,955.00 1,955.00

Kitchen

Supplies 828.13 1,419.64 1,419.64 1,419.64 1,419.64

Utensils 3,364.58 5,767.86 5,767.86 5,767.86 5,767.86

Equipments 37,762.24 64,735.27 64,735.27 64,735.27 64,735.27

Other

Equipment 10,729.74 57,808.68 18,393.84 99,100.58 18,393.84 99,100.58 18,393.84 99,100.58 18,393.84 99,100.58

Utilities 111,198.91 198,251.82 206,181.89 214,429.17 223,006.34

Total Fixed Cost 939,007.59 1,670,152.40 1,732,994.47 1,798,350.23 1,866,320.22

Total Production Cost 5,409,047.36 9,324,297.05 9,878,142.97 10,463,225.50 11,080,930.60

EPICUREAN | 115

CHAPTER IV

FINANCIAL ASPECT

A. Major Assumptions used in the preparation of Financial Statements

1. Depreciable assets are depreciated using the straight-line method with no salvage value.

2. Fully depreciated property, plant and equipment are retired when fully depreciated.

3. The same kind of the PPE retired are purchased at the same cost, at the same time that it

was fully depreciated.

4. Interest on short-term borrowing is accrued and paid every month.

5. Interest on long-term borrowing is paid at year-end.

6. Loans are received at face value to be paid in installments for 10 years with an interest rate

of 6%.

7. Interest expense is based on the interest rate of 6% which is the mean of 4%-8% interest

rate range on loans given by DBP.

8. The withholding tax payable is for the following: salaries and wages, payroll sheet, 2% of

the rental payment, and 2% of professional fees.

9. The accounts payable at the end of the year is equal to the ending raw materials inventory.

10. Inflation rate per year is 4%.4

11. All of the sales transactions are made in cash.

12. Sales are made evenly throughout the year.

13. Quantity of products sold increases by 2.3% per year based on projected sales in the market

study.

14. Purchases are made in cash and in credit.

15. Purchases are made evenly throughout the year.

16. Price of raw materials increases per year at inflation rate.

17. Product price increases by 4% every two years.

18. The supply of raw materials in the stockroom is good for one week. Thus, purchases of raw

materials are done once a week.

19. The finished goods inventory at the end of the year is equal to the demand of the following

day.

4 http://www.tradingeconomics.com/philippines/inflation-cpi/forecast

https://www.bdo.com.ph/mobile/personal/credit-debit-cards/merchant-accreditation

EPICUREAN | 116

20. Salaries and wages, employee benefits (e.g. thirteenth month pay), communication, gas,

oil, and lubricants, power light, and water increase per year at inflation rate.

21. Contract on operating lease is Php 100,000 per month and is good for five years.

22. Repairs and maintenance are incurred evenly throughout the year.

23. Repairs and maintenance increase 4% per year.

24. Utilities are paid at the end of the month.

25. Lessors and outsourced auditing firms are non-VAT registered.

26. Petty cash fund and payroll fund are replenished every end of the month.

27. The amount of annual petty cash fund remains constant for the next five years.

28. The monthly payroll fund for the salaries and wages and for the SSS, PhilHealth and

HDMF contributions pertain to the following month.

29. The employee benefits account is only composed of the 13th month pay of the employees.

30. There is a day off of one day per week for each employee. Such day off is assumed to be

paid.

31. Holiday pay implications are ignored.

32. Cost of equity and cost of debt remain constant for simplicity.

33. Work-in-process inventory was assumed to be zero (0) due to the difficulty of computation.

EPICUREAN | 117

B. Total Project Cost

The project cost is computed as follows:

Taxes and Licences

Business Name Registration 500.00

Regulatory Fees and Charges

Local Business Tax 750.00

Permit Fee 1,000.00

Garbage Fee 400.00

City Environment and Natural Resources

Solid Waste Management Certificate 300.00 300.00

Office of the City Building Official

Electrical Annual Inspection Fee 296.00

Mechanical Annual Inspection Fee 110.00

Plumbing Annual Inspection Fee 60.00

Sign and Signboard Structure Inspection Fee 500.00 966.00

City Health Office

Health Certificate Fee 50.00

Laboratory Fee 60.00

Sanitary Inspection Fee 300.00

Sanitary Permit Fee 200.00 610.00

City Planning and Development Office

Zoning Fee 300.00 300.00

Bureau of Fire Protection (10% of Total Regulatory Fees) 480.67

Licensing and Registration

Verification and reservation of the company with SEC 40.00

Notarization of articles of partnership 500.00

Registration of the company with SEC 2,500.00

Annual Community Tax 500.00

Barangay Clearance 100.00

Notarization of encoded business permit application form at the City Legal

Office 50.00

Temporary Authority to Operate and Compliance Form from the BBLP 3,000.00

Special Books of Account 400.00

Certificate of Registration and Taxpayer Identification Number (TIN) at

the BIR 15.00

Registration fee and Documentary Stamp Taxes 1,000.00

Printing receipts and invoices at print shops 1,750.00

Processing Costs 1,500.00 16,661.67

Property, Plant and Equipment

Machineries, Tools and Equipment (MTE) 1,083,090.85

Leasehold Improvement 756,818.44 2,060,698.40

EPICUREAN | 118

Input VAT 220,789.11

Initial Working Capital Requirements for the first two (2) months

Raw Materials Purchases 1,204,196.90

Salaries and Wages Expenses 354,040.00

SSS Premium Contribution 7,808.78

PhilHealth Premium Contribution 1,775.00

HDMF Premium Contribution 3,460.40

Rent Expense 300,000.00

Advertising and Promotion Expenses 2,625.00

Office Supplies Expenses 4,303.57

Communications Expenses 6,000.00

Meetings and Conferences 2,000.00

Repairs and Maintenance Expenses 1,500.00

Insurance Expenses 15,230.88

Miscellaneous Expenses 1,666.67

Utilities Expenses 19,092.33

Training Expenses 46,493.24

Input VAT 145,020.06 2,115,212.83

Total Project Cost 4,192,572.90

Less: Sales for 1st month 930,195.00

Capital and Loan Requirements 3,262,377.90

C. Initial Working Capital Requirements

1. Cash Management

As the most liquid and vulnerable of all assets, cash must be handled carefully.

Epicurean will maintain cash on hand, cash in bank, payroll fund, and petty cash fund as

cash accounts.

The amount of Cash on Hand must be enough to pay current obligations for the

month. Replenishment of Petty Cash Fund will be made from Cash on Hand. Payroll Fund

will also be made out of this account. Epicurean will require and hold a petty cash fund of

15,000 every month. The petty cash fund will be accounted through the Imprest Fund

System and will be under the custody of the cashier.

Cash in bank account includes deposits of customer payments from Epicurean.

Payments from customers will be collected by the cashier upon order of the goods. At the

end of the day, the cashier will remit the collections to the manager. The manager will be

the one to place the collections to the safety deposit box. After three days, the manager will

EPICUREAN | 119

deposit the collections to the bank. Cash in bank also includes credit and debit card sales5

payments from customers.

2. Inventory Management

Epicurean should employ a balance between having enough raw materials to make

its products and limiting the amount of raw materials stored to ensure freshness and avoid

waste and spoilage. With this, Epicurean will employ a First-In, First-Out basis of raw

material management. In addition, it will employ Periodic Accounting System in

monitoring its inventory.

In deciding for the order schedule of Epicurean, the proponents took into account

certain factors such as a raw materials’ shelf life and relative demand of the product. Raw

material procurement will not be uniform for every product because other materials spoil

faster. Orders are made every end of the week for the forecasted demand of the next week.

The reorder point for each raw material will happen when the amount of materials in the

storage room will not be enough for the forecasted demand. The inventory count should be

taken every night after Epicurean closes to determine whether a material has reached its

safety stock level.

Normal waste and spoilage of raw materials will be embedded in the Cost of Goods

Sold. Abnormal waste and spoilage of raw materials will be treated as expense.

3. Receivables/ Credit Policy Management

Payments to suppliers will be made after the receipt of goods depending upon the

agreed-upon credit terms. Epicurean will have no accounts receivables even if credit and

debit card payments are accepted. This is because credit and debit card payments are

immediately credited to the current and savings account6.

D. Alternative Sources of Financing

To cover the needed costs to start the business, the proponents decided to use both the

internal and external sources of financing. A part of the initial project cost will be financed using

the total contribution of the parties and a part will come from the proceeds from a long-term debt

acquired from the Development Bank of the Philippines (DBP). The terms of loan with DBP was

discussed during the interview of Mr. Fernando Lagahit, Regional Head of DBP Davao, It will

5 See Appendix 4.0 6 https://www.bdo.com.ph/mobile/personal/credit-debit-cards/merchant-accreditation



EPICUREAN | 120

also enter in short-term debt engagement with its suppliers when purchasing inventories, raw

materials and other basic items in order to sustain its operational activities. Moreover, in the event

of business expansion, additional short-term and/or long-term financing will be considered. (The

lists of banks, where Epicurean could transact its future borrowings, together with their respective

loan and credit terms and conditions, are attached in the Appendix 4.1.)

E. Sources of financing the Project

Capital Structure Policy

As already mentioned above, the initial project cost will be financed using the partners’

investment and a long-term borrowing from a bank. The capital structure of the business will

be composed of 20% equity and 80% debt. The terms of the loan with DBP was discussed

during the interview of Mr. Fernando Lagahit, Regional Head of DBP Davao. According to

him, the collateral of the loan could be the equipment, the machineries, and the furniture of

Epicurean. (See Appendix 4.5.)

The project will be financed as follows:

Long-term Debt (80%) 2,640,000.00

Equity (20%) 660,000.00

Total Capital and Loan

Requirements 3,300,000.00

Cost of Capital Determination

The following is Epicurean’s weighted average cost of capital:

*See Appendix C for computation of the weighted average cost of capital.

Long-term debt financing costs 6% per year. Financing through the partners’ capital costs

6.83% which is based on industry average7. As Epicurean’s long-term debt decreases annually

7 http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/wacc.htm

2017 2018 2019 2020 2021

*WACC 4.7740%

4.9787%

5.2091%

5.4208%

5.6544%

http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/wacc.htm

EPICUREAN | 121

due to the proportional principal amount of the loan being paid, its WACC also increases since

the cost of equity is higher by .83% than the cost of debt.

Profit/Loss Sharing Policy

The profit/loss sharing policy of Epicurean will depend upon the agreement of the partners.

It may be based on the investment (i.e. capital, labor, etc.) contributed by each partner or any

other terms. For the purpose of this study, the profit sharing would be 60:40 for partner A and

B, respectively. Since partner A is the industrial partner which is responsible for the

management of the patisserie, he will have a greater amount of share in the profit.

EPICUREAN | 122

F. PRO FORMA FINANCIAL STATEMENTS

Epicurean Chocolates

Fabie Building, Pelayo Street, Poblacion District

Davao City, Philippines

STATEMENT OF FINANCIAL POSITION

As of December 31, 2017-2021

ASSET

Notes 2017 2018 2019 2020 2021

CURRENT ASSETS: Cash & Cash Equivalents 3 1,128,422.55 1,384,224.00 1,579,045.01 1,691,980.09 1,888,226.70

Other Current Assets 4 277,277.65 287,844.48 299,723.63 312,314.40 325,811.58

Total 1,405,700.20 1,672,068.48 1,878,768.64 2,004,294.49 2,214,038.28

NON-CURRENT ASSETS: Property & Equipment, net 5 1,830,830.18 1,659,577.63 1,488,325.08 1,317,072.54 1,145,819.99

TOTAL ASSETS 3,236,530.38 3,331,646.11 3,367,093.72 3,321,367.03 3,359,858.27

LIABILITIES & STOCKHOLDERS EQUITY

LIABILITIES: Current Liabilities Accrued and other payables 6 195,473.69 207,245.28 222,615.93 238,606.84 256,962.06

Income Tax Payable 8 1,763.96 121,781.90 141,578.67 119,951.53 140,960.77

Loans Payable 7.a 264,000.00 264,000.00 264,000.00 264,000.00 264,000.00

TOTAL 461,237.65 593,027.17 628,194.60 622,558.37 661,922.83

Non-Current Liabilities Loans Payable 7.b 2,112,000.00 1,848,000.00 1,584,000.00 1,320,000.00 1,056,000.00

TOTAL LIABILITIES 2,573,237.65 2,441,027.17 2,212,194.60 1,942,558.37 1,717,922.83

STOCKHOLDER'S EQUITY: Partners' Capital 9 663,292.73 890,618.94 1,154,899.12 1,378,808.65 1,641,935.43

TOTAL LIABILITES & STOCKHOLDER'S EQUITY 3,236,530.38 3,331,646.11 3,367,093.72 3,321,367.03 3,359,858.27

EPICUREAN | 123




STATEMENT OF COMPREHENSIVE INCOME

For the year ended December 31, 2017-2021

Notes 2017 2018 2019 2020 2021

REVENUE : Sales 10 7,744,524.45 13,828,950.00 14,716,634.40 15,053,781.60 16,012,114.56

LESS: COST OF GOODS SOLD 11 5,383,471.62 9,323,464.06 9,876,565.20 10,461,571.35 11,079,159.97

GROSS PROFIT 2,361,052.83 4,505,485.94 4,840,069.20 4,592,210.25 4,932,954.59

EXPENSES Salaries & Wages 469,140.00 836,409.60 869,865.98 904,660.62 940,847.05

SSS Premium Contribution 74,773.02 130,834.32 137,022.00 138,774.00 142,328.40

PhilHealth Premium Contribution 14,087.50 24,150.00 25,050.00 25,650.00 27,150.00

HDMF Premium Contribution 24,782.80 44,184.00 45,950.88 47,789.77 62,126.53

Taxes and Licenses 16,661.67 525.80 8,327.55 6,939.35 8,327.55

Employee Benefits 177,020.00 184,100.80 191,464.83 199,123.43 207,088.36

Depreciation Expense 38,556.83 66,097.42 66,097.42 66,097.42 66,097.42

Rent Expense 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00

Professional Fees 20,000.00 20,800.00 21,632.00 22,497.28 23,397.17

Advertising and Promotion 9,187.50 16,380.00 17,035.20 17,716.61 18,425.27

Office Supplies 16,870.00 30,076.80 31,279.87 32,531.07 33,832.31

Communication 21,000.00 37,440.00 38,937.60 40,495.10 42,114.91

Meetings and Conferences 7,000.00 12,480.00 12,979.20 13,498.37 14,038.30

Repairs and Maintenance 3,000.00 6,240.00 6,489.60 6,749.18 7,019.15

Insurance 15,230.88 15,840.12 16,473.72 17,132.67 17,817.98

Miscellaneous Expense 5,000.00 10,400.00 10,816.00 11,248.64 11,698.59

Utilities 66,823.16 119,048.43 142,051.74 146,912.95 151,968.60

Interest Expense 158,400.00 126,720.00 110,880.00 95,040.00 79,200.00

Training Expense 39,922.19 - - - -

Total Expenses 2,337,533.36 2,881,727.29 2,952,353.60 2,992,856.45 3,053,477.59

NET INCOME/(LOSS) BEFORE

TAX 23,519.47 1,623,758.66 1,887,715.60 1,599,353.79 1,879,477.00

Provision for Income Tax 30% 7,055.84 487,127.60 566,314.68 479,806.14 563,843.10

NET INCOME/(LOSS) AFTER

TAX 16,463.63 1,136,631.06 1,321,400.92 1,119,547.66 1,315,633.90

EPICUREAN | 124

Epicurean Chocolates Fabie Building, Pelayo Street, Poblacion District


CASH FLOW STATEMENT


2017 2018 2019 2020 2021

Cash Flows from Operating Activities:

Net Income/(loss) 16,463.63 1,136,631.06 1,321,400.92 1,119,547.66 1,315,633.90

Adjustment to reconcile net income to net

cash provided by operating activities:

Depreciation 99,897.32 171,252.55 171,252.55 171,252.55 171,252.55

Changes in Assets & Liabilities:

(Increase)/Decrease in Other Current Assets (476,378.45) (10,566.82) (19,243.18) (20,249.37) (29,745.66)

Increase/(Decrease) in Income Tax Payable 1,763.96 120,017.94 19,796.77 (21,627.14) 21,009.24

Increase/(Decrease) in Accrued and Other

Payables 195,473.69 11,771.58 15,370.65 15,990.91 18,355.22

Increase/(Decrease) in Current Loans Payable 264,000.00 - - - -

Cash Flows from Investing Activities:

(Increase)/Decrease in Non-Current Assets (1,930,727.50) - - - -

Cash Flows from Financing Activities

Increase/(Decrease ) in Paid-in Capital 660,000.00 - - - -

Increase/(Decrease ) in Non-current

Liabilities 2,112,000.00 (264,000.00) (264,000.00) (264,000.00) (264,000.00)

Drawings (13,170.90) (909,304.85) (1,057,120.74) (895,638.12) (1,052,507.12)

Net Increase in Cash and cash equivalents

929,321.75 255,801.46 187,456.97 105,276.49 179,998.13

Add: Cash balance at beginning of the year

- 929,321.75 1,185,123.20 1,372,580.18 1,477,856.66

Cash balance at end of year 929,321.75 1,185,123.20 1,372,580.18 1,477,856.66 1,657,854.79

Cash Accounted as follows:

Cash on hand 13,276.02 9,876.03 11,438.17 12,315.47 13,815.46

Cash in bank 916,045.72 1,175,247.18 1,361,142.01 1,465,541.19 1,644,039.34

Total Cash Accounted 929,321.75 1,185,123.20 1,372,580.18 1,477,856.66 1,657,854.79

EPICUREAN | 125




STATEMENT OF CHANGES IN PARTNERSHIP EQUITY


2017 2018 2019 2020 2021

Partner's Capital, Beginning - 663,292.73 890,618.94 1,154,899.12 1,378,808.65

Add: Partners

Contribution

Partner A 330,000.00 - - - -

Partner B 330,000.00 - - - -

Net Income 16,463.63 1,136,631.06 1,321,400.92 1,119,547.66 1,315,633.90

Less: Drawings

Partner A 8,231.81 568,315.53 660,700.46 559,773.83 657,816.95

Partner B 4,939.09 340,989.32 396,420.28 335,864.30 394,690.17

Net Loss

Partnership Equity, End 663,292.73 890,618.94 1,154,899.12 1,378,808.65 1,641,935.43

EPICUREAN | 126

Epicurean Chocolates Fabie Building, Pelayo Street, Poblacion District Davao City, Philippines NOTES TO FINANCIAL STATEMENTS As of December 31, 2021, 2020, 2019, 2018 and 2017 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation The financial statements of the Company have been prepared in accordance with the Philippine Reporting Standards for Small and Medium-sized entities (PFRS for SMEs). The financial statements have been prepared on the historical cost basis and are presented in Philippine peso,

which is the entity's functional currency. All values represent absolute amounts except when otherwise indicated.

Cash and Cash Equivalents The Cash and Cash Equivalents account are made up of Cash on Hand, Cash in Bank (Demand Deposit Account), Petty Cash and Payroll Fund. The accounts under Cash and Cash equivalents are immediately available without restriction for use. Cash on Hand - includes undeposited cash receipts from sales and proceeds from bank loan. Cash in Bank - The amount deposited in the bank and credited to the account of the company. It is unrestricted as to withdrawal.

Petty Cash Fund - represents money set aside to pay small expenses which cannot be paid conveniently by issuance of checks.

Payroll Fund - The amount in this fund is exclusively for the distribution of salaries to employees. Inventories Inventories are assets held for sale in the normal course of business (PAS 2). It includes Raw Materials Inventory, Goods in Process

Inventory, and Finished Goods Inventory. The Periodic Inventory System is used in accounting for the inventories. The FIFO method is

used in inventory valuation. Property, Plant and Equipment (PPE) The management evaluates the PPE at the time they are incurred. The useful life of the asset is estimated based on the probable future

economic benefits associated with the asset that will flow to the entity. The asset items under Property, Plant, and Equipment account are tested for impairment annually or if material circumstances arise

that require the remeasurement of these items (e.g. flood, fire, damage, technology advancement) such that there is an indication

that the carrying amount of the item is not fully recoverable. Trade and Other Payables Trade payables are non-interest bearing and on normal credit terms. Accrued Expenses and Other Obligations are obligations that

will be settled within a year. Revenue Recognition The revenue recognition is in accordance with the accrual system. It only includes the gross inflow of economic benefits received by the entity (PAS 18). 2 MANAGEMENT'S SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES 3.1 Judgments The preparation of the company's financial statements in conformity with Financial Reporting Framework (in reference to

the Generally Accepted Accounting Principles of the Philippines) requires management to make estimates and assumptions

EPICUREAN | 127

that affect the amounts reported in the company's financial statements and accompanying notes. The estimates and

assumption used in the company's financial statements are based upon management's evaluation of relevant facts and

circumstances as of the date of the company's financial statements. Actual results could differ from such estimates,

judgments and estimates are continually evaluated and are based on historical experience and other factors, including

expectation of future events that are believed to be reasonable under the circumstances. 3.2 Estimates In the application of the company's accounting policies, management is required to make judgment, estimates and

assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.

The estimates and associated assumptions are based on historical experience and other factors that are considered

to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates

are recognized in the period in which the estimates are revised if the revision affects only that period, or in the

revision and future periods if the revision affects both current and future periods. The following represents a summary of the significant estimates and judgment and related impact and associated risks in the

company's financial statements. Estimated Useful Lives of Property, Plant and Equipment The company estimates the useful lives of property, plant and equipment based on the period over which the property, plant

and equipment are expected to be available for use. The estimated useful lives of the property, plant and equipment are

reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical

or commercial obsolescence and legal or other on the use of the property, plant and equipment. Depreciation is composed on a straight-line method over the estimated useful lives of the assets as follows: Basic Tools and measuring utensils 5 Mixing Tools 10 Specialty Tools 10 Baking Pans 5 Kitchen Supplies 5 Utensils 5 Furniture and Fixtures 10 Equipment 10 Other Equipment 10 Leasehold Improvements 15 3 CASH AND CASH EQUIVALENTS This account consists of the following: 2017 2018 2019 2020 2021

Cash on Hand 16,120.32 11,535.20 13,158.71 14,099.83 15,735.22

Cash in Bank 1,112,302.22 1,372,688.80 1,565,886.30 1,677,880.26 1,872,491.47

Payroll Fund 184,100.80 191,464.83 199123.43 207,088.37 215,371.90

Petty Cash Fund 15,000.00 15,000.00 15,000.00 15,000.00 15,000.00

Total Cash and Cash Equivalents 1,327,523.35 1,590,688.83 1,793,168.44 1,914,068.46 2,118,598.60

Cash on hand at the end of the year is cash not yet deposited in the bank. This is determined by dividing the cash and cash equivalents at the

end of the year by the number of days of operations for the year and multiply by 3 to represent the last three days that cash is not yet

deposited at year-end. The remaining amount represents the cash in bank. 4 OTHER CURRENT ASSETS 2017 2018 2019 2020 2021

Finished Goods Inventory (Note 21) 25,575.74 26,408.73 27,986.50 29,640.65 31,411.28

Raw Materials Inventory (Note 18) 151,701.92 161,435.75 171,737.13 182,673.75 194,400.30

Rent Deposit 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00

Total 277,277.65 287,844.48 299,723.63 312,314.40 325,811.58

EPICUREAN | 128

5 PROPERTY AND EQUIPMENT, NET 2017 2018 2019 2020 2021

Machineries, Tools and Equipment

Basic Tools and Measuring Utensils 18,631.03 18,631.03 18,631.03 18,631.03 18,631.03

Mixing Tools 21,722.32 21,722.32 21,722.32 21,722.32 21,722.32

Specialty Tools 9,305.36 9,305.36 9,305.36 9,305.36 9,305.36

Baking Pans 9,775.00 9,775.00 9,775.00 9,775.00 9,775.00

Kitchen Supplies 7,098.21 7,098.21 7,098.21 7,098.21 7,098.21

Utensils 28,839.29 28,839.29 28,839.29 28,839.29 28,839.29

Furniture and Fixtures 156,428.57 156,428.57 156,428.57 156,428.57 156,428.57

Equipment 647,352.68 647,352.68 647,352.68 647,352.68 647,352.68

Other Equipment 183,938.39 183,938.39 183,938.39 183,938.39 183,938.39

TOTAL Machineries, Tools and Equipment 1,083,090.85 1,083,090.85 1,083,090.85 1,083,090.85 1,083,090.85

Leasehold Improvements 847,637 847,637 847,637 847,637 847,637

TOTAL NON-CURRENT ASSET 1,930,727.50 1,930,727.50 1,930,727.50 1,930,727.50 1,930,727.50

Less: Accumulated Depreciation Basic Tools and measuring utensils 2,173.62 5,899.83 9,626.03 13,352.24 17,078.44

Mixing Tools 1,267.14 3,439.37 5,611.60 7,783.83 9,956.06

Specialty Tools 542.81 1,473.35 2,403.88 3,334.42 4,264.96

Baking Pans 1,140.42 3,095.42 5,050.42 7,005.42 8,960.42

Kitchen Supplies 828.12 2,247.77 3,667.41 5,087.05 6,506.69

Utensils 3,364.58 9,132.44 14,900.30 20,668.16 26,436.02

Furniture and Fixtures 9,125.00 24,767.86 40,410.71 56,053.57 71,696.43

Equipment 37,762.24 102,497.51 167,232.78 231,968.04 296,703.31

Other Equipment 10,729.74 29,123.58 47,517.42 65,911.26 84,305.10

Leasehold Improvements 32,963.65 89,472.76 145,981.87 202,490.98 259,000.09

TOTAL Accumulated Depreciation 99,897.32 271,149.87 442,402.42 613,654.96 784,907.51

PROPERTY AND EQUIPMENT, NET 1,830,830.18 1,659,577.63 1,488,325.08 1,317,072.54 1,145,819.99

6 ACCRUED AND OTHER PAYABLES 2017 2018 2019 2020 2021

Accounts Payable 151,701.92 161,435.75 171,737.13 182,673.75 194,400.30

Withholding tax payable (Note 16) 27,365.86 28,758.50 30,157.14 32,253.02 34,395.06

VAT Payable (Note 20) 16,405.92 17,051.03 20,721.66 23,680.08 28,166.69

TOTAL 195,473.69 207,245.28 222,615.93 238,606.84 256,962.06

7 LOANS PAYABLE 2017 2018 2019 2020 2021

7.a Current Portion

Loans to Development Bank of the Philippines (DBP) 264,000.00 264,000.00 264,000.00 264,000.00 264,000.00

7.b Non-Current portion

Loans to Development Bank of the Philippines

(DBP) 2,112,000.00 1,848,000.00 1,584,000.00 1,320,000.00 1,056,000.00

The face value of the loans to DBP is Php 2,640,000 to be paid in installments for ten (10) years with an annual interest rate of 6%.

8 INCOME TAX PAYABLE 2017 2018 2019 2020 2021

Gross Income 23,519.47 1,623,758.66 1,887,715.60 1,599,353.79 1,879,477.00

Income Tax Rate Applicable 30% 30% 30% 30% 30%

Income tax payable before prepayments 7,055.84 487,127.60 566,314.68 479,806.14 563,843.10

Prepaid Income Tax 5,291.88 365,345.70 424,736.01 359,854.60 422,882.32

Income tax Payable, Net 1,763.96 121,781.90 141,578.67 119,951.53 140,960.77

EPICUREAN | 129

9 PARTNER'S CAPITAL 2017 2018 2019 2020 2021

Partner's Capital Beginning 0.00 663,292.73 890,618.94 1,154,899.12 1,378,808.65

Add:Partner A, Capital 330,000.00 Partner B, Capital 330,000.00 Income/(Loss) 16,463.63 1,136,631.06 1,321,400.92 1,119,547.66 1,315,633.90

Less:Partner A, Drawing 8,231.81 568,315.53 660,700.46 559,773.83 657,816.95

Partner B, Drawing 4,939.09 340,989.32 396,420.28 335,864.30 394,690.17

Partner's Capital End 663,292.73 890,618.94 1,154,899.12 1,378,808.65 1,641,935.43

10 REVENUE Revenue for Cakes Demand in Units for First Week 248 Multiplied by: Discounted Price per unit 75

Sales for First Week 18,619

Demand in Units for the Rest of the Year 6,703 12,186 12,474 12,762 13,050

Multiplied by: Price per unit 150.00 150.00 156.00 156.00 162.24

Sales for the Rest of the Year 1,005,450.00 1,827,900.00 1,945,944.00 1,990,872.00 2,117,232.00

Total Sales for Cakes 1,024,068.75 1,827,900.00 1,945,944.00 1,990,872.00 2,117,232.00

Revenue for Cupcakes Demand in Units for First Week of Operations 248 Multiplied by: Discounted Price per unit 72.5


Demand in Units for the Rest of the Year 6683 12150 12438 12726 13014


Sales for the Rest of the Year 969,035.00 1,761,750.00 1,875,650.40 1,919,080.80 2,041,011.65

Total Sales for CupCakes 986,978.75 1,761,750.00 1,875,650.40 1,919,080.80 2,041,011.65

Revenue for Cookies Demand in Units for First Week of Operations 352 Multiplied by: Discounted Price per unit 70





Total Sales for Cookies 1,355,629.10 2,421,720.00 2,576,246.40 2,633,904.00 2,801,949.70

Revenue for Ice Cream Demand in Units for First Week of Operations 413 Multiplied by: Discounted Price per unit 72.5





Total Sales for Ice Cream 1,644,916.25 2,938,860.00 3,126,988.80 3,197,563.20 3,401,686.08

Revenue for Hot Chocolate Drinks Demand in Units for First Week of Operations 370 Multiplied by: Discounted Price per unit 70





Total Sales for Hot Chocolate Drinks 1,424,929.10 2,545,200.00 2,707,286.40 2,770,185.60 2,946,408.19

EPICUREAN | 130

Revenue for Cold Chocolate Drinks Demand in Units for First Week of Operations 340 Multiplied by: Discounted Price per unit 70





Total Sales for Cold Chocolate Drinks 1,308,002.50 2,333,520.00 2,484,518.40 2,542,176.00 2,703,826.94

Total Sales 7,744,524.45 13,828,950.00 14,716,634.40 15,053,781.60 16,012,114.56

Sales for the first year represents sales for the first seven (7) months of operations since there are no operations yet in the first five (5) months of

the first year. Hence, the demand in units for each product the first year is multiplied by the fraction of 7/12 (7 months of operations out of 12) to

determine the sales in uinits for the first year for each product. 11 COST OF SALES 2017 2018 2019 2020 2021

Raw Materials Inventory, Beginning - 151,701.92 161,435.75 171,737.13 182,673.75

Add: Purchases of Raw Materials 4,621,741.69 7,663,878.48 8,155,449.88 8,675,811.89 9,226,336.94

Total Raw Materials 4,621,741.69 7,815,580.40 8,316,885.63 8,847,549.02 9,409,010.69

Less: Raw Materials Inventory, End 151,701.92 161,435.75 171,737.13 182,673.75 194,400.30

Raw Materials Inventory Used 4,470,039.77 7,654,144.65 8,145,148.50 8,664,875.27 9,214,610.38

Direct Labor 770,000.00 1,372,800.00 1,427,712.00 1,484,820.48 1,544,213.30

Manufacturing Overhead 169,007.58 297,352.40 305,282.47 313,529.75 322,106.92

Total Manufacturing Cost 5,409,047.36 9,324,297.05 9,878,142.97 10,463,225.50 11,080,930.60

Add: Work in Process, Beginning - - - 0 -

Total Cost of Goods put in production 5,409,047.36 9,324,297.05 9,878,142.97 10,463,225.50 11,080,930.60

Less: Work in Process, End - - - 0 -

Cost of Goods Manufactured 5,409,047.36 9,324,297.05 9,878,142.97 10,463,225.50 11,080,930.60

Add: Finished Goods Inventory, Beginning - 25,575.74 26,408.73 27,986.50 29,640.65

Goods Available for Sale 5,409,047.36 9,349,872.78 9,904,551.70 10,491,212.00 11,110,571.25

Less: Finished Goods Inventory, End 25,575.74 26,408.73 27,986.50 29,640.65 31,411.28

Cost of Goods Sold 5,383,471.62 9,323,464.06 9,876,565.20 10,461,571.35 11,079,159.97

. 12 EXPENSES 2017 2018 2019 2020 2021

Salaries & Wages 469,140.00 836,409.60 869,865.98 904,660.62 940,847.05

SSS Premium Contribution 74,773.02 130,834.32 137,022.00 138,774.00 142,328.40

PhilHeath Premium Contribution 14,087.50 24,150.00 25,050.00 25,650.00 27,150.00

HDMF Premium Contribution 24,782.80 44,184.00 45,950.88 47,789.77 62,126.53

Taxes and Licenses 16,661.67 525.80 8,327.55 6,939.35 8,327.55

Employee Benefits 177,020.00 184,100.80 191,464.83 199,123.43 207,088.36

Depreciation Expense 38,556.83 66,097.42 66,097.42 66,097.42 66,097.42

Rent Expense 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00

Professional Fees 20,000.00 20,800.00 21,632.00 22,497.28 23,397.17

Advertising and Promotion 9,187.50 16,380.00 17,035.20 17,716.61 18,425.27

Office Supplies 16,870.00 30,076.80 31,279.87 32,531.07 33,832.31

Communication 21,000.00 37,440.00 38,937.60 40,495.10 42,114.91

Meetings and Conferences 7,000.00 12,480.00 12,979.20 13,498.37 14,038.30

Repairs and Maintenance 3,000.00 6,240.00 6,489.60 6,749.18 7,019.15

Insurance 15,230.88 15,840.12 16,473.72 17,132.67 17,817.98

Miscellaneous Expense 5,000.00 10,400.00 10,816.00 11,248.64 11,698.59

Utilities 66,823.16 119,048.43 142,051.74 146,912.95 151,968.60

Interest Expense 158,400.00 126,720.00 110,880.00 95,040.00 79,200.00

Training Expense 39,922.19 0.00 0.00 0.00 0.00

TOTAL 2,337,533.36 2,881,727.29 2,952,353.60 2,992,856.45 3,053,477.59

EPICUREAN | 131

13 PAYROLL FUND Number

Salary/Wage

Rate

Months/Days Cost 2017 2018 2019 2020

2021

per year

DIRECT LABOR

Chef/Store Manager 1 50,000.00 12 600,000.00 350,000.00 624,000.00 648,960.00 674,918.40 701,915.14

Kitchen Crew 4 15,000.00 12 720,000.00 420,000.00 748,800.00 778,752.00 809,902.08 842,298.16

Total Direct 110,000.00 1,320,000.00 770,000.00 1,372,800.00 1,427,712.00 1,484,820.48 1,544,213.30

INDIRECT LABOR

Front Crew/Cashier 4 400.00 360 576,000.00 336,000.00 599,040.00 623,001.60 647,921.66 673,838.53

Shop Cleaner 2 317.00 360 228,240.00 133,140.00 237,369.60 246,864.38 256,738.96 267,008.52

Total Indirect Labor 67,020.00 469,140.00 836,409.60 869,865.98 904,660.62 940,847.05

Total 1,239,140.00 2,209,209.60 2,297,577.98 2,389,481.10 2,485,060.35

14 EMPLOYER CONTRIBUTIONS

SSS/ PhilHealth/ HDMF Premium Contributions (Monthly for 2017) N A B C (A+B+C)*N

Employer Classification No.

SSS (ER) HDMF (ER)

Philhealth

(ER) Total SSS (ER) HDMF (ER)

Chef/Store Manager 1.00 1,178.70 1,000.00 437.50 2,616.20 1178.7 1000

Kitchen Crew 4.00 1,141.89 300.00 187.50 6,517.56 4567.56 1200

Front Crew/Cashier 4.00 884.00 240.00 150.00 5,096.00 3536 960

Shop Cleaner 2.00 699.80 190.2 112.50 2,005.00 1399.6 380.4

Total 3,904.39 1,730.20 887.50 16,234.76 10681.86 3540.4

74773.02 24782.8


No.

SSS (ER) HDMF (ER)

Philhealth


Chef/Store Manager 1.00 1,178.70 1,040.00 437.50 2,656.20 1178.7 1040

Kitchen Crew 4.00 1,141.89 312.00 187.50 6,565.56 4567.56 1248

Front Crew/Cashier 4.00 920.80 249.60 150.00 5,281.60 3683.2 998.4

Shop Cleaner 2.00 736.70 197.8 112.50 2,094.00 1473.4 395.6

Total 3,978.09 1,799.40 887.50 16,597.36 10902.86 3682

130834.32 44184


No.

SSS (ER) HDMF (ER)

Philhealth


Chef/Store Manager 1.00 1,178.70 1,081.60 437.50 2,697.80 1178.7 1081.6

Kitchen Crew 4.00 1,178.70 324.48 200.00 6,812.72 4714.8 1297.92

Front Crew/Cashier 4.00 994.50 259.58 150.00 5,616.32 3978 1038.32

Shop Cleaner 2.00 773.50 205.7 125.00 2,208.40 1547 411.4

Total 4,125.40 1,871.36 912.50 17,335.24 11418.5 3829.24

137022 45950.88


No.

SSS (ER) HDMF (ER) Philhealth


EPICUREAN | 132


Kitchen Crew 4.00 1,178.70 337.46 200.00 6,864.64 4714.8 1349.8368

Front Crew/Cashier 4.00 1,031.00 269.97 162.50 5,853.88 4124 1079.88

Shop Cleaner 2.00 773.50 213.95 125.00 2,224.90 1547 427.9

Total 4,161.90 1,946.24 925.00 17,684.48 11564.5 3982.4808

138774 47789.7696


No.

SSS (ER) HDMF (ER)

Philhealth



Kitchen Crew 4.00 1,178.70 350.96 212.50 6,968.63 4714.8 1403.830272

Front Crew/Cashier 4.00 1,068.20 280.77 175.00 6,095.88 4272.8 1123.08

Shop Cleaner 2.00 847.20 222.5 137.50 2,414.40 1694.4 445

Total 4,272.80 2,024.09 962.50 18,264.97 11860.7 4141.768832

142328.4 62126.53248

EPICUREAN | 133

15 RENT EXPENSES MONTH (Year 2017 )

January February March April May June July August September October November December

Store Rental 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

Total Rentals 1,200,000

YEAR 2018 2019 2020 2021 Store Rental 1,200,000 1,200,000 1,200,000 1,200,000 Total Rentals 1,200,000 1,200,000 1,200,000 1,200,000

16 WITHHOLDING TAX PAYABLE MONTH (Year 2017)


On Salary 24765.86 24765.86 24765.86 24765.86 24765.86 24765.86 24765.86

On Store Rental 2400 2400 2400 2400 2400 2400 2400

On Professional Fees 200 200

Total Withholding

tax payable 0 0 0 0 0 27365.86 27165.86 27165.86 27165.86 27165.86 27165.86 27365.86

Year 2018 2019 2020 2021

On Salary

26,150.50

27,540.82 29,628.04

31,761.09

On Store Rental

2,400.00

2,400.00 2,400.00

2,400.00

On Professional Fees

208.00

216.32 224.98

233.97

Total Withholding

tax payable

28,758.50

30,157.14 32,253.02 34395.06

17 ACCRUED EXPENSES

MONTH (Year 2017)


13th month pay 177,020.00

Interest Expenses 13200 13200 13200 13200 13200 13200 13200 13200 13200 13200 13200 13200

Power and Light-Manufacturing

Overhead 14241.205 14241.205 14241.205 14241.205 14241.205 14241.205 14241.205

Power and Light-Periodic 9363.46 9363.46 9363.46 9363.46 9363.46 9363.46 9363.46

Water- Manufacturing Overhead 1644.354 1644.354 1644.354 1644.354 1644.354 1644.354 1644.354

Water- Periodic 182.706 182.706 182.706 182.706 182.706 182.706 182.706

Total 13200 13200 13200 13200 13200 38631.725 38631.725 38631.725 38631.725 38631.725 38631.725 215651.725

Year 2018 2019 2020 2021 13th month pay 184,100.80 191,464.83 199,123.43 207,088.36

Interest Expenses -

126,720.00

110,880.00 95,040.00

79,200.00

Power and Light-

Manufacturing Overhead 177730.28 184839.4912 192233.071 199922.3937

EPICUREAN | 134

Power and Light-Periodic 116855.96 121530.1984 126391.406 131447.0626

Water- Manufacturing

Overhead 20521.54 21342.4016 22196.0977 23083.94157

Water- Periodic 2192.472 20521.54 20521.54 20521.54 Total 488551.08 487184.3232 486396.496 486210.756

18 RAW MATERIALS INVENTORY

MONTH (Year 2017)


Beginning Balance 0.00 148,278.94 148,278.94 148,278.94 148,278.94 148,278.94 148,278.94

RM Purchases 804,942.79 635,481.15 635,481.15 635,481.15 635,481.15 635,481.15 639,393.13

Used in Production 656,663.86 635,481.15 635,481.15 635,481.15 635,481.15 635,481.15 635,970.15

Ending Balance 148,278.94 148,278.94 148,278.94 148,278.94 148,278.94 148,278.94 151,701.92

Year 2018 2019 2020 2021 Beginning Balance 151,701.92 161,435.75 171,737.13 182,673.75 RM Purchases 8,140,613.43 8,662,884.24 9,215,646.45 9,802,626.91 Used in Production 8,130,879.60 8,652,582.86 9,204,709.83 9,790,900.35 Ending Balance 161,435.75 171,737.13 182,673.75 194,400.30

19 TRAINING EXPENSE

Employees No. Salary/Wage

Rate No. of Days Chef/Store Manager 1.00 50,000.00 4 6,666.67 Kitchen Crew 4.00 15,000.00 3 6,000.00 Front Crew/Cashier 4.00 400.00 3 4,800.00 17,466.67 Estimated Raw Materials Used 21,182.71 Cost/month No. of Days Utilities Expense 9,546.17 4 1,272.82

Total Training

Expense 39,922.19

20 VAT PAYABLE 2017


Output VAT

Sales

132,763.28

132,763.28 132,763.28 132,763.28 132,763.28 132,763.28 132,763.28

Input VAT Equipment Basic Tools and Measuring Utensils 37.26 37.26 37.26 37.26 37.26 37.26 37.26

Mixing Tools 43.44 43.44 43.44 43.44 43.44 43.44 43.44

Specialty Tools 18.61 18.61 18.61 18.61 18.61 18.61 18.61

Baking Pans 19.55 19.55 19.55 19.55 19.55 19.55 19.55

Kitchen Supplies 14.20 14.20 14.20 14.20 14.20 14.20 14.20

Utensils 57.68 57.68 57.68 57.68 57.68 57.68 57.68

Furniture and Fixtures 312.86 312.86 312.86 312.86 312.86 312.86 312.86

Equipment 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71

Other Equipment 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68

EPICUREAN | 135

Total Equipment 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98

Leasehold

Improvement 1,514 1,514 1,514 1,514 1,514 1,514 1,514

Raw Materials 76,257.74 76,257.74 76,257.74 76,257.74 76,257.74 76,257.74 76,257.74

Total Input VAT 116,357.36 116,357.36 116,357.36 116,357.36 116,357.36 116,357.36 116,357.36

VAT PAYABLE

16,405.92

16,405.92 16,405.92 16,405.92 16,405.92 16,405.92 16,405.92

2018


Output VAT Sales 138,289.50 138,289.50 138,289.50 138,289.50 138,289.50 138,289.50 138,289.50 138,289.50 138,289.50 138,289.50 138,289.50 138,289.50

Input VAT Equipment

Basic Tools and

Measuring Utensils 37.26 37.26 37.26 37.26 37.26 37.26 37.26 37.26 37.26 37.26 37.26 37.26

Mixing Tools 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44

Specialty Tools 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61

Baking Pans 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55

Kitchen Supplies 14.20 14.20 14.20 14.20 14.20 14.20 14.20 14.20 14.20 14.20 14.20 14.20

Utensils 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68

Furniture and

Fixtures 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86

Equipment 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71

Other Equipment 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68

Total Equipment 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98

Leasehold Improvement 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514

Raw Materials 81,138.85 81,138.85 81,138.85 81,138.85 81,138.85 81,138.85 81,138.85 81,138.85 81,138.85 81,138.85 81,138.85 81,138.85

Total Input VAT 121,238.47 121,238.47 121,238.47 121,238.47 121,238.47 121,238.47 121,238.47 121,238.47 121,238.47 121,238.47 121,238.47 121,238.47

VAT PAYABLE 17,051.03 17,051.03 17,051.03 17,051.03 17,051.03 17,051.03 17,051.03 17,051.03 17,051.03 17,051.03 17,051.03 17,051.03

2019


Output VAT Sales 147,166.34 147,166.34 147,166.34 147,166.34 147,166.34 147,166.34 147,166.34 147,166.34 147,166.34 147,166.34 147,166.34 147,166.34

Input VAT Equipment

Basic Tools and


Mixing Tools 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44

Specialty Tools 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61

Baking Pans 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55


Utensils 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68

Furniture and Fixtures 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86

Equipment 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71

Other Equipment 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68

Total Equipment 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98

Leasehold

Improvement 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514

Raw Materials 86,345.06 86,345.06 86,345.06 86,345.06 86,345.06 86,345.06 86,345.06 86,345.06 86,345.06 86,345.06 86,345.06 86,345.06

Total Input VAT 126,444.68 126,444.68 126,444.68 126,444.68 126,444.68 126,444.68 126,444.68 126,444.68 126,444.68 126,444.68 126,444.68 126,444.68

EPICUREAN | 136

VAT PAYABLE 20,721.66 20,721.66 20,721.66 20,721.66 20,721.66 20,721.66 20,721.66 20,721.66 20,721.66 20,721.66 20,721.66 20,721.66

2020


Output VAT Sales 150,537.82 150,537.82 150,537.82 150,537.82 150,537.82 150,537.82 150,537.82 150,537.82 150,537.82 150,537.82 150,537.82 150,537.82

Input VAT Equipment

Basic Tools and


Mixing Tools 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44

Specialty Tools 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61

Baking Pans 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55


Utensils 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68

Furniture and

Fixtures 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86

Equipment 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71

Other Equipment 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68

Total Equipment 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98

Leasehold

Improvement 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514

Raw Materials 86,758.12 86,758.12 86,758.12 86,758.12 86,758.12 86,758.12 86,758.12 86,758.12 86,758.12 86,758.12 86,758.12 86,758.12

Total Input VAT 126,857.74 126,857.74 126,857.74 126,857.74 126,857.74 126,857.74 126,857.74 126,857.74 126,857.74 126,857.74 126,857.74 126,857.74

VAT PAYABLE 23,680.08 23,680.08 23,680.08 23,680.08 23,680.08 23,680.08 23,680.08 23,680.08 23,680.08 23,680.08 23,680.08 23,680.08

2021


Output VAT

Sales

160,121.15

160,121.15 160,121.15

160,121.15 160,121.15

160,121.15

160,121.15 160,121.15 160,121.15 160,121.15 160,121.15 160,121.15

Input VAT Equipment

Basic Tools and


Mixing Tools 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44 43.44

Specialty Tools 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61 18.61

Baking Pans 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55


Utensils 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68 57.68

Furniture and

Fixtures 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86 312.86

Equipment 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71 1,294.71

Other Equipment 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68 36,787.68

Total Equipment 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98 38,585.98

Leasehold Improvement 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514 1,514

Raw Materials 91,854.83 91,854.83 91,854.83 91,854.83 91,854.83 91,854.83 91,854.83 91,854.83 91,854.83 91,854.83 91,854.83 91,854.83

Total Input VAT 131,954.45 131,954.45 131,954.45 131,954.45 131,954.45 131,954.45 131,954.45 131,954.45 131,954.45 131,954.45 131,954.45 131,954.45

VAT PAYABLE 28,166.69

28,166.69 28,166.69

28,166.69 28,166.69

28,166.69

28,166.69 28,166.69 28,166.69 28,166.69 28,166.69 28,166.69

EPICUREAN | 137

21 COMPUTATION OF FINISHED GOODS INVENTORY

a b a + b = c d c x d

Product 2017 Total Demand

2018 Daily Demand

Production in Units*

RM Cost/Unit Total RM

Product Mix

Cake 6951 33.85 6984.85 56.3681581 393723.129 8.81%

Cupcake 6930 33.75 6963.75 60.44484374 420922.781 9.42%

Cookies 9859.5 48.05 9907.55 53.66147941 531653.79 11.89%

Ice Cream 11550 56.3 11606.3 122.6744414 1423796.37 31.85%

Hot Chocolate Drink 10363.5 50.5 10414 83.378334 868301.97 19.42%

Cold Chocolate

Drink 9513 46.3 9559.3 86.99818345 831641.735 18.60% TOTAL 4470039.77 100.00%

2017

Product

Product Share in COGM

(Product Mix) x

(COGM)

Finished Goods, end

(Daily

Demand Succeeding

Year ÷

Production)

Cake

464,650.09

2,251.79

Cupcake

496,749.60

2,407.51

Cookies

627,428.16

3,042.92

Ice Cream

1,680,285.10

8,150.75

Hot Chocolate Drink

1,024,721.58

4,696.12

Cold Chocolate Drink

981,457.21

4,753.64

TOTAL

25,302.74

2018

Product

Product Share

in COGM (Product Mix) x

(COGM)

Finished

Goods, end (Daily

Demand

Succeeding Year ÷

Production)

Cake

820,365.28

2,326.03

Cupcake

877,097.50

2,487.06

EPICUREAN | 138

Cookies

1,108,587.29

3,140.98

Ice Cream

2,969,453.88

8,415.03

Hot Chocolate Drink

1,810,332.33

5,128.65

Cold Chocolate

Drink

1,731,833.27

4,910.97

TOTAL

26,408.73

2019

Product


(Product Mix) x

(COGM)

Finished Goods, end

(Daily

Demand Succeeding

Year ÷

Production)

Cake

870,003.86

2,465.47

Cupcake

930,232.45

2,636.32

Cookies

1,174,814.80

3,326.96

Ice Cream

3,147,458.73

8,914.94

Hot Chocolate Drink

1,918,261.49

5,436.85

Cold Chocolate

Drink

1,836,846.07

5,205.96

TOTAL

27,986.50

2020

Product

Product Share

in COGM

(Product Mix) x (COGM)

Finished

Goods, end

(Daily Demand

Succeeding

Year ÷ Production)

Cake

921,706.68

2,610.66

Cupcake

985,578.92

2,791.75

Cookies

1,243,774.77

3,523.99

Ice Cream

3,332,824.62

9,443.21

Hot Chocolate Drink

2,032,549.00

5,757.81

EPICUREAN | 139

Cold Chocolate Drink

1,946,232.46

5,513.15

TOTAL

29,640.56

2021

Product


(Product Mix) x

(COGM)

Finished Goods, end

(Daily

Demand Succeeding

Year ÷

Production)

Cake

976,110.44

2,767.13

Cupcake

1,043,817.91

2,959.26

Cookies

1,317,597.44

3,734.82

Ice Cream

3,530,758.31

10,007.11

Hot Chocolate Drink

2,152,809.64

6,100.99

Cold Chocolate

Drink

2,061,335.34

5,842.09

TOTAL

31,411.40

EPICUREAN | 140

G. FINANCIAL ANALYSES

1. Financial Ratios

LIQUIDITY RATIO 2017 2018 2019 2020 2021

Current Ratio 3.048 2.814 2.982 3.207 3.330

Quick Ratio 2.447 2.328 2.505 2.705 2.837

Net Working Capital 944,462.55 1,075,635.70 1,244,950.84 1,373,895.32 1,542,057.04

Current ratio, quick ratio, and net working capital measure the firm’s ability to pay its short-

term liabilities. As we can see above, Epicurean’s high liquidity ratios for 5 years means that paying

its short-term liabilities would not pose a big problem. That is because the company has a current

asset of Php 3.048 in every peso of their current liability; they have Php 2.447 of quick asset (i.e. cash

and AR) for every peso of the current liability; and they have current assets in excess of current

liability of almost one million. Although there’s a decrease in current and quick ratio in 2018, the

company still has ample current assets to pay its current liabilities. Although this might be the case,

it could also mean that the establishment employs inefficient cash management.

PROFITABILITY RATIO 2017 2018 2019 2020 2021

Gross profit margin 0.3049 0.3258 0.3289 0.3051 0.3081

Net profit margin 0.0021 0.0814 0.0890 0.0736 0.0815

Return on Assets 0.0051 0.3382 0.3898 0.3345 0.3894

Return on Equity 0.0248 1.2669 1.1389 0.8078 0.7988

Total Asset Turnover 2.3928 4.1550 4.3780 4.5431 4.7800

Fixed Asset Turnover 4.2301 8.3328 9.8881 11.4297 13.9744

Profitability ratios measure the business’ capability to generate earnings compared to its

expenses and other relevant costs incurred during a specific period of time. The gross profit margin

of Epicurean, though not that high, is enough to cover the period cost to generate a net income.

However, the net profit margin of the establishment is noticeably low. This means that Epicurean’s

period costs do not offer a leeway for any excessive increase because such increases could lead to a

net loss. The considerably low return on net assets in the first year is largely due to the incurrence of

one-year rent expense with only seven months of operation. It has substantially grown in the

EPICUREAN | 141

succeeding years because of full year operations. This positive return on net assets is a good indication

that the establishment need not incur additional debt in the future. The return on equity of more than

100% in the second and third years of operations show how well the investment of the partners is

earning. However, the decrease in this ratio in the fourth and fifth years are the result of the higher

growth in equity than the growth in net income. Lastly, total asset turnover and fixed asset turnover

is increasing. This implies efficient use of company’s assets.

LEVERAGE 2017 2018 2019 2020 2021

Total debt to assets ratio 0.7951 0.7331 0.6577 0.5859 0.5125

Total debt to equity ratio 3.8795 2.7463 1.9218 1.4148 1.0512

According to Loth, “the debt ratio compares a company's total debt to its total assets, which

is used to gain a general idea as to the amount of leverage being used by a company. A low percentage

means that the company is less dependent on leverage, i.e., money borrowed from and/or owed to

others. The lower the percentage, the less leverage a company is using and the stronger its equity

position. In general, the higher the ratio, the more risk that company is considered to have taken

on.” In the table presented above, it can be observed that the company is largely dependent on debt.

In 2017, the company is financed by 80% debt. And by the end of 2021, its debt decreased to 51%.

This means that through the years, the establishment’s equity is gaining strength.

“The D/E ratio indicates how much debt a company is using to finance its assets relative to

the amount of value represented in shareholders’ equity (Investopedia).” In financing for the initial

project cost of Epicurean, the partners took a huge risk by largely leaning on debt which is four times

larger than its equity. Nevertheless, this risk was greatly reduced in the fifth year of operations when

total debt became roughly equivalent to equity.

http://www.investopedia.com/terms/d/debtratio.asp

http://www.investopedia.com/terms/d/debt.asp

http://www.investopedia.com/terms/a/asset.asp

http://www.investopedia.com/terms/d/debt.asp

http://www.investopedia.com/terms/a/asset.asp

http://www.investopedia.com/terms/e/equity.asp

EPICUREAN | 142

2. Horizontal and Vertical Analysis

2.1. Horizontal Analysis

Statement of Financial Operations

2017 2018 2019 2020 2021

SALES 100.00% 178.56% 190.03% 194.38% 206.75%

COGS 100.00% 173.19% 183.46% 194.33% 205.80%

GROSS PROFIT 100.00% 190.83% 205.00% 194.50% 208.93%

EXPENSES

Salaries & Wages 100.00% 178.29% 185.42% 192.83% 200.55%

SSS Premium

Contribution 100.00% 174.98% 183.25% 185.59% 190.35%

PhilHealth

Premium

Contribution 100.00% 171.43% 177.82% 182.08% 192.72%

HDMF Premium

Contribution 100.00% 178.28% 185.41% 192.83% 250.68%

Taxes and

Licenses 100.00% 3.16% 49.98% 41.65% 49.98%

Employee Benefits 100.00% 104.00% 108.16% 112.49% 116.99%

Depreciation

Expense 100.00% 171.43% 171.43% 171.43% 171.43%

Rent Expense 100.00% 100.00% 100.00% 100.00% 100.00%

Professional Fees 100.00% 104.00% 108.16% 112.49% 116.99%

Advertising and

Promotion 100.00% 178.29% 185.42% 192.83% 200.55%

Office Supplies 100.00% 178.29% 185.42% 192.83% 200.55%

Communication 100.00% 178.29% 185.42% 192.83% 200.55%

Meetings and

Conferences 100.00% 178.29% 185.42% 192.83% 200.55%

Repairs and

Maintenance 100.00% 208.00% 216.32% 224.97% 233.97%

Insurance 100.00% 104.00% 108.16% 112.49% 116.99%

Miscellaneous

Expense 100.00% 208.00% 216.32% 224.97% 233.97%

Utilities 100.00% 178.15% 212.58% 219.85% 227.42%

Interest Expense 100.00% 90.00% 80.00% 70.00% 60.00%

Training Expense 100.00% 0.00% 0.00% 0.00% 0.00%

Total Expenses 100.00% 123.96% 126.98% 128.71% 131.31%

NET

INCOME/(LOSS)

BEFORE TAX 100.00% 6836.54% 7958.84% 6732.78% 7923.81%

EPICUREAN | 143

Provision for

Income Tax (0.3) 100.00% 6836.54% 7958.84% 6732.78% 7923.81%

NET

INCOME/(LOSS)

AFTER TAX 100.00% 6836.54% 7958.84% 6732.78% 7923.81%

* with 2017 as base year

From year 2017 to year 2021, the sales increase in an average of 27% yearly. This increasing

sales trend is due to the increasing number of units sold every year and also due to the increasing

price of the products sold. The prices are increased by 4% every two years. Compared to sales, the

increase in cost of goods sold is a slightly lower with an average increase of 26% annually. Given

the higher annual increase in sales compared to cost of goods sold, with an average of 32% increase

in gross profit. Thus, it follows that gross profit is at increasing trend.

The operation in the first year is only for seven months thus resulting to a relatively higher

percentage, increase in expenses in next period. The increasing percentage in the selling and

administrative expenses yearly is due to the reflected inflation rate considered by the proponents. The

remaining five months are allotted for the renovation of the establishment. The rental rate for the next

five years is fixed; this is based on the agreement of Epicurean and its lessee. The company pays its

creditors interest incurred and principal repayments annually for five years. This is the reason why

the interest expenses decrease every year. There are no additional training expenses in the latter years

because employee trainings are conducted only in the first year.

All in all, the operations of Epicurean will result to an increase of its income which is an

indicator that it has a very satisfactory financial operation. The increase in net income means more

profit to be shared by the partners and more benefits, in terms of taxes paid to the government, it

would contribute to the community. Also, it would attract more customers and creditors since it has

good financial operations as evidenced by its financial statements.

Statement of Financial Condition

ASSET

2017 2018 2019 2020 2021

CURRENT ASSETS:

Cash & Cash Equivalents 100.00% 122.67% 139.93% 149.94% 167.33% Other Current Assets 100.00% 103.81% 108.10% 112.64% 117.50%

EPICUREAN | 144

Total 100.00% 118.95% 133.65% 142.58% 157.50%

NON-CURRENT ASSETS:

Property & Equipment, net 100.00% 90.65% 81.29% 71.94% 62.58%

TOTAL ASSETS 100.00% 102.83% 103.86% 102.38% 103.50%

LIABILITIES & PARTNERS’ EQUITY

LIABILITIES:

Current Liabilities

Accrued and other payables 100.00% 106.02% 113.89% 122.07% 131.46% Income Tax Payable 100.00% 6903.89% 8026.18% 6800.13% 7991.15% Loans Payable 100.00% 100.00% 100.00% 100.00% 100.00% TOTAL 100.00% 128.57% 136.20% 134.98% 143.51% Non-Current Liabilities Loans Payable 100.00% 87.50% 75.00% 62.50% 50.00% TOTAL LIABILITIES 100.00% 94.86% 85.97% 75.49% 66.76%

PARTNERS' EQUITY:

Partners' Capital 100.00% 134.27% 174.12% 207.87% 247.54%

TOTAL LIABILITES & PARTNERS’

EQUITY 100.00% 100.00% 102.94% 104.03% 102.62%

* with 2017 as base year

The increase in Cash and Cash Equivalents is due to the increasing cash receipts from the

sales of the company. The salaries and wages increases annually and so, the amount allotted to payroll

fund also increases which is reflected on the increasing trend of Other Current Assets. With the

increase in cash availability, some amounts should be put in an investment account if such is more

than the necessary cash reserves. On the other hand, the increase in percentages of the Other Current

Assets is affected by the increase in cost of inventory purchased. The cost of inventoriable items

increases annually based on the inflation rate which is 4%. Moreover, there is a constant decrease on

the Property, Plant, and Equipment because of the annual depreciation and also there is no additional

acquisition of PPE during the first five years of the operations.

As a result of the decreasing trend in Non-Current Assets, the overall Total Assets is

decreasing despite the increasing trend in the Current Assets. The annual decrease in percentage of

Property, Plant, and Equipment is much higher than the yearly increase in Total Current Assets, thus

resulting in a decreasing trend in Total Assets for the first four years. However, on the third year, the

EPICUREAN | 145

percentage increase in Total Current Assets is much higher than the percentage decrease in PPE due

to the increase in the product price and quantity sold.

The accrued and other payables account composes only of the purchases on account of

inventories. The prices of the inventories increase by 4% every year because of the inflation. And

because of this, the increase in purchases is reflected on the payables of the company. Furthermore,

the amount paid to the creditors every year includes the interest incurred for the period and a parcel

of the loan which is payable for five years. This relative decrease in Loans Payable, which is greatly

higher than the total amount of current liabilities, drives the decreasing drift of the annual percentages

of the Total Liabilities.

Another thing, there is an observable spike increase in the income tax payable on the

subsequent operating years because the net income in the first year is substantially lower than the

next periods.

The Total Liability and Partners’ Equity is decreased by the declining Loans Payable and

increased by the distribution of net income to the partners. There is a good indicator that the partners

are earning well out of their investments given that the account Partners’ Capital under the

Stockholder Equity increases every year.

With the increasing percentage movement of the total assets, decreasing total liabilities trend,

and increasing drift in stockholders’ equity, it can be concluded that Epicurean is having a good

financial status. It shows that it has enough assets to cover its liabilities making itself safe from

bankruptcy. Also, it signifies that it could devote more in some fixed assets and other kinds of

investments. And if the business will constantly retain such healthy financial condition, it could go

venture into business expansion in the future.

2.2. Vertical Analysis

STATEMENT OF FINANCIAL POSITION

ASSET 2017 2018 2019 2020 2021

CURRENT ASSETS:

Cash & Cash Equivalents 34.87% 41.55% 46.90% 50.94% 56.20% Other Current Assets 8.57% 8.64% 8.90% 9.40% 9.70% Total 43.43% 50.19% 55.80% 60.35% 65.90%

EPICUREAN | 146

NON-CURRENT ASSETS:

Property & Equipment, net 56.57% 49.81% 44.20% 39.65% 34.10%

TOTAL ASSETS 100.00% 100.00% 100.00% 100.00% 100.00%

LIABILITIES & PARTNERS’ EQUITY

LIABILITIES:

Current Liabilities

Accrued and other payables 6.04% 6.22% 6.61% 7.18% 7.65% Income Tax Payable 0.05% 3.66% 4.20% 3.61% 4.20% Loans Payable 8.16% 7.92% 7.84% 7.95% 7.86% TOTAL 14.25% 17.80% 18.66% 18.74% 19.70% Non-Current Liabilities Loans Payable 65.26% 55.47% 47.04% 39.74% 31.43% TOTAL LIABILITIES 79.51% 73.27% 65.70% 58.49% 51.13%

PARTNERS’ EQUITY:

Partners' Capital 20.49% 26.73% 34.30% 41.51% 48.87%

TOTAL LIABILITES &

PARTNERS' EQUITY 100.00% 100.00% 100.00% 100.00% 100.00%

In Epicurean’s Financial Position for the first three years, Property and Equipment comprises

the highest percentage in relation to Total Assets. On the fourth and fifth year, Cash and Cash

Equivalents have the highest percentage in relation to Total Assets. This change is caused by the

decreasing amount of Property and Equipment due to depreciation while Cash and Cash Equivalents

increases.

Epicurean’s current liabilities as percentage of Total Liabilities and Partners’ Equity increase

throughout the years because of the increase in demand. However, non-current liabilities have the

highest share in Total Liabilities and Partners’ Equity.

The current assets having higher percentage than the current liabilities mean that the

company’s working capital position is strong. The company, therefore, has the ability to meet its

short-term obligations.

The partners’ capital percentage, on the other hand, increases every year because each year

produces net income to be added to the capital of the partners less withdrawals of the partners which

are of constant percentage of the net income very year. This means that the drawings of the partners

EPICUREAN | 147

would not exceed the net income added to the capital of the partners resulting to continuous increase

in capital.

STATEMENT OF FINANCIAL PERFORMANCE

2017 2018 2019 2020 2021

REVENUE :

Sales 100.00% 100.00% 100.00% 100.00% 100.00%

LESS: COST OF

GOODS SOLD

69.51% 67.42% 67.11% 69.49% 69.19%

GROSS PROFIT

30.49% 32.58% 32.89% 30.51% 30.81%

EXPENSES

Salaries & Wages 6.06% 6.05% 5.91% 6.01% 5.88%

SSS Premium Contribution 0.97% 0.95% 0.93% 0.92% 0.89%

PhilHealth Premium Contribution 0.18% 0.17% 0.17% 0.17% 0.17%

HDMF Premium Contribution 0.32% 0.32% 0.31% 0.32% 0.39%

Taxes and Licenses 0.22% 0.00% 0.06% 0.05% 0.05%

Employee Benefits 2.29% 1.33% 1.30% 1.32% 1.29%

Depreciation Expense 0.50% 0.48% 0.45% 0.44% 0.41%

Rent Expense 15.49% 8.68% 8.15% 7.97% 7.49%

Professional Fees 0.26% 0.15% 0.15% 0.15% 0.15%

Advertising and Promotion 0.12% 0.12% 0.12% 0.12% 0.12%

Office Supplies 0.22% 0.22% 0.21% 0.22% 0.21%

Communication 0.27% 0.27% 0.26% 0.27% 0.26%

Meetings and Conferences 0.09% 0.09% 0.09% 0.09% 0.09%

Repairs and Maintenance 0.04% 0.05% 0.04% 0.04% 0.04%

Insurance 0.20% 0.11% 0.11% 0.11% 0.11%

Miscellaneous Expense 0.06% 0.08% 0.07% 0.07% 0.07%

Utilities 0.86% 0.86% 0.97% 0.98% 0.95%

Interest Expense 2.05% 1.03% 0.86% 0.74% 0.59%

Training Expense 0.52% 0.00% 0.00% 0.00% 0.00%

Total Expenses 30.18% 20.95% 20.17% 19.99% 19.17%

NET INCOME/(LOSS) BEFORE

TAX 0.30% 11.63% 12.72% 10.52% 11.64%

Provision for Income Tax 0.09% 3.49% 3.82% 3.16% 3.49%

NET INCOME/(LOSS) AFTER TAX 0.21% 8.14% 8.90% 7.36% 8.15%

EPICUREAN | 148

There is an increase in the gross profit margin from year 2017 to 2018 because the fixed cost

is spread more in 2018 given that in 2017, the number of units sold is only for seven months as

compared in 2018 where operations is for one year. There is also an increase of the gross profit margin

from year 2018 to 2019 because in addition to the increase in units sold, the price also increases to

cope with the increase of the amount of costs to be incurred due to inflation. The gross profit margin

from 2019 to 2020 decreases despite the continuous increase in demand because the price remains

the same with that of 2019 while the costs incurred continue to increase due to inflation. Lastly, the

gross profit margin from 2020 to 2021 increased because in addition to increase in units sold, the

price is also increase to cope with the increase of the amount of costs to be incurred due to inflation.

Total expenses as a percentage of sales in the second, third, fourth, and fifth year of operations

is decreasing. This is because the sales continually increase while some other expenses are constant

in amount such as rent expense and there are expenses which are incurred in 2017 but no longer

incurred in the next years such as training expense.

Rent Expense and Salaries and Wages are the expense accounts that have the two highest

percentage shares in the Total Expenses as a percentage of sales every year for five years. The high

share of Salaries and Wages is due to the fact that the average salary of workers in Epicurean’s

industry is high. This is due to specialization needed in performing work in Epicurean. Rent expense

is the highest expense because the current market value of the rented space is high due to its location

in the downtown area of the city. The significant decrease of percentage of rent expense from 2017

to 2018 is due to the significant increase in demand because for 2017, the units sold is only for seven

months while for 2018, the units sold is for one year. Interest expenses, on the other hand, are also

decreasing as a percentage of sales. This decrease is due to the yearly payment of the loan principal.

3. Capital Budget Analysis

3.1 Payback

Year

(a)

Cash Flow

(b)

Investment

(c)

Unrecovered Investment

(c-b)

1 (162,779.85) 3,300,000.00 3,462,779.85

2 1,416,830.30

2,045,949.55

3 1,497,489.71 548,469.84

4 1,253,826.61 0

EPICUREAN | 149

Cash Flow1

1+r Cash Flow2

(1+r)2 Cash Flowt

(1+r)t

Payback Period = 3 +

= 3.4374 approximately 3 years and 5.25 months

As presented by the payback period computation above, the capital

invested in Epicurean is expected to be recovered in 3 years and 5.25 months.

3.1 Discounted Payback

Payback Period = 3 +

= 3.8293 approximately 3 years and 9.95 months

For the discounted payback period, we used Epicurean’s computed

WACC as the discount rate, which is 4.774% in computing for the present values

of the estimated annual cash flows. As presented above, capital investment in

Epicurean is expected to be recovered in approximately 3 years and 9.95 months.

3.3 Net Present Value

The formula in solving for the Net Present Value is:

NPV = Initial Investment + + . . .

Where:

r = discount rate used to discount the cash flow which is equal to

the WACC computed in Appendix 4.2.

Year

(a)

PV

Factor

(b)

Cash Flow

(c)

Present Value

of Cash flows

(d)

Investment

(e)

Unrecovered

Investment

(e-d)

1 0.9544 (162,779.85) (155,357.09) 3,300,000.00 3,455,357.09

2 0.9109 1,416,830.30 1,290,590.72

2,164,766.37

3 0.8694 1,497,489.71 1,301,917.55 862,848.82

4 0.8298 1,253,826.61 1,040,425.32 0

5 0.7920 1,485,417.25 1,176,450.46 0

EPICUREAN | 150

*the PV factors presented are only limited to 4 decimals but its actual value was used in

the computation of NPV.

Epicurean yields an NPV equal to 1,354,196.05 which implies that the

value for Epicurean Chocolates’ revenue exceeds its costs. A positive NPV

means that the investment adds value to the investor therefor it is expected to

produce more income than what could be gained by earning the discount rate.

However, there are limitations to the NPV method. It is limited by

assumptions and guesses about what might occur in the future. The usefulness

of this method relies on the accuracy of the expected income of the project

and the discount rate.

3.3 Internal Rate of Return

The Internal Rate of Return or the IRR is the interest rate where the

NPV is nil or 0. The rate of return that would yield a nil or 0 NPV is

15.70722250270620% or 15.71%.

*the PV factors presented are only limited to 4 decimals but its actual value was used in

the computation of NPV.

Calculation of the Net Present Value

Period Cash Flow *PV Factor NPV

Initial Investment (3,300,000.00) 1 (3,300,000.00)

1 (162,779.85) 0.9566 (155,362.83)

2 1,416,830.30 0.9150 1,290,656.84

3 1,497,489.71 0.8753 1,301,976.89

4 1,253,826.61 0.8373 1,040,455.20

5 1,485,417.25 0.8009 1,176,469.96

Total NPV 1,354,196.05

Calculation of the Net Present Value (using 51.90745269% discount rate)

(Cost)/ Revenue *PV Factor NPV

Initial Investment (3,300,000.00) 1 (3,300,000.00)

1 (162,779.85) 0.8643 (140,682.53)

2 1,416,830.30 0.7469 1,058,271.01

3 1,497,489.71 0.6455 966,679.35

4 1,253,826.61 0.5579 699,512.71

5 1,485,417.25 0.4822 716,219.47

Total NPV 0

EPICUREAN | 151

An IRR of 15.71% is desirable for investors since it exceeds that

company’s required rate of return or WACC of 4.774% which means that the

net cash inflow of the project is high enough to cover its cash outflow.

H. Accounting and Control Policies

Revenue Cycle

The Process

Collection Officer / Cashier

All of the sales are made in cash. The cashier gets the order of the customer, and inputs into

the cashier register. The cashier receives the payment and issues a copy of sales invoice to customer.

At the end of the day, the cashier remits all the cash collected from sales together with the Summary

of Sales Transactions produced by the cash register to the managing/industrial partner.

Managing/Industrial Partner

Upon the receipt of the cash remitted by the cashier, the managing partner reconciles the cash

receipts with the cash sales transactions. The Cash Sales transactions are summarized in a summary

of sales transactions. The managing/industrial partner keeps it in a safety deposit box. The cash

receipts from sales for three operating days are kept in a safety deposit box and after the third day,

the managing/industrial partner deposits the cash kept in the safety deposit box to the company’s

demand deposit account.

Outsourced Auditor

The auditor monthly reconciles the copy of sales invoices issued with its summary and copy

of deposit slips. He then records sales and cash receipt. The auditor shall prepare the monthly bank

reconciliation.

EPICUREAN | 152

Revenue Cycle

Cashier

Managing Partner

Outsourced Accountant

Deposit Slip

Sales Invoice Deposit Slip

Sales Invoice

Customer

Receives orders,

inputs orders to

cash register,

receives payment

Prepares

Summary of

Sales

Transactions

Summary of

Sales Trans.

File

Summary of

Sales Trans.

Reconcile

File

Summary of

Sales Trans.

Reconcile

and

Record

File

A

Deposit Slip

Sales Invoice

Summary of

Sales Trans.

Deposit Slip

Sales Invoice

Sales Invoice

A

B

B

Bank

EPICUREAN | 153

Expenditure Cycle

The Process

Kitchen Crew 1

The kitchen crew 1 shall monitor raw materials inventory. When the level of inventory

reaches the reorder point, he shall issue 3 Purchase Orders (P.O.). He shall submit one copy of the

P.O. to the managing/industrial partner. One copy shall be kept by the kitchen crew 1 for

reconciliation and filing with the receiving report, and one is kept to be used later for reconciliation

and recording by the industrial/managing partner.

Kitchen Crew 2 (Receiving Personnel)

Upon the arrival of the raw materials purchased, the kitchen crew 2 shall prepare a

receiving report of the items received. Two copies are prepared, one for reconciliation and filing

by the kitchen crew 1, and one to be used by the industrial/managing partner. He shall indicate in

the report the items received and the quantity of each item. The receiving report shall be used by

the kitchen crew 1 to be matched with the purchase order and to close the open P.O. file.

Managing/Industrial Partner

The managing/industrial partner issues check for the purchase of the raw materials based

on the P.O. The issued check must be payable to the applicable supplier. Purchase transactions

with suppliers that are paid through checks should have a prior agreement. The official receipt and

purchase invoice received from the supplier shall be kept for the use of the industrial/managing

partner.

The managing/industrial partner shall make a summary of purchases invoices received and

file it. He shall also file the purchase orders received from the kitchen crew.

Outsourced Auditor

The purchase orders, supplier’s invoices, and receiving reports kept by the

industrial/managing partner for the use of the auditor shall be reconciled by the latter in making

reliable financial statements. The industrial/managing partner shall record the purchases and cash

disbursements. He shall prepare the monthly bank reconciliation.

EPICUREAN | 154

Records, Documents, and Physical Controls

The documents issued by the company such as purchase orders, receiving reports, and sales

invoices given to its customers should be pre numbered to assure completeness of occurrence of

transactions.

Also, physical control should be employed in handling cash and other monetary assets, raw

materials inventory, source documents and financial statements and non-financial reports to avoid

unauthorized access to these accounts. Implementation of physical controls reduces the risk of

fraud and other malicious activities.

Control of Payroll Fund

A payroll fund shall be established strictly for the disbursement of salaries and wages of

the company’s employees. The fund shall be under the control of managing/industrial partner. The

payroll would be prepared by the managing/industrial partner. Disbursements from payroll fund

shall be made only if correct and complete payroll documents are provided with proper

authorization to assure that no outflow is made without undergoing the required process. Before

the release of salaries, the pay slips must be signed by the employees. The industrial/managing

partner shall conduct unannounced cash count of the payroll fund every month. Any unclaimed

salary shall be reviewed and transferred back to the demand deposit account of company if no

employee is entitled to receive such money. However, in instances that there is a claimant for such

item, the same shall be retained in the payroll fund until disbursed.

Controls for Petty Cash Fund

The Petty Cash Fund shall be employed through the Imprest Fund System and shall be

under the custody of the Cashier. Disbursements out of this fund shall be supported with receipts

or, if unavailable, such as in cases of jeepney fares, the customary amount shall be applied and a

petty cash voucher shall be prepared by the personnel who incurred the expense. The receipts,

vouchers, and currency and coins of Petty Cash Fund shall be kept in a safety box. Inventories to

be stocked shall not be paid out of this fund. The managing/industrial partner shall conduct surprise

cash count and reconciliation every month. The Petty Cash Fund shall be replenished monthly.

EPICUREAN | 155

Expenditure Cycle

Kitchen Crew 1

Kitchen Crew 2

Managing Partner

Outsourced Accountant

C

B

Monitor Raw Mats.

Inventory

Purchase

Order

Open

P.O

File

Purchase

Order

Match P.O w/ R.R

Receiving

Report Purchase

Order

File Close

P.O

File

Check

Goods

Received

Receiving

Report

Purchase

Order

Verify supplier and issue check

Check

Purchase

Order

File

Supplier

O.R

Supplier’s

invoice

Prepare summar

y

Summary of Supplier’s

Invoice

File

Purchase

Order Supplier’s

invoice Receiving

Report

Reconcile and

Record

Purchase

Order Supplier’s

invoice Receiving

Report

File

A

B

A

C

Supplier’s

invoice

D

D

EPICUREAN | 156

CHAPTER V

SOCIO-ECONOMIC ASPECT

Aside from ascertaining the market, technical and financial viability of establishing a

Chocolate Patisserie Shop, the feasibility study is also conducted to determine its socio-economic

effects specifically the impact on its affected stakeholders – its employees, the community and the

government.

Employees

In putting up the business, there would be eleven (11) employees to be employed – one (1)

chef/store manager, four (4) kitchen crews, four (4) front crews/cashiers, and two (2) shop cleaners.

An outsourced accountant will be employed for the business’ financial reporting needs. The

employment of such persons means that additional jobs will be offered to those who are suited and

competent enough for the aforementioned positions.

Such job opportunities will give these people a stable source of income since they will be

receiving periodic salaries/wages including employee benefits like SSS, PhilHeath and Pag-IBIG.

In the future, when the business has grown and expanded, employee salaries/wages will

correspondingly increase. This means a higher income will be given to the employees.

In addition, the employees will be able to acquire new knowledge and harness their skills

as they will be undertaking seminars and trainings. Thus, human development linked to increase

of employees’ productivity and competitiveness will be promoted.

Aside from the full-time employees that Epicurean would be hiring, the entity would also

be open to working students who would like to apply for jobs. This would provide students the

opportunity to earn while studying, hence enabling them to provide for their studies. Also, the

working students will be able to acquire new knowledge and develop skills as they will be

undertaking seminars and trainings, just like the full-time employees.

Community

Epicurean’s employment of community members will contribute to the overall

employment growth in Davao City, even though such employees will only comprise a very small

fraction of the city’s whole population. The opening of the business will still help the community

in achieving its goal to lower the number of unemployed individuals. In this way, it will also help

EPICUREAN | 157

in reducing poverty. The newly-hired employees, having enough income, will be able to afford

and sustain the needs of their respective families. Also, edible leftovers will be distributed to less

fortunate people in an organized activity.

The establishment will also uphold productivity and competitiveness in the business

industry where it belongs. It will contribute to the supply of different chocolate products not only

here in Davao City but also to Mindanao as well as to the entire Philippines. On the other hand, it

will also help its various suppliers of raw materials and other basic items, particularly the

chocolate/cacao suppliers in Davao City, to increase the demand of their products and/or services

and the profit that they will earn.

Furthermore, the establishment of the business will provide students a new comfortable

place conducive for study. Also, it will provide an accessible venue for young professionals and

businessmen where they can conduct business meetings and other related transactions.

Government

Once the business will be established and employees will be hired, the government can

collect business income tax and personal income tax. This would mean additional income for the

government which it will use to conduct its operations.

In case of business expansion, the taxes that will be collected from the establishment will

increase since it will be earning more than its usual income. Moreover, additional taxes will also

be collected from the employees because of salary increase and the increase of number of

employees. In short, when the business and employees earns more, the government also earns

more.

Through taxes, the business will be able to help in the projects, activities and programs

implemented by the government for the development of our country. Through taxes, the business

will be able to contribute to the government fund used by the government to support the needs of

its people.

EPICUREAN | 158

VI. ORGANIZATION AND MANAGEMENT STUDY

A. Basic Consideration in Forming the Organization

There are various factors and corners to be taken into account when establishing an

organization. Presented below are several material factors to consider in forming an organization.

1. Number of Members

The number of members that will comprise an organization is an essential factor

because it determines the amount of capital that will support the operations of the organization

which will also determine the accounting standards and principles to be followed. Also, the

number of members will determine how the profit will be distributed among the members.

2. Financial Capacity of Members

The financial capacity of members determines the amount of money initially available

for the business and determines the remaining amount to be borrowed from financial

institutions to comply with its required capital to start the business.

3. Objective in forming the organization

The organization should identify its objectives to determine where it should position

itself in the market. The objectives set the direction of the organization on where to focus its

resources and efforts. It serves as the foundation and guide in formulating and actualizing the

organization’s strategies.

4. Knowledge and Skill of Management

One of the key factors in a successful business is the knowledge and skills of the

persons managing the entity because there are many aspects of the business that necessitates

professional judgment and proper estimation. If these persons are not equipped with the

required knowledge, there is a big probability that the business will be adversely affected by

the former’s erroneous decisions. The persons in the management should be skillful enough

because they are the one who lead the direction of the organization towards its goals.

5. Requirements of the Industry

The organization should identify requirements, common and specific, of the industry

where it will operate to determine whether it can satisfy such requirements. Also, the

organization should consider the legal government regulations governing the industry to

EPICUREAN | 159

resolve any incompatibilities and conflicting provisions of the government and the

organization.

6. Industry Performance

Industry performance depicts how the industry is adding value to its consumers, the

wider economy, government, and to its investors. It shows how the business organizations in

the industry are operating. It also shows an organization’s profit share in the industry, the

employment it provides, and its position in the entire business industry.

B. Form of Ownership

Epicurean is a partnership which, as defined by the Civil Code of the Philippines Article

1767, is a contract where two or more parties (in this case, two) bind themselves to contribute

money, property or industry to a common fund with the intention of dividing the profit among

themselves.

Since it is a partnership, Epicurean has the following characteristics:

1. There is no limit as to its existence and it is up to the partners when to end the

contract as compared to corporations which can only exist up to 50 years;

2. It has its own juridical personality whether or not it is registered to the Securities

and Exchange Commission (SEC);

3. The partners, even though having the ability to transfer his or her interest to

another person, the latter, which is the transferee, is not immediately considered a

partner without the consent of the other partner;

4. In case of liability to third persons, the partners can be held liable up to their

personal properties; and

5. It can be dissolved due to the insolvency, civil interdiction, death, insanity or

retirement of any of the partners.

To register to the SEC, Epicurean should submit the following requirements:

1. Name Verification Slip with the reservation of the partnership name

2. Articles of Partnership

3. Registration Data Sheet

4. Affidavit of a partner undertaking to change partnership name

5. Certificate of Bank Deposit

EPICUREAN | 160

These information are also needed:

1. Name of the partnership

2. Principal office address

3. Telephone number of the partnership

4. Name, citizenship, address, birthday and TIN of the partners

5. Capital contribution of the partners

6. Purpose of the partnership

In this research paper, the proponents have no actual investors for the project. In this regard,

the proponents opted to use 80% debt and 20% equity as the basis for computing the capital

investment needed by Epicurean. In the case of Epicurean, there will be two partners, wherein one

partner will invest cash and the other will invest both cash and skills. The partner who will invest

both cash and skills will become the managing partner of Epicurean. To reward the managing

partner, a 60:40 profit sharing ratio will be used.

C. Key Personnel

Organizational Chart

Personnel Responsibilities

● Managing Partner/Industrial Partner

The Managing Partner/Industrial Partner will be responsible for the keeping

of the books of Epicurean. Furthermore, he/she will be responsible for any

administrative works of Epicurean, like preparing the payroll, keeping the records

of the employees and etc.

Partners

Kitchen Crew Front Crew Cashier Shop Cleaner

Chef/Store Manager

EPICUREAN | 161

● Chef/Store Supervisor

The Chef/Store Supervisor will have the following tasks and responsibilities:

1. Make list of raw materials needed for the production process

2. Check quality of items to be served

3. Supervise the work of kitchen crews, front crews and cashiers.

4. Check the quality of raw materials bought

● Kitchen Crew

Kitchen Crews will have the following tasks and responsibilities:

1. Check inventory level in the store room

2. Ensure proper arrangement of raw materials in store room

3. Make list of raw materials that needed to be replenished

4. Assist the chef in preparing the products.

5. Prepares the ingredients ready for use and prepares the kitchen for use.

6. Check items in counter chiller

● Front Crew/Cashier

The Front Crew will have the following tasks and responsibilities:

1. Prepare customer orders

2. If assigned as cashier, process the payment of the customers

3. Check whether orders prepared match receipts

4. Serve customer orders

As a cashier, he/she will have the following tasks and responsibilities:

1. Take customer order

2. Issue receipts

3. Submit daily sales report to the managing partner

4. If assigned as front crew, prepare customer orders.

● Shop Cleaner

The Shop Cleaner will have the following tasks and responsibilities:

1. Ensure that the store is always clean.

2. Ensure that after the customers leave, tables are cleaned.

EPICUREAN | 162

D. Organizational Policy

The following are the major policies of Epicurean:

● Daily Operations

1. Epicurean will operate 7 days a week, from 10:00 AM to 10:00 PM.

2. Employees must log-in 1 hour before the opening of the store or by 9:00

am.

3. Every Sunday, the chef and the kitchen crew must log-in by 6:00 am for the

procurement of raw materials.

4. Cleanliness must be maintained always.

5. Highest quality of food and service must be given to the customers.

● Payroll

1. A list of employees will be maintained by the managing partner. This will

include the personal documents of the employees.

2. The managing partner will maintain a logbook for the attendance of the

employees. This logbook will contain login time and logout time of the

employees.

3. Each employee will have 1 day off each week.

4. Holidays will be allowed depending on the discretion of the managing

partner.

5. The managing partner will prepare the payroll of the employees every 2

weeks.

6. The payment of the salary will be made every after 2 weeks.

7. The payment of the employee benefits, which is their 13th month pay, will

be made together with their salary in December.

● Hiring

1. Child labor will not be allowed in epicurean.

2. Employees must satisfy the requirements that is stated in the Labor

Requirements section of this paper.

3. Working students will be allowed in Epicurean.

4. Any form of discrimination will be prohibited.

EPICUREAN | 163

● Other major policies

1. A monthly meeting with the employees will be implemented to show the

progress of the business and to discuss any important matters.

2. Any conflict with between employees must be reported directly to the chef,

or if the chef is involved, to the managing partner.

EPICUREAN | 164

APPENDICES

APPENDIX 1.0. Articles of Partnership

ARTICLES OF PARTNERSHIP

of

EPICUREAN CHOCOLATES

KNOW ALL MEN BY THESE PRESENTS:

That we, the undersigned, all of legal age and residents of the Republic of the Philippines have agreed to

amend a general partnership under the terms and conditions herein set forth and subject to the provisions of

existing laws of the Republic of the Philippines.

AND WE HEREBY CERTIFY:

ARTICLE I.

That the name of the partnership shall be: Epicurean Chocolates.

ARTICLE II.

That the principal office of the Partnership shall be located at Ground floor, Fabie Building, Poblacion District,

Davao City.

ARTICLE III.

That the names, citizenship, residence and designation of the partners of said partnership are as follows:

Name Citizenship Residence Designation

Partner A Filipino Davao City General/Industrial

Partner

Partner B Filipino Davao City General Partner

ARTICLE IV.

That the term for which said partnership is to exist is 30 years from the original recording of said partnership by the

Securities and Exchange Commission.

ARTICLE V.

That the purpose for which said partnership is formed are as follows:

1. To open the first Patisserie in Davao City that offers high quality chocolate pastry products.

2. To provide quality customer service to the entity’s patrons and prospective customers.

3. To highlight locally produced chocolates by offering products using chocolate as the main ingredient.

ARTICLE VI.

That the capital of the partnership shall be Php 660,000.00 Philippine Currency contributed in cash by the partners

as follows:

EPICUREAN | 165

Name Amount Contributed

Partner A P 330,000.00

Partner B P 330,000.00

That no transfer will reduce the ownership of Filipino citizens to less than the required percentage of capital shall

be recorded in the paper books of the partnership.

ARTICLE VII.

That the profits and losses shall be divided pro-rata among the partners. 60% of the profit/loss shall be given

to the managing partner (Partner A) and the remaining 40% shall be given to the general

capitalist partner (Partner B).

ARTICLE VIII.

That should there be additional contribution made by any of the partners, such must be agreed upon by all the

partners in writing and duly recorded at least two days after signing the same agreement. Such agreement shall

amend Article VI of the Articles of Partnership.

ARTICLE IX.

That a partner may admit an additional limited partner, provided that the other partners have been duly notified in

writing five (5) days before effectivity of admission and duly concurred by all the partners in writing.

ARTICLE X.

That the remaining general partner or partners shall have the right to continue the business in cases of death,

retirement, civil interdiction, insanity or insolvency of a general partner.

ARTICLE XI.

That the firm shall be under the management of Partner A, as the Managing Partner and as such he/she shall be in

charge of the management of the affairs of the partnership.

ARTICLE XII.

That the partners will willingly undertake to change the name of the partnership immediately upon receipt of

notice/directive from the Securities and Exchange Commission that another partnership, corporation, or person

has been declared misleading, deceptive, confusingly similar to a registered name or contrary to public morals,

good customs or public policy.

IN WITNESS WHEREOF, we have hereunto set our hands this DATE.

PARTNER A

TIN:

PARTNER B

EPICUREAN | 166

ACKNOWLEDGEMENT

Republic of the Philippines }

City of Davao } S. S.

BEFORE ME, a Notary Public, for and in Davao City, Philippines, DATE, personally came and personally

appeared the following persons with their Community Tax Certificates as follows:

Name CTC# Date Place Issued

Partner A Davao City

Partner B Davao City

Known to me to be the same persons who executed the FOREGOING ARTICLES OF

PARTNERSHIP, and they acknowledged to me that the same their voluntary act and need.

WITNESS MY HAND AND SEAL on the date first above written.

Name of Legal Counsel

Notary Public

Valid until December 31,2017

PTR No.

IBP No.

Roll of Attorney No.

TIN

Davao City

Doc. No.:

Page No.:

Book No.:

SERIES OF 2017

EPICUREAN | 167

APPENDIX 2.0. LEASE CONTRACT

KNOW ALL MEN BY THESE PRESENTS:

This CONTRACT OF LEASE is made and executed at the City of Davao, this day of

_______________, 20__, by and between:

(NAME OF LESSOR), of legal age, single/married to (Name of spouse if any), Filipino,

and with residence and postal address at (Address), hereinafter referred to as the LESSOR.

-AND-

Lea, Filipino and with residence and postal address at (Address), hereinafter referred to as the

LESSEE.

WITNESSES; That

WHEREAS, the LESSOR is the owner of THE LEASED PREMISES, a commercial property

situated at Ground Floor Fabie Building, Pelayo Street, Davao City, 8000 Davao del Sur;

WHEREAS, the LESSOR agrees to lease-out the property to the LESSEE and the LESSEE is

willing to lease the same;

NOW THEREFORE, for and in consideration of the foregoing premises, the LESSOR leases unto

the LESSEE and the LESSEE hereby accepts from the LESSOR the LEASED premises, subject

to the following:

TERMS AND CONDITIONS

1. PURPOSES: That premises hereby leased shall be used exclusively by the LESSEE for

commercial purposes only and shall not be diverted to other uses. It is hereby expressly agreed

that if at any time the premises are used for other purposes, the LESSOR shall have the right to

rescind this contract without prejudice to its other rights under the law.

2. TERM: This term of lease is for ONE (1) YEAR. from (Date) to (Date) inclusive. Upon its

expiration, this lease may be renewed under such terms and conditions as my be mutually agreed

upon by both parties, written notice of intention to renew the lease shall be served to the LESSOR

not later than seven (7) days prior to the expiry date of the period herein agreed upon.

3. RENTAL RATE: The monthly rental rate for the leased premises shall be in PESOS: ONE

HUNDRED THOUSAND PESOS (P100,000.00), Philippine Currency. All rental payments shall

be payable to the LESSOR.

EPICUREAN | 168

4. DEPOSIT: That the LESSEE shall deposit to the LESSOR upon signing of this contract and

prior to move-in an amount equivalent to the rent for THREE (3) MONTHS or the sum of PESOS:

THREE HUNDRED THOUSAND PESOS (P 300,000.00), Philippine Currency. wherein the two

(2) months deposit shall be applied as rent for the 11th and 12th months and the remaining one (1)

month deposit shall answer partially for damages and any other obligations, for utilities such as

Water, Electricity, CATV, Telephone, Association Dues or resulting from violation(s) of any of

the provision of this contract.

5. DEFAULT PAYMENT: In case of default by the LESSEE in the payment of the rent, such as

when the checks are dishonored, the LESSOR at its option may terminate this contract and eject

the LESSEE. The LESSOR has the right to padlock the premises when the LESSEE is in default

of payment for One (1) month and may forfeit whatever rental deposit or advances have been given

by the LESSEE.

6. SUB-LEASE: The LESSEE shall not directly or indirectly sublet, allow or permit the leased

premises to be occupied in whole or in part by any person, form or corporation, neither shall the

LESSEE assign its rights hereunder to any other person or entity and no right of interest thereto or

therein shall be conferred on or vested in anyone by the LESSEE without the LESSOR'S written

approval.

7. PUBLIC UTILITIES: The LESSEE shall pay for its telephone, electric, cable TV, water,

Internet, association dues and other public services and utilities during the duration of the lease.

8. FORCE MAJEURE: If whole or any part of the leased premises shall be destroyed or damaged

by fire, flood, lightning, typhoon, earthquake, storm, riot or any other unforeseen disabling cause

of acts of God, as to render the leased premises during the term substantially unfit for use and

occupation of the LESSEE, then this lease contract may be terminated without compensation by

the LESSOR or by the LESSEE by notice in writing to the other.

9. LESSOR'S RIGHT OF ENTRY: The LESSOR or its authorized agent shall after giving due

notice to the LESSEE shall have the right to enter the premises in the presence of the LESSEE or

its representative at any reasonable hour to examine the same or make repairs therein or for the

operation and maintenance of the building or to exhibit the leased premises to prospective

LESSEE, or for any other lawful purposes which it may deem necessary.

10. EXPIRATION OF LEASE: At the expiration of the term of this lease or cancellation thereof,

as herein provided, the LESSEE will promptly deliver to the LESSOR the leased premises with

all corresponding keys and in as good and tenable condition as the same is now, ordinary wear and

tear expected devoid of all occupants, movable furniture, articles and effects of any kind. Non-

compliance with the terms of this clause by the LESSEE will give the LESSOR the right, at the

latter's option, to refuse to accept the delivery of the premises and compel the LESSEE to pay rent

therefrom at the same rate plus Twenty Five (25) % thereof as penalty until the LESSEE shall have

complied with the terms hereof. The same penalty shall be imposed in case the LESSEE fails to

EPICUREAN | 169

leave the premises after the expiration of this Contract of Lease or termination for any reason

whatsoever.

11. JUDICIAL RELIEF: Should any one of the parties herein be compelled to seek judicial relief

against the other, the losing party shall pay an amount of One Hundred (100) % of the amount

clamed in the complaint as attorney's fees which shall in no case be less than P50,000.00 pesos in

addition to other cost and damages which the said party may be entitled to under the law.

12. This CONTRACT OF LEASE shall be valid and binding between the parties, their successors-

in-interest and assigns.

IN WITNESS WHEREOF, parties herein affixed their signatures on the date and place above

written.

(Name of Lessor) Leah

LESSOR LESSEE

Signed in the presence of:

_____________________________ ______________________________

ACKNOWLEDGEMENT

Republic of the Philippines)

_________________________) S.S

BEFORE ME, personally appeared:

Name CTC Number Date/Place Issued

(Name of Lessor) 10000000 February 24, 20__ / Cavite City

(Name of Lessee) 10000000 January 07, 20__ / Makati

Known to me and to me known to be the same persons who executed the foregoing instrument and

acknowledged to me that the same is their free and voluntary act and deed.

EPICUREAN | 170

This instrument consisting of ____ page/s, including the page on which this acknowledgement is

written, has been signed on each and every page thereof by the concerned parties and their

witnesses, and and sealed with my notarial seal.

WITNESS MY HAND AND SEAL, on the date and place first above written.

Notary Public

Doc. No.______;

Page No. ______;

Book No.______;

Series of 20___.

EPICUREAN | 171

APPENDIX 2.1. Survey Questionnaire

FRONT BACK

EPICUREAN | 172

APPENDIX 3.0. Cost of Raw Materials

Products

Total

Serving Serving

Cost

Average

serving

cost per

product

Demand

(yearly)

Raw Mats cost per year

(in Php) 0 1 2 3 4 5

Hot Chocolate Drinks

Choc-buttered rum 206.26 2 103.13 10,363.50

Mocha Latte 148.88 2 74.44 18,180.00

Melted Hot Chocolate

with Sea Salt Whipped

Cream

188.74 2 94.37 18,594.00

S'mores Hot Chocolate 98.36 2 49.18 19,026.00

White Hot Chocolate 321.49 4 80.37 19,458.00

Bourbon Spiked Hot

Chocolate 351.06 4 87.76 19,908.00

Coconut Hot Chocolate 283.17 3 94.39 83.38 864,091.36 1,576,450.84 1,676,844.22 1,784,434.96 1,897,950.01 2,019,517.13

Input Vat 103690.9637 189174.1004 201221.3065 214132.1953 227754.0012 242342.0558

Total Cost 967782.3282 1765624.937 1878065.527 1998567.156 2125704.011 2261859.188

Cold Chocolate Drinks

Salted caramel Mocha

Smoothie 74.81 1 74.81 9,513.00

Black Forest Smoothie 229.52 1 229.52 16,668.00

Strawberry Chocolate

Smoothie 214.38 2 107.19 17,064.00

White Chocolate Latte 131.93 4 32.98 17,460.00

Chocolate Avocado

Smoothie 23.28 1 23.28 17,856.00

White Chocolate Mango

Smoothie 162.62 3 54.21 87.00 18,270.00 827,613.72 1,508,089.15 1,605,675.22 1,708,655.24 1,817,304.57 1,933,817.24

Input Vat 99,313.65 180,970.70 192,681.03 205,038.63 218,076.55 232,058.07

Total Cost 926,927.37 1,689,059.85 1,798,356.25 1,913,693.86 2,035,381.12 2,165,875.31

Ice cream

Matcha avocado Mint

Chocolate Mousse Swirl

Ice Cream

661.96 25 26.48 11,550.00

EPICUREAN | 173

Salted Caramel

Chocolate Vegan Ice

Cream

266.62 25 10.66 20,268.00

Caramel Brownie ice

Cream Sundae 234.99 25 9.40 20,736.00

Rocky Road Ice Cream 468.02 25 18.72 21,204.00

Chocolate Chip Ice

Cream Cookies 164.90 18 9.16 21,690.00

Rocky road ice cream

sandwich 537.67 14 38.40 22,194.00

Grasshopper Ice Cream

Sandwich 265.20 9 29.47

Chocolate Coconut Ice

Cream Sandwich 183.45 7 26.21

Boston Cream Pie Ice

Cream Sandwich 352.43 14 25.17

Chocolate Waffle Ice

Cream Sandwiches 350.51 2 175.26

S'mores waffle sundaes 399.38 8 49.92

Blueberry and Coconut

Ice Cream Sandwich 574.75 8 71.84 122.67 1,416,889.80 2,585,820.20 2,751,349.44 2,925,983.70 3,112,769.76 3,312,503.66

Input Vat 170,026.78 310,298.42 330,161.93 351,118.04 373,532.37 397,500.44

Total Cost 1,586,916.57 2,896,118.63 3,081,511.37 3,277,101.74 3,486,302.13 3,710,004.10

Cupcakes

Chocolate Pistachio

Cupcakes 530.28 28 18.94 6,930.00

Matcha Cocoa Cupcakes 417.20 28 14.90 12,150.00

Mint Hot Chocolate 515.26 32 16.10 12,438.00

Double chocolate

cupcakes with white

chocolate cream cheese

frosting

521.28 20 26.06 12,726.00

Double Chocolate

cupcakes with salted

caramel buttercream

371.09 28 13.25 13,014.00

Salted Caramel

chocolate cupcakes 632.40 8 79.05 13,320.00

Chocolate Espresso

Cupcakes 233.26 27 8.64

EPICUREAN | 174

Maple Buttercream and

Bacon Cupcakes 504.26 24 21.01

Chocolate Banana

Cupcakes with Dulce de

Leche Filling

258.21 18 14.35

Coconut sponge cake

with chocolate espresso

buttercream

124.97 15 8.33

Coffee Chocolate

Cupcakes with Baileys

Irish Cream Frosting

206.24 20 10.31

Espresso Fudge

Cupcakes with

Chocolate Cream Cheese

Icing

189.80 20 9.49

Red Devil's Food

Cupcakes with Sour

Cream Chocolate

Frosting

580.28 27 21.49 60.44 418,882.77 763,781.05 813,160.90 865,269.10 920,244.90 979,558.06

Input Vat 50,265.93 91,653.73 97,579.31 103,832.29 110,429.39 117,546.97

Total Cost 469,148.70 855,434.77 910,740.21 969,101.39 1,030,674.29 1,097,105.02

Cakes

White Chocolate Mocha

Mousse Mini Cake 333.93 12 27.83 6,951.00

Black Forest Mini Cake 962.24 7 137.46 12,186.00

Chocolate-Covered

Strawberry Cake 585.14 10 58.51 12,474.00

Banana Bread Tiramisu

Mini Cake 895.46 6 149.24 12,762.00

S'mores Mini

Cheesecakes 227.59 12 18.97 13,050.00

Triple Chocolate Mousse

Mini Cake 74.13 8 9.27 13,356.00

Almond Joy Cake 917.95 12 76.50

Chocolate Espresso

Bundt Cake with Dark

Chocolate Cinnamon

Glaze

280.30 12 23.36

Chocolate Whiskey Cake 734.80 12 61.23

EPICUREAN | 175

Nutella CheeseCake 739.41 10 73.94

Chocolate Chocolate

Cake 699.51 12 58.29

Mango Mousse Cake 162.40 10 16.24

Mint Cookies and Cream

Cake 328.75 10 32.88

Salted Chocolate

Caramel Ice Cream Cake 725.17 10 72.52

Strawberry Chocolate

Mousse 648.94 10 64.89

Mudslide Cake 478.04 10 47.80

Triple Chocolate

Cheesecake 535.18 10 53.52

Salted Caramel Milk

Chocolate Cake 634.74 12 52.89

Red Velvet Oreo Truffle

Cake 545.81 8 68.23

Mini Chocolate Mud

Cakes with Salted

Caramel Chocolate Icing

285.48 12 23.79 56.37 391,815.07 714,378.47 760,512.33 809,193.90 860,553.18 915,960.93

Input Vat 47,017.81 85,725.42 91,261.48 97,103.27 103,266.38 109,915.31

Total Cost 438,832.87 800,103.89 851,773.81 906,297.17 963,819.56 1,025,876.24

Cookies

Double Chocolate Chip

Cookies 102.19 18 5.68 9,859.50

Chocolate Peanut Butter

Chip Cookies 218.35 24 9.10 17,298.00

coconut oatmeal

chocolate chip cookies 238.51 36 6.63 17,694.00

mint oreo cookies 175.19 16 10.95 18,090.00

chocolate sugar cookies 78.01 24 3.25 18,504.00

salted caramel dark

chocolate cookies 216.05 115 1.88 18,936.00

matcha green tea white

chocolate cookies 501.35 24 20.89

white chocolate lemon

sugar cookies 239.80 40 6.00

hot chocolate thumbprint

cookies 173.03 18 9.61

EPICUREAN | 176

Chocolate orange

cookies 64.38 24 2.68 53.66 529,075.36 965,365.72 1,026,964.29 1,091,946.16 1,161,613.41 1,236,282.11

Input Vat 63,489.04 115,843.89 123,235.72 131,033.54 139,393.61 148,353.85

Total Cost 592,564.40 1,081,209.61 1,150,200.01 1,222,979.70 1,301,007.02 1,384,635.96

Total

Input

VAT

533,804.17 973,666.25 1,036,140.77 1,102,257.97 1,172,452.30 1,247,716.70

Raw Mats

Cost x

Demand

4,448,368.07 8,113,885.43 8,634,506.41 9,185,483.07 9,770,435.83 10,397,639.13

EPICUREAN | 177

APPENDIX 4.0. Credit and Debit Card Transaction Path

Credit Card Transaction Path

https://www.firstdata.com/downloads/thought-leadership/payments101wp.pdf

https://www.firstdata.com/downloads/thought-leadership/payments101wp.pdf

EPICUREAN | 178

APPENDIX 4.1. List of Banks for Future Borrowings

1. Landbank of the Philippines

ASENSO Program

Description A program jointly implemented by different GFIs in support of the

National SME Development Plan. The Program adopts a unified

procedure and terms and conditions in lending to SMEs.

Eligible Borrowers Sole Proprietorship

Partnership

Corporation (at least 60% Filipino-owned)

Cooperatives

Eligible Projects Manufacturing

Agri-business (except direct farm level agricultural production)

Services

Trading (except enterprises engaged in purely trading of imported

commodities, in extractive industries, in vice generating activities

and in real estate development

Loan Purpose Working Capital

Fixed Asset Acquisition

Amount of Loan Maximum of P5 M

Term of Loan Short Term – 1 year

Long Term – maximum of 5 years inclusive of maximum of 1

year grace period on principal payment

Loan Security REM

Chattel on machinery & equipment

Hold-out on deposit

Deed of Assignment on inventory & receivable

JSS of principal stockholders/officers

Guarantee cover from SBGFC, PhilEXIM, etc.

EPICUREAN | 179

*The prevailing market interest rate as of August 11, 2016 according to Bangko Sentral ng

Pilipinas is three percent (3%).

2. Development Bank of the Philippines

Sustainable Enterprises for Economic Development (SEED)

Retail Lending for

Micro and Small

Enterprises (RLM)

The RLM is a retail lending facility that aims to enhance micro and

small enterprises’ (MSE) access to credit through simplified loan

procedures and shorter turnaround time.

Eligible Projects

All types of projects of a qualified MSE borrower shall be eligible for

MSE financing, except those undertaken for unlawful purposes, or

those which may pose a risk to health, national security and the

environment.

Eligible Borrowers Single Proprietorship, Partnership, Corporation, Cooperative, and

other entities with legal personality to engage in a business enterprise

with asset size of not more than PhP15.0 million.

Loan Amount For term loans, the MSE loan amount shall be up to 90% of total

project cost.

For PO/LC financing, the MSE loan amount shall be up to 80% of

the amount of the instrument or based on the actual cost of the

goods purchased, whichever is lower.

Interest Rate Prevailing market rate (fixed or variable)

Loan Repayment

Term

Based on enterprise’s development period but not to exceed ten

(10) years, payable based in business cash cycle.

Maximum grace period of three (3) years on principal payment for

projects with short gestation period and five (5) years for projects

with long gestating period.

*The prevailing market interest rate as of August 11, 2016 according to Bangko Sentral ng

Pilipinas is three percent (3%).

3. Bank of the Philippines Islands

EPICUREAN | 180

KA-NEGOSYO ZERO COLLATERAL LOAN

1 year 10.00%

2 years 12.00%

3 years 14.00%

EPICUREAN | 181

KA-NEGOSYO CREDIT LINE: 4.50 % for 90 days

KA-NEGOSYO FRANCHISING LOAN (Secured)

Term Interest Rates

1 year 7.00%

2 - 3 years 8.00%

KA-NEGOSYO TERM LOAN (Secured)

1 year 5.50%

2 - 3 years 6.50 %

4 - 5 years 7.00%

6 - 10 years 9.00%

KA-NEGOSYO FRANCHISING LOAN (No Collateral)

Term Interest Rates

1 year 10.00%

2 years 12.00%

3 years 14.00%

EPICUREAN | 182

APPENDIX 4.2. Computation of WACC

WACC = * Re + * Rd * (1 – T)

Where:

Re = cost of equity

Rd = cost of debt

E = Total equity

D = Total long term debt

V = E + D

E/V = percentage of financing that is equity

D/V = percentage of financing that is debt

T = tax rate

2017 2018 2019 2020 2021

Re 0.0683 0.0683 0.0683 0.0683 0.0683

Rd 0.06 0.06 0.06 0.06 0.06

E 663,292.73 888,401.34 1,150,463.92 1,372,155.85 1,633,065.03

D 2,376,000.00 2,112,000.00 1,848,000.00 1,584,000.00 1,320,000.00

V 3,039,292.73 3,000,401.34 2,998,463.92 2,956,155.85 2,953,065.03

Tc 0.3 0.3 0.3 0.3 0.3

WACC 4.7740% 4.9787% 5.2091% 5.4208% 5.6544%

http://www.investopedia.com/terms/c/corporatetax.asp

EPICUREAN | 183

APPENDIX 4.3. Local Business Tax Matrix

Davao City Treasurer’s Office

Restaurants, cafes, cafeterias, carenderias, eateries, food caterer, ice cream & other

refreshment parlors, & soda fountain bars, & places wherein customers thereof actively

participate without bets or wagers, including but not limited to night clubs, or day clubs, cocktail

lounges, cabarets or dance halls, karaoke bars, clubs such as country & sports club, resorts &

other similar places, billiard & pool tables, bowling alleys:

RANGE (based on net income) ANNUAL QUARTERLY

Less than 10,000 272.50 68.13

10,000 15,000 399.30 99.83

15,000 20,000 525.80 131.45

20,000 30,000 816.20 205.05

30,000 40,000 1,107.15 276.79

40,000 50,000 1,361.25 140.31

50,000 75,000 1,565.30 391.33

75,000 100,000 1,831.50 457.88

100,000 150,000 2,142.80 535.70

150,000 200,000 2,506.90 626.73

200,000 250,000 2,933.15 733.29

250,000 300,000 3,432.00 858.00

300,000 400,000 4,015.00 1,003.75

400,000 500,000 4,818.00 1,204.50

500,000 750,000 5,782.70 1,445.68

750,000 1,000,000 6,939.35 1,734.84

1,000,000 2,000,000 8,327.55 2,081.89

EPICUREAN | 184

APPENDIX 4.4. Basis for Inflation Rate

The inflation rate employed by the researchers for this feasibility study is based on the

forecasted and released rate by Trading Economics Global Macro Models and analysts’

expectations. Based on the forecast using econometric models, the Philippine Inflation Rate, in the

long-term, is projected to trend around 3.8 percent in 2020. The Philippines Inflation Rate

Forecasts are projected using an autoregressive integrated moving average (ARIMA) model

calibrated using the expectations of its analysts. The forecasted inflation rate is modeled using

great amounts of historical data and is adjusted by coefficients of the econometric model by taking

into account our analysts assessments and future expectations.

EPICUREAN | 185

APPENDIX 4.5. DBP Credit Terms

EPICUREAN | 186

CURRICULUM VITAE

ALONDAY, DEXTER VAL J. BACHELOR OF SCIENCE IN

ACCOUNTANCY 5th YEAR STUDENT

Mobile Number: 09234823566

Email Address: [email protected]

Address: Toril, Davao City, Philippines

Career Objectives

To gain experience in a progressive

company/firm that provides an opportunity to

capitalize my technical skills and abilities in the

field of accounting and finance.

Key Competencies

Knowledgeable in accounting standards

(IFRS, IAS and GAAP)

Proficient in financial statements preparation

and financial ratio analysis

Adept in Microsoft Office applications such

as Word, Excel, and PowerPoint

Excellent command in both spoken and

written English

Competent interpersonal skills and able to

work harmoniously with a team

Familiar with the basic features of SAP

Business One accounting software

Computer Savvy and adept in Photoshop and

video editing

Loyalty towards work and duties

Willingness to learn

Educational Background

High School Saint Peter’s

College of Toril

College (4th Year

Student) Ateneo de Davao

University

Achievements

Graduated Salutatorian in the High School

Level

Consistent Deans Lister in the College Level

Awarded the Most Outstanding Junior

Philippine Institute of Accountants (JPIA)

member of 2014

Awarded with a certificate of completion of

the SAP Business One Technical Proficiency

Grant-In-Aid scholar for 4 years and counting

Extra-curricular Involvements

Junior Philippine Institute of Accountants

(JPIA) Creative Pool Executive Committee

member (2015-2016)

Fourth Year Accountancy Students

Executive Council (FASEC) Creative Pool

Head (2015-2016)

Ateneo de Davao University Scholars

Society Creative Pool Head (2015-2016)

Ateneo Reaching Towards Excellence

(ARETE) exclusive club for honor students

member (2013-2015)

Accountancy Students Executive Council

(ASEC) Creative Pool Head (2016-2017)

mailto:[email protected]

EPICUREAN | 187

ANSING, JEANETTE AMABELLE E.

BACHELOR OF SCIENCE IN


[email protected]

+639483265222

EDUCATION


Bachelor of Science in Accountancy

President’s Lister S.Y. 2014-2015 2nd

semester

Dean’s Lister S.Y. 2014-2015 1st semester

Dean’s Lister S.Y. 2013-2014 2nd semester

President’s Lister S.Y. 2013-2014 1st

semester

President’s Lister S.Y. 2012-2013 1st & 2nd

semesters

St. Mary’s College of Tagum – Tagum City

Secondary Education

Graduated as Second Honorable Mention

President of Vocation Promoters’ Club

Secretary of Peer Counselors’ Club

Sports Writer of school paper Marian Voice

CLUBS

Junior Philippine Institute of Accountants-

AdDU Local Chapter

Logistics Committee Member

Campus Liturgical Ministry

Member

SEMINARS/WORKSHOPS

SAP Business One Training Course

Caveat Emptor Symposium

Summer SAPPHIREans Work Ethics and

Professionalism

Leadership and Development Conference

JPIA Summit: Seminar 3 with the theme

“Meet your future employers”

JPIA Summit: Seminar 2 with the theme

“Meet the Ateneo Alumni from SGV: A

career talk”

Civic Welfare Training Service I & II

Ateneo de Davao University’s National

WORK EXPERIENCE

2015 ANFLOCOR Summer Job Program

General Accounting Department

TADECO

Bo. Antonio Floirendo

SKILLS

Technical and creative writing

Microsoft Word, Excel, and Powerpoint,

SAP

CHARACTER REFERENCE

Dr. Belinda S. Villegas, CPA

Full-time Faculty, Accountancy Department

Part-time Professor, MBA and MPA Graduate

Programs

0922-832-0325

Ms. Joan Ang, CPA

Part-time Faculty, Accountancy Department

Assistant Manager, Bank of the Philippine

Islands

0917-716-2601

PERSONAL DETAILS

Date of Birth July 8, 1996

Age 20 years’ old

Address Doña Segunda Building, C.M.

Recto Street, Davao City 255

Purok 4-B, Barangay

Cambanogoy, Poblacion,

Asuncion, Davao del Norte

EPICUREAN | 188

ARYATA, DAWN NICCA D. BACHELOR OF SCIENCE IN


EDUCATION

Ateneo de Davao University Course:


Davao del Norte State College

Year Graduated: 2012

Honors/Awards Received: Second

Honorable Mention

ORGANIZATIONS

Ateneans Reaching Towards

Excellence (ARETE) – Vice President

for Spirituality

JPIA (AdDU Local Chapter) -Member


(Region 11) – Member


(National) – Member

Ateneans Reaching Towards Excellence

(ARETE) – Member

JPIA (AdDU Local Chapter) – Publicity

Comimittee-Member

Accountancy Student’s Executive Council –

Production Committee – Member

Accountancy Class Officer – Vice President

AWARDS AND RECOGNITIONS

Gawad: Gabi ng Parangal Awardee

President’s List First and Second

Quizbowl 2016 – Champion Team Category

PICPA Quizbowl 2016 – 8th place Individual

Category

JPIA Regional MidYear Convention –

Auditing Cup – 3rd place

Search for the Most Outstanding

Accountancy Student of the Philippines-

Participant

ARETE Grand Slam Award (Three-Peat

Honor Student)

Third Year Accounting Quiz Bowl –

Participant

English Speech Festival (Oratory Speech)-

Champion

First Year Accounting Quiz Bowl-

Participant

EMPLOYMENT BACKGROUND

2015 Tagum Agricultural Development

Company (TADECO)

Sapphireans Summer Job Program 2016

2013 Tagum Agricultural Development

Company (TADECO)

SEMINARS AND TRAININGS


DTI and FDA Talks: Caveat Emptor

Symposium (Consumers’ Rights)

Board of Accountancy Talk

CRC Talk: Road to CPA

SGV TALK: Meet the Ateneo Alumni from

SGV: A Career Talk

SGV TALK: Meet Your Future Employers


(Ateneo de Davao University’s National

Service Training Program)

SKILLS

Technical Skills and Creative Writing

Computer: Office (Microsoft Word, Excel &

PowerPoint); SAP

Sports: Basketball, Baseball

EPICUREAN | 189

JOSHUA REY B. COSARE BACHELOR OF SCIENCE IN


EDUCATION


Dean’s Lister

Topnotcher in the Advanced Accounting

2 Departmental Examination in the First

Semester S.Y. 2015-2016


semester

St. Marry’s College of Bansalan –

Bansalan, Davao del Sur

Graduated as With Honor

Student Supreme Council Auditor

Peer Counselor’s PIO

Won3rd place in MathSciCom 2011 Quiz

Bee participated by different schools in

Davao del Sur

CLUBS


Logistic Committee Member

Christ Youth in Action

Accountancy Jaguars (Accountancy

Talents)

Art Company

SEMINARS/WORKSHOPS


Caveat Emptor Symposium: A forum

raising awareness on consumers’ rights

SKILLS

Realistic drawing

Microsoft Word, Excel, and Powerpoint,

Access

SAP Business One

PERSONAL DETAILS

Date of Birth December 6, 1995

Age 20 years old

Status Single

Address Juan Luna Street , Bansalan,

Davao del Sur

CHARACTER REFERENCE

Joan Ang, CPA Faculty Member, Accountancy

Depertment


+63 917 716 2601

Ma. Corazon Gabayan, CPA

Faculty Member, Accountancy

Depertment


+63 942 638 2552

EPICUREAN | 190

JASPER NIKKO ESTIMADA BACHELOR OF SCIENCE IN


PERSONAL INFORMATION

Age 21 years old

Civil Status Single

Sex Male

Date of Birth October 11, 1995

EDUCATION



Panabo National High School

Special Science Curriculum

High School

Valedictorian

Panabo Central Elementary School

Special Education - Fast Learners

Elementary

Valedictorian

AFFILIATIONS

Ateneans Reaching Towards

Academic Excellence (ARETE)

Auditor (2016-2017)

Auditor (2015-2016)

Creative Team Member (2014-2015)

Senior Member (2014-2017)

Junior Member (2013-2014)

Junior Philippine Institute of

Accountants

Member (2012-2017)

Art Company (ArtCo)

Member (2015-2017)

Classroom

Creative Head (2015-2017)

CONTEST/TRAINING

2nd Runner Up

Management Advisory Services Cup, 2016

Regional Mid-Year Conference

INTERNSHIP

Navales Accounting and Consultancy Firm,

Davao City

EPICUREAN | 191

MAMACLAY, MARICON M. BACHELOR OF SCIENCE IN


EDUCATION

Atendeo de Davao University

Course: Bachelor of Science in Accountancy

Fatima College of Camiguin

Year Graduated: 2012

Honors/Awards Received:

Class Salutatorian, Subject Award in CLVE and

Makabayan, Girl Scout Leadership Awardee,

Service Award in Journalism, Rizal Quiz

Awardee, Athlete of the Year

ORGANIZATIONS

JPIA AdDU – Design Logistics Committee

Head

Ateneans Reaching Towards Excellence

(ARETE) – Member


(AdDU Local Chapter) – Member


(Region 11) – Member


(National) – Member

Girl Scouts of the Philippines - Venturer

Scout and School Camp-Aid

GSP Senior Planning Board - Chairman

Fatima College of Camiguin Sports Club -

President

AWARDS AND RECOGNITIONS

Slogan Making Contest – JPIA

Top 5 Most Outstanding Scholars – JSF

President’s List First and Second Semester

ARETE Grand Slam Award (Three-Peat

Honor Student)

Dean’s List First and Second Semester

Second Year Accounting Quiz Bowl -

Participant

President’s List First and Second Semester

First Year Basic Accounting League -

Participant

SEMINARS AND TRAININGS


DTI and FDA Talks: Caveat Emptor

Symposium (Consumers’ Rights)

CRC Talk: Road to CPA


Mid-Year Regional Convention

SGV TALK: Meet the Ateneo Alumni from

SGV: A Career Talk

SGV TALK: Meet Your Future Employers

SGV TALKS: Glimpse into the Future: Learn

about the Corporate World


(Ateneo de Davao University’s National

Service Training Program)

SKILLS

Drawing, Painting, Composing Filipino Poems

Computer: Office (Microsoft Word, Excel &

PowerPoint); SAP

Sports: Volleyball

CHARACTER REFERENCE

Name: Anthony Aguelo

Company: AdDU

Position: Faculty

Contact Number: 0947-547-4645

Name: Magdalena Solis

Company: AdDU

Position: Faculty

Contact Details: 0917-700-9463

EPICUREAN | 192

SWEETZEL DYNE L. MORALES BACHELOR OF SCIENCE IN


+639332170957 / +639222805220

[email protected]

Filipino

CAREER OBJECTIVES

Obtain industry experience and wider

industry knowledge, particularly asset

management and control, accounting, business

management, commercial awareness and

increased responsibility by utilizing the rich

diversity of attained educational training.

EDUCATION



06/2012 – Present




semester

President’s Lister S.Y. 2012-2013 1st and

2nd semesters

Lupon Vocational High School – Lupon, Davao

Oriental

Secondary Education

06/2008 – 03/2012

Graduated as Class Valedictorian – Batch

2012

Supreme Students’ Government (SSG)

Officer:

4th year representative – S.Y. 2011-2012

Vice President – S.Y. 2010-2011

School Publication “The Builders” - Editor

in Chief

Chief Girl Scout Medal Scheme Awardee

CLUBS

Junior Philippine Institute of Accountants-

AdDU Local Chapter Member

Subdominant 7 – Ateneo de Davao

University Chapel Choir Auditor for S.Y.

2014-2015 and 2015-2016

SEMINARS/WORKSHOPS


Caveat Emptor Symposium


SKILLS

Technical and creative writing

Office: Microsoft Word, Excel, and

Powerpoint

SAP Business One

CHARACTER REFERENCE

Ms. Joan Ang, CPA


Faculty member, Accountancy Department

Bank of the Philippine Islands

Assistant Manager

0917-716-2601

PERSONAL DETAILS

Date of Birth July 31, 1995

Age 21 years old

Address

Home: Purok Pag-asa, Barangay

Ilangay, Lupon, Davao Oriental

Mailing: Room 205-1, PARS MKTG.,

Juan dela Cruz St., Davao City

EPICUREAN | 193

PINOON, SHIELDON VIC S. BACHELOR OF SCIENCE IN


Prk. Sibuyas, Brgy. Gredu, Panabo City

+639309548991

[email protected]

ACHIEVEMENTS:

A Deans Lister from 1st year till 3rd year

college

Joined and won 1st Runner Up in the

Association of Science Educators in the

Philippines (ASEP) National Science Fair in

2012

Became a President of Red Cross Youth

Organization in Panabo National High

School in 2011

Member of Junior Philippine Institute of

Accountants (JPIA)

QUALIFICATIONS:

As a student I am always committed to do my

best in my studies and to any tasks or

responsibilities that is given to me in class.

I am able and willing to learn new stuffs, even

things which are not related to accounting,

like photo editing, video editing, simple

website design and etc.

A Youth Leader in our church.

When I am in a team, I always look to

contribute in any way to the team and if I am

voted as the team leader I always look unto

the capabilities of my teammates so that I

would be able to assign to them tasks which

suits their capabilities.

I had some experience working in a small

business and contributing to its accounting

department since my mother is the overall

director of such business.

CERTIFICATES:

SAP Business One 2016

SEMINARS:

SAP Business One Training

November 2, 2015 – March 9, 2016

Ateneo De davao University

4th Philosophers Rally

February 27, 2016

Participant

Bangsamoro Basic Law Forum

2013

Participant

SKILLS:

Trained in using SAP Business One ERP

Software.

Proficient in using Microsoft Office

applications:

o Microsoft Word 2013

o Microsoft Excel 2013

o Microsoft PowerPoint 2013

Basic skills in video editing using Adobe

Premiere Pro, Sony Vegas and Adobe After

effects.

Basic skills in editing pictures using Adobe

Photoshop.

Basic Computer Troubleshooting skills.

EDUCATIONAL BACKGROUND:

Tertiary: Ateneo de Davao University

Secondary: Panabo National High School

Elementary: Panabo Rizal Elementary School

PERSONAL INFORMATION:

Age: 20

Date of Birth: July 29, 1995

Gender: Male

Height: 5’7

Weight: 65 kg

EPICUREAN | 194

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Epicurean Chocolates

Education

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